Ocwen Comments On Modification Efforts

http://www.ocwen.com][u]Ocwen Financial Corp.[/u][/link], which was among the 25 servicers that met with Treasury and HUD officials Tuesday, has reaffirmed its support for the federal mortgage modification program, with CEO William C. Erbey calling modifications ‘the key to a lasting solution’ to the foreclosure crisis. ‘We applaud any effort to advance the effectiveness of the administration's modification plan to assist homeowners with unaffordable mortgages and prevent avoidable foreclosures," says Erbey. Tuesday's meeting between administration officials and HAMP servicers was seen as the administration's attempt to assuage lawmakers' criticism of the program's management to date by pressing servicers to act faster. The Ocwen statement also comes two days after a [link=http://www.nytimes.com/2009/07/30/business/30services.html?_r=1][u]New York Times[/u][/link] article slammed the servicing industry, suggesting servicers were avoiding modifications in order to collect late fees. The article quoted Florida attorney and former Ocwen employee Margery Golant, who said, "I don't think [servicers are] motivated to do modifications at all. They keep hitting the loan all the way through for junk fees. It's a license to do whatever they want." In the company's statement, Paul A. Koches, Ocwen's executive vice president and general counsel who was also quoted in the NYT article, said that modifications – not late fees – are what's best for business. "In fact, late fees, which rarely, if ever, are collected in foreclosures, don't come close to covering the cost of advances that must be made – out of the servicer's pocket – to the owners of delinquent loans," he said. Ocwen says it has solicited about 60,000 modifications under HAMP. In its statement, the company also touted its success with modifications, citing a July 2009 Bank of America Mortgage Credit Research Report that showed the company has the highest industry average of modifying fixed-rate and adjustable-rate subprime mortgages that are over 90 days delinquent and turning them into current, performing loans. Ocwen says its redefault rate is 24%. ‘We've put a lot of effort into ensuring that our loan modifications stick, meaning that the reduced monthly payment is both affordable by the homeowner on a sustained basis while, at the same time, returns cashflow for the investor that exceeds foreclosure value," Koches said. SOURCES: [link=http://www.ocwen.com]Ocwen[/link], [link=http://www.nyt.com]New York Times


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