In April 2017, more than 20 state business regulators issued regulatory enforcement orders to subsidiaries of Ocwen Financial Corp to address “mishandling of consumer escrow accounts and a deficient financial condition,” according to an April news release from the North Carolina Office of the Commissioner of Banks.
Since September 28, Ocwen has announced reaching resolutions with a number of states, but Thursday morning the company added two more, bringing Ocwen to a total of 17 resolutions.
Additionally, Ocwen announced under the "Wholesale Forward Lending" section of the 8K filing that they have decided to exit the wholesale forward lending business, agreeing to sell certain assets related to the business to an undisclosed buyer.
"The buyer is expected to assume a facilities lease and to offer positions to certain Ocwen employees in the business," the filing said. "Ocwen estimates that it will recognize a loss of approximately $7 million related to the divestiture in its third quarter 2017 results."
According to the filing, This loss is primarily due to the company writing off the capitalized balance of internally developed software for the wholesale forward lending business and the company expects an additional $1 to $2 million of severance expense following the closing of the transaction, expected to occur next quarter.
Thus far, Ocwen has settled with Georgia, Idaho, Illinois, Maine, Michigan, Mississippi, Montana, Rhode Island, South Carolina, Wisconsin, New Mexico, Virginia, and West Virginia, with Thursday’s addition of Alabama and Minnesota. State regulatory agencies in Indiana and Nevada either withdrew or allowed their respective cease and desist orders to expire.
“Ocwen is pleased to have reached resolutions with two additional states, Alabama and Minnesota, to resolve regulatory actions brought against the Company, bringing the total number of states where we have reached a resolution to 17,” said John Lovallo, Spokesperson for Ocwen.
As previously reported, the agreements terms include details such as Ocwen not acquiring any new residential mortgage servicing rights until April 30, 2018, developing plans to transition to a new servicing system, and not engaging an auditor to perform an escrow review of between 8,000 and 10,000 loans. However, the release also notes that Ocwen did not admit or deny liability in these settlements and none of the agreements contain any monetary fines or penalties.
If the company successfully enters into agreements with the remaining states, they may contain some or all of the terms mentioned above—but there is no assurance that will happen.
“We continue to work cooperatively with the remaining 14 state regulatory agencies and two state attorneys general to reach acceptable resolutions,” Lovallo said.
To read the 8K filing, click here.