Just over a year ago, Altisource Portfolio Solutions disclosed that the Consumer Financial Protection Bureau was investigating the company’s relationship with Ocwen Financial, but now, it looks that investigation is over.
Altisource revealed Thursday that it recently received a notification from the CFPB, which said that the agency’s investigation has been completed and that the agency will not pursue an enforcement action against the company.
According to Altisource CEO William Shepro, the CFPB is currently not recommending an enforcement action and relieved the company of its document retention obligations that were part to the civil investigative process.
According to Altisource, the company received a “Notice and Opportunity to Respond and Advise” from the CFPB on Nov. 10, 2016. The letter stated that the CFPB “was considering a potential enforcement action against Altisource relating to an alleged violation of federal law focused on the REALServicing platform and certain other technology services provided to Ocwen, including claims related to the features, functioning and support of such technology.”
In December 2016, Altisource responded to the letter, laying out its case with the legal, policy and factual reasons why the company believed an enforcement action was unwarranted.
Now, Altisource said that earlier this month it received a notice from the CFPB that it was ending its investigation and did not plan to recommend a fine or other action against the company.
The investigation delved into the REALServicing platform and other services that Altisource provided to Ocwen.
The CFPB, in its lawsuit against Ocwen, claimed that REALServicing, the system Ocwen used to process and apply borrower payments, communicate payment information to borrowers, and maintain loan balance information, was riddled with errors and technologically deficient.
Over the last several months, Ocwen has reached settlements with nearly all of the states that brought regulatory action, and each of those settlements stipulated that Ocwen develop a plan to move away from REALServicing.
That plan will be achieved by Ocwen moving its servicing to Black Knight’s platform, a deal that was announced in early November.
And now, with REALServicing soon to be in Ocwen’s rear view, the CFPB is dropping its probe into Altisource’s piece of the puzzle.
According to Altisource, the company does not make a significant amount of revenue from Ocwen’s use of REALServicing.
“Additionally, Ocwen has notified us, disclosed in its filings and stated in connection with resolving several state administrative actions discussed above, that it plans to transition from REALServicing to another mortgage servicing software platform,” Altisource said in a filing with the Securities and Exchange Commission.
“Furthermore, Ocwen disclosed in its filings that its pending acquisition of PHH Corporation is expected to accelerate its transition to a new servicing platform,” Altisource continued. “Altisource is supporting Ocwen through this transition. We do not anticipate that a servicing technology transition would impact the other services we provide to Ocwen.”
According to the company, its service revenue from REALServicing was $6.5 million in the first quarter of 2018, compared to $7 million in the first quarter of 2017.
The company’s overall service revenue was $188.8 million in the first quarter of 2018.
When contacted by HousingWire about the Altisource situation, the CFPB said that it does not comment on investigations and will not be commenting on this one either.