LETTER | DFS Superintendent Lawsky letter to Ocwen of backdating hundreds of thousands of borrower letters


LETTER | DFS Superintendent Lawsky letter to Ocwen of backdating hundreds of thousands of borrower letters

LETTER | DFS Superintendent Lawsky letter to Ocwen of backdating hundreds of thousands of borrower letters

Highlights of the letter:


  • On June 19, 2014, the Monitor discovered that Ocwen backdated by 41 days a letter denying a mortgage loan modification.  The letter Ocwen sent to the borrowers was dated June 14, 2012, but the system indicated that it was not sent until July 25, 2012.  Given the seriousness of this issue, the Monitor immediately demanded an explanation.
  • Over the course of the next three months, Ocwen represented to the Department and the Monitor that (1) the issue was isolated to letters of a specific type, (2) the problem affected approximately 6,100 letters, (3) Ocwen discovered the issue in April or May of 2014, and (4) Ocwen implemented changes to its systems in May 2014 that resolved the problem.  Each of these representations turned out to be false.  
  • In the meantime, the Monitor undertook its own investigation into the issue.  Within a few days, the Monitor uncovered nearly a thousand additional backdated letters that Ocwen evidently failed to find in the prior three months.
  • The Monitor also discovered inconsistencies in Ocwen’s servicing system that call into question the accuracy and reliability of Ocwen’s recordkeeping.  For example, Ocwen’s system shows that Ocwen sent a borrower a pre-foreclosure notice dated May 23, 2013, stating that the borrower was in default and at risk of foreclosure.  Yet, a conflicting record in Ocwen’s system indicates that the notice was created on April 9, 2014 – nearly one year after the date of the pre-foreclosure notice.  In another example, a letter dated October 29, 2013, warns that the borrower is in danger of foreclosure if he does not make a payment by August 7, 2013, nearly three months prior to the date of the letter.  We do not yet know whether this borrower or the many others like him gave up trying to save their homes upon receiving such a letter that appeared to have arrived too late. 
  • Subsequently, under pressure from the Department and the Monitor to identify and disclose the full extent of this issue, Ocwen finally admitted in a memorandum on September 10, 2014, that the backdating issue may not be isolated and that the changes to Ocwen’s systems in May 2014 did not fully resolve the problem.  However, Ocwen identified only a fraction of the instances of backdating that had already been uncovered by the Monitor.
  • The memorandum also repeated the assertion that Ocwen initially discovered the backdating issue in April 2014.  However, after persistent questioning from the Monitor for more details surrounding the discovery of the issue, Ocwen informed the Monitor that its investigative team had been mistaken once again.  Upon further investigation, Ocwen discovered that one of its employees identified the problem in November 2013 and informed senior management, including the Vice President of Compliance.


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