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Monitor: Ocwen Failed Four Metrics in Compliance Test for Second Half of 2014

pen-and-paper1Ocwen Financial Corporation failed four metrics and was deemed to have failed seven others in an independent settlement monitor’s review of the servicer’s entire residential mortgage loan portfolio covering the second half of 2014, according to the monitor’s report filed with the U.S. Court for the District of Columbia on Thursday.

Joseph A. Smith, Jr., monitor of the National Mortgage Settlement (NMS), found in his report—the first one on Ocwen’s entire loan portfolio—that the Atlanta-based mortgage servicer had failed four metrics on the compliance test for the testing period of Q3 and Q4 for 2014: Pre-foreclosure Initiation Notification Letters, Fee Adherence to Guidance, Short Sale Document Collection Timeline Compliance, and Loan Modification Denial Notice Disclosures.

Ocwen still has work to do,” Smith said. “I anticipate that Ocwen will complete its corrective actions later this year or in early 2016. I will report the results of my reviews in my next report, which will also cover compliance for the first and second quarters of 2015.”

In addition to those four failed metrics, Smith and Ocwen agreed that seven metrics with timeline requirements would be deemed failures under Ocwen’s Global Corrective Action Plan (CAP) to address the issue of erroneously dated correspondence to borrowers during Q3 2014. Those six metrics are: Third-party Vendor Management, Loan Modification Document Collection Timeline Compliance (5-day letter), Loan Modification Decision/Notification Timeline Compliance, Short Sale Decision Timeline Compliance, Short Sale Document Collection Timeline Compliance, Dual Track Failure to Postpone Foreclosure Compliance, and Loan Modification Process. In all, 10 metrics are subject to CAPs after Q4 2014, according to Smith’s report. The erroneously dated notices resulted in Ocwen reaching a $150 million settlement with the New York Department of Financial Services in December 2014.

“The Monitor’s report confirms continued confidence by the OMSO (Office of Settlement Mortgage Oversight) in the changes we have made to our Internal Review Group function, the qualifications and process around our metrics testing, and discusses our state of compliance with the National Mortgage Settlement,” Ocwen spokesman John Lovallo said in an email to DS News. “The specific metrics mentioned in this report are from the third and fourth quarters of 2014, and not a reflection of our current operations. They have all been addressed with Corrective Action Plans approved by OMSO and implemented by Ocwen in 2015. We also note that the Monitor’s report specifically discusses that Ocwen has cured its potential violation regarding termination of lender-placed insurance and passed that metric during the cure period in the fourth quarter of 2014.

“Ocwen is committed to being fully compliant with all rules and regulations related to our business, and we continue to invest in our risk and compliance management systems."

—Ocwen spokesman John Lovallo

“Ocwen is committed to being fully compliant with all rules and regulations related to our business, and we continue to invest in our risk and compliance management systems. We will continue to work closely with the Monitor and look forward to the next report.”

In his previous report on Ocwen’s compliance with the NMS, which was issued on August 11, Smith said he had concluded his year-plus long investigation of Ocwen's Internal Review Group (IRG) with the determination that issues surrounding the IRG had been “sufficiently addressed.” Smith and his team launched an investigation in May 2014 after hearing from an employee about "serious deficiencies in Ocwen's internal review group process" and issues relating to erroneously dated foreclosure notices to about 7,000 borrowers, which Ocwen blamed on computer errors.

In that same August report, Smith confirmed that Ocwen has provided more than $881 million in consumer relief to 8,861 borrowers through first-lien mortgage modifications as of December 31, 2014. Under the terms of the NMS, Ocwen is obligated to pay $2 billion in consumer relief.

Click here for more information on Smith’s report released Thursday.

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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