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3 years ago
Fitch: Ocwen Integration Drags on US Servicer Monitor Report
December 17, 2014 / 5:12 PM / 3 years ago

Fitch: Ocwen Integration Drags on US Servicer Monitor Report

(The following statement was released by the rating agency) NEW YORK, December 17 (Fitch) The Office of Mortgage Oversight's Interim Compliance Report indicates improving servicing capabilities and compliance for most of the residential servicers subject to the National Mortgage Settlement, Fitch Ratings says. One possible exception to this trend is Ocwen Loan Servicing, for which challenges remain. In Fitch's view, Ocwen's challenges are partially attributable to the significant integration tasks that accompanied its acquisition of Residential Capital's (ResCap) GMAC Mortgage and GMAC-RFC residential servicing operations in 2013. Moreover, the monitor's determination that it could not rely on parts of Ocwen's internal review group process is likely to further heighten the already elevated regulatory scrutiny faced by the servicer. Bank servicers exhibited the most notable improvement in the monitor's evaluation, as they lack the integration challenges faced by non-bank servicers and have more meaningful regulatory compliance resources. For example, in 1Q14, Bank of America failed two metrics and Citi failed one. In 2Q14 there were no fails for those banks. Ocwen continued to struggle under the examination process. The complexities of integrating the systems and volume of ResCap businesses into Ocwen's operations created some issues highlighted by the monitor. As of June 30, 2012, Ocwen was servicing approximately 800,000 residential mortgage loans with an unpaid balance (UPB)of $122.6 billion. In 2012, the company won a 2.4 million loan, $356 billion UPB joint bid for ResCap's mortgage servicing and origination assets, and ultimately acquired the majority of the servicing assets in 2013. Ocwen's servicer ratings and Issuer Default Rating (IDR) already incorporate much of the operational/integration risk and regulatory scrutiny facing the company, although potential downside risks remain. Reflecting these dynamics, on Oct. 24, 2014 Fitch placed Ocwen's servicer ratings and 'B' IDR on Rating Watch Negative, citing concerns over Ocwen's aggressive growth strategy in an environment of heightened regulatory scrutiny for the overall sector. Fitch would view an improvement in Ocwen's corporate governance and operational control framework positively. We also believe that reducing the interconnectedness between Ocwen and its affiliate companies, which we consider in our rating process, could also be valuable. The monitor of the National Mortgage Settlement's interim report was published yesterday and provides an overview of the process that evaluates servicer reforms, describes their plans to correct issues from prior reports, and analyzes borrower complaints. Contact: Roelof Slump Managing Director Residential Mortgage Backed Securities +1 212 908-0705 33 Whitehall Street New York, NY Nathan Flanders Managing Director Banks +1 212 908-0872 Rob Rowan Senior Director Fitch Wire +1 212 908-9159 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. Additional information is available on www.fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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