By Shayndi Raice
A New York state regulator has halted indefinitely a $2.7
billion deal by Ocwen Financial Corp. to purchase
mortgage-servicing rights from Wells Fargo & Co., the mortgage
servicer said Thursday.
The office of Benjamin Lawsky, the superintendent of New York's
Department of Financial Services, has concerns over the mortgage
servicer's ability to handle more loans, said a person familiar
with the decision.
The deal, which was announced last month, would have given Ocwen
the right to service approximately $39 billion worth of loans.
Ocwen released a statement saying it has agreed to put the deal
on hold at the request of DFS. "Ocwen will continue to work closely
with the NY DFS to resolve its concerns about Ocwen's servicing
portfolio," the company said in a statement.
DFS regulates Atlanta-based Ocwen, which is chartered as a New
York state bank. The regulator last year installed an independent
monitor to oversee Ocwen's servicing practices as part of an
agreement reached over allegations of abusive behavior toward
homeowners.
A Wells Fargo spokesman had no immediate comment.
Mortgage servicers collect payments from homeowners and
distribute the payments to investors who own the loans through
mortgage securities.
In December, Ocwen reached a $2.1 billion settlement with the
Consumer Financial Protection Bureau and 49 states to resolve
allegations it mistreated homeowners facing foreclosure and had
far-ranging problems with its loan-processing operations.
The company had been accused of committing a litany of errors
and other problems, including charging unauthorized fees, failing
to credit borrowers' mortgage payments in a timely fashion,
improperly imposing expensive insurance policies and filing
foreclosure documents in court without verifying the information in
them.
Ocwen has quickly grown in recent years by acquiring servicing
businesses from Goldman Sachs Group Inc., Bank of America Corp.,
Ally Financial Inc.'s Residential Capital LLC subsidiary and other
banks.
The company focuses on delinquent loans and those made to buyers
with poor credit histories. It collects payments on nearly $435
billion in loans, making it the fourth-largest U.S. mortgage
servicer and the largest that isn't also a retail bank.
For Wells Fargo, the deal to sell mortgage-servicing rights is
in line with moves by other banks to comply with new international
rules that require banks to hold extra capital against
mortgage-servicing rights. The deal would have included 184,000
loans, representing about 2% of Wells Fargo's total
residential-servicing portfolio as of the end of the fourth
quarter.
Write to Shayndi Raice at shayndi.raice@wsj.com
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