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CORRECTED-New York bank regulator stops Ocwen-Wells Fargo deal
February 6, 2014 / 6:20 PM / 4 years ago

CORRECTED-New York bank regulator stops Ocwen-Wells Fargo deal

(Corrects name in para 6 to Consumer Financial Protection Bureau)

By Peter Rudegeair

Feb 6 (Reuters) - New York’s top bank regulator has indefinitely halted Ocwen Financial Corp’s purchase of the right to collect payments on a portfolio of mortgages from Wells Fargo & Co, a person familiar with the matter said on Thursday.

The New York Department of Financial Services, led by Superintendent Benjamin Lawsky, is concerned that Ocwen lacks the ability to handle the additional servicing load, the person said.

In January, Ocwen announced it was buying for an undisclosed sum the servicing rights to 184,000 Wells Fargo home loans with a total principal balance of $39 billion.

Lawsky’s office has previously taken action against Ocwen. In December 2012, the department announced that it was requiring the Atlanta-based company to install a monitor to ensure Ocwen was meeting certain mortgage servicing guidelines.

Ocwen agreed to follow the mortgage servicing rules, such as ending robo-signing and other practices, to get the regulator’s approval to purchase Goldman Sachs Group Inc’s Litton Loan Servicing unit in September 2011.

The rapid rise of specialty servicers like Ocwen has drawn the attention of state regulators, as well as the Consumer Financial Protection Bureau, who wonder whether such companies have the systems in place to collect mortgage payments in large volumes.

A spokesman for Wells Fargo declined to comment. A representative for Ocwen did not immediately return a request for comment.

News of the New York superintendent’s action was first reported by the Wall Street Journal. (Editing by Tom Brown)

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