By James Sterngold
In an escalation of its fight with a group of large mortgage
investors, Ocwen Financial Corp. issued a lengthy rebuttal of
claims that the company was responsible for poor mortgage-servicing
practices.
In a letter disclosed Monday, Ocwen rejected efforts the
investors are making to remove the firm as the servicer of billions
of dollars of mortgage pools.
"Ocwen has explored and identified untenable legal arguments and
factual misapprehensions underlying" the investor claims, Ocwen's
general counsel wrote to trustees who will examine both sides'
arguments.
In January, the investors, including asset managers Allianz SE's
Pacific Investment Management Co., Kore Capital LP, MetLife Inc.
and BlackRock Inc., sent a letter to the trustees over the mortgage
pools, saying that Ocwen had improperly enriched itself, made
imprudent loan modifications and failed to maintain adequate
records or account for all the funds it was handling for the
investors.
Ocwen earlier said those statements were false, and its lawyers
have now provided what they say is statistical evidence showing
Ocwen's practices benefit both the mortgage borrowers, many of whom
have credit scores that make the loans subprime, and the investors.
Ocwen's lawyers said the investors are opposed to loan
modifications, which the investors have denied.
The trustees for the 119 mortgage pools in dispute, including
units of banks such as Wells Fargo & Co., Citigroup Inc. and
Bank of New York Mellon Corp., will have to decide whether to
remove Ocwen as the servicer or keep them in place.
The claims follow a series of challenges for Ocwen. After New
York state's Department of Financial Services alleged that Ocwen
had engaged in improper servicing practices for distressed-mortgage
borrowers and had questionable dealings with affiliated companies,
the company agreed in December to pay $150 million, and William
Erbey, its executive chairman, agreed to step down.
Since then, Ocwen has said it will sell off its servicing rights
for mortgages owned by the government-supported entities Fannie Mae
and Freddie Mac and focus on so-called nonagency mortgages. It has
also announced agreements to sell about $65 billion of those rights
for more than $600 million.
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