A regulatory probe into nonbank mortgage servicing companies and their business dealings will continue, a New York regulator said during a Mortgage Bankers Association conference on Tuesday, and an investigation into ancillary services is next.
Benjamin Lawsky, the superintendent of the New York Department of Financial Services, has already gotten involved in the non-bank servicing industry and told conference goers on that he still has concerns about certain practices and business relationships.
“The potential for conflicts of interest and self-dealing here are perfectly clear. Servicers have every incentive to use these affiliated companies exclusively for their ancillary services, and they often do,” he said in his prepared remarks. “The affiliated companies have every incentive to provide low-quality services for high fees, and they appear in some cases to be doing so.”
Lawsky has already begun looking into Ocwen Financial Corp.’s (NYSE:OCN) business dealings with companies that provide it with technology services. The regulator is concerned about potential conflicts of interest that could increase costs for homeowners, he said in a February letter to the Liberty Home Equity Solutions parent company. Lawsky additionally has voiced similar concerns about mortgage servicer Nationstar (NYSE:NSM), owner of reverse mortgage originator Greenlight Financial.
The NYDFS under Lawsky’s guidance already halted an agreement for Ocwen to acquire the servicing rights for $39 billion of mortgages from Wells Fargo.
“Regulators have a responsibility to ask whether the purported ‘efficiencies’ at non-bank mortgage servicers are too good to be true,” Lawsky said in his written speech. “…You should expect us to expand our investigation into ancillary services in the coming weeks and months.”
Written by Alyssa Gerace