National mortgage servicer Ocwen Financial Corp. will pay $2 million to resolve a complaint brought by the Securities and Exchange Commission (SEC) alleging that the firm used a “flawed, undisclosed methodology” to value mortgage assets and that its internal controls “failed to prevent conflicts of interest” involving its former chairman.
In a statement released Wednesday, Ocwen officials say they are “pleased with the resolution” of the SEC’s investigation.
“As previously disclosed in our October 2015 SEC 10-Q filing, funds have already been reserved to address this settlement,” the company says. “Ocwen remains committed to full compliance with all legal and regulatory requirements and will continue to fully cooperate with regulators on any matter brought to its attention.”
Ocwen didn’t admit any wrongdoing in resolving the complaint.
Ocwen has resolved multiple complaints and regulatory actions during the past two years. The biggest settlement for the firm came in December 2014, when it agreed to pay $100 million to settle allegations brought by the New York Department of Financial Services that the company violated numerous mortgage servicing rules designed to protect consumers. As part of that settlement, William C. Erbey, the company’s founder, agreed to step down as executive chairman.
Erbey was at the center of complaints alleging conflicts of interest, as he held multiple leadership roles at the company: He was also chairman of Home Loan Servicing Solutions (HLSS), an Ocwen affiliate.
In October, HLSS agreed to pay $1.5 million to settle allegations brought by the SEC that the mortgage servicer made material misstatements about its relationship with Erbey, as well as its valuation of billions of dollars in mortgage servicing rights it acquired from Ocwen.
As a result of recent regulatory actions, Ocwen decided last year that it would temporarily discontinue servicing agency-backed mortgages until all of the legal matters against it have been resolved. As a result of that decision, the firm, for about the past year, has been rapidly selling off its mortgage servicing rights on agency-backed loans. For more on those past deals, click here, here, here and here.
