According to a filing with the Securities and Exchange Commission from Ocwen, the two companies signed a mutual termination agreement on Thursday.
Ocwen’s SEC filing states that the company will receive its entire $25 million deposit back.
The deal has been in limbo since February, when the New York Department of Financial Services put an indefinite hold on the deal.
At the time, the NYDFS said that it was concerned about Ocwen’s ability to handle Wells Fargo’s portfolio of mortgage servicing rights in the deal, which was originally announced in January and which would have given Ocwen the right to service approximately $39 billion in mortgages.
Wells Fargo said in a brief release announcing the cancelation of the deal that parties have mutually decided to cancel the deal and that the cancellation of the transaction is not expected to be material to Wells Fargo’s consolidated financial results.
In the wake of the deal initially being placed on hold, Ocwen Executive Chairman William Erbey said that the NYDFS had effectively halted all MSR portfolio deals.
“Until we resolve – this relates to Ocwen – until we resolve New York State we’re not acquiring any new (MSR) portfolios at all. As a matter of fact the entire market – nothing is being put out for bid right now,” Erbey said in April. “The whole market has stopped until that gets resolved.”
NYDFS Superintendent Benjamin Lawsky has long been looking into Ocwen’s business dealings, including Ocwen’s close relationship with Altisource Residential (RESI), Altisource Asset Management Corp (AAMC), Altisource Portfolio (ASPS), and Home Loan Servicing Solutions (HLSS). Lawsky first sent a letter to Ocwen’s general counsel about the dealings between the affiliated companies in February.
Ocwen announced two weeks ago in its own earnings statement that it booked a $100 million charge for a potential settlement with the New York Department of Financial Services over allegations that it was backdating letters to borrowers.
And now, concerns from the NYDFS have killed Ocwen's $2.7 billion MSR deal.