White Paper: In Defense of Ocwen Servicing – July 2016 Update


In Defense of Ocwen Servicing – July 2016 Update


In Defense of Ocwen Servicing, published in the spring of 2015, argued that, “The servicer’s job, is to service (mortgage) loans in order to maximize the cashflow to the entire deal—and not to pay down senior classes in the fastest manner possible to the detriment of both subordinate bondholders and homeowners.” We reviewed the servicing practices at Ocwen Financial Corporation (“Ocwen”), finding support for its aggressive loan modification practices.

In this update, we compare Ocwen performance to Select Portfolio Servicing, Inc. (“SPS”), a highly regarded mortgage servicer. We chose SPS because they are viewed favorably by the mortgage investment community, and hold above average servicer ratings from the rating agencies. Currently, Ocwen is rated below average at Standard & Poor’s. These ratings matter to investors not only as a signal of overall servicing quality, but also because servicing could be transferred away from Ocwen, if it does not maintain a minimum average servicer rating by 2017. LL Funds owns over $1.8 Billion current face of bonds where the underlying mortgage loans are serviced by Ocwen. Because the investment performance of our opportunistic funds relies critically on how the underlying mortgage loans are serviced, we want Ocwen to continue to service these loans, and are sharing our research to raise awareness of the benefits of Ocwen servicing. While LL Funds does not own Ocwen equity in any of its funds, partners and employees of LL Funds do own the stock in their personal accounts.

Our research convinced us early on that Ocwen was the best servicer for troubled borrowers, because Ocwen is willing to modify borrowers—multiple times, if necessary—both by lowering interest rates and/or forgiving principal. We have enough data now to measure performance differences across servicers. When we look at a pool of borrowers that went seriously delinquent between 2008 and 2014, and track their performance through May 2016, we find that loans serviced by Ocwen resulted in 6% lower losses—liquidation and modification combined—compared to SPS. The reason for this difference is SPS liquidated 71% of these delinquent loans, while Ocwen liquidated 57%, choosing to modify and re-modify more often. Of this pool of initially delinquent borrowers, 18% of SPS serviced loans are performing as of May 2016, compared to 28% for Ocwen. This 10% difference is significant for both investors and for homeowners, who have been able to stay in their homes.

While it is clear from the data that Ocwen’s servicing practices have been good for investors overall—and also for homeowners—there are additional criteria used to arrive at servicer ratings. Because LL Funds is not in a position to evaluate these other criteria, we conclude this update with a brief summary of the Duff and Phelps report commissioned by Wells Fargo, acting as Master Servicer to some Ocwen serviced trusts, to investigate allegations made by investors and regulators. The report investigated the most important allegations against Ocwen and has found no evidence of malfeasance.

Full White Paper below…




In Defense of Ocwen Servicing – July 2016 Update

5 Responses to “White Paper: In Defense of Ocwen Servicing – July 2016 Update”
  1. lvent says:

    Moreover, it’s still going on under many guises but insurance fraud like catastrophic loss they create under the guise of HO INSURANCE the investors repurchase fraudulently under every type of insurance imaginable is the INVESTMENT BROKERS fallacy in the belief investment is ownership when it’s not.

    If it were, we would be slaves by proxy of some unknown trade which makes the bailout of AIG criminally catastrophic because they think they’re owners of something that can be hunted like prey which is based on paganism & its pragmatic beliefs.

  2. lvent says:

    One of the banksters was on CNBC saying people bought houses they didn’t qualify for & the link below discredits that because they were obviously credit brokering mortgage fraud like valuable commodities they weren’t.

  3. lvent says:



  4. mike Drouin says:

    The mistake everyone makes , and I did to , in my Federal Court case , is allow any entity the argument that a Mortgage Loan ever existed !!! What has happened to millions of American Families is that they were led to believe they were entering into a Mortgage contract with the entities they created documents with , but that was ” never ” the INTENT of the entity who never executed a Mortgage contract nor did they at any time , loan you any money !!! These ” Straw man ” Lenders and Mortgage Documents are a front to hide what was taking place , behind your back and without your knowledge !?!?
    What was actually brokered was an illegal contract using your personal property ( note ) converted into securities with your home giving value to those securities . This is called , THE INTENTIONAL TORT OF CONVERSION and it is outright THEFT !!! So where did the money come from if you had to pay an entity off in a refinance ??? Behind the scenes , Investors put money into a REMIC , Real Estate Mortgage Investment Conduit , this money was used to fuel the scheme for obscene profits created by the INVESTMENT BANKS who created the securities sold to the investor to create income streams flowing from homeowner to Investor . So now you have a Banking system who set up a contract between the Homeowner who doesn’t have a clue what they are involved in and the Investor , who think they are in long term investments but are set up to fail within three to five years of origination . The Banks played both ends against the middle and when the designed collapse came , they fired up the foreclosure mills and Millions of Homes were stolen or equity gutted in one of the largest confiscation of wealth in the history of the United States !!!!! Because CONVERSION is illegal , you have a right to RESCIND the bogus Mortgage documents !! Consummation never occurred , and there can be no ” Mutual Assent ” to the terms of a contract when the Mortgage terms were never executed !!! besides the violation of contract Law , several Federal Statutes were violated , Truth in Lending Act ( TILA ) , Real Estate Settlement Procedure Act ( RESPA ) Uniform Electronic Transfer Act ( UETA ) , and State Law .

  5. Concerned says:

    That paper needs to be printed on softpaper so it get the same usage as the old thick Sears Roebuck catalogs: they were used as toilet paper in the out house/latrine.

    Interesting that the paper cites just the two characters in my own parade. Of course, mine starts with Litton which was acquired by Ocwen. Litton had already generated ‘problem paperwork’ in my account, one being the assignment to an incorrect version of the CWABS trust, many years too late. Other issues were also generated by Litton and LSI.

    Then Ocwen bought Litton from Goldman-Sucks.

    Then Ocwen claimed to have the ability to use a Power of Attorney to assign from the badly-named version of the trust to the one that at least had some paperwork done, albeit without ever needing a BANK ACCOUNT. That assignment is so self-serving on Ocwen’s part.

    Now HOW, just HOW did the (EMPTY) trust manage to have anything of value to transfer to obtain the loan? That is what the new assignment claimed to do (transfer for value received). They need to have a POA for BOTH ‘entities’ and while Ocwen MIGHT get a POA produced for the CWABS account that they really WANT to claim the loan for, there is no ability to EVER produce the POA for the first trust. Nor can the first trust named take anything of value. It has no bank account nor any employees.

    At the time of the attempted assignment, the loan was supposedly in default. So, that is also an issue. Transfer of a loan too late is a big no-no. Another big no-no is any attempt to acquire a loan that is supposedly already in default.

    After doing these deeds, the servicing was transferred to SPS from Ocwen.

    All of the paper deserves to be used as toilet-paper.

Leave a Reply