Ocwen Financial is a step closer to the day when it can resume purchases of mortgage servicing rights.
The West Palm Beach, Fla., company has reached a new agreement with the New York State Department of Financial Services, it said in an 8-K filing this week. The consent order follows a February agreement with California regulators.
The New York agreement modifies a December 2014 order in which Ocwen agreed to pay a $150 million fine and remove founder and Executive Chairman William Erbey from the company over the backdating of foreclosure letters to consumers. It also required the state to approve MSR purchases.
Under the new order, the third-party operations monitor created in 2014 will be terminated in three weeks. Following a previously scheduled servicing examination, the restrictions on MSRs purchases could be lifted. The date of that exam was not included in the 8-K.
"Ocwen continues to work cooperatively with the New York State Department of Financial Services and believes that its entry into the 2017 consent order, which provides for the termination of the operations monitorship, is in the best interest of its shareholders, customers, servicing clients, employees and other stakeholders," the company said in an emailed statement.
However, if the state regulator finds that Ocwen has failed to comply with the new consent order or otherwise determines its servicing operations are materially deficient, it may require the company to retain an independent consultant to review and issue recommendations, the 8-K filing said.
"In this consent order, NYSDFS is requiring that the operations monitor will issue a final report identifying the outstanding corrective measures that Ocwen must implement to address identified weaknesses and deficiencies in Ocwen's operations," a statement from the regulator said. "DFS will actively supervise Ocwen's progress in addressing the required corrective measures and, after a year, conduct an in-depth examination of Ocwen's remediation. DFS reserves the right to install a consultant for an additional year if, after this examination, DFS finds that Ocwen has failed to effectively address the corrective measures. DFS also reserves the right to examine Ocwen at any time."
As a result of the New York and California restrictions, as well as servicing rights sales, Ocwen's MSR portfolio has shrunk to $209.1 billion from $464.7 billion in 2013.
Ocwen still has to clear more legal issues tied to servicing. It set aside $12.5 million in the fourth quarter for a potential settlement with the Consumer Financial Protection Bureau over its servicing practices and technology. Ocwen is also still subject to the December 2013 National Mortgage Settlement.