New York's top banking supervisor once again set his sights on Ocwen Financial Corp. this week, saying the non-bank servicer sent thousands of foreclosure warnings to borrowers months after it was too late to save their homes.
In a letter released earlier this week, Benjamin Lawsky, superintendent of financial services for New York, said an investigation of Ocwen's mortgage servicing practices turned up more than 7,000 letters sent to borrowers that had been backdated and sent only after their payment deadlines had passed.
"In many cases, borrowers received a letter denying a mortgage loan modification, and the letter that was dated more than 30 days prior to the date that Ocwen mailed the letter. These borrowers were given 30 days from the date of the denial letter to appeal that denial, but those 30 days had already elapsed by the time they received the backdated letter," Lawsky said in the letter, which was addressed to executives and board directors at Ocwen.
In other cases, Lawsky said, Ocwen's systems showed borrowers facing foreclosure received notices to cure their default months after the cure date had already passed.
In addition, Lawsky claims the company ignored concerns brought up by an employee that its letter dating processes were inaccurate and misrepresented the severity of the problem to his team when questioned about it.
"The existence and pervasiveness of these issues raise critical questions about Ocwen's ability to perform its core function of servicing loans," Lawsky said.
This week's letter is just the latest regulatory headache for Ocwen, the largest non-bank operating in the mortgage servicing space. The company has seen tighter scrutiny from Lawsky and other federal and state bank regulators in the last year as they turn their attention to independent servicers, who have grown significantly as banks come under heavier regulation.
On Wednesday, a group of state bank supervisors—including a representative from Lawsky's New York office—announced the formation of a new task force to analyze growth and practices at non-bank servicers in the hope of developing workable servicing standards for that segment.
In a statement, Ocwen said the backdating issue stems from software errors in correspondence systems. While the company is not certain how many borrowers received backdated letters, it believes it has resolved the issues that have been found so far.
"We are continuing to review the rest of the cases," the company said. "We are working with and fully cooperating with DFS and the Monitor to address their concerns."
A spokesperson representing the company turned down a request for an interview.