Ocwen argues it shouldn’t be removed as servicer on mortgage pools
In an escalation of its fight with a group of large mortgage investors,Ocwen Financial Corp. issued a lengthy rebuttal of claims that the company was responsible for poor mortgage-servicing practices.
In a letter disclosed Monday, Ocwen rejected efforts the investors are making to remove the firm as the servicer of billions of dollars of mortgage pools.
“Ocwen has explored and identified untenable legal arguments and factual misapprehensions underlying” the investor claims, Ocwen’s general counsel wrote to trustees who will examine both sides’ arguments.
In January, the investors, including asset managers Allianz SE’s Pacific Investment Management Co., Kore Capital LP, MetLife Inc.and BlackRock Inc., sent a letter to the trustees over the mortgage pools, saying that Ocwen had improperly enriched itself, made imprudent loan modifications and failed to maintain adequate records or account for all the funds it was handling for the investors.
Ocwen earlier said those statements were false, and its lawyers have now provided what they say is statistical evidence showing Ocwen’s practices benefit both the mortgage borrowers, many of whom have credit scores that make the loans subprime, and the investors. Ocwen’s lawyers said the investors are opposed to loan modifications, which the investors have denied.
The trustees for the 119 mortgage pools in dispute, including units of banks such as Wells Fargo & Co., Citigroup Inc. and Bank of New York Mellon Corp., will have to decide whether to remove Ocwen as the servicer or keep them in place.
The claims follow a series of challenges for Ocwen. After New York state’s Department of Financial Services alleged that Ocwen had engaged in improper servicing practices for distressed-mortgage borrowers and had questionable dealings with affiliated companies, the company agreed in December to pay $150 million, and William Erbey, its executive chairman, agreed to step down.
Since then, Ocwen has said it will sell off its servicing rights for mortgages owned by the government-supported entities Fannie Mae and Freddie Mac and focus on so-called nonagency mortgages. It has also announced agreements to sell about $65 billion of those rights for more than $600 million.
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