| NEW YORK
NEW YORK Feb 12 New York's financial regulator
on Wednesday said the explosive growth of non-bank mortgage
servicers is a "troubling trend" that must be confronted "before
more homeowners get hurt."
Benjamin Lawsky, superintendent of New York's Department of
Financial Services, said that four of the top 10 firms managing
mortgages in the United States are non-banks, whereas all were
banks in 2011, and that the four service more than a trillion
dollars in loans.
"We have serious concerns that some of these non-bank
mortgage servicers are getting too big, too fast," Lawsky said
in prepared remarks for Wednesday's New York Bankers Association
Meeting and Economic Forum.
"We are seeing far too many struggling homeowners getting
caught in a vortex of lost paperwork, unexplained fees and
avoidable foreclosures," he said.
Lawsky said servicers are buying up mortgage-servicing
rights due to stronger capital requirements for banks following
the mortgage crisis. He said banks are getting less credit for
the rights on their balance sheets and rather than building up
stronger buffers, they are offloading them to the more lightly
The regulator took aim at one unidentified firm that he said
quadrupled in size in about a year and now services more than
$400 billion in loans. He said the firm said it could service
distressed loans at a 70 percent lower cost than the rest of the
Lawsky said regulators have to ask whether such so-called
efficiencies are "too good to be true."
His remarks seemed to be directed at Ocwen Financial Corp,
which is the fourth-largest mortgage servicer, behind
Wells Fargo & Co, JPMorgan Chase & Co and Bank
of America Corp.
A spokesman for Ocwen, Richard Gillespie, did not
immediately respond to an email for comment.
Last Thursday, Ocwen said New York's Department of Financial
Services halted its purchase of servicing rights on a portfolio
of mortgages from Wells Fargo & Co. The regulator is
concerned that Ocwen does not have the ability to handle the
load, a person familiar with the matter said. [ID: nL2N0LB265]
Other non-bank servicers among the top 10 include
Nationstar Mortgage, PHH Mortgage, and Walter Investment