Mortgage – HousingWire

CFPB hopes to reverse court decision that handed Ocwen a win last year
Freddie Mac names new general counsel
To free up cash, Homepoint will outsource servicing

CFPB hopes to reverse court decision that handed Ocwen a win last year

Posted: 14 Feb 2022 03:35 PM PST

Nearly a year after a federal judge dismissed the Consumer Financial Protection Bureau‘s mortgage servicing misconduct suit against Ocwen Financial Corp., the watchdog agency is hoping to overturn the decision.

During oral arguments in Miami before the U.S. Court of Appeals for the Eleventh Circuit, Lawrence DeMille-Wagman, CFPB's attorney, argued that a consent agreement from 2013 did not excuse the mortgage servicer from future violations and that Ocwen is on the hook for alleged wrongdoings.

Last March, U.S. District Judge Kenneth Marra, in Florida’s Southern District in West Palm Beach, ruled that most of the CFPB’s claims were blocked because of a 2013 settlement between Ocwen, the bureau, authorities in 49 states, and the District of Columbia.

The CFPB took issue with that ruling, and filed an appeal last October. In a hearing last week, DeMille-Wagman argued that the settlement agreement did not shield Ocwen from all future liability.

"If the regulated party in the post consent period violates the law in a way that also violates the injunctive provisions of the consent, the regulatory agency is free to either pursue a contempt action or to bring a new case alleging the law enforcement violations," DeMille-Wagman argued.

"It may be now that Ocwen wishes it had negotiated a more thorough, more comprehensive release in [December] 2013, but it did not."

The attorney for Ocwen, William Jay, pointed to stipulations in the consent order that the mortgage servicer had a "right to cure" violations without facing penalties.

Jay argued that, in the consent order, the parties agreed to give Ocwen time to make its systems and practices compliant. The order established a system to make sure Ocwen complied with the standards, he said, and gave them time to fix any violations without a penalty.

Per the consent order, if Ocwen didn’t resolve violations, Jay argued, the penalty would be “swift.”

“It’s a $1 billion dollar penalty at the drop of a hat,” Jay said. “That was the bargain. That’s what the bureau is attempting to unwind here."

In 2017, the agency announced that it was suing Ocwen for "failing borrowers at every stage of the mortgage servicing process."

The CFPB's lawsuit alleged that Ocwen cost borrowers money, and in some cases, their homes, as a result of years of "widespread errors, shortcuts, and runarounds" dating back to January 2014.

Specifically, the bureau alleged that Ocwen botched "basic functions like sending accurate monthly statements, properly crediting payments and handling taxes and insurance."

The CFPB declined to comment. Ocwen did not return a request for comment.

The current dispute stems from now-settled allegations by the CFPB that date to the early days of the watchdog agency.

In 2013, the CFPB accused Ocwen of "engaging in significant and systematic misconduct that occured at every stage of the mortgage servicing process.” The CFPB alleged that the mortgage servicer failed to timely and accurately apply payments made by borrowers, and that it charged borrowers authorized fees for default-related services.

Those accusations were resolved with a consent order issued Dec. 17, 2013, shielding the servicer from future actions arising from the alleged practices up to that point. Ocwen also agreed to pay $2 billion in consumer relief as part of the settlement.

Ocwen, in a Jan. 2021 statement, said that the "CFPB's claims regarding Ocwen's past servicing practices are unsubstantiated."

Ocwen, at the time, said it had set aside an additional $13.1 million as a result of efforts to resolve the matter with the CFPB through mediation, which eventually failed. According to the firm’s latest quarterly filing, it has now set aside $44.6 million as of the end of the third quarter of 2021, for legal bills and regulatory matters, including the dispute with the CFPB.

The post CFPB hopes to reverse court decision that handed Ocwen a win last year appeared first on HousingWire.

Freddie Mac names new general counsel

Posted: 14 Feb 2022 12:18 PM PST

Freddie Mac has named former Wells Fargo deputy general counsel Heidi Mason its new general counsel.

Mason will assume the role March 7, and will replace Jerry Weiss, who has been general counsel on an interim basis since March 2021.

Weiss will continue to serve as Freddie Mac's senior executive liaison to its conservator, the Federal Housing Finance Agency, and Treasury, which holds warrants to purchase 79.9% of the GSEs' common stock, in his longtime role of chief administrative officer. Weiss was the fifth-highest earning named executive officer at Freddie Mac in 2021, with a total compensation of $2.3 million.

"Heidi brings deep expertise in areas across the legal spectrum, including in mortgage lending, servicing, credit access and regulatory matters, among others," said Michael DeVito, CEO of Freddie Mac. "I have no doubt she quickly will become a valuable member of Freddie Mac's executive team."

Mason is the second ex-Wells Fargo executive to come aboard Freddie Mac in the past year. DeVito, who assumed the role of CEO in June 2021, held numerous positions at the bank from 2007 to 2020, including, most recently, head of home lending. Wells Fargo is also the largest servicer of Freddie loans, servicing 8% of Freddie Mac's single-family loan portfolio in 2021. Freddie's other top 10 servicers service 39% of the loan portfolio.

As general counsel, Mason will be responsible for Freddie Mac's legal division, including advising the board of directors and senior management on legal and governance matters and litigation strategy. She will also lead Freddie Mac's efforts to navigate complex business and regulatory initiatives, within the complex web of relationships that define Freddie Mac's conservatorship arrangement.

Most recently, Mason was a partner at majority-woman owned law firm ElevateNext Law, where she advised financial services companies on legal, consulting and regulatory matters. Mason has also been on the board of One Economy Financial Development Corporation, which provides financial coaching, and small-balance loans in the Black community in central Iowa, since 2020, and is funded in part by a grant from Wells Fargo.

Before joining ElevateNext, Mason spent 17 years as executive vice president and senior deputy general counsel at Wells Fargo.

Prior to that, she defended financial institutions in investigations brought by the Department of Justice, the Federal Trade Commission, the Department of Housing and Urban Development and banking regulators, and in class actions brought under fair lending laws.

The post Freddie Mac names new general counsel appeared first on HousingWire.

To free up cash, Homepoint will outsource servicing

Posted: 14 Feb 2022 10:14 AM PST

Michigan-based wholesale lender Homepoint announced on Monday that ServiceMac, a First American company, will handle its servicing operations.

The decision allows the lender to focus on growing its originations business. Critically, the move reduces Homepoint's costs, which is a topic of criticism among mortgage stock analysts.

Homepoint has over 300 employees in mortgage servicing operations, who will be laid off but subsequently hired by ServiceMac, according to a spokesperson.

"All of our 300+ servicing associates will have the opportunity to join the experienced ServiceMac team as part of this transition that kicks off next quarter," the spokesperson told HousingWire.

ServiceMac will begin servicing loans on behalf of Homepoint in the second quarter. The Homepoint brand will still appear on all servicing communications, and Homepoint will support retention efforts through “Customer for Life” programming.

Terms of the deal were not disclosed.

Willie Newman, Homepoint's CEO, said in a statement that the partnership "elevates the customer experience and supports the scale of the combined operation."

The decision to have ServiceMac be the subservicer follows Homepoint’s move in November to wind down its Ginnie Mae servicing business.

In total, the lender reported a $126 billion mortgage servicing portfolio in the third quarter of 2021, a strong increase compared to $74 billion in the same period of 2020.

According to Phil Shoemaker, president of originations at Homepoint, the move is "freeing up resources to accelerate enhancements to our wholesale platform" during a transition into a purchase market.

Mortgage stock analysts say Home Point Capital, the smaller of the two publicly listed pure-play wholesalers, is in a somewhat fragile position. The company has a higher cost structure, given its lower scale, compared to its competitors, notably UWM, whose stock has also been dinged .

Goldman Sachs' team changed the recommendation for the stocks to sell from neutral, believing that the wholesale channel gain on sale margins will remain under pressure for the foreseeable future.

Homepoint's management is working to lower the cost to originate a loan to $900 per loan in 2022 from $1,700 in the first quarter of 2021, largely through headcount reductions and process improvements.

In June, the company announced it reorganized its operations and sales personnel, potentially losing hundreds of jobs.

A new regionalized staffing model, dubbed "Homepoint Amplify," was rolled out to broker partners across the country, creating fewer touch points and greater efficiencies.

A spokesperson for Homepoint said the change in operational structure would result in an elimination of "less than 10%" of its workforce, which sources said was believed to be around 4,000 workers.

Homepoint's decision to outsource its servicing operations goes in the opposite direction of some competitors.

LoanDepot, for example, announced in 2021 a decision to begin servicing Fannie Mae, Freddie Mac and Ginnie Mae loans in-house. According to Joe Garrett, a mortgage consultant at Garrett, McAuley & Co., a sub-servicer can take 23% to 30% of servicing revenues – and finding places to trim becomes more critical as rates rise and margins narrow.

The post To free up cash, Homepoint will outsource servicing appeared first on HousingWire.

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Tuesday, February 15, 2022