Ocwen reaches mortgage servicing settlement with Nebraska

Latest in string of settlements with states over servicing issues

Ocwen Financial disclosed Monday that it settled a number of pending legal matters, but those weren’t the only settlements the nonbank announced.

Ocwen also disclosed Monday that it reached a settlement with Nebraska to remove the state’s restrictions on Ocwen’s business.

Over the last few months, Ocwen began settling with some of the 31 states that took regulatory actions against the nonbank earlier this year over alleged escrow issues, restricting the company’s ability to acquire new mortgage servicing rights and originate new loans.

The first round of settlements included Georgia, Idaho, Illinois, Maine, Michigan, Mississippi, Montana, Rhode Island, South Carolina, and Wisconsin. Then came New Mexico, Virginia, West Virginia; followed by Alabama and Minnesota; then Arkansas, Tennessee, and the District of Columbia; then Texas; and most recently, Hawaii.

And Monday, Ocwen disclosed in a filing with the Securities and Exchange Commission that it reached an agreement with the state of Nebraska.

As with the previous settlements, Ocwen’s agreement with Nebraska prohibits the nonbank from acquiring any new residential mortgage servicing rights until April 30, 2018.

As part of the agreement, Ocwen also agreed to develop a plan to move away from REALServicing, which is used to process and apply borrower payments, communicate payment information to borrowers, and maintain loan balance information.

That plan will be achieved by Ocwen moving its servicing to Black Knight’s platform, a deal that was announced last month.

The agreement with Nebraska, as with the other states’ agreements, restricts Ocwen from boarding new loans through REALServicing. The restriction does not apply to loans already serviced on REALServicing, including modifications or loans that are converted to an arrangement where Ocwen acts as a subservicer.

While Ocwen disclosed the agreement on Monday, the Nebraska Department of Banking and Finance actually announced the settlement last month.

Nebraska was one of several states that said back in April that they expected Ocwen to provide detailed reports on its servicing activity on a frequent basis going forward.

And the November announcement from the Nebraska Department of Banking and Finance stipulates exactly that.

“The Nebraska Department of Banking and Finance will receive regular reports on Nebraska mortgage loans and will interact with the Ocwen entities, on behalf of consumers, through an enhanced consumer complaints processing procedure,” the regulator said last month. “The Department will also receive regular reports on the Ocwen entities’ financial condition for three years and will get direct notification if certain liabilities are incurred by the Ocwen entities.”

Additionally, the Nebraska settlement states that Ocwen will “engage an independent third-party auditor to test approximately 9,000 loan files for compliance with state and federal escrow laws at an estimated cost to the Ocwen entities of at least $4.4 million.”

This settlement brings the total number of jurisdictions that have reached a settlement with Ocwen to 22.

“Ocwen continues to seek timely resolutions with the remaining eight regulatory agencies and two state attorneys general,” Ocwen said in its SEC filing.

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