But Ocwen will pay this penalty with someone else’s money. As a non-bank agent, they actually don’t hold any of the loans. They only manage loans, collect monthly payments, and handle loan modifications and foreclosures, for investors who bought them under mortgage-backed securities. So the principal reductions on these loans affected investors, not Ocwen. While it is true that capital cuts often yield better results for investors than foreclosing on a house, Ocwen himself incurs no real penalties for what was solely his misconduct. Ocwen also noted in a regulatory filing that they would share nearly half of the $ 127.3 million cash payment to foreclosure victims with the agents who previously handled the loans. So their total exposure for all of this is $ 66.9 million, which they have already covered largely with a dedicated cash reserve.
Richard Cordray of CFPB objected to this criticism, saying that organizing the major cuts will cost Ocwen in labor and administrative expenses, and that if the company does not reach the $ 2 billion in major reductions within three years, it will have to pay the balance. in liquid. But that’s not a big hurdle, and I don’t think a reasonable observer would argue that the trivial administrative costs – which Ocwen naturally undertakes in his role as a loan manager – amounts to the crime of turning hundreds of thousands of dollars. landlords take to the streets under false pretenses and deceive millions of others.
As in the case of the recent JPMorgan Chase settlement which imposed capital reductions, it is the owners who could suffer the most. The mortgage forgiveness debt relief law is due to expire on December 31, and after that date any reduction in principal will be considered earned income for the homeowner, exposing them to significant tax bills. ‘he can’t afford. Attorney General Bondi at least stressed the need to expand relief and protect homeowners from huge tax debts. “Distressed homeowners depend on this relief,” she said on the call. Bondi co-wrote a letter to Congress signed by 42 attorneys general asking for an extension. But the House is already gone for the year, and Senate Republicans on Thursday blocked consideration of an extension.
Ocwen’s illegal procedures are symptomatic of the entire industry. They became the fourth-largest maintenance department in the country, and the largest that isn’t also a bank, by reclaiming service rights abandoned by those who also abused owners. If the new standards get too onerous, it can be assumed that Ocwen will simply cede maintenance rights to a new fleet of night flight operations with even worse business practices. And homeowners, who don’t choose their repairer, will be caught in the middle.
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