Ocwen Financial Corp. (NYSE:OCN) is putting mortgage servicing deals on hold in the wake of recent regulatory scrutiny from the state of New York, an executive said during a first quarter earnings call for Home Loan Servicing Solutions.
There’s a freeze in the MSR market as the New York Department of Financial Services takes a closer look at non-bank mortgage servicers, and it’s impacting Ocwen’s pipeline, said Bill Erbey, chairman of Home Loan Servicing Solutions and executive chairman of Ocwen (NYSE:OCN), the parent company of Liberty Home Equity Solutions.
HLSS has acquired mortgage servicing rights from Ocwen in the past, but the company’s unpaid principal balance portfolio was down slightly compared to last quarter, an analyst noted during the earnings call. The analyst asked whether HLSS had reassessed its pipeline for mortgage servicing rights (MSRs) assets from Ocwen.
Since the fourth quarter of 2013, Ocwen has closed some small incremental acquisitions, said John Van Vlack, president and CEO of HLSS, and its pipeline is “looking strong.”
But that pipeline is on hold, Erbey said, and it’s related to the New York Department of Financial Services putting an indefinite freeze on Ocwen’s agreement to purchase servicing rights to $39 billion of loans from Wells Fargo.
“Until we resolve [regulatory issues] in New York State, we are not acquiring any new portfolios at all,” he said. “As a matter of fact, the entire market, quite frankly, is just– nothing is really being put out for bid right now, so it’s the whole market that’s basically stopped until that gets resolved.”
Ocwen isn’t the only one under the microscope: The New York DFS superintendent Benjamin Lawsky is probing other mortgage servicers as well, including Nationstar (NYSE:NSM), which owns reverse mortgage originator Greenlight Financial. The regulator sent a letter of inquiry in early March seeking information about Nationstar’s servicing portfolio growth and practices.
Written by Alyssa Gerace
