Magazine article American Banker

Lawsky Cites Ocwen's Growth in Halting Servicing Deal with Wells

Magazine article American Banker

Lawsky Cites Ocwen's Growth in Halting Servicing Deal with Wells

Article excerpt

Byline: Kate Berry

New York regulators halted Ocwen Financial's (OCN) deal to buy a mortgage servicing portfolio from Wells Fargo (WFC) out of concern that the nonbank is growing too fast.

Ocwen said Thursday it had agreed "to put an indefinite hold" on its $2.7 billion purchase of the servicing rights from Wells at the request of Benjamin Lawsky, the superintendent of New York's Department of Financial Services. Based in Atlanta, Ocwen has a New York mortgage banking charter.

"Ocwen will continue to work closely with [Lawsky's department] to resolve its concerns about Ocwen's servicing portfolio growth," the company said in a press release. Bloomberg News had reported earlier Thursday that the deal was on hold.

Concerns were raised about Ocwen's ability to service the 184,000 loans, totaling $39 billion, that it planned to take over from Wells after an independent monitor reviewed the servicer's operations, a person familiar with the situation says. The monitor was installed last year as part of a consent order with Lawsky following Ocwen's acquisition of Litton Loan Servicing from Goldman Sachs in 2011.

The monitor has been assessing whether Ocwen has enough staff and capacity to handle delinquent loans. An examination by the New York regulator in 2012 found gaps in Ocwen's servicing records and areas of noncompliance in offering borrowers alternatives to foreclosure.

Wells Fargo did not respond to a request for comment Thursday. …

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