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Ocwen Financial Corporation
, a leading financial services holding company, yesterday sent a
letter of rebuttal to Trustees and Master Servicers for 119 residential
mortgage-backed securities trusts in response to a notice of alleged
non-performance issued on January 23, 2015 by Gibbs & Bruns LLP. That notice
was sent on behalf of a group of RMBS investors, including BlackRock Financial
Management, Inc., Pacific Investment Management Company LLC (PIMCO), Kore
Advisors, L.P., Metropolitan Life Insurance Company, and Neuberger Berman
Europe Limited.
Ocwen's rebuttal letter made clear the following key points:
* The notice is the latest effort in a long campaign by Blackrock, PIMCO,
Kore, Met Life and Neuberger to try and impose changes to standard
servicing practices, with the goal of forcing more home foreclosures and
fewer loan modifications. Ocwen is a leading provider of loan
modifications under HAMP, the Home Affordable Modification Program
administered by the United States Department of the Treasury. HAMP
furthers the Treasury Department's strong public policy to help struggling
borrowers remain in their homes by encouraging and guiding servicers like
Ocwen to pursue profitable loan modifications rather than rushing to
foreclosure. Instead, these investors' pro-foreclosure, anti-modification
agenda is driven by their desire to increase their own financial returns
on their specific tranche-level holdings in RMBS Trusts, at the expense of
long-term gains to the Trusts as whole, through sustainable modifications.
* The allegations in the notice are substantially the same claims that were
refuted during a failed attempt to prevent Ocwen from acquiring a
competitor's servicing portfolio in 2013. Those allegations were
ultimately dismissed after being found to have no merit by independent
experts.
* The current standard of servicing outlined in Ocwen's agreements requires
the company to service loans in the best interest of all investors and in
conformance with accepted industry practices. Ocwen is compliant with this
standard of servicing. Each modification Ocwen performs is designed to
yield a higher anticipated recovery to investors than foreclosure. Nothing
alleged by the investors establishes that Ocwen breached the standard of
servicing called for by the agreements.
* Unable to establish otherwise, the investors instead malign Ocwen's
modifications through selectively presented data that does not comport
with the facts, as well as allegations of imprudent modification practices
that are belied by Ocwen's use of standard industry practices and
compliance with applicable regulations.
* Ocwen is uniquely positioned in the market to handle the special demands
of servicing subprime loans in a manner consistent with servicing
standards that achieve positive investor outcomes.
The full letter is available for review by clicking on the following link:
Rebuttal Letter to Trustees.
A February 2015 independent recent research report from Morgan Stanley's RMBS
strategy team details many aspects of Ocwen's servicing business including
that Ocwen's "modification style" is effective. The report states that
"Whether a borrower first went delinquent while being serviced by Ocwen, or
fell delinquent and was then transferred to Ocwen, we find that these
borrowers are more likely to be in their homes today than if the MSRs were
held elsewhere." Moreover, the report goes on to say that "It doesn't appear
in investors' best interest to replace Ocwen as servicer."
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