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Washington hits Ocwen with fine for using unlicensed offshore companies

Ocwen to pay $900,000; only use licensed entities to service Washington loans

Ocwen Financial will pay $900,000 to the state of Washington after an investigation conducted by the state found that Ocwen used unlicensed companies in India and the Philippines to service mortgage loans, the state’s financial regulator announced Thursday.

According to the Consumer Services Division of the Washington State Department of Financial Institutions, an investigation into Ocwen’s mortgage servicing activities found that Ocwen Loan Servicing, which is licensed to service mortgages in the state, used unlicensed affiliate offshore companies to “perform activities considered residential mortgage loan servicing under Washington law.”

Washington’s Consumer Loan Act specifically requires companies servicing residential mortgage loans in the state to be licensed as Consumer Loan Companies.

But an investigation into Ocwen’s operations found that Ocwen used two unlicensed companies, Ocwen Financial Solutions Private Limited, operating out of a location in India, and Ocwen Business Solutions, operating out of a location in the Philippines, to conduct “servicing” activities on Washington residential mortgage loans.

According to the Washington State Department of Financial Institutions, its investigation found that Ocwen Financial Solutions Private Limited engaged in unlicensed servicing activities dating back to Aug. 1, 2010, while Ocwen Business Solutions’ unlicensed activity took place between June 2013 and August 2015.

The consent order between Washington and Ocwen stated that in 2010, Ocwen Financial Solutions Private Limited applied for a license to conduct business in the state from a location in India, but the application was never completed, despite Ocwen providing additional application materials in “subsequent” time.

Additionally, in September 2015, Ocwen Business Solutions applied to conduct business within the state from a location in the Philippines, but was later notified by the Department of Financial Institutions that it would not license foreign entities.

Under the terms of the settlement agreement, Ocwen will pay $900,000 to the state of Washington in two payments – $600,000 within the next 10 days and another $300,000 by no later than March 31, 2017.

Additionally, Ocwen, which did not admit nor deny any wrongdoing, will end its practice of using offshore unlicensed affiliate companies to perform residential mortgage loan servicing activities for Washington loans.

“Ocwen cooperated in our investigation and quickly made changes to its operations to address our concerns around unlicensed activity,” Charles Clark, the Washington State Department of Financial Institutions’ director of consumer services, said.

“Our licensing requirement to engage in servicing activities is a significant protection for borrowers trying to pay off their homes,” DFI Director Scott Jarvis said. “It is critical that Washington residents' mortgage payments are properly handled and that loan modifications and foreclosures are in compliance with the law, and licensure allows us to closely monitor these activities.”

In a statement provided to HousingWire, Ocwen stated that it is “pleased” to reach a settlement in this matter.

“This settlement resolves questions regarding which activities are permissible under the Washington Consumer Loan Act,” the company said. “Under the Consent Order, Ocwen neither admits nor denies any wrongdoing. Ocwen continues to invest significantly in its risk and compliance infrastructure and remains committed to a culture of compliance with all regulatory requirements.”

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