The overseer of the National Mortgage Settlement said that Ocwen Financial Corp., one of the largest U.S. servicers of home loans, has failed to produce reliable information about its practices and he has hired an independent accounting firm to re-evaluate the servicer’s compliance.
Joseph Smith is the appointed “Monitor” over the $25 billion settlement with the top mortgage servicers over loan modification deficiencies and outright abuses in the foreclosure process affecting millions of homeowners.
Ocwen is the fourth-largest mortgage servicer in the country and the biggest that isn’t a bank.
Smith gave credit to an unnamed whistleblower in his released assessment Tuesday. The whistleblower, an Ocwen employee, contacted Smith after noting “serious deficiencies” in Ocwen’s internal review group, which is suppose to report servicing issues to Smith’s office and meet new standards to ensure borrowers are treated fairly.
“The Monitoring Committee and I took the claims seriously, and I launched an investigation, during which my team and I reviewed thousands of documents and interviewed nine Ocwen executives and employees,” Smith said. ” As a result, I retained an independent auditing firm to review and retest the Ocwen internal review group (IRG)’s work. This work is ongoing, and I will report on Ocwen’s performance for the period covered in these reports when it is complete. I appreciate this whistle-blower’s integrity.
The National Mortgage Settlement, arranged in 2012, requires banks and firms such as Ocwen to meet tighter servicing standards that aim to ensure that struggling borrowers are provided an opportunity to modify loans and avoid foreclosure.
The monitor, Joseph A. Smith Jr., regularly reviews whether the firms are in compliance with the standards. To do so, he relies to a large extent on reports from an “internal review group” inside each of the institutions that are part of the settlement.
Performance problems with Ocwen as outlined by Smith has only added to regulatory actions against the mortgage servicer.
“We will continue to support the monitor’s efforts to ensure that we are fully compliant with all aspects of the National Mortgage Settlement,” Ronald M. Faris, Ocwen’s chief executive, said in a statement. “We are committed to delivering best-in-class servicing as we work to help struggling borrowers keep their homes.”