NEW YORK, Oct. 30, 2014 /PRNewswire/ -- Morningstar
Credit Ratings, LLC today removed from Alert status and lowered its
three outstanding operational risk assessment rankings for two
Ocwen Financial Corporation (OFC) residential mortgage servicing
subsidiaries, Ocwen Loan Servicing, LLC and Ocwen Financial
Solutions Pvt. Ltd. (collectively, Ocwen). Morningstar also
assigned its 'MOR RS2' residential prime mortgage servicer ranking
to Ocwen Loan Servicing, LLC.
Morningstar lowered its outstanding residential nonprime
mortgage servicer and residential mortgage special servicer
rankings for Ocwen Loan Servicing, LLC to 'MOR RS2' from 'MOR RS1.'
Morningstar also lowered its residential vendor ranking for Ocwen
Financial Solutions Pvt. Ltd. to 'MOR RV2' from 'MOR RV1.'
Morningstar placed its outstanding residential mortgage servicer
and residential vendor rankings for Ocwen on Alert in January 2014 following an announcement that Ocwen
had entered into a $2.1 billion
settlement with the Consumer Financial Protection Bureau (CFPB) for
alleged improper servicing practices involving Ocwen's residential
mortgage servicing business as well as two predecessor mortgage
servicing businesses acquired by OFC. In addition to new
consumer-mortgage servicing rules and other consumer-protection
requirements enacted by the CFPB effective in January 2014, OFC also is subject to the
servicing standards established under the 2012 National Mortgage
Settlement. Morningstar maintained an extended Alert for its OFC
residential mortgage servicer rankings as it monitored OFC's
residential mortgage servicing performance and practices, including
the company's compliance with the CFPB settlement order and other
regulatory requirements.
Morningstar removed its three outstanding residential rankings
for Ocwen from Alert status and lowered them as a result of
continuing regulatory scrutiny and allegations of improper
servicing practices. The New York
State Department of Financial Services (DFS) continues to
investigate OFC's servicing practices and most recently alleged
that there has been widespread backdating of loan modification
denial letters mailed to borrowers. While Morningstar's review of
OFC's loan-servicing performance metrics indicates
better-than-average industry results, Morningstar believes this
latest investigation by New York
State DFS further raises concerns about the company's
processes and systems and the effectiveness of its
compliance-monitoring practices. A recent review of OFC's internal
audit reports validates some of these ongoing concerns.
The forecast for the residential mortgage servicer, residential
vendor, and residential prime mortgage servicer rankings is
Unfavorable. Morningstar believes that continuing regulatory
scrutiny could have further negative consequences for OFC's
residential mortgage servicing business. Morningstar will continue
to monitor regulatory developments and review the company's
performance and may take further ranking actions as necessary.
As of June 30, 2014, OFC serviced
a portfolio of approximately 972,331 nonprime residential mortgage
loans with an aggregate unpaid principal balance (UPB) of
approximately $191 billion. Its
residential mortgage special servicing portfolio consisted of 4,613
loans with an aggregate UPB of approximately $1.1 billion, and its prime residential mortgage
servicing portfolio consisted of more than 1,087,991 loans with an
aggregate UPB of approximately $191
billion.
To access Morningstar's operational risk assessment methodology
and all published reports, please visit
https://ratingagency.morningstar.com.
About Morningstar Credit Ratings, LLC and Morningstar,
Inc.
Morningstar Credit Ratings, LLC is a Nationally Recognized
Statistical Rating Organization (NRSRO) that specializes in
structured credit research and ratings and offers a wide array of
services including new-issue ratings and analysis, operational risk
assessments, surveillance services, data, and technology
solutions.
Morningstar Credit Ratings' rankings, forecasts, and assessments
contained in this press release are evaluations and opinions of
noncredit related risks, and therefore, are not credit ratings
within the meaning of Section 3 of the Securities Exchange Act of
1934 ("Exchange Act") or credit ratings subject to the Exchange Act
requirements and regulations promulgated thereunder with respect to
credit ratings issued by NRSROs.
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Inc. (NASDAQ: MORN), a leading provider of independent investment
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management as of Sept. 30, 2014. The
company has operations in 27 countries.
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corporate issuers are not NRSRO credit ratings.
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Media Contact:
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SOURCE Morningstar, Inc.