Ocwen Financial Corporation (NYSE: OCN) emerged from an auditor’s shadow in California last week after paying a $25 million settlement and agreeing to nearly $200 million in loan forgiveness over the next three years.
The Atlanta-based mortgage servicer nearly lost its license to operate in California in 2015 after authorities said it failed to turn over documentation proving that it was following the state’s lending laws, the Los Angeles Times reported at the time. In order to keep operating, Ocwen — which originates reverse mortgages through its Liberty Home Equity Solutions subsidiary — agreed to pay $2.5 million and subject itself to independent third-party auditing as recommended by the State of California Department of Business Oversight. Under the terms of that settlement, Ocwen was also temporarily prevented from acquiring the mortgaging servicing rights to any loans in the state of California.
In a statement released late Friday night, ahead of the long Presidents Day weekend, Ocwen said the new settlement would free itself from the independent auditor and allow it to begin picking up new mortgages in the Golden State.
“Ocwen is pleased to have reached a comprehensive settlement with the DBO related to matters the agency raised, and we will quickly move forward to implement all terms associated with this agreement,” wrote Ron Faris, Ocwen’s president and CEO, in the statement. Requests for comment from Ocwen and a third-party public relations firm were not returned to RMD by press time.
Despite the seemingly hefty terms of the settlement, Ocwen had been actively attempting to reach such a deal since the summertime, as HousingWire reported back in July, due to even more onerous costs associated with the third-party monitor: According to a company 10-Q report filed in October, Ocwen’s regulatory expenses jumped from $27.8 million during the nine months ended September 2015 to $73.3 million over the same period in September 2016, due primarily to the California audit.
Ocwen noted in its statement that it would admit no wrongdoing as part of the settlement agreement.
Written by Alex Spanko