Dec 5 A New York state regulator said it has ordered Ocwen Financial Corp to hire a monitor to make sure the growing mortgage servicer complies with a previous agreement to reform its practices.
The New York Department of Financial Services on Wednesday said it imposed the requirement after an examination found signs that Ocwen was violating the agreement. The monitor will be in place for two years.
In September 2011, Ocwen was the first mortgage servicer to agree to follow the department's new mortgage servicing requirements, which aimed to prevent the so-called robo-signing of foreclosure documents and other improper practices.
In its examination, the department said it found instances where Ocwen failed to show it had sent required 90-day notices before starting foreclosure proceedings or that it had standing to foreclose. The regulator also had other concerns about the company's servicing practices, including indications that it had failed to provide some borrowers with a single point of contact for communicating with the company.
Ocwen did not immediately respond to a request for comment.
The Atlanta-based company has been expanding rapidly through acquisitions as banks such as Morgan Stanley and Goldman Sachs Group Inc back away from a business that burned them during the financial crisis. Mortgage servicers collect payments from borrowers and help them modify their loans when they fall behind on the their payments.
Earlier this month, the servicer agreed to buy mortgage lender Homeward Residential Holdings from Wilbur Ross' private equity firm for $750 million in cash and stock. In October, Ocwen and Walter Investment Management Corp prevailed in a bankruptcy auction for Residential Capital LLC's mortgage business with a $3 billion bid that topped rival Nationstar Mortgage Holdings Inc. [ID: nL1E8LO71V]
Mortgage servicers have been under fire from regulators for their poor handling of foreclosures and loan modifications since the U.S. housing market cratered. In February, five large banks reached a $25 billion settlement requiring them to reduce loan balances for borrowers and to reform servicing practices.
The Wall Street Journal on Tuesday first reported that New York's banking regulator had concerns about Ocwen's practices. [ID: nL4N09F0G7]