OcwenOrder17 025
OcwenOrder17 025
WAKE COUNTY
IN A MATTER
BEFORE THE COMMISSIONER OF BANKS
Corporation has engaged in, or is engaging in, or is about to engage in, acts or practices constituting
violations of state and federal law and applicable regulations, hereby issues the following
in West Palm Beach, Florida. Ocwen Mortgage Servicing, Inc. (OMS) is a U.S. Virgin Islands
corporation with headquarters in St. Croix, US Virgin Islands and an assigned NMLS identifier
number of 1089752. Ocwen Loan Servicing, LLC (OLS) is a Delaware limited liability
company with headquarters located in West Palm Beach, Florida and an assigned NMLS identifier
number of 1852. OLS at all relevant times herein was a wholly-owned subsidiary of OMS, which
mortgage loan servicer under the North Carolina Secure and Fair Enforcement Mortgage Licensing
Act (NC SAFE Act), Article 19B of Chapter 53 of the North Carolina General Statutes.
1
3. The Commissioner has jurisdiction over the licensing and regulation of persons and
entities engaged in the business of residential mortgage loan servicing in North Carolina pursuant
to the NC SAFE Act and its implementing rules at 04 NCAC 03M .0101, et seq.
regulators who have agreed to address their enforcement concerns with Ocwen in a collective and
coordinated manner. On February 28, 2015, the states of Florida, Maryland, Massachusetts,
federal and state laws and regulations, financial condition, and control and supervision of the
licensed mortgage servicing operations. The Multi-State Examination of Ocwen covered the
inspect the books, accounts, papers, records, and files of mortgage loan servicers, transacting
business in North Carolina to determine compliance with the provisions of the NC SAFE Act, and
any rule, or regulation issued thereunder, and with any law, rule, or regulation applicable to the
conduct of the licensed business. In addition to the MMC examination, the Commissioner
independently examined OLS, and a Report of Examination was issued on November 22, 2016.
This examination covered the period of May 17, 2013 to May 17, 2016.
authorized to enter into written agreements with other government agencies to share confidential
information. In addition, pursuant to N.C. Gen. Stat. 53-244.115(f), the Commissioner may:
2
(4) Accept and rely on examination or investigation reports made by other
government officials, within or without this State.
B. FINDINGS OF FACT
state and federal law, including, but not limited to, consumer escrow accounts that could not be
reconciled and willful and ongoing unlicensed activity in certain states. Additionally, it was
respond to requests for information in a timely manner, the examination found that Ocwen
unlicensed activity was cited in the report of exam. The Examining States had numerous
conversations with the Board of OFC in which the Examining States communicated that these
continuing violations were unacceptable and would not be tolerated. Although OFC partially
addressed the unlicensed activity two years after it was initially cited, unlicensed activity is
9. The MMC examination found that Ocwen has been unable to accurately reconcile
many of the consumer escrow accounts in its portfolio. Consumer escrow accounts are accounts
that contain consumer funds held for the payment of taxes and insurance. The MMC examination
further found that Ocwen failed to make timely disbursements to pay for taxes and insurance from
escrow accounts on numerous loans. The MMC examination also found that Ocwen routinely sent
3
10. In 2015, Ocwen failed to provide key financial documents and reconcilements of
11. Based on the findings of the examination and subsequent communications with
OFC, the state regulators and Ocwen entered into a Memorandum of Understanding (MOU) on
December 7, 2016.
12. The MOU required Ocwen to retain an independent auditing firm to perform a
comprehensive audit and reconciliation of all consumer escrow accounts, with a report to be
furnished by the Auditor to Ocwen and the MMC within five business days thereafter. The audit
plan was to be submitted to, and approved by, the MMC no later than January 13, 2017.
13. Ocwens response to the state regulators on January 13, 2017, was that the
consumer funds, would cost $1.5 billion and be well beyond Ocwens financial capacity to fund.
Ocwen has suggested instead that a sample of 457 escrow accounts be reconciled out of 2.5 million
active first lien escrow accounts that Ocwen has serviced since January 2013. This proposal could
leave a vast number of consumers with unaudited and inaccurate escrow accounts.
regarding escrow accounts that have been mismanaged, resulting in significant harm to consumers,
15. The MOU required Ocwen to provide, among other things, a viable going forward
business plan that encompassed an analysis of its financial condition going forward. The purpose
of the plan was to analyze Ocwens future financial condition incorporating and encompassing all
4
16. Ocwens going forward plan submitted in response to the MOU did not provide a
complete assessment of its financial condition because it excluded significant liabilities. If the
going forward plan accurately accounted for known or anticipated regulatory penalties and other
operational costs, including, but not limited to, the expenses of moving to a new servicing platform
and complete reconciliation of consumer escrow accounts with restitution to impacted borrowers,
C. CONCLUSION OF LAW
17. Based upon the information contained in Paragraphs 1 through 16, pursuant to N.C.
a. Ocwen has engaged in, is engaging in, or is about to engage in, acts or
practices which warrant the belief that the company is not operating
honestly, fairly, soundly, and efficiently in the public interest, and /or in
loan servicer including, but not limited to, the provisions of N.C. Gen. Stat.
1. Ocwen shall immediately cease acquiring new mortgage servicing rights, and
acquiring or originating new residential mortgages serviced by Ocwen, until Ocwen can show it is
a going concern by providing a financial analysis that encompasses all of the liabilities Ocwen
currently maintains, as well as liabilities it has knowledge it will incur in the course of its business;
5
2. Ocwen shall immediately cease from acquiring new mortgage servicing rights, and
acquiring or originating new residential mortgages serviced by Ocwen, until Ocwen can provide
the state regulators with a reconcilement of its escrow accounts showing that consumer funds are
appropriately collected, properly calculated, and disbursed accurately and timely; and
3. This Order is effective immediately upon signing and shall remain in effect unless
modified or vacated by the Commissioner.
4. This Order shall not be construed as approving any act, practice, or conduct not
specifically set forth herein which was, is, or may be in violation of relevant state or federal laws
and regulations.
NOTICE
Pursuant to N.C. Gen. Stat. 53-244.113(b), Ocwen may, within 20 days of receiving
this Order, submit a written request for a hearing before the Commissioner. Upon receipt of
such a request, the Commissioner shall calendar a hearing within 15 days or at such time as the
parties may mutually agree. If a hearing is not requested, this Order shall remain in full force
and effect until it is modified or vacated by the Commissioner.
The Commissioner will post a copy of any final order or decision in this matter to the
NMLS under regulatory actions which will be viewable by regulators and the public.
s/ Ray Grace
Commissioner of Banks
6
CERTIFICATE OF SERVICE
THE UNDERSIGNED hereby certifies that she has this day served a copy of the
foregoing Cease and Desist Order by email to the individuals identified below and by placing a
copy of the same with a delivery service authorized by law and addressed to: