New York's top state bank regulator is yet to approve Ocwen Financial Corp's recent agreements to buy two mortgage servicing firms as a result of concerns about what it says are unfair loan practices, the Wall Street Journal reported.
Ocwen recently struck deals to buy Homeward Residential Holdings Inc and the mortgage servicing unit of Residential Capital LLC. Both companies collect mortgage payments and rework troubled loans for U.S. homeowners.
The two deals would make Ocwen the biggest servicer of home loans made to borrowers with weak credit histories - also known as subprime mortgages - and the fifth largest mortgage servicer in the United States overall.
Ocwen needs the approval of Benjamin Lawsky, New York's superintendent of financial services. The company has said it expects the deals to close by early 2013.
In a review of dozens of Ocwen's loan cases, Lawsky's office found what it sees as evidence of practices it deemed abusive, the Journal said, citing people familiar with the review. (link.reuters.com/wut44t)
Lawsky's office is demanding that Ocwen bring on a monitor of his choice who would oversee the company's mortgage operations for two years and recommend changes in business practices, the paper said.
"We have not received from any regulator at the federal or state or any level any findings or evidence we have wrongfully foreclosed on any borrower. Further, we do everything in our power to avoid foreclosure," Paul Koches, Ocwen's general counsel, told the Journal.
Ocwen teamed up with Walter Investment Management Corp to win a bankruptcy auction for Residential Capital LLC's mortgage business with a $3 billion bid. Ocwen also agreed to buy Homeward Residential Holdings from Wilbur Ross' private equity firm for $750 million in cash and stock.
Ocwen Financial, Lawsky's office and Residential Capital could not immediately be reached for comment by Reuters outside regular U.S. business hours.