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» New York Custom Loss Mitigation Services Michael J. Wallace 516.319.1600 mjwallace@wallacerealestatesolutions.com WallaceRealEstateSolutions.com IN THE NEWS Ocwen Required to Hire Monitor After a Review of Its Servicing Practices A review of Ocwen's mortgage servicing practices has found indications of non-compliance with recent servicing reforms, New York's Department of Financial Services announced early last month. In a release, Superintendent Benjamin Lawsky said a review of Ocwen's business showed that "in some instances, the company failed to demonstrate that it had sent out required 90-day notices before commencing foreclosure proceedings or even that it had standing to bring the foreclosure actions." The exam also found that Ocwen sometimes failed to provide a single point of contact for borrowers, pursued foreclosure actions on borrowers seeking loan modifications, failed to conduct an independent review of loan mod denials, and failed to ensure that borrower and loan information was accurate and up to date. Ocwen was the first mortgage servicer to agree to the department's new Mortgage Servicing Practices in 2011, but Lawsky says simply agreeing to reform your business is not enough. "The best unrealized reforms won't protect homeowners. To protect homeowners facing the risk of losing their homes, we must ensure that the companies are actually living up to their promises," Lawsky said. He added that the examination of Ocwen's servicing practices came about after the department received complaints about the company. Following the examination, the department is now requiring that Ocwen hire an independent monitor to review its operations and identify and report on corrective actions. Ocwen has 20 days from the execution of the consent order to do so. The requirement may slow down Ocwen's recent efforts to expand its servicing portfolio. Since 2011, the company has acquired portfolios from several major servicers, most of which contained distressed loans. In October 2012, Ocwen and Walter Investment Management Corp. won in a joint $3 billion bid to acquire the assets of the bankrupt Residential Capital, LLC (ResCap). Ocwen also announced in October 2012 its intent to purchase Homeward Residential Holdings, Inc. in a $750 million deal. Those deals have not yet seen regulatory approval. Ocwen did not immediately respond to a request for comment. New York AG Targets Credit Suisse in Second RMBS Task Force Suit New York Attorney General Eric Schneiderman announced a complaint was filed Tuesday, November 20, 2012 against Credit Suisse Securities (USA) LLC and its affiliates for allegedly misrepresenting residential mortgage-backed securities (RMBS) sold to investors. The complaint is the result of investigations carried out by the RMBS Working Group, a federal task force created by President Obama in early 2012. The lawsuit marks the second complaint from the group. The suit alleges that from 2006 to 2007, Credit Suisse led investors to believe the bank carefully evaluated the loans underlying the RMBS and encouraged originators to implement "sound" practices. Instead, Zurich-based Credit Suisse "systematically failed to adequately evaluate these loans, and kept investors in the dark about the inadequacy of their review procedures," the complaint states. Thus, loans in the bank's RMBS included loans made to borrowers who were likely to go into default. The group alleges that from 2006 to 2007, Credit Suisse issued $93.8 billion in RMBS. As of August, losses from those securities reached over $11.2 billion, or about 12 percent of the total. VISIT US ONLINE @ DSNEWS.COM The New York AG's complaint seeks to recover investor losses and "other equitable relief." In October 2012, the RMBS Working Group brought on its first suit against JPMorgan Chase. During a conference call, Schneiderman, who serves as co-chair of the group, revealed there are other institutions being "scrutinized," and says the working group still has a long way to go. While other financial companies are being investigated, as of now, Schneiderman says there have been no claims brought out against individuals. New York AG Says Wells Fargo Policy 'Likely' Violates Settlement In a letter, New York Attorney General Eric T. Schneiderman accused Wells Fargo of using Hurricane Sandy to evade obligations under the national mortgage settlement. According to the AG's letter, a law firm representing Wells Fargo released a letter in November 2012 stating the bank will suspend "all Home Preservation reviews and decisions" as a result of Hurricane Sandy. The AG says the letter from Wells Fargo further states the bank "will not respond to requests for mortgage relief until you receive further information from FEMA." The letter applied to decisions in the Northeast. "Wells Fargo is not excused from any of its obligations under the National Mortgage Settlement or under New York law as a result of Hurricane Sandy," Schneiderman wrote. "My office will aggressively pursue any loan servicing company that uses this tragic event as an excuse to violate loss mitigation decision timelines." The $25 billion mortgage settlement was reached in February 2012 between state and federal officials and the five largest servicers—Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial. As part of the settlement agreement, "Wells Fargo is required to make a decision about a homeowner‚ loan modification request within 30 days of receiving a completed application package. Wells Fargo's decision to delay review will likely result in multiple violations of the National Mortgage Settlement," the AG letter stated. In an email, a Wells Fargo spokesperson said, "It is extremely unfortunate that Wells 147

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