Lost paperwork..PLEASE.. the banks who have it hidden are giving them to them and than saying they never had it, just ask JP Morgan/Chase.. there good at this game.
New York's banking regulator Benjamin Lawsky unleashed a verbal assault on nonbank servicer Ocwen Financial Wednesday, saying the company's explosive growth "raises red flags," and that its use of technology to better handle distressed loans is "too good to be true."
Speaking at the annual meeting of the New York Bankers Association, Lawsky said Ocwen's public documents make "for startling reading." He sees "corners being cut," by nonbank servicers that have touted their ability to help distressed borrowers.
"We have serious concerns that some of these nonbank mortgage servicers are getting too big, too fast," Lawsky told New York bankers who were meeting at the Waldorf Astoria. "We see far too many struggling homeowners getting caught in a vortex of lost paperwork, unexplained feed and avoidable foreclosures."
Last week, Ocwen put an indefinite hold on its $2.7 billion purchase of servicing rights from Wells Fargo after Lawsky raised concerns about the Atlanta-based servicers' growth.
Yet Lawsky refused to cite Ocwen by name. Instead, he referred to a public document filed with the Securities and Exchange Commission by "a nonbank servicer" that boasted to investors that it was still "in the middle innings of cleaning up the human wreckage left by the mortgage meltdown."
Ocwen has used the "middle innings" reference in presentations in January and in December to analysts and investors.
Lawsky also cited Ocwen's comments to investors that it has identified $400 billion in servicing rights that it plans to acquire in the next 12 to 18 months, and that up to $1 trillion in servicing will change hands in the next few years.
But he took particular umbrage by Ocwen's assertions that it can service delinquent loans at a cost that is 70% lower than the rest of the industry, calling into question its entire servicing model.
"Those kinds of cost-saving claims bear special scrutiny," Lawsky said. "Regulators have to ask whether the purported efficiencies at nonbank mortgage servicers are too good to be true."
As superintendent of New York's Department of Financial Services, Lawsky has jurisdiction over Ocwen as a licensed mortgage banker in New York. He also has additional insight into Ocwen's operations because in Dec. 2012, Ocwen agreed to an independent monitor as part of a consent order that cleared the path for its 2011 acquisition of Litton Loan Servicing from Goldman Sachs.
Lawsky made specific references to servicers' difficulty in handling the transfer of documents and dealing with distressed borrowers.
"We see electronic loan files strewn around the globe with no one who knows how to pull them together," Lawsky said. "We see a virtual potpourri of computer systems containing critical borrower information, but no one who knows how to extract that information at the right time and for the right purpose."
Kevin Barker, an analyst at Compass Point, says it is uncertain whether Lawsky is primarily concerned about Ocwen's ability to take on more distressed loans or if it the concerns relate to past servicing practices — or both.
"It's not easy to transfer the servicing and boarding of all these loans because you have to think about what kind of shape the files are in when they get them," Barker says.
Lawsky has previously used his authority to hold up past transfers of mortgage servicing to Ocwen and to demand concessions such as the independent monitor. Still, servicers are concerned whether his actions will set a precedent that upends other servicing transfers involving New York loans.
"Regulators should not just be rubber stamps," Lawsky told bankers.