National Mortgage Settlement Monitor’s Update on Ocwen’s Compliance

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National Mortgage Settlement Monitor’s Update on Ocwen’s Compliance

National Mortgage Settlement Monitor’s Update on Ocwen’s Compliance

Introduction

The following pages provide an overview of my report to the United States District Court for the District of Columbia on Ocwen’s compliance with the servicing standards. Close followers of the National Mortgage Settlement (NMS or Settlement) will recall that Ocwen was a successor servicer to one of the original servicers in the Settlement, ResCap Parties. As a result of that transaction, I monitored Ocwen’s compliance with the Settlement for that portion of its loan portfolio. Subsequently, in February 2014, Ocwen joined the Settlement for its entire operation. This report is my third report on Ocwen with respect to all the loans it services and covers testing periods for the third and fourth calendar quarters 2015.

Though Ocwen passed all my tests during the third quarter 2015, it did fail two tests for the fourth quarter 2015, each of which is related to force-placed insurance. Further discussion of these fails and Ocwen’s actions to correct them are below.

As stated in my previous reports, I required Ocwen to place a hold on foreclosure sales on 17,300 loans because of significant errors in loan modification denial notices sent to borrowers. This hold was related to part of Ocwen’s remediation efforts after it failed Metric 31. These errors included, among other things, failure to provide the factual information considered by Ocwen in making its decision and the timeframe for borrowers to appeal the denial and provide evidence that the denial was made in error. After Ocwen mailed corrected loan modification denial notices to affected borrowers in May 2016 and provided a sufficient timeframe for borrowers to appeal their denials, I permitted Ocwen to lift the foreclosure hold in July 2016. Ocwen continues to address and implement other remediation efforts related to its Metric 31 failure. In August 2016, I confirmed Ocwen had completed its Metric 31 corrective action plan (CAP) as of March 2016. I will continue to closely monitor Ocwen’s implementation of its Metric 31 remediation plan and its overall compliance with the Settlement.

Sincerely,

JAS-signature

 

 

 

 

Joseph A. Smith, Jr.

Monitoring the Settlement

As previously reported, testing has uncovered issues with Ocwen’s Internal Review Group (IRG). Due to these issues, I directed the professionals working with me to conduct additional testing. Specifically, this included enhanced scrutiny of testing protocols for Metrics 2, 28 and 29. These metrics test the accuracy of Ocwen’s denial of a loan modification request, the timeliness of forceplaced insurance notices sent to borrowers and the timeliness of Ocwen’s force-placed insurance policy termination and refund of premiums, respectively. I required increased scrutiny on these metrics to ensure that both the servicer and its vendors are in compliance with the servicing standards.

Monitor’s Role: Testing a Metric

Fails: What’s Next?

Compliance Testing Results

During the third quarter 2015, Ocwen did not fail any metrics. However, my testing during the final quarter 2015 uncovered two failed metrics related to forceplaced insurance.

Scorecard

Metric 28

Metric 28 tests whether Ocwen is timely in its communications to borrowers regarding a lapse in homeowner’s insurance coverage and notifies the borrower that force-placed insurance may be obtained if evidence of the borrower’s own insurance is not submitted.

Errors occur on this metric if all notification letters are not sent in a timely manner, or do not contain all the necessary information, or if Ocwen places force-placed insurance when there was evidence of a valid insurance policy already in place.

Ocwen’s IRG and my professionals determined that Ocwen exceeded the Metric 28 threshold error rate and failed the metric for the fourth quarter 2015.

In its CAP, Ocwen identified several root causes that contributed to the fail. Most were attributable to the implementation of a new process for handling notifications in connection with condominium loans.

In these instances, some letters omitted required language offering to establish an escrow account for insurance payments. In a smaller number of instances, human errors and technology issues led to non-compliance, including letters not sent within timeline requirements, letters not sent to the correct borrower address and force-placed insurance policies issued despite the borrower having submitted evidence of valid insurance. I approved Ocwen’s CAP in June 2016. That plan is summarized below.

Corrective Action Plan (CAP) for Metric 28

Metric 29

Metric 29 tests whether Ocwen terminated force-placed insurance and refunded premiums to affected borrowers in a timely manner.

An error under Metric 29 occurs when force-placed insurance is not terminated and any prorated portions of premiums are not refunded within 15 days of a servicer’s receipt of the borrower’s proof of insurance.

Ocwen’s IRG and my professionals determined that Ocwen exceeded the Metric 29 threshold error rate and failed the metric for the fourth quarter 2015.

In its CAP, Ocwen identified the root cause of the fail as miscellaneous manual errors by Ocwen’s forceplaced insurance vendor. I approved Ocwen’s CAP in August 2016. That plan is summarized below.

Corrective Action Plan (CAP) for Metric 29

Update on Corrective Actions

Ocwen has implemented the CAPs to correct five previously reported Metric fails. After I uncovered these fails, I worked with Ocwen and the Monitoring Committee to establish and review the servicer’s CAPs. Below is an overview of Ocwen’s progress.

Metric 7

Ocwen failed Metric 7 in the third quarter 2014. This metric determines whether Ocwen sends preforeclosure notification letters in a timely manner and with accurate and complete information.

Ocwen completed its CAP as of July 2015. In November 2015, I determined that Ocwen had completed the remediation for Metric 7. The IRG’s testing resumed as of the fourth quarter 2015, and my professionals and I have determined that the Metric 7 fail is cured. My professionals and I will continue testing and report to the Monitoring Committee, the Court and the public on future testing results.

Corrective Action Plan (CAP) for Metric 7

Metric 8

Ocwen failed Metric 8 in the fourth quarter 2014. This metric tests whether Ocwen properly collected default-related fees from borrowers. Those fees include property preservation fees, valuation fees and attorneys’ fees.

Ocwen completed its CAP as of February 2016. In March 2016, I determined that Ocwen had completed the remediation for Metric 8. The IRG’s testing resumed as of the second quarter 2016. My professionals and I will review the IRG’s testing and will report whether the Metric 8 fail has been cured in a future report. My professionals and I will continue testing and report to the Monitoring Committee, the Court and the public on future results.

Corrective Action Plan (CAP) for Metric 8

Metric 19

Ocwen failed Metric 19 in the first quarter 2014. This metric determines whether Ocwen sends a timely response to borrowers regarding missing or incomplete information or documents in loan modification packets. Ocwen completed its CAP as of June 2015. The IRG’s testing resumed in the third quarter 2015, and my professionals and I have determined that the Metric 19 fail is cured. My professionals and I will continue testing and report to the Monitoring Committee, the Court and the public on future results.

Ocwen completed its CAP as of June 2015. The IRG’s testing resumed in the third quarter 2015, and my professionals and I have determined that the Metric 19 fail is cured. My professionals and I will continue testing and report to the Monitoring Committee, the Court and the public on future results.

Remediation
Ocwen elected to treat the Metric 19 failure as if it was widespread. In April 2016, Ocwen reported that it had remediated all borrowers who could have been impacted from December 1, 2013, to March 31, 2015, by providing them with a correct notification of missing documents and additional time to provide the missing information. My professionals and I are now testing to determine if the remediation is complete.

Corrective Action Plan (CAP) for Metric 19

Metric 23

Ocwen failed Metric 23 in the third quarter 2014. Metric 23 tests whether Ocwen provides notification to borrowers of missing documents or information within 30 days of Ocwen’s receipt of the borrower’s request for a short sale.

Ocwen completed its CAP as of June 2015. In February 2016, I determined that Ocwen’s assertion that no material harm had occurred as a result of this failure was accurate, and no remediation was required. The IRG’s testing resumed in the third quarter 2015, and my professionals and I have determined that the Metric 23 fail is cured. My professionals and I will continue testing and report to the Monitoring Committee, the Court and the public on future results.

Corrective Action Plan (CAP) for Metric 23

Metric 31

Ocwen failed Metric 31 in the third quarter 2014. Metric 31 tests whether the servicer sent a loan modification denial notification to a borrower that included the reason for the denial, the factual information considered by the servicer in making its decision and a timeframe by which the borrower can provide evidence that the decision was made in error.

Ocwen completed its CAP as of March 2016. The IRG’s testing resumed as of the second quarter 2016. My professionals and I will review the IRG’s testing and will report whether the Metric 31 fail has been cured in a future report. My professionals and I will continue testing and report to the Monitoring Committee, the Court and the public on future results.

Remediation
Because the Metric 31 fail was widespread, Ocwen was required to mail corrected loan modification denial notices to 17,300 potentially affected borrowers. I required the company to hold foreclosure sales for all borrowers who could have received an incorrect loan modification denial notice until these borrowers received the correct information and had a chance to appeal. After Ocwen mailed corrected loan modification denial notices in May 2016 and affected borrowers were afforded a chance to appeal, I granted Ocwen permission to lift that hold in July 2016. Ocwen is continuing to implement other aspects of the remediation plan related to this metric. I expect Ocwen to complete the plan soon, and I will report on Ocwen’s progress in future reports.

Corrective Action Plan (CAP) for Metric 31

Update on Global Letter-dating Corrective Action Plan

As described in more detail in my previous reports, Ocwen and I agreed that seven metrics (12, 19, 20, 22, 23, 27 and 30) would be deemed failures for the third quarter 2014 due to Ocwen’s letter-dating issues. Ocwen has addressed the letter-dating issues through a global CAP.1

In previous testing periods, I reported that Ocwen was in compliance with Metric 12. For Metrics 19, 20, 22, 23, 27 and 30, the IRG’s testing resumed as of the third quarter 2015, and my professionals and I have determined that these deemed fails due to the letter-dating issues are cured. My professionals and I will continue testing and report to the Monitoring Committee, the Court and the public on future results.

Corrective Action Plan (CAP) for Global Letter-dating Issues

Conclusion

Ocwen has made demonstrable progress in its efforts to improve its compliance with the Settlement. However, as evidenced by the two fails reported in the final quarter 2015, there is still work to be done for Ocwen to fully comply.

My professionals and I will continue to test Ocwen on all metrics through February 2017. The seven metrics impacted by the letter-dating issues outlined above and in previous reports (Metrics 12, 19, 20, 22, 23, 27 and 30) will undergo extended testing through December 31, 2017.

I look forward to reporting to the Court and to the public as I continue my work to ensure Ocwen treats borrowers fairly as outlined in the National Mortgage Settlement.

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6 Responses to “National Mortgage Settlement Monitor’s Update on Ocwen’s Compliance”

  1. tesah says:

    Ocwen is a criminal enterprise that can never change, it must be shot down immd ,Ocwen stole many homes by fraud all over America from the American homeowners with the help of corrupt judges that embrace fraud and look the other way

  2. tesah says:

    Ocwen is a criminal enterprise that can never change, it must be shot down immd ,Ocwen stole many homes by fraud all over America from the American homeowners with the help of corrupt judges that embrace fraud and look the other way

  3. Eugene Villarreal says:

    The monitor couldn’t see the forest for the trees. Forced-placed ins. and loan mods, yes, but also the assignments themselves where as in my case, Ocwen assigned the assignment to themselves and now assign it to Fannie Mae who all along claimed to be the “investor/ owner of the loan.” That’s the rub. Its the government who owns all the loan.

  4. Michael says:

    Who oversees the judges turning their heads and not ruling on law

  5. jerry says:

    Ocwen is mafia folks we cant sugar coat here all their personal and managers belong in jail for stealing homes all over America with the help of judges that they pay secretly on the side

  6. Curtis says:

    So many victims. I probably would be as well but I pay my bills monthly and on time. Perhaps I should not expect others to do the same. Perhaps we should all stop paying our debts and have a free ride and cry when someone takes our homes because we don’t pay our bills. Or better yet, just move to a communist regime and let the government provide your housing and you wont have to worry about paying your bills.

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