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Ocwen Financial's shares jumped 19% to more than $10 a share as of late morning Friday, the day after it reported a first-quarter profit and highlighted an expansion into mortgage lending.
May 1 -
Ocwen Financial came under fire from Joseph A. Smith, the monitor of the national mortgage settlement, after concerns of conflicts of interest were raised by an unnamed whistleblower.
December 16
Ocwen Financial failed a test to determine whether it had notified borrowers of missing or incomplete documents for loan modifications in a timely manner, according to the national mortgage settlement monitor.
Joseph A. Smith Jr., the settlement monitor, plans to file a report Thursday with the U.S. District Court for the District of Columbia outlining corrective actions taken by Ocwen, which passed eight other tests.
Ocwen
In December, Smith
The retesting of metrics began last year after a whistleblower contacted Smith claiming that Ocwen was selecting its own samples of loan files instead of taking a statistical sample. Smith then created a hotline to allow any concerned employees to contact him.
The results of the current review by the independent accounting firm McGladrey show that Ocwen failed just one metric, on loan mod documentation, that it had previously claimed to have passed. The company passed eight other tests including one that its internal review group claimed to have failed on terminating force placed insurance agreements.
To put Ocwens results in perspective, last year,
Ocwen has replaced an unnamed executive who had previously led the internal review group that was created to comply with terms of the 2012 national mortgage settlement, Smith said. The company also has reorganized its employees, adopted corporate governance principles and enhanced the monitors access to information, Smith said.
The settlement allows banks and servicers to correct all violations, and it only subjects them to financial penalties if their mistakes reach a specific "error threshold" after corrective actions have been taken. No bank or servicer has yet paid financial penalties for failing any of the 33 metrics being tested by independent reviewers working for Smith.
Ocwen said it is committed to being fully compliant with all the rules and regulations related to its business.
"We are pleased with the progress we have made so far working with the monitor, and we will continue to make every effort to improve all aspects of our compliance procedures and processes," the company said in an emailed statement.
The 2012 national mortgage settlement with federal regulators and 49 state attorneys general resulted from servicers' "robo-signing" foreclosure documents and other lapses. Ocwen became a party to the settlement after purchasing mortgage servicing rights from Residential Capital, the former lending arm of General Motors that later belonged to Ally Financial.