Mortgage

Ocwen reaches settlement with Massachusetts mortgage regulator, but state lawsuit remains

Reaches final administrative settlement with raft of state regulators

Ocwen Financial’s troubles with state regulators are nearly over, for now, at least.

The nonbank disclosed Friday in a Securities and Exchange Commission filing that it reached a settlement with the Massachusetts Office of Consumer Affairs & Business Regulation’s Division of Banks, which took regulatory action against the company last year along with more than 30 other states over alleged escrow and other mortgage servicing issues.

The settlement with the Massachusetts banking regulator means that Ocwen has now reached a settlement with each of the state regulators that took administrative action against the nonbank last year.

But Ocwen’s not out of the woods yet, especially with Massachusetts.

Massachusetts’ banking regulators went further than many of the other states, effectively putting Ocwen out of business in the state by prohibiting Ocwen from acquiring new mortgage servicing rights, prohibiting it from originating new loans, prohibiting it from servicing any mortgages in the state, and ordering Ocwen to transfer all mortgages it services to other servicers.

Then, a week later, Massachusetts Attorney General Maura Healey announced that the state is suing Ocwen for widespread “abusive” mortgage servicing practices, including charging homeowners in the state for “unnecessary and expensive force-placed insurance policies, imposed excessive fees on delinquent borrowers, and failed to properly process escrow and insurance payments.”

And while Ocwen reached a settlement with Massachusetts’ banking regulator, the state’s lawsuit against the company is still ongoing.

As is the state of Florida’s lawsuit against Ocwen, the company disclosed Friday.

Despite the two outstanding state lawsuits, Ocwen’s issues with state banking regulators are nearly over.

The company disclosed Friday that its settlement with Massachusetts contains similar terms to many of its previous settlements with state regulators.

Previous settlements prohibited the nonbank from acquiring any new residential mortgage servicing rights until April 30, 2018, and stipulated that Ocwen develop a plan to move away from REALServicing, Ocwen’s proprietary platform that 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 in early November.

But the settlement with Massachusetts does carry several different characteristics than previous settlements.

According to Ocwen’s SEC filing, Ocwen also agreed to pay $1 million to the Commonwealth of Massachusetts Mortgage Education Trust.

But that’s not all.

“The company and the Massachusetts regulatory agency also agreed on a schedule pursuant to which Ocwen will regain eligibility to acquire residential mortgage servicing rights on Massachusetts loans (including loans originated by Ocwen) as it meets certain thresholds in its transition to a new servicing platform,” Ocwen said in its SEC filing.

“All restrictions on Massachusetts MSR acquisitions will be lifted when Ocwen completes the second phase of a three-phase data integrity audit which will be conducted by an independent third-party following completion of Ocwen’s servicing platform transition,” Ocwen continued. “The company also agreed to certain additional review and remediation obligations.”

All of those restrictions are explained in much further (and frankly complicated) detail on the Massachusetts banking regulator’s website.

For a full look at the number of steps that Ocwen must take to be allowed to operate fully in the state again, click here.

“Ocwen is pleased to have reached resolution with Massachusetts to resolve regulatory action brought against the company,” Ocwen spokesperson John Lovallo said in a statement.

Ocwen's 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. Those were followed by TexasHawaiiNebraskaOregon and WyomingNorth Carolina and South DakotaConnecticut; and most recently, Maryland.

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