Re-Blogged from www.law360.com
By Evan Weinberger Law360, New York (September 6, 2017, 5:53 PM EDT) — Ocwen Financial Corp. on Wednesday agreed to a $1 million penalty for failing to meet metrics related to the termination of force-placed insurance that was required under a 2014 national mortgage servicing settlement, according to court filings.
The West Palm Beach, Florida-based mortgage firm exceeded the maximum 5 percent error rate on a metric in the settlement that requires the firm to terminate certain force-placed insurance policies and refund prorated premiums within 15 days during the first quarter of 2017, according to a filing in the D.C. district court by state attorneys general charged with monitoring the settlement.
Ocwen reached a 6.54 percent error rate on so-called Metric 29 of the settlement in the first quarter of 2017, the court filing said.
Because the exceeded error rate came just after Ocwen wrapped up remediating similar problems with Metric 29 from 2015 when the problems arose in the first quarter of 2017, Ocwen is subject to the $1 million fine, the attorneys general said.
“Accordingly, because this fail occurred in the quarter immediately following implementation of the corrective action plan, this failure constitutes an uncured potential violation” and subjected Ocwen to a $1 million penalty, the filing said.
Ocwen, which first revealed the first-quarter problems in an Aug. 3 filing with the U.S. Securities and Exchange Commission, did not oppose the request for the $1 million sanction to be applied.
“As Ocwen disclosed in its most recent U.S. Securities and Exchange Commission Form 10-Q, Ocwen exceeded the applicable error threshold on one metric for the first quarter of 2017. As set forth in the monitoring committee’s motion and without agreeing with the monitoring committee’s allegations, Ocwen has agreed to pay $1 million to resolve this matter,” John Lovallo, a spokesman for the company, said.
While not originally a party to the $25 billion 2012 national mortgage settlement, Ocwen took over the servicing operations of Residential Capital LLC, Ally Financial Inc. and other former General Motors Co. lending units. In February 2014, Ocwen agreed to pay $2.1 billion in consumer relief and comply with the settlement’s servicing standards.
The firm has run into several problems with the settlement monitor, former North Carolina Banking Commissioner Joseph Smith, since agreeing to take part in the deal. Smith’s office filed a report on Aug. 25 outlining the problems at Ocwen.
Prior to exceeding the maximum error rate on Metric 29 in the first quarter of this year, Smith’s office cited Ocwen in September 2016 for failing two tests required under the settlement in the fourth quarter of 2015.
Testing was suspended at Ocwen for 2016 as it worked to fix those problems, and the company was subject to regular examinations beginning in the first quarter of this year.
The monitor’s office found problems with the force-placed insurance remediation test under that exam, according to the filing. The settlement mandates that any firm that has a problem in the first exam after being subject to an order to fix earlier problems be required to pay a $1 million penalty, according to the order.
The settlement monitor’s office could not be reached for comment Wednesday.
Ocwen’s problems with the 2014 settlement are not its only mortgage servicing issue. It also faces a separate suit from the Consumer Financial Protection Bureau and has agreed to other regulatory settlements in recent years.
The settlement monitoring committee is represented by Patrick Madigan of the Iowa Attorney General’s Office.
Ocwen is represented by J. Riley Key and Robert Richmond Maddox of Bradley Arant Boult Cummings LLP.
The case is Consumer Financial Protection Bureau et al v. Ocwen Financial Corporation et al, case number 1:13-cv-02025, in the U.S. District Court for the District of Columbia.
–Editing by Christine Chun.
Opinions expressed are the author’s and do not necessarily represent the position of The Gallant Goose & Friends.
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