Ocwen Issues Rebuttal Letter to Trustees in Response to Notice From RMBS Investors
March 23 2015 - 7:30AM
Ocwen Financial Corporation (NYSE:OCN), a leading financial
services holding company, yesterday sent a letter of rebuttal to
Trustees and Master Servicers for 119 residential mortgage-backed
securities trusts in response to a notice of alleged
non-performance issued on January 23, 2015 by Gibbs & Bruns
LLP. That notice was sent on behalf of a group of RMBS investors,
including BlackRock Financial Management, Inc., Pacific Investment
Management Company LLC (PIMCO), Kore Advisors, L.P., Metropolitan
Life Insurance Company, and Neuberger Berman Europe Limited.
Ocwen's rebuttal letter made clear the following key points:
- The notice is the latest effort in a long campaign by
Blackrock, PIMCO, Kore, Met Life and Neuberger to try and impose
changes to standard servicing practices, with the goal of forcing
more home foreclosures and fewer loan modifications. Ocwen is
a leading provider of loan modifications under HAMP, the Home
Affordable Modification Program administered by the United States
Department of the Treasury. HAMP furthers the Treasury
Department's strong public policy to help struggling borrowers
remain in their homes by encouraging and guiding servicers like
Ocwen to pursue profitable loan modifications rather than rushing
to foreclosure. Instead, these investors' pro-foreclosure,
anti-modification agenda is driven by their desire to increase
their own financial returns on their specific tranche-level
holdings in RMBS Trusts, at the expense of long-term gains to the
Trusts as whole, through sustainable modifications.
- The allegations in the notice are substantially the same claims
that were refuted during a failed attempt to prevent Ocwen from
acquiring a competitor's servicing portfolio in 2013. Those
allegations were ultimately dismissed after being found to have no
merit by independent experts.
- The current standard of servicing outlined in Ocwen's
agreements requires the company to service loans in the best
interest of all investors and in conformance with accepted industry
practices. Ocwen is compliant with this standard of servicing. Each
modification Ocwen performs is designed to yield a higher
anticipated recovery to investors than foreclosure. Nothing
alleged by the investors establishes that Ocwen breached the
standard of servicing called for by the agreements.
- Unable to establish otherwise, the investors instead malign
Ocwen's modifications through selectively presented data that does
not comport with the facts, as well as allegations of imprudent
modification practices that are belied by Ocwen's use of standard
industry practices and compliance with applicable regulations.
- Ocwen is uniquely positioned in the market to handle the
special demands of servicing subprime loans in a manner consistent
with servicing standards that achieve positive investor
outcomes.
The full letter is available for review by clicking on the
following link: Rebuttal Letter to Trustees.
A February 2015 independent recent research report from Morgan
Stanley's RMBS strategy team details many aspects of Ocwen's
servicing business including that Ocwen's "modification style" is
effective. The report states that "Whether a borrower first
went delinquent while being serviced by Ocwen, or fell delinquent
and was then transferred to Ocwen, we find that these borrowers are
more likely to be in their homes today than if the MSRs were held
elsewhere." Moreover, the report goes on to say that "It doesn't
appear in investors' best interest to replace Ocwen as
servicer."
About Ocwen Financial Corporation
Ocwen Financial Corporation is a financial services holding
company which, through its subsidiaries, is engaged in the
servicing and origination of mortgage loans. Ocwen is headquartered
in Atlanta, Georgia, with offices throughout the United States and
support operations in India and the Philippines. Utilizing
proprietary technology, global infrastructure and superior training
and processes, Ocwen provides solutions that help homeowners and
make our clients' loans worth more. Ocwen may post information that
is important to investors on its website (www.Ocwen.com).
Forward Looking Statements
This news release 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.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. Forward-looking statements
and involve a number of assumptions, risks and uncertainties that
could cause actual results to differ materially.
Important factors that could cause actual results to differ
materially from those suggested by the forward-looking statements
include, but are not limited to, the following: adverse effects on
our business as a result of recent regulatory settlements;
reactions to the announcement of such settlements by key
counterparties; increased regulatory scrutiny and media attention,
due to rumors or otherwise; uncertainty related to claims,
litigation and investigations brought by government agencies and
private parties regarding our servicing, foreclosure, modification
and other practices; any adverse developments in existing legal
proceedings or the initiation of new legal proceedings; our ability
to effectively manage our regulatory and contractual compliance
obligations; the adequacy of our financial resources, including our
sources of liquidity and ability to fund and recover advances,
repay borrowings and comply with debt covenants; our servicer and
credit ratings as well as other actions from various rating
agencies, including the impact of recent downgrades of our servicer
ratings; volatility in our stock price; the characteristics of our
servicing portfolio, including prepayment speeds along with
delinquency and advance rates; our ability to contain and reduce
our operating costs; our ability to successfully modify delinquent
loans, manage foreclosures and sell foreclosed properties;
uncertainty related to legislation, regulations, regulatory agency
actions, government programs and policies, industry initiatives and
evolving best servicing practices; as well as other risks detailed
in Ocwen's reports and filings with the Securities and Exchange
Commission (SEC), including its annual report on Form 10-K/A for
the year ended December 31, 2013 (filed with the SEC on 08/18/14)
and its quarterly report on Form 10-Q for the quarter ended
September 30, 2014 (filed with the SEC on 10/31/14). Anyone wishing
to understand Ocwen's business should review its SEC filings.
Ocwen's forward-looking statements speak only as of the date they
are made and, except for our ongoing obligations under the U.S.
federal securities laws, we undertake no obligation to update or
revise forward-looking statements whether as a result of new
information, future events or otherwise.
CONTACT: FOR FURTHER INFORMATION CONTACT
Investors:
Stephen Swett
T: (203) 614-0141
E: shareholderrelations@ocwen.com
Media:
John Lovallo
T: (917) 612-8419
E: jlovallo@levick.com
Dan Rene
T: (202) 973-1325
E: drene@levick.com
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