Following allegations from New York’s banking regulator over Ocwen Financial backdating mortgage servicing documents, Moody’s has downgraded Ocwen for its servicing capabilities and Standard & Poors has also issued a downgrade for the company.
Moody’s Investors Service has downgraded Ocwen Loan Servicing LLC both as a primary servicer of subprime mortgages and as a special servicer of residential mortgages, following earlier downgrades that took place in September.
The changes include downgrading Ocwen from an SQ3+ classification to SQ3 as a primary services or subprime mortgages and from SQ3+ to SQ3 as a specialty servicer of residential mortgages.
The assessments are based on Moody’s view of the company in its ability to prevent or mitigate asset pool losses across changing markets. Both assessments remain on review for further downgrades, Moody’s said.
Standard & Poor’s also downgraded Ocwen following news of the new regulatory scrutiny. On Tuesday it lowered its long-term issuer credit rating from B+ to B and stated its outlook as negative.
“The rating action reflects our view of increasing regulatory scrutiny over the company’s servicing practices and today’s announcement that the company erroneously dated correspondence to some borrowers who were facing foreclosure,” said Standard & Poor’s credit analyst Stephen Lynch. “We believe the culmination of events and ongoing investigations will limit the company’s ability to acquire servicing assets.
Written by Elizabeth Ecker