Ocwen Financial Corporation (NYSE:OCN) (Ocwen or the Company) today
issued the following statement in response to receiving cease and
desist orders from state mortgage regulators (State Regulators):
“As with the recent CFPB enforcement action, Ocwen strongly
disputes the key allegations made in the State Regulators’ cease
and desist orders that Ocwen’s mortgage loan servicing practices
have caused substantial consumer harm. Ocwen will not sign unfair
and unjust consent orders that make impractical demands that no
other market participant could rationally accept, and which would
harm consumers. Under these circumstances, Ocwen has a
responsibility to its customers, shareholders, and employees to
vigorously defend the Company against unfounded claims while
continuing to work with State Regulators to resolve any valid
concerns.”
Below are the Company’s views on the main topics of the State
Regulators’ filings of April 20, 2017:
Escrow – Ocwen’s escrow administration
practices are subject to frequent review or examination by
independent third parties acting on behalf of mortgage loan
investors and rating agencies. These independent reviews have
consistently confirmed Ocwen’s escrow practices are in line with
common industry standards for timeliness and accuracy. No mortgage
servicer is perfect – to the extent mistakes are made, we have a
process to identify and remediate consistent with other mortgage
servicers.
Ocwen has provided State Regulators with an estimate of the
expected expense of an individual loan escrow account review for
approximately 2.5 million loans over a four-year period, which a
third party estimated to be $1.5 billion, or approximately $600 per
file. This review cost did not relate in any way to amounts in
escrow accounts or to customer funds. The Company has also provided
an alternative of a statistically sound sampling methodology
recommended by an independent third party. This alternative is
consistent with methods used in other regulatory settlements and
with the Multi-State Mortgage Committee’s (MMC) examination manual
practices. The Company has engaged the independent review firm to
conduct this review.
Financial Condition – Ocwen disagrees with any
allegation it is not financially sound. Despite significant
operating losses from 2014 to 2016 driven by a shrinking portfolio
and $171 million of state and national regulatory monitoring
expenses, Ocwen generated over $1.4 billion of positive operating
cash flow. The Company ended 2016 with $257 million of cash on the
balance sheet. Additionally, in December 2016, Ocwen refinanced its
corporate debt, significantly extending the maturity dates and
demonstrating significant lender confidence in Ocwen. Over this
time period, Ocwen reduced its corporate debt by over $942 million,
or 58%, dropping its corporate debt-to-equity ratio from an already
conservative 1.6x in 2014 to 1.0x in 2016. Ocwen remains one of the
least levered non-bank servicers today.
Ocwen provides a variety of financial information to select
individual states as well as the MMC, such as recurring liquidity
reports, monthly results, and future financial and cash
projections. Additionally, it completed a comprehensive business
plan in December 2016, and provided a robust going concern analysis
prepared in conjunction with the issuance of Ocwen’s annual report.
Despite this remarkable transparency, the MMC continues to ask
Ocwen how it would handle “contingent liabilities” such as a
hypothetical settlement with CFPB and the escrow analysis described
above.
Licensing – Ocwen has worked diligently to
correct perceived licensing concerns and has entered into recent
settlements with three states, without admitting or denying
wrongdoing. Ocwen believes it is properly licensed in all states
where it conducts business and welcomes the opportunity to
demonstrate its compliance to any State Regulators who may still
have questions or concerns.
Cooperation – Over the course of almost two
years, Ocwen and the Company’s Board of Directors have been in
regular communication with State Regulators. In fact, the State
Regulators informed the Company that its cooperation and the amount
of information provided by the Company over the past 18 months had
been constructive in building stronger supervisory relationships
and solidifying Ocwen’s place as a necessary market participant in
servicing mortgage loans and keeping borrowers in their homes.
Ocwen intends to vigorously defend itself against yesterday’s
actions by State Regulators while at the same time working with
State Regulators to find common ground to resolve differences.
Ocwen is recognized as the industry leader in responsible home
retention through foreclosure prevention. A homeowner whose loan is
serviced by Ocwen has a much better chance of avoiding foreclosure
than if their loan is serviced by any other large mortgage
servicer. This has been confirmed by independent third-party
studies, which find that Ocwen has a superior record helping
borrowers bring their payments current, stay current, and repay
their mortgage.
Since January 1, 2008, Ocwen has granted over 735,000 loan
modifications, including approximately 75,000 in 2016, and Ocwen is
responsible for 20% of all modifications under the U.S. Department
of the Treasury Home Affordable Modification Program, the federal
government’s leading modification program. Ocwen also has
provided billions of dollars in principal forgiveness to homeowners
at risk of foreclosure.
About Ocwen Financial Corporation
Ocwen Financial Corporation is a financial services holding
company which, through its subsidiaries, originates and services
loans. We are headquartered in West Palm Beach, Florida, with
offices throughout the United States and in the U.S. Virgin Islands
and operations in India and the Philippines. We have been serving
our customers since 1988. We may post information that is important
to investors on our website (www.Ocwen.com).
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements may be identified by a
reference to a future period or by the use of forward-looking
terminology.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. Our business has been
undergoing substantial change which has magnified such
uncertainties. Readers should bear these factors in mind when
considering such statements and should not place undue reliance on
such statements. Forward-looking statements involve a number of
assumptions, risks and uncertainties that could cause actual
results to differ materially. In the past, actual results have
differed from those suggested by forward-looking statements and
this may happen again.
Important factors that could cause actual results to differ
materially from those suggested by the forward-looking statements
include, but are not limited to, the following: our servicer and
credit ratings as well as other actions from various rating
agencies, including the impact of downgrades of our servicer and
credit ratings; adverse effects on our business as a result of
regulatory investigations or settlements; reactions to the
announcement of such investigations or settlements by key
counterparties; increased regulatory scrutiny and media attention;
claims, litigation and investigations brought by government
agencies and private parties regarding our servicing, foreclosure,
modification and other practices, including uncertainty related to
past, present or future investigations and settlements with state
regulators, the CFPB, State Attorneys General, the SEC, Department
of Justice or HUD and actions brought under the False Claims Act by
private parties on behalf of the United States of America regarding
incentive and other payments made by government entities; any
adverse developments in existing legal proceedings or the
initiation of new legal proceedings; our ability to effectively
manage our regulatory and contractual compliance obligations; our
ability to contain and reduce our operating costs, including our
ability to successfully execute on our cost improvement initiative;
the adequacy of our financial resources, including our sources of
liquidity and ability to sell, fund and recover advances, repay
borrowings and comply with debt covenants, including the financial
and other covenants contained in them; volatility in our stock
price; the characteristics of our servicing portfolio, including
prepayment speeds along with delinquency and advance rates; our
ability to successfully modify delinquent loans, manage
foreclosures and sell foreclosed properties; uncertainty related to
legislation, regulations, regulatory agency actions, government
programs and policies, industry initiatives and evolving best
servicing practices; as well as other risks detailed in Ocwen's
reports and filings with the Securities and Exchange Commission
(SEC), including its annual report on Form 10-K for the year ended
December 31, 2016 and its current and quarterly reports since
such date. Anyone wishing to understand Ocwen's business
should review its SEC filings. Ocwen's forward-looking
statements speak only as of the date they are made and, we disclaim
any obligation to update or revise forward-looking statements
whether as a result of new information, future events or
otherwise.
FOR FURTHER INFORMATION CONTACT:
Investors:
Stephen Swett
T: (203) 614-0141
E: shareholderrelations@ocwen.com
Media:
John Lovallo
T: (917) 612-8419
E: jlovallo@levick.com
Dan Rene
T: (202) 973 -1325
E:drene@levick.com
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