Ocwen Financial is officially moving its mortgage servicing operations away from its proprietary REALServicing platform, which was at the center of the company’s recent regulatory troubles with more than 30 states and the Consumer Financial Protection Bureau.
Earlier this year, the CFPB and 31 states took action against Ocwen, alleging various failures in the mortgage servicing process – with Ocwen’s REALServicing platform, which is used to process and apply borrower payments, communicate payment information to borrowers, and maintain loan balance information, as a main focus.
The CFPB, for example, said in its lawsuit against Ocwen that in 2014, the company’s head of servicing allegedly described REALServicing as “ridiculous” and a “train wreck.”
The CFPB alleged that Ocwen’s system was riddled with inaccurate and incomplete information, and even when data was accurate, the system generated errors due to system failures and deficient programming.
Now, Ocwen is moving away from REALServicing and moving to Black Knight’s LoanSphere MSP servicing system.
Black Knight announced Wednesday that it signed a seven-year contract with Ocwen Loan Servicing, the servicing subsidiary of Ocwen Financial. Under the terms of the contract, Ocwen will use MSP to service residential mortgages and home equity loans and lines of credit.
According to Black Knight, Ocwen will also implement Black Knight’s suite of Default Solutions, Portfolio Overview Insight and Lien Alert as part of the contract.
“We are proud to provide Ocwen with a comprehensive solution that can meet all of its servicing needs – from loan boarding and payment processing to escrow administration and default management,” said Joe Nackashi, president of Black Knight. “Ocwen selected the servicing system with a track record of delivering proven capabilities, reliability and scalability, which will help expand Ocwen’s business and better position it for future growth.”
Discontinuing its use of REALServicing was also a requirement in each of the 21 settlements Ocwen recently reached with the states that took regulatory actions against Ocwen earlier this year over alleged escrow issues and restricted Ocwen’s ability to acquire new mortgage servicing rights and originate new loans.
In its settlement with each state, Ocwen agreed to develop a plan to move away from the REALServicing platform. Under the terms of each settlement, Ocwen is prohibited from boarding new loans through REALServicing.
But now, Ocwen is moving to Black Knight’s system.
Scott Anderson, executive vice president and chief servicing officer for Ocwen Financial, said the moving to Black Knight will allow it to focus on helping homeowners.
Parveen Aery, senior vice president and chief information officer for Ocwen Financial, said there are financial benefits too.
“Using Black Knight’s integrated technology system aligns with our corporate objectives of reducing costs, streamlining the technology product suite, and creating efficiencies within the organization,” Aery said in a release.
In a statement provided to HousingWire, Ocwen spokesperson John Lovallo said the change to Black Knight’s system was not an overnight decision.
“Over a multi-year period, Ocwen undertook a detailed review of industry leading mortgage loan serving systems. Our decision to transition to the LoanSphere MSP loan servicing system is part of Ocwen’s corporate objectives of reducing costs, streamlining the technology product suite, and creating efficiencies within the organization,” Lovallo said.
“Today’s announcement demonstrates our commitment and continued focus on improvement across the company. Ocwen is a better company today than at any point in our 30-year history,” Lovallo added. “Our performance has improved across every phase of our operations, from customer service and communications, to compliance and transparency. As always, we remain focused on our core mission of helping homeowners.”
[Update: This article is updated to reflect the accurate number of jurisdictions that took action against Ocwen.]