Exclusive: New York regulator probes Ocwen over reports of homeowner gag rule
(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)
- China food scandal spreads, drags in Starbucks, Burger King and McNuggets in Japan |
- U.S. court rulings create new uncertainty over Obamacare
- Israel pounds Gaza despite international peace efforts |
- EU readies possible capital, tech sanctions on Russia
- Islamic State crushes and coerces on march towards Baghdad