Ocwen Financial Corporation (NYSE: OCN) announced late Monday that it had struck a deal with with the New York Department of Financial Services to free it from the thumb of a mandatory third-party monitor in place since 2014.
Under a consent order with the Empire State, the West Palm Beach, Fla.-based Ocwen will emerge from the monitoring period within the next three weeks, and the company indicated in an 8-K filing that the agreement could represent a path out of a ban on acquiring additional mortgage servicing rights in New York State.
The state forced Ocwen to pay $150 million in fines in 2014 over a variety of misconduct charges, including errors in foreclosure proceedings and record-keeping failures. Of that total, $50 million went to direct restitution payments to former and then-current Ocwen homeowners, with an additional $100 million supporting a variety of housing and community development programs in New York State.
The Department of Financial Services also required former Ocwen executive chairman William C. Erbey to resign over conflict of interest issues; Erbey had chaired the boards of four related companies, the state said at the time.
In addition, the regulatory punishment included the institution of the third-party monitor, which was tasked with laying out a series of servicing-improvement benchmarks that Ocwen needed to meet before being allowed to acquire new mortgage servicing rights. The 8-K was light on detail about the lifting of the acquisition ban, but noted that it could be “eased” after an upcoming examination of Ocwen’s servicing operations.
“Ocwen continues to work cooperatively with the NY DFS and believes that its entry into the 2017 Consent Order, which provides for the termination of the operations monitorship, is in the best interest of its shareholders, customers, servicing clients, employees, and other stakeholders,” the company said in a statement released by a third-party spokesman Monday evening.
Ocwen’s 8-K filing also noted that New York reserves the right to require the company to work with an independent consultant if Ocwen does not comply with ongoing reporting obligations, or if its servicing turns out to be “materially deficient.”
As of this post, Ocwen’s stock had already reacted positively: Seeking Alpha reported just before 5 p.m. Eastern that OCN had risen 3.7% in after-hours trading.
Ocwen services reverse mortgages through its Liberty Home Equity Solutions entity.
Correction: A previous version of this story stated that Ocwen is based in Atlanta. Ocwen now maintains its headquarters in West Palm Beach, Fla. Reverse Mortgage Daily regrets the error.
Written by Alex Spanko