Exclusive: Ocwen Financial to stop gagging homeowners in mortgage deals
NEW YORK (Reuters) - Ocwen Financial Corp will stop requiring some homeowners to not criticize the company publicly in exchange for having the terms of their loans eased, New York state banking regulator Benjamin Lawsky said on Tuesday.
Atlanta-based Ocwen, which collects payments on home loans, was among a number of companies that required borrowers in litigation sign non-disparagement clauses as a condition of getting their mortgages modified, according to a May 21 Reuters report.
Such clauses forbade consumers from saying anything negative about the companies in public forums.
"In discussions with our Department, Ocwen has agreed to no longer seek gag rules as part of settlement agreements or loan modifications with borrowers," Lawsky, the superintendent of New York's Department of Financial Services, said in an emailed statement to Reuters. "Additionally, the company has stated it will not enforce gag rule provisions in existing agreements."
Lawsky said his office would review the issue at other financial institutions.
Ocwen said in a separate statement that it only had used non-disparagement clauses in the "highly unusual situation where there is a legal settlement agreement with a borrower." Such cases represent less than 1 percent of the loans in its portfolio, the company said.
Bank of America Corp and PNC Financial Services Group Inc were among the other mortgage servicers that made use of non-disparagement clauses in the process of modifying the loans of struggling borrowers in litigation, according to consumer lawyers. Representatives for each company did not immediately respond to requests seeking comment.
(Reporting by Peter Rudegeair and Michelle Conlin in New York; Editing by Lisa Von Ahn)
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