The State of California announced Wednesday that it has chosen the company that will serve as the independent auditor tasked with oversight of Ocwen Financial (OCN) and its operations in the state, as stipulated by the terms of the settlement between California and Ocwen because the company failed to turn over documentation showing that it complies with the state’s laws.

According to a release, the California Department of Business Oversight selected Fidelity Information Services to serve as independent auditor for Ocwen and its subsidiary, Ocwen Loan Servicing.

The CDBO said that Fidelity Information Services was chosen from a field of 31 applicants.

According to the CDBO, Fidelity Information Services will have two main tasks as independent auditor.

First, FIS will examine a sample of loan files and report to the CDBO on Ocwen’s compliance with the 2012 Homeowner Bill of Rights, the California Residential Mortgage Lending Act and other state and federal laws and regulations.

If the FIS compliance review finds violations, the CDBO can bring an enforcement action against Ocwen to collect consumer restitution and penalties under the terms of the settlement with Ocwen.

Second, FIS is set to assess Ocwen’s loan servicing practices, procedures and staffing levels. According to the CDBO, FIS will submit a report to the CDBO and Ocwen that identifies weaknesses that could inhibit Ocwen from treating borrowers properly as required by law. 

If FIS identifies any deficiencies, Ocwen will have to adopt an action plan to correct them. The CDBO must approve the action plan, and FIS will oversee the plan’s implementation by Ocwen.

“The DBO has a duty to ensure its licensees fully comply with laws and regulations designed to protect California homeowners,” said CDBO Commissioner Jan Lynn Owen. “FIS will help us fulfill that duty with respect to Ocwen.”

According to a release from the CDBO, as of March 31, Ocwen serviced 366,955 California mortgages with a total unpaid principal balance of $92.4 billion, which represented 24% of Ocwen’s U.S. portfolio.

Under the terms of the settlement, Ocwen will pay for FIS’ work, and will have 20 days to submit an engagement letter to the DBO for its approval. FIS must complete the servicing practices review within 90 days after the DBO approves the engagement letter with Ocwen. FIS will have no deadline for submitting a final compliance review, but must submit monthly reports to the DBO.

Under the terms of the settlement, Ocwen was also required to pay a $2.5 million fine. Ocwen is also prohibited from acquiring any additional mortgage servicing rights for loans in California until the CDBO is “satisfied that (Ocwen-subsidiary) Ocwen Loan Servicing can satisfactorily respond to the requests for information and documentation made in the course of a regulatory exam.”