For further information please call 954-495-9867 or 520-405-1688
Chickens are coming home to roost. Just read the letter. Anyone who is litigating a case where Ocwen is involved in any way in the chain of title or ownership of the loan paperwork should read this in detail. This could be used as support for arguments that the books and records of the servicer or foreclosing party should not be given the luxury of certain legal presumptions. The presumption that there is in fact a servicing de fault called by the bondholders may enough to force the parties actually prove the nonexistent transactions about which their assignments and endorsements are written.
Why? That is the question everyone should be asking. If Ocwen was not servicing for the benefit of the REMIC Trust (and the bondholders) then who are they really working for? Themselves? Or are they taking instructions from the underwriter who is also the Master Servicer that committed fraud in the first place on the investors and then on the borrowers, hiding behind the mask and layers of “originators,” “aggregators” and other conduits and sham entities? My opinion is that this is all part of the same scheme to distance themselves both from the transaction in which the bondholder gave money to the underwriter in exchange for the mortgage bonds and the “loans” that were funded not by the trust but directly from investor money that should have been given to the trust. And Ocwen’s selfish interest is to make the most out of “servicer advances” which is their cut of the pie — money that was actually advanced from investor money to pay them with their own money.
Here are some excerpts from the fund manager’s letter —
The facts establishing these Events of Default are irrefutable. For example, Ocwen recently “stipulate[d]” and “agree[d]” in a consent order with the New York Department of Financial Services to violations of law and to engaging in imprudent servicing practices. In addition, the California Department of Business Oversight has commenced proceedings to suspend Ocwen’s servicer license in California, a significant source of loans in the RMBS trusts that generate the advances that collateralize the payments to Noteholders. These (and other) agencies’ findings and enforcement actions demonstrate Ocwen’s systemic, long-standing and continuing servicing failures and disregard of applicable and analogous laws.
I. Ocwen’s Violations of Law and Imprudent Servicing Practices
A. New York Investigations
Facts admitted by Ocwen establish multiple breaches of various covenants in the Transaction Documents and Designated Servicing Agreements and multiple defaults or Events of Default under the Indenture. On December 19, 2014, Ocwen and Ocwen Financial Corporation admitted to facts that give rise to material breaches and defaults of the covenants and agreements in the above-referenced provisions. Ocwen’s stipulations are memorialized in the Consent Order Pursuant to New York Banking Law § 44 (the “2014 Consent Order”) that Ocwen entered into with the New York State Department of Financial Services (“NYSDFS”). Specifically, the 2014 Consent Order sets forth numerous facts to which Ocwen has admitted
B. California Investigations
Two different California regulators have found that Ocwen violated California law. On a webpage answering “frequently asked questions” related to Ocwen’s settlement with the Consumer Finance Protection Bureau and attorneys general from 49 states and the District of Columbia (discussed below), the California Attorney General states, “[w]e believe that Ocwen violated federal and state laws against unfair and deceptive practices. Ocwen’s unlawful conduct hurt consumers who have had home loans serviced by Ocwen, Litton, and Homeward. For example, Ocwen made consumers pay improper fees and charges, caused unreasonable delays and expenses when consumers asked for help to avoid foreclosure, and wrongly refused to give consumers loan modifications that could have helped those consumers stay in their homes.”
C. Consumer Finance Protection Bureau and State Attorneys General Investigation
Additionally, in December 2013, the federal Consumer Finance Protection Bureau (“CFPB”) and the attorneys general for 49 states and the District of Columbia filed a Complaint against Ocwen and Ocwen Financial Corporation in the U.S. District Court for the District of Columbia. The CFPB and state attorneys general alleged “violations” of (i) “state law prohibiting unfair and deceptive consumer practices with respect to loan servicing,” (ii) “state law prohibiting unfair and deceptive consumer practices with respect to foreclosure processing,” (iii) the Consumer Protection Act of 2010, 12 U.S.C. § 5481 et seq., “with respect to loan servicing,” and (iv) the Consumer Financial Protection Act of 2010, 12 U.S.C. § 5481 et seq., “with respect foreclosure processing.” Specifically, the CFPB and the attorneys general alleged that Ocwen engaged in the following acts and practices:
D. Federal Monitor Investigation
On December 16, 2014, a monitor appointed in United States, et al. v. Bank of America Corp., et al., No. 12-CV-361 (D.D.C. 2012) (the “Federal Monitor”) issued the “Monitor’s Interim Report Regarding Compliance by Ocwen Loan Servicing, LLC as Successor by Assignment from Defendants Residential Capital LLC, GMAC Mortgage LLC, and Ally Financial Inc. for the Measurement Periods Ended March 31, 2014 and June 30, 2014” (the “Monitor Report”). The Monitor Report addressed, among other things, the “independence, competency and capacity” of Ocwen’s internal quality control review group (“IRG”). (Monitor Report at 7.) According to the Federal Monitor, IRG’s processes and procedures “lacked the critical keys to integrity mandated in the Enforcement Terms [as defined in the Monitor Report],” namely “an internal quality control group that is independent from the line of business whose performance is being measured and an internal quality control group with the appropriate authority, privileges and knowledge to effectively implement and conduct the reviews and metric assessments contemplated in the Enforcement Terms.” (Id. at 13 (quotations omitted).) The Federal Monitor identified a “dysfunctional and chaotic working environment” during the first half of 2014, noting “serious problems and flaws in the processes and procedures” employed by the IRG. (Id. at 13.) Based on these findings, the Federal Monitor notified Ocwen that the IRG had not correctly implemented the Enforcement Terms in a number of “material respects.” (Id. at 14.)
II. The Market Reaction
The rating agencies have cited the NYSDFS’s investigation of Ocwen as a reason for their downgrading of Ocwen’s servicer rating. The rating downgrades have increased the risk that Ocwen will be terminated as a servicer and/or subservicer. For example, in October 2014—months before Ocwen signed the 2014 Consent Order—Standard & Poor’s downgraded Ocwen’s servicer rating to “average” following a letter by the NYSDFS to Ocwen “stating that during its review of Ocwen’s mortgage servicing practices it had uncovered serious issues with Ocwen’s systems and processes, including Ocwen’s backdating of potentially hundreds of thousands of foreclosure-related letters to borrowers.” Standard & Poor’s concluded that, based on the facts uncovered in the NYSDFS investigation, Ocwen’s “internal practices and policies may not meet industry or regulatory standards.” On October 22, 2014, Moody’s also downgraded its assessments of Ocwen “as a primary servicer of subprime residential mortgage loans to SQ3 from SQ3+ and as a special servicer of residential mortgage loans to SQ3 from SQ3+.” According to Moody’s, “[t]he assessment actions follow [the NYSDFS’] allegations,” which “also raise the risk of actions that restrict Ocwen’s activities, the levying of monetary fines against Ocwen, or additional actions that negatively affect Ocwen’s servicing stability.”