Ocwen Financial Corp. has reached settlements with two additional states over allegations of deficiencies in its compliance with laws and regulations relating to its servicing and lending activities. It also announced its decision to exit the wholesale forward lending business.
The company agreed to tougher scrutiny from regulators in Minnesota and Alabama, bringing the number of states with which it reached settlement to 17.
Like the previous settlements, the terms of the latest agreements prevent the company from acquiring any new residential mortgage servicing rights until April 30, 2018, and require it to engage a third-party auditor to perform an analysis with respect to its compliance with certain federal and state laws.
Ocwen agreed to develop a plan to shift to an alternate servicing system from the current REALServicing system and agreed not to board any new loans onto the REALServicing system. If Ocwen decides to merge with or acquire an unaffiliated company or its assets in order to effectuate a transfer of loans from the REALServicing system, it must serve prior notice to the regulatory agency before signing any final agreement.
In reaching those settlements, Ocwen neither admitted nor denied liability. The company is still working to reach resolutions with 14 regulatory agencies and two state attorneys general.
Further, the company has agreed to sell certain assets related to wholesale forward lending business to an undisclosed buyer. The buyer is expected to assume a facilities lease and to offer positions to certain Ocwen employees in the business. Ocwen expects to book a loss of approximately $7 million related to the divestiture in its third-quarter results as it writes off the capitalized balance of internally developed software for the business. An additional $1 million to $2 million of severance expense is expected following the closing of the transaction, which is expected to occur in the fourth quarter, subject to closing conditions.
Ocwen remains in retail forward lending and all existing channels of reverse mortgage lending.