Wells Fargo Ends Sale of Loan-Servicing Rights to OcwenDakin Campbell
Wells Fargo & Co.’s deal to sell $39 billion of residential mortgage-servicing rights to Ocwen Financial Corp. was canceled by mutual agreement after New York’s top financial regulator delayed the transaction.
The termination isn’t expected to have a material impact on Wells Fargo’s financial results, the San Francisco-based company said yesterday in a statement. Ocwen said in a separate regulatory filing that it will get back its $25 million deposit.
Benjamin M. Lawsky, head of New York’s Department of Financial Services, asked Atlanta-based Ocwen to put the deal on indefinite hold in February amid reviews of its business. The firm, overseen by billionaire founder and Chairman William C. Erbey, has dropped 59 percent this year and slid further in extended trading yesterday in New York. The stock had surged almost sixfold over the previous three years.
In a February letter to Ocwen, Lawsky said he was examining potential conflicts of interest between the firm and vendors because of concern the links “could create incentives that harm borrowers and push homeowners unduly into foreclosure.” Last month, he accused Ocwen of backdating thousands of loan-modification denial notices starting in 2012.
“The existence and pervasiveness of these issues raise critical questions about Ocwen’s ability to perform its core function” of loan servicing, he wrote in the October letter.
A spokesman for Ocwen said at the time that the company deeply regrets improperly-dated correspondence that resulted from “errors” in its systems. In May, Chief Executive Officer Ron Faris predicted that increased regulatory scrutiny eventually would benefit the firm and industry “by building greater confidence in the system and rewarding those with efficient and effective servicing processes.”