Exclusive: New York regulator probes Ocwen over reports of homeowner gag rule

Wed May 21, 2014 4:40pm EDT

New York State Department of Financial Services Superintendent Benjamin Lawsky speaks during the Reuters Financial Regulation Summit in New York, April 29, 2014. REUTERS/Mike Segar

New York State Department of Financial Services Superintendent Benjamin Lawsky speaks during the Reuters Financial Regulation Summit in New York, April 29, 2014.

Credit: Reuters/Mike Segar

(Reuters) - New York banking regulator Benjamin Lawsky said on Wednesday he is looking into reports Ocwen Financial Corp is requiring some struggling homeowners to agree not to criticize the company in public if they want to have a mortgage modified.

Reuters reported on Wednesday that a number of companies collecting payments on home loans, including Ocwen, are increasingly demanding borrowers in litigation sign non-disparagement clauses if they want the terms on their mortgages eased. In some cases, servicers are also demanding the clauses be inserted in loans modified outside of litigation.

Those clauses prohibit consumers from printing or posting anything negative about the companies.

"Reports that Ocwen is imposing a gag rule for certain struggling homeowners - preventing them from criticizing the company - are troubling and deeply offensive," Lawsky, New York's superintendent of financial services, said in an emailed statement to Reuters. "We will investigate this issue immediately."

"Servicers have a responsibility to act in the best interest of borrowers and investors - not to try and sweep shoddy practices under the rug or muzzle struggling homeowners," Lawsky added.

Ocwen said in a statement that it only uses non-disparagement clauses when there is a legal dispute with a borrower. These cases represent less than 1 percent of the loans in its portfolio. The company added that it believes the clauses are consistent with industry practice and that they help both sides achieve closure with the dispute.

A source familiar with Lawsky's thinking said the probe could be expanded to other servicers.

(Reporting by Peter Rudegeair and Michelle Conlin in New York; Editing by Paul Simao and Eric Walsh)

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Comments (2)
Roddie wrote:
Ocwen needs to be stopped. They fabricated fees, didn’t credit my account for payments and now trying to foreclose on my home of 24 years. I’m only one of thousands.

May 21, 2014 1:18pm EDT  --  Report as abuse
Bwitch wrote:
Ocwen does need to be stopped…….They are a bunch of crooks. Lost my house of 19 years, foreclosed on while waiting on a loan modification….sold at sheriff auction and was never notified!! I am am just a drop in the bucket of what they are pulling on people.

May 22, 2014 10:19pm EDT  --  Report as abuse
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