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December 19, 2013

CONSUMER FINANCIAL PROTECTION BUREAU, STATE AUTHORITIES ORDER OCWEN TO

PROVIDE $2 BILLION IN RELIEF TO HOMEOWNERS FOR SERVICING WRONGS
Today the Consumer Financial Protection Bureau (CFPB), authorities in 49 states, and the District of
Columbia filed a proposed court order requiring the countrys largest nonbank mortgage loan servicer,
Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing, to compensate for years of
systemic misconduct at every stage of the mortgage servicing process. This misconduct included unfair
shortcuts, unauthorized fees, deception, and other illegal practices.
Ocwen By The Numbers
1st: Ocwens position among nonbanks in the mortgage servicing market.
4th: Ocwens position in the overall mortgage servicing market.
185,000: Estimated number of consumers who lost their homes to foreclosure while being serviced by
Ocwen, Homeward Residential Holdings, or Litton Loan Servicing, from Jan. 1, 2009 to Dec. 31, 2012.
$2 billion: Amount Ocwen must provide in principal reduction to underwater customers.
$125 million: Amount Ocwen must refund to consumers who were foreclosed on.
$2.3 million: Amount Ocwen must pay to administer the refunds to consumers.
Background
Ocwen is a publically-traded Florida corporation headquartered in Atlanta, Ga., with customers all over the
country. As a mortgage servicer, Ocwen is responsible for collecting payments from the mortgage
borrower and forwarding those payments to the owner of the loan. It handles customer service,
collections, loan modifications, and foreclosures.
Ocwen specializes in servicing subprime or delinquent loans. In recent years, it has bought out competitors
including Homeward Residential Holdings LLC (formerly American Home Mortgage Servicing Inc.) and
Litton Loan Servicing LP. It has also acquired the mortgage servicing rights from other major bank and
nonbank mortgage servicers. Because of its high percentage of delinquent loans, Ocwen places a major
emphasis on resolving delinquency through loss mitigation or foreclosure.
The CFPB is charged with enforcing the Dodd-Frank Wall Street Reform and Consumer Protection Act
which protects consumers from unfair, deceptive, or abusive acts or practices by any mortgage servicer
whether they are a bank or nonbank. In early 2012, examinations by the Multistate Mortgage Committee,
which is comprised of state financial regulators, identified potential violations at Ocwen. In addition, the
Federal Trade Commission referred its investigation of Ocwen to the CFPB after the Bureau opened in July
2011. The Bureau then teamed with state attorneys general and state regulators to investigate and resolve
the issues identified. Todays settlement is a multi-jurisdictional, multi-state collaborative effort.
Borrowers Pushed into Foreclosure by Servicing Misconduct
The CFPB and its state partners believe that Ocwen was engaged in significant and systemic misconduct
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that occurred at every stage of the mortgage servicing process. According to the complaint filed in federal
district court in the District of Columbia, Ocwens violations of consumer financial protections put
thousands of people across the country at risk of losing their homes. Specifically, the complaint says that
Ocwen:

Took advantage of homeowners with servicing shortcuts and unauthorized fees: Customers relied on
Ocwen to, among other things, treat them fairly, give them accurate information, and appropriately
charge for services. According to the complaint, Ocwen violated the law in a number of ways,
including:
o Failing to timely and accurately apply payments made by borrowers and failing to maintain
accurate account statements;
o Charging borrowers unauthorized fees for default-related services;
o Imposing force-placed insurance on consumers when Ocwen knew or should have known that
they already had adequate home-insurance coverage; and
o Providing false or misleading information in response to consumer complaints.

Deceived consumers about foreclosure alternatives and improperly denied loan modifications:
Struggling homeowners generally turn to mortgage servicers, the link to the owners of the loans, as
their only means of developing a plan for payment. Ocwen failed to effectively assist, and in fact
impeded, struggling homeowners trying to save their homes. This included:
o Failing to provide accurate information about loan modifications and other loss mitigation
services;
o Failing to properly process borrowers applications and calculate their eligibility for loan
modifications;
o Providing false or misleading reasons for denying loan modifications;
o Failing to honor previously agreed upon trial modifications with prior servicers; and
o Deceptively seeking to collect payments under the mortgages original unmodified terms after the
consumer had already begun a loan modification with the prior servicer.

Engaged in illegal foreclosure practices: One of the most important jobs of a mortgage servicer is
managing the foreclosure process. But Ocwen mishandled foreclosures and provided consumers with
false information. Specifically, Ocwen is accused of:
o Providing false or misleading information to consumers about the status of foreclosure
proceedings where the borrower was in good faith actively pursuing a loss mitigation alternative
also offered by Ocwen; and
o Robo-signing foreclosure documents, including preparing, executing, notarizing, and filing
affidavits in foreclosure proceedings with courts and government agencies without verifying the
information.

Remedies: Consumer Protections

Todays proposed court order will bar Ocwen from committing such violations in the future. It requires
Ocwen to provide $125 million in refunds to foreclosed-upon consumers and $2 billion in loan
modification relief to its customers through principal reduction. The refunds and relief also apply to
consumers whose loans were previously serviced by Homeward Residential Holdings and Litton Loan
Servicing. Further, the order requires Ocwen to operate its business under better servicing standards. The
CFPB, state attorneys general, and state regulators can ensure Ocwen is following the new standards.
Among other things, todays federal order extends the requirements of the National Mortgage Settlement
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to all of Ocwens loans. The 2012 National Mortgage Settlement is an agreement between several federal
agencies, state attorneys general, and the five largest bank servicers that provided $25 billion in relief to
consumers. The settlement addressed issues related to past mortgage loan servicing and foreclosure
abuses and fraud. While some of Ocwens portfolio was subject to the National Mortgage Settlement, the
substantial majority of it was not. Now, Ocwens full portfolio must adhere to all of the servicing standards
with certain important new homeowner protections, outlined below.
The proposed federal court order will have the full force of law only when signed by the presiding judge.
According to the proposed order, Ocwen must:

Provide $2 billion in relief to underwater borrowers: Over a three-year period, Ocwen must complete
sustainable loan modifications that result in principal reductions totaling $2 billion. For loan
modification options, eligible borrowers may be contacted directly by Ocwen. Or borrowers may
contact Ocwen to obtain more information about specific loan modification programs and to find out
whether they may be impacted by this settlement. Ocwen can be reached at
ConsumerRelief@Ocwen.com or 1-800-337-6695. If Ocwen fails to meet this commitment, it must pay
a cash penalty in the amount of any shortfall to the CFPB and the states.

Provide $125 million in refunds to foreclosure victims: Ocwen must refund $125 million to
consumers whose loans were being serviced by Ocwen, Homeward Residential Holdings, or Litton
Loan Servicing, and who lost their homes to foreclosure between Jan. 1, 2009 and Dec. 31, 2012. All
eligible consumers who submit valid claims will receive an equal share of the $125 million. Borrowers
who receive payments will not have to release any claims and will be free to seek additional relief in
the courts. Ocwen will also pay $2.3 million to administer the refund process. Eligible consumers can
expect to hear from the settlement administrator about potential payments.

Stop robo-signing official documents: Ocwen must ensure that facts asserted in its documents about
borrowers loans used in foreclosure and bankruptcy proceedings are accurate and supported by
reliable evidence. Affidavits and sworn statements must be based on personal knowledge.

Adhere to significant new homeowner protections: Ocwen must change the way it services mortgages
to ensure that borrowers are protected from the illegal behavior that puts them in danger of losing
their homes. To ensure this, the CFPB and the states are proposing that Ocwen follow the servicing
standards set up by the 2012 National Mortgage Settlement with the five largest banks. Because of
Ocwens track record of problems handling the large volume of mortgage servicing rights it has quickly
acquired in recent years, Ocwen is also being ordered to adhere to additional consumer protections,
including how it manages transferred loans. Among other things, Ocwen must:
o Properly process pending requests: For loans that are transferred to Ocwen, the company must
determine the status of in-process loss mitigation requests pending within 60 days of transfer.
Until then, Ocwen cannot start, refer to, or proceed with foreclosure.
o Honor previous loan modification agreements: If the borrower has a loan modification
agreement, Ocwen must honor it under the terms of the company that transferred the loan.
o Ensure continuity of contact for consumers: Ocwen will have to ensure that consumers get
regular and dependable assistance when they call for help. This includes requiring more than just a
single point of contact assigned to each borrower, but also that other Ocwen employees with
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access to the borrowers information be available if the borrower wants to speak to someone
immediately.
o Restrict servicing fees: All servicing fees must be reasonable, bona fide, and disclosed in detail to
borrowers. For example, Ocwen cannot collect any late fees if a loan modification application is
under review or if the borrower is making timely trial modification payments.
o Notify consumers of loss mitigation options and restrict dual tracking: Ocwen generally cannot
refer a borrowers account to foreclosure while the borrowers application for loan modification is
still pending. If the loan modification request is denied, the borrower can appeal that decision and
Ocwen cannot proceed to foreclosure until that appeal has been resolved.
C FPBs Mortg ag e Serv ici ng R ul es
Every mortgage servicer will have to follow the CFPBs rules once they take effect on Jan. 10, 2014. The
standards that Ocwen must adhere to according to the CFPB court order are in addition to the protections
offered to consumers under these new rules.
The CFPBs new mortgage servicing rules were written to address the many problems and bad practices
seen in the mortgage servicing marketplace. The rules establish strong protections for homeowners facing
foreclosure. They protect consumers from getting the runaround and being hit with surprises. For more
information about the new mortgage servicing rules, go to www.consumerfinance.gov/mortgage.

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Ocwen Backdating Draws Attention of Attorneys General - Bloomberg

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Ocwen Backdating Draws Attention of Attorneys

General
By Andrew Harris - Oct 23, 2014

Ocwen Financial Corp.s backdating of letters rejecting homeowner requests to modify mortgages has
drawn the attention of at least three state attorneys general who were part of a $2.1 billion agreement
to curb the companys alleged abuse of borrowers just last year.
The backdating left some consumers with insufficient time to appeal the denials, according to a letter
sent to the loan servicing company by Benjamin Lawsky, the head of New Y orks Department of
Financial Services.
Ocwens actions may have also breached its December accord with the federal Consumer Financial
Protection Bureau and attorneys general from 49 states.
Were monitoring the issue and looking into other issues as well, Illinois Attorney General Lisa
Madigans spokeswoman, Natalie Bauer, said in a phone interview yesterday. Bauer declined to
describe the other issues being looked at by Madigan, a Democrat.
Florida Attorney General Pam Bondi, a Republican, and Iowas Tom Miller, a Democrat, are also
looking at a potential breach of the December settlement, spokesmen for those officials said.
The accord required Ocwen, the biggest non-bank mortgage servicing business in the U.S., to provide
$2.1 billion in borrower relief, with $125 million of that to compensate people who lost their homes to
foreclosure and the bulk of it in the form of loan principal forgiveness, according to a CFPB statement
issued in December.

Independent Monitor
Ocwen also consented to the appointment of attorney Joseph A. Smith, a former North Carolina
banking commissioner, as an independent monitor of its compliance.
Lawsky said Ocwen backdated thousands of loan modification denial notices starting in 2012 and
continuing into this year, likely causing significant harm to borrowers left with no time to challenge
those determinations.
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The existence
and pervasiveness
of these issues
raise critical questions
about Ocwens
ability

perform its core function of loan servicing, according to Lawskys letter, which was made public two
days ago.
His letter was cited by Moodys Investors Service yesterday in a decision to downgrade its quality
assessment of an Ocwen unit servicing residential and subprime-residential loans.

Risks Cited
Both assessments remain on review for further downgrade, the ratings company said. Allegations
raised in Lawskys letter raise the risk of actions that restrict Ocwens activities, the levying of of
monetary fines against Ocwen, or additional actions that negatively affect Ocwens servicing
stability, Moodys said.
Ocwen closed at $19.51 today, down almost 26 percent from its close on Oct. 20.
Under a consent order signed by U.S. District Judge Rosemary M. Collyer in Washington in February,
the CFPB could seek penalties for any violation of the agreement.
David Millar, a spokesman for Atlanta-based Ocwen, said Oct. 21 that the company deeply regrets the
improperly-dated correspondence that resulted from errors in its systems.
Millar, who is affiliated with Sard Verbinnen & Co., declined to comment on the consent order.
Smith is due to file a compliance report by the end of this year.
Matthew Anderson, a spokesman for Lawsky, declined to comment on the matter. Sam Gilford, a
Consumer Financial Protection Bureau spokesman, also declined to comment.
The case is Consumer Financial Protection Bureau v. Ocwen Financial Corp. (OCN), 13-cv-2025, U.S.
District Court, District of Columbia (Washington).
To contact the reporter on this story: Andrew Harris in federal court in Chicago at
aharris16@bloomberg.net
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net David
Glovin
2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.

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Andrew M. Cuomo
Governor

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Benjamin M. Lawsky
Superintendent

August 4, 2014
Timothy Hayes
General Counsel
Ocwen Financial Corporation
1661 Worthington Road, Suite 100
West Palm Beach, FL 33409
Dear Mr. Hayes:
As part of the Departments ongoing examination of Ocwens mortgage servicing practices, we
are reviewing a troubling transaction involving Ocwens related company, Altisource Portfolio
Solutions, S.A. (Altisource), and the provision of force-placed insurance. Indeed, this complex
arrangement appears designed to funnel as much as $65 million in fees annually from alreadydistressed homeowners to Altisource for minimal work. Additionally, the role that Ocwens
Executive Chairman William C. Erbey played in approving this arrangement appears to be
inconsistent with public statements Ocwen has made, as well as representations in company SEC
filings. As discussed below, we require certain information about this force-placed insurance
arrangement and about Mr. Erbeys role in approving the arrangement.
Background
As you know, the Department has previously expressed concerns about Ocwens use of related
companies to provide fee-based services such as property inspections, online auction sites,
foreclosure sales, real estate brokers, debt collection, and many others. Because mortgage
servicing presents the extraordinary circumstance where there is effectively no customer to select
a vendor for ancillary services, Ocwens use of related companies to provide such services raises
concerns about whether such transactions are priced fairly and conducted at arms-length.
The Department now seeks additional information about Ocwens provision of force-placed
insurance through related companies. As you are aware, the Departments recent investigation
into force-placed insurance revealed that mortgage servicers were setting up affiliated insurance
agencies to collect commissions on force-placed insurance, and funneling all of their borrowers
force-placed business through their own agencies, in violation of New York Insurance Law
section 2324s anti-inducement provisions. The Department discovered that servicers own
insurance agencies had an incentive to purchase force-placed insurance with high premiums
because the higher the premiums, the higher the commissions kicked back by insurers to the
servicers or their affiliates. The extra expense of higher premiums, in turn, can push already
struggling families over the foreclosure cliff. In light of this investigation, the Department last
year imposed further prohibitions on these kickbacks to servicers or their affiliates.

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However, as part of our broader review of ancillary services provided by non-bank mortgage
servicers, we are concerned that certain non-bank mortgage servicers are seeking to side-step
those borrower protections through complex arrangements with subsidiaries and affiliated
companies. Indeed, in recent weeks, we halted one such arrangement at another non-bank
mortgage servicing company.
Agreements with SWBC and Altisource
Based on its investigation and through the Monitors work, the Department understands that
Ocwens force-placed arrangement with Altisource features the use of an unaffiliated insurance
agent, Southwest Business Corporation (SWBC), apparently as a pass-through so that Ocwen
and Altisource are not directly contracting with each other, but Altisource can still receive
insurance commissions and certain fees seemingly for doing very little work.
These are the facts established by documents Ocwen provided to the Monitor: In August 2013,
Ocwen appointed an Altisource subsidiary called Beltline Road Insurance Agency, Inc.
(Beltline) as its exclusive insurance representative, purportedly to negotiate and place a new
force-placed insurance program for Ocwen. Ocwens existing force-placed arrangement with the
insurer Assurant was set to expire in March 2014, and Beltlines stated task was to find an
alternative arrangement. In January 2014, Altisource provided a memo to the Credit Committee
of Ocwen Mortgage Servicing, Inc., recommending, among other things, replacing Assurant with
SWBC as Ocwens managing general agent. SWBC would then be charged with managing
Ocwens force-placed insurance program, including negotiating premiums with insurers. As part
of this arrangement, Altisource recommended itself to provide fee-based services to SWBC.
In emails dated January 15 and 16, 2014, the transaction was approved by the three members of
the Credit Committee: William Erbey, Duo Zhang, and Richard Cooperstein. The Credit
Committee did not meet to discuss this proposal, no minutes were taken of the Credit
Committees consideration of this proposed transaction, and the proposed transaction apparently
was not presented for review or approval to any member of the Ocwen Board of Directors except
Mr. Erbey, as Mr. Zhang and Mr. Cooperstein are not members of the Ocwen Board of
Directors.
Just one month after this Credit Committee approval, on February 26, 2014, the company
received the Departments letter raising concerns about potential conflicts of interest between
Ocwen and its related public companies. In that letter, we identified facts that cast serious
doubts on recent public statements made by the company that Ocwen has a strictly arms-length
business relationship with those companies, and we specifically referenced the multiple roles
played by Mr. Erbey as an area of concern.
Disregarding the concerns raised in our letter, Ocwen proceeded to execute contracts formalizing
this new force-placed arrangement, apparently without further consideration by any Board
member other than Mr. Erbey. Those contracts, dated as of June 1, 2014, indicate that Altisource
will generate significant revenue from Ocwens new force-placed arrangement while apparently
doing very little work. Indeed, a careful review of these and other documents suggests that
Ocwen hired Altisource to design Ocwens new force-placed program with the expectation and
intent that Altisource would use this opportunity to steer profits to itself.

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First, Altisource will reap enormous insurance commissions for having recommended that
Ocwen hire SWBC. Under the contracts, Ocwen promises to give its force-placed insurance
business to SWBC. SWBC does the work of negotiating premiums, preparing policies, and
handling renewals and cancellations. For these services, SWBC receives commissions from
insurers. SWBC then passes on a portion of those commissions, constituting 15% of net written
premium on the policies, to Altisource subsidiary Beltline, for insurance placement services.
Documents indicate that Ocwen expects to force-place policies on its borrowers in excess of
$400 million net written premium per year; a 15% commission on $400 million would be $60
million per year. It is unclear what insurance placement services, if any, Altisource is providing
to justify these commissions.
Second, Altisource will be paid a substantial annual fee for providing technology support that it
appears to be already obligated to provide. This fee relates to monitoring services, whereby
Ocwen pays a company to monitor whether its borrowers insurance remains in effect. Such
monitoring is necessary to establish which borrowers have lapsed on their payments and need to
have insurance force-placed upon them. Prior to 2014, Ocwen was paying ten cents per loan per
month to Assurant for monitoring. In this new arrangement, however, Ocwen agrees to pay
double the prior amount twenty cents per loan per month now paid to SWBC, for each of the
approximately 2.8 million borrowers serviced by Ocwen. SWBC, in turn, agrees to pass on
fifteen out of that twenty cents to Altisource, or an estimated $5 million per year. Altisource
provides only one service in exchange for this fee: granting SWBC access to Ocwens loan files.
Altisource, of course, only has access to Ocwens loan files through its own separate services
agreements with Ocwen, which appear to contractually obligate Altisource to provide this access
to business users designated by Ocwen to receive such access.
Third, the contracts require SWBC to use Altisource to provide loss draft management services
for Ocwen borrowers; to pay Altisource $75 per loss draft for these services; and to pay
Altisource an additional $10,000 per month for certain other services.
In an effort to better understand this arrangement, the Department requests that Ocwen provide
the following information and documents:
1. Is Altisource already obligated to provide access to Ocwens loan files to SWBC
pursuant to separate agreements with Ocwen? If your answer is no, please specifically
explain how the Technology Products Letter between Ocwen and Altisource, produced to
the Department beginning at OFC00002496, does not impose this obligation.
2. What services, if any, does Altisource or its subsidiary provide to SWBC in exchange for
SWBC paying the Altisource subsidiary a commission of 15% of insurance premiums?
In addition, it appears that payment of this commission excludes premium generated by
policies issued on properties in New York State. Please describe the negotiations that
resulted in this exclusion, and identify any alternate compensation to be paid to
Altisource or any affiliate to make up for the excluded commissions on New York
properties.
3. What services, if any, does Altisource provide to SWBC in exchange for SWBC paying
Altisource fifteen cents per loan per month?

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4. What services, if any, does Altisource provide to SWBC in exchange for an additional
$10,000 per month?
5. Under what circumstances do Ocwen policies and procedures permit approval of
transactions solely through the Credit Committee? Did this force-placed insurance
arrangement meet those requirements? Do Ocwen policies and procedures require any
additional review or approvals for transactions involving related companies? If so, did
Ocwen engage in that review or obtain those approvals for this arrangement?
6. Were any options presented to the Credit Committee other than the proposed SWBC
transaction? If so, did all such options feature the retention of Altisource to provide feebased services? Or were options presented that did not involve payments to Altisource?
7. Throughout this process, did members of the Credit Committee or any Ocwen personnel
give any consideration to the impact that Altisource fees and commissions would have in
increasing insurance premiums to be paid by struggling families?
8. After the Credit Committee approved Altisources January 2014 proposal for Ocwens
new forced-placed insurance program, it appears that certain changes were made to the
proposal, including an expansion of SWBCs and Altisources roles in the program and
their associated compensation. Please describe those changes and the negotiations that
led to those changes, and identify all personnel involved in negotiating and approving
those changes.
9. What process resulted in the August 2013 appointment of Altisources subsidiary as
Ocwens exclusive insurance representative? Was this process competitive? What
Ocwen Board members or personnel were involved in this appointment? Which Board
members, if any, authorized this appointment? Did those Ocwen Board members or
personnel know or anticipate that Altisource would return with a plan that would appear
to be highly profitable for itself?
10. What amount of revenue has Altisource or its affiliates realized, and what amount of
revenue is it projected to realize, from the services it is providing pursuant to this forceplaced insurance arrangement? What are its costs for providing those services? How
many employees at Altisource or its subsidiaries work on providing those services, and
how much of their time is dedicated to this work?
11. Altisources presentation to the Credit Committee stated that Altisource will establish its
own managing general underwriter during 2014 to provide LPI underwriting services
starting in 2015. Please explain Altisources intention to establish a managing general
underwriter, state whether Ocwen supports Altisources plan, and explain how this
development will affect Ocwens force-placed program, Altisources revenue, and the
fees to be charged to Ocwen borrowers or mortgage investors.

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Ocwens Public Statements Concerning Transactions with Related Companies

In addition to the issues raised above, the Department has serious concerns about the apparently
conflicted role played by Ocwen Executive Chairman William Erbey and potentially other
Ocwen officers and directors in directing profits to Altisource, which is related to Ocwen but is
formally a separate, publicly-traded company. As you know, Mr. Erbey is Ocwens largest
shareholder and is also the Chairman of and largest shareholder in Altisource. In fact, Mr.
Erbeys stake in Altisource is nearly double his stake in Ocwen: 29 percent versus 15 percent.
Thus, for every dollar Ocwen makes, Mr. Erbeys share is 15 cents, but for every dollar
Altisource makes, his share is 29 cents.
The Department and its Monitor have uncovered a growing body of evidence that Mr. Erbey has
approved a number of transactions with the related companies, despite Ocwens and Altisources
public claims including in SEC filings1 that he recuses himself from decisions involving
related companies. Mr. Erbeys approval of this force-placed insurance arrangement as
described above appears to be a gross violation of this supposed recusal policy.
12. Please explain how and why Mr. Erbey approved the arrangement between Ocwen,
SWBC, and Altisource.
13. Please provide every instance where Mr. Erbey has approved a transaction involving a
related company notwithstanding Ocwens statements to the contrary.
Finally, Ocwen and Altisource state in their public filings that rates charged under agreements
with related companies are market rate,2 but Ocwen has not been able to provide the Monitor
with any analysis to support this assertion.
14. Please advise whether Ocwen has performed any independent analysis to determine
whether the rates charged in the SWBC arrangement are market rate.
15. Please address whether Ocwen has performed any independent analysis to support the
assertion that the rates charged under other related party agreements are market rate.

Ocwen Financial Corporation 2013 Form 10-K Annual Report, at 18 (We have adopted policies, procedures and
practices to avoid potential conflicts with respect to our dealings with Altisource, HLSS, AAMC and Residential,
including our Executive Chairmen recusing himself from negotiations regarding, and approvals of, transactions
with these entities.); Altisource Portfolio Solutions S.A. 2013 Form 10-K Annual Report, at 17 (We follow
policies, procedures and practices to avoid potential conflicts with respect to our dealings with Ocwen, HLSS,
AAMC and Residential, including our Chairman recusing himself from negotiations regarding, and approvals of,
transactions with these entities.).
Ocwen Financial Corporation 2013 Form 10-K Annual Report, at F-60 (We believe the rates charged under
[agreements with Altisource] are market rates as they are materially consistent with one or more of the following:
the fees charged by Altisource to other customers for comparable services and the rates Ocwen pays to or
observes from other service providers.); Altisource Portfolio Solutions S.A. 2013 Form 10-K Annual Report, at 7
(We record revenue we earn from Ocwen and its subsidiaries under various long-term servicing contracts at rates
we believe to be market rates as they are consistent with one or more of the following: the fees we charge to other
customers for comparable services; the fees Ocwen pays to other service providers; and fees charged by our
competitors.).

5
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We intend to fully review all of the issues raised above. Please also provide documents that
support your responses. We ask and expect that Ocwen will preserve all documents concerning
the matters discussed in this letter.
Sincerely,

Benjamin M. Lawsky
Superintendent of Financial Services
cc:

William C. Erbey, Executive Chairman, Ocwen Board of Directors

Ronald M. Faris, Ocwen Board of Directors
Ronald J. Korn, Ocwen Board of Directors
William H. Lacy, Ocwen Board of Directors
Wilbur L. Ross, Jr., Ocwen Board of Directors
Robert A. Salcetti, Ocwen Board of Directors
Barry N. Wish, Ocwen Board of Directors
Mitra Hormozi, Zuckerman Spaeder LLP
James Sottile, Zuckerman Spaeder LLP

6
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Ocwen Reaches $2B Deal In Mortgage Servicing

Suit
By Juan Carlos Rodriguez
Law360, New York (December 19, 2013, 5:18 PM ET) -- Mortgage servicer Ocwen Financial Corp. on
Thursday agreed to a $2.1 billion settlement with the federal government and 49 states over allegations it had
engaged in significant and systemic misconduct at every stage of the mortgage servicing process.
The proposed agreement, which must be approved by a judge, comes just shy of two years after five of the
largest banks in the U.S. reached a $25 billion settlement over similar allegations. It promises homeowners a
measure of relief in the form of principal reductions facilitated by Ocwen, which specializes in servicing subprime
or delinquent loans.
According to a complaint filed by the states and the Consumer Financial Protection Bureau, Ocwen took
advantage of homeowners with servicing shortcuts and unauthorized fees, deceived consumers about foreclosure
alternatives and improperly denied loan modifications, and engaged in illegal foreclosure practices.
Ocwen which has tangled with state and federal officials in the past over its servicing practices, including
in Texas and New York did not respond to a request for comment Thursday.
Under the settlement, Ocwen will provide $125 million in refunds to consumers who lost their homes to
foreclosure while being serviced by Ocwen or subsidiaries Homeward Residential Holdings or Litton Loan
Servicing between 2009 and 2012.
In addition, over a three-year period, Ocwen is responsible for seeing to it that $2 billion in principal reductions
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USCA Case
#14-5265
Document
Filed: 12/16/2014
Page
of 5If
go to homeowners,
meaning
that Ocwen
will have#1527674
to work with the mortgage
holders to reach
that 3goal.
Ocwen doesnt succeed, the difference between the relief achieved and $2 billion will be assessed against
Ocwen as a penalty and distributed to the CFPB and the offices of the states attorneys general, CFPB Director
Richard Cordray said Thursday.

Cordray said that while some of Ocwens portfolio was part of the 2012 settlement, the majority of it was not,
and the new settlement bridges that gap. According to the CFPB, Ocwen is the largest nonbank mortgage
servicer, and ranks as the fourth-largest mortgage servicer overall in the U.S. It has recently acquired smaller
competitors such as Homeward and Litton, and has taken on servicing duties for some of the big banks, the
bureau said.
Todays action extends the standards of that settlement to the full portfolio of the largest nonbank servicer,
Cordray said. This result furthers the Consumer Bureaus objective of extending its oversight over the entire
mortgage servicing market, including both bank and nonbank participants.
In January the CFPBs new mortgage servicing rules will take effect and Ocwen, like other servicers, will be
subject to the stricter standards, which, among other things, ban robo-signing and prohibit borrowers from being
referred to foreclosure before an application can be reviewed.
But because of its conduct, as described in our complaint, Ocwen will be subject to standards above and
beyond the rest of the industry, Cordray said.
He said the agreement aims to solve problems surrounding Ocwens handling of modifications in transferred
loans by forbidding the company from initiating or continuing a foreclosure process within 60 days after a loan is
transferred to it. During that time, Ocwen must determine the status of any loss mitigation requests already in
process.
Florida Attorney General Pam Bondi estimates that her states share of the $2 billion in principal reductions
17 percent will be larger than any other states, based on the number of Florida homeowners who qualify.
The average principal reduction would be $50,000 per loan, she said.
That is a substantial savings, and it will hopefully help ease their mortgage burden considerably, helping
homeowners to stay in their homes, Bondi said.
Tom Miller, Iowas attorney general, said the agreement was a good sign of the kind of collaboration that can
occur between states and the CFPB on this type of issue.
Principal reduction works, works well and does not have all the negatives that were feared, the moral hazard
kinds of negatives, Miller said, referring to a worry expressed by servicers in the 2012 agreement that principal
reduction would reward people who simply dont pay their mortgages.
Oklahoma was the only state not to participate in the settlement.
Counsel information for Ocwen was not available Thursday.

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Case #14-5265
Document
#1527674
Filed: 12/16/2014
Page1:13-cv4 of 5
The caseUSCA
is Consumer
Financial Protection
Bureau
et al. v. Ocwen Financial
Corp. et al., number
02025, in the U.S. District Court for the District of Columbia.

--Additional reporting by Evan Weinberger, Brian Mahoney and Karlee Weinmann. Editing by Kat Laskowski.

Related Articles
CFPB And State AGs Vs. Lawyers
Lender Wrong About Foreclosed Homeowners' Liabilities: Suit
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Case Information
Case Title
CONSUMER FINANCIAL PROTECTION BUREAU et al v. OCWEN FINANCIAL CORPORATION et
al

Case Number
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1:13-cv-02025

Document #1527674

Filed: 12/16/2014

Page 5 of 5

Court
District Of Columbia
Nature of Suit
Other Statutory Actions
Judge
Rosemary M. Collyer
Date Filed
December 18, 2013
Companies
Ocwen Financial Corporation
Government Agencies
Consumer Financial Protection Bureau
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