Ocwen Financial Corp. (OCN), which won a $3 billion auction for Residential Capital LLC’s mortgage servicing business, must hire a monitor to review operations, New York’s banking regulator said.
The monitor is required to ensure the company complies with an agreement to reform servicing practices, the state’s Department of Financial Services said in a statement today. A review by the department found “indications” Ocwen violated the agreement reached with the regulator.
“To protect homeowners facing the risk of losing their homes, we must ensure that the companies are actually living up to their promises,” Benjamin Lawsky, superintendent of the department, said in the statement.
Ocwen reached an agreement with the state last year to make changes to its servicing operations, according to the department. In October, Ocwen and Walter Investment Management Corp. won the bidding for ResCap’s loan servicing and origination assets.
Department of Financial Services spokesman David Neustadt said the department hasn’t yet approved the ResCap sale to Ocwen. He declined to comment further.
Katarina Wenk-Bodenmiller, a spokeswoman for Ocwen, had no immediate comment on the state’s announcement.
A department examination found indications that in some instances Ocwen failed to provide a single point of contact for borrowers and pursued foreclosures against borrowers who sought loan modifications.
Under a consent order, Ocwen has 20 days to find an independent monitor acceptable to the department. The monitor will review the company’s operations and report on “corrective actions” within 90 days, the state said.