Feb 26 Credit rating agency Moody's Corp
warned that mortgage servicers such as Ocwen Financial Corp
could be pushed into subprime lending as their core
business comes under increased regulatory scrutiny.
The rapid growth of mortgage servicers since the subprime
crisis has drawn the attention of state and federal regulators
who are concerned about the companies' capacity to collect
mortgage payments in large volumes.
Earlier this month, Ocwen said New York's banking regulator
halted its purchase of servicing rights on a portfolio of
mortgages from Wells Fargo & Co with a total principal
balance of $39 billion.
Moody's in a research note said it was concerned over the
possibility that the companies would attempt to offset a
decrease in growth by shifting business models and originating
subprime mortgages, which would be a net credit negative.
Servicers get paid by loan owners, typically banks or
investors, to collect mortgage payments and handle delinquencies
Moody's said regulatory action on Ocwen may signal a broader
regulatory push to moderate the growth of large mortgage
servicing companies, which include Walter Investment and
National Mortgage LLC.
Ocwen, Walter Investment and National Mortgage were not
immediately available for comment outside of regular business