Ocwen
Financial Corporation (Ocwen or the Company) provides the following update on regulatory matters.
Ocwen
has previously disclosed that it is seeking timely resolutions to the regulatory actions taken against us on April 20, 2017 or
shortly thereafter by mortgage and banking regulatory agencies from thirty states and the District of Columbia and two state attorneys
general alleging various deficiencies in our compliance with laws and regulations relating to our servicing and lending activities.
On September
28, 2017, Ocwen entered into agreements with 10 states to resolve the regulatory actions brought by these states.
These agreements generally contain the following key terms (the Multi-State Common Settlement Terms):
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Ocwen
will not acquire any new residential mortgage servicing rights until April 30, 2018.
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Ocwen
will develop a plan of action and milestones regarding its transition from the servicing
system it currently uses, REALServicing®, to an alternate servicing system and will
not board any new loans onto the REALServicing system. This restriction on boarding new
loans does not apply to loans that are already serviced on the REALServicing system,
including those that are subsequently modified or those that are subsequently converted
to an arrangement whereby Ocwen acts as sub-servicer.
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In
the event that Ocwen chooses to merge with or acquire an unaffiliated company or its
assets in order to effectuate a transfer of loans from the REALServicing platform, Ocwen
must give the applicable regulatory agency prior notice to the signing of
any final agreement and the opportunity to object. If no objection
is received, the provisions of the first bullet point above shall not prohibit the transaction,
or limit the transfer of loans from the REALServicing system onto the merged or acquired
company’s alternate servicing platform. In the event that an unaffiliated company
merges with or acquires Ocwen or Ocwen’s assets, the provisions of the first bullet
point above shall not prohibit the transaction, or limit the transfer of loans from the
REALServicing system onto the merging or acquiring company’s alternate servicing
system.
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Ocwen
will engage a third party auditor to perform an analysis with respect to its compliance
with certain federal and state laws relating to escrow by testing approximately 9,000
loan files relating to loans secured by residential real property in various states
and the District of Columbia.
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Ocwen
will develop and submit for review corrective action plans for any errors that are identified
by the third party auditor and will remediate any individual accounts impacted by such
errors.
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Ocwen
will develop and submit for review a plan to enhance its consumer complaint handling
processes.
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Ocwen
will provide financial condition reporting on a confidential basis as part of each state’s
supervisory framework for the next three years.
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In all
of the above-described agreements, Ocwen neither admitted nor denied liability.
None
of the agreements contain any monetary fines or penalties, although Ocwen will incur costs complying with the terms of these settlements,
including in connection with the escrow analysis and transition to a new servicing system.
These
agreements are generally documented as consent orders or consent agreements that resolve the specific cease and desist or other
order brought by the applicable regulatory agency on April 20, 2017 or shortly thereafter. These agreements are with the applicable
regulatory agency in the following jurisdictions: Georgia, Idaho, Illinois, Maine, Michigan, Mississippi, Montana, Rhode Island, South Carolina and Wisconsin. Each agreement applies to
the same Ocwen entities as were named in the initiating cease and desist or other order.
In addition,
state regulatory agencies in Indiana and Nevada have previously either withdrawn or allowed their respective cease and desist
orders to expire.
Ocwen
continues to seek timely resolutions with the remaining 19 regulatory agencies and two state attorneys general. If Ocwen
is successful in reaching such resolutions, they may contain some or all of the terms outlined above and may also contain additional
terms. There can be no assurance that Ocwen will be able to reach resolutions with the remaining regulatory agencies and state
attorneys general.
In the
event that Ocwen does not comply with the terms of these agreements or if Ocwen is otherwise found to have breached applicable
laws and regulations, this could lead to (i) administrative fines and penalties and litigation, (ii) loss of our licenses and
approvals to engage in our servicing and lending businesses, (iii) governmental investigations and enforcement actions, (iv) civil
and criminal liability, including class action lawsuits and actions to recover incentive and other payments made by governmental
entities, (v) breaches of covenants and representations under our servicing, debt or other agreements, (vi) damage to our reputation,
(vii) inability to raise capital or otherwise fund our operations and (viii) inability to execute on our business strategy. Any
of these occurrences could increase our operating expenses and reduce our revenues, hamper our ability to grow or otherwise materially
and adversely affect our business, reputation, financial condition, liquidity and results of operations.
Special Note Regarding
Forward-Looking Statements
This Current
Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by a reference
to a future period or by the use of forward-looking terminology. Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. Our business has been undergoing substantial change which has magnified such uncertainties.
Readers should bear these factors in mind when considering such statements and should not place undue reliance on such statements.
Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ
materially. In the past, actual results have differed from those suggested by forward looking statements and this may happen again.
Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements
include those described in Ocwen’s reports and filings with the Securities and Exchange Commission (SEC), including its
amended 2016 Annual Report on Form 10-K/A and its current and quarterly reports since such date. Anyone wishing to understand
Ocwen’s business should review our SEC filings. Ocwen’s forward-looking statements speak only as of the date they
are made and we disclaim any obligation to update or revise forward-looking statements whether as a result of new information,
future events or otherwise. Ocwen may post information that is important to investors on our website.