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December 19, 2013

CONSUMER FINANCIAL PROTECTION BUREAU, STATE AUTHORITIES ORDER OCWEN TO

PROVIDE $2 BILLION IN RELIEF TO HOMEOWNERS FOR SERVICING WRONGS

Today the Consumer Financial Protection Bureau (CFPB), authorities in 49 states, and the District of Columbia filed a proposed court order requiring the country’s largest nonbank mortgage loan servicer, Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing, to compensate for years of systemic misconduct at every stage of the mortgage servicing process. This misconduct included unfair shortcuts, unauthorized fees, deception, and other illegal practices.

Ocwen By The Numbers • 1st: Ocwen’s position among nonbanks in the mortgage servicing market. • 4th: Ocwen’s position in the overall mortgage servicing market. • 185,000: Estimated number of consumers who lost their homes to foreclosure while being serviced by

Ocwen, Homeward Residential Holdings, or Litton Loan Servicing, from Jan. 1, 2009 to Dec. 31, 2012. • $2 billion: Amount Ocwen must provide in principal reduction to underwater customers. • $125 million: Amount Ocwen must refund to consumers who were foreclosed on. • $2.3 million: Amount Ocwen must pay to administer the refunds to consumers.

Background Ocwen is a publically-traded Florida corporation headquartered in Atlanta, Ga., with customers all over the country. As a mortgage servicer, Ocwen is responsible for collecting payments from the mortgage borrower and forwarding those payments to the owner of the loan. It handles customer service, collections, loan modifications, and foreclosures.

Ocwen specializes in servicing subprime or delinquent loans. In recent years, it has bought out competitors – including Homeward Residential Holdings LLC (formerly American Home Mortgage Servicing Inc.) and Litton Loan Servicing LP. It has also acquired the mortgage servicing rights from other major bank and nonbank mortgage servicers. Because of its high percentage of delinquent loans, Ocwen places a major emphasis on resolving delinquency through loss mitigation or foreclosure.

The CFPB is charged with enforcing the Dodd-Frank Wall Street Reform and Consumer Protection Act which protects consumers from unfair, deceptive, or abusive acts or practices by any mortgage servicer – whether they are a bank or nonbank. In early 2012, examinations by the Multistate Mortgage Committee, which is comprised of state financial regulators, identified potential violations at Ocwen. In addition, the Federal Trade Commission referred its investigation of Ocwen to the CFPB after the Bureau opened in July 2011. The Bureau then teamed with state attorneys general and state regulators to investigate and resolve the issues identified. Today’s settlement is a multi-jurisdictional, multi-state collaborative effort.

Borrowers Pushed into Foreclosure by Servicing Misconduct The CFPB and its state partners believe that Ocwen was engaged in significant and systemic misconduct

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that occurred at every stage of the mortgage servicing process. According to the complaint filed in federal district court in the District of Columbia, Ocwen’s violations of consumer financial protections put thousands of people across the country at risk of losing their homes. Specifically, the complaint says that Ocwen:

• Took advantage of homeowners with servicing shortcuts and unauthorized fees: Customers relied on

Ocwen to, among other things, treat them fairly, give them accurate information, and appropriately charge for services. According to the complaint, Ocwen violated the law in a number of ways, including: o Failing to timely and accurately apply payments made by borrowers and failing to maintain

accurate account statements; o Charging borrowers unauthorized fees for default-related services; o Imposing force-placed insurance on consumers when Ocwen knew or should have known that

they already had adequate home-insurance coverage; and o Providing false or misleading information in response to consumer complaints.

• Deceived consumers about foreclosure alternatives and improperly denied loan modifications:

Struggling homeowners generally turn to mortgage servicers, the link to the owners of the loans, as their only means of developing a plan for payment. Ocwen failed to effectively assist, and in fact impeded, struggling homeowners trying to save their homes. This included: o Failing to provide accurate information about loan modifications and other loss mitigation

services; o Failing to properly process borrowers’ applications and calculate their eligibility for loan

modifications; o Providing false or misleading reasons for denying loan modifications; o Failing to honor previously agreed upon trial modifications with prior servicers; and o Deceptively seeking to collect payments under the mortgage’s original unmodified terms after the

consumer had already begun a loan modification with the prior servicer. • Engaged in illegal foreclosure practices: One of the most important jobs of a mortgage servicer is

managing the foreclosure process. But Ocwen mishandled foreclosures and provided consumers with false information. Specifically, Ocwen is accused of: o Providing false or misleading information to consumers about the status of foreclosure

proceedings where the borrower was in good faith actively pursuing a loss mitigation alternative also offered by Ocwen; and

o Robo-signing foreclosure documents, including preparing, executing, notarizing, and filing affidavits in foreclosure proceedings with courts and government agencies without verifying the information.

Remedies: Consumer Protections Today’s proposed court order will bar Ocwen from committing such violations in the future. It requires Ocwen to provide $125 million in refunds to foreclosed-upon consumers and $2 billion in loan modification relief to its customers through principal reduction. The refunds and relief also apply to consumers whose loans were previously serviced by Homeward Residential Holdings and Litton Loan Servicing. Further, the order requires Ocwen to operate its business under better servicing standards. The CFPB, state attorneys general, and state regulators can ensure Ocwen is following the new standards.

Among other things, today’s federal order extends the requirements of the National Mortgage Settlement

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to all of Ocwen’s loans. The 2012 National Mortgage Settlement is an agreement between several federal agencies, state attorneys general, and the five largest bank servicers that provided $25 billion in relief to consumers. The settlement addressed issues related to past mortgage loan servicing and foreclosure abuses and fraud. While some of Ocwen’s portfolio was subject to the National Mortgage Settlement, the substantial majority of it was not. Now, Ocwen’s full portfolio must adhere to all of the servicing standards – with certain important new homeowner protections, outlined below.

The proposed federal court order will have the full force of law only when signed by the presiding judge. According to the proposed order, Ocwen must:

• Provide $2 billion in relief to underwater borrowers: Over a three-year period, Ocwen must complete

sustainable loan modifications that result in principal reductions totaling $2 billion. For loan modification options, eligible borrowers may be contacted directly by Ocwen. Or borrowers may contact Ocwen to obtain more information about specific loan modification programs and to find out whether they may be impacted by this settlement. Ocwen can be reached at ConsumerRelief@Ocwen.com or 1-800-337-6695. If Ocwen fails to meet this commitment, it must pay a cash penalty in the amount of any shortfall to the CFPB and the states.

• Provide $125 million in refunds to foreclosure victims: Ocwen must refund $125 million to

consumers whose loans were being serviced by Ocwen, Homeward Residential Holdings, or Litton Loan Servicing, and who lost their homes to foreclosure between Jan. 1, 2009 and Dec. 31, 2012. All eligible consumers who submit valid claims will receive an equal share of the $125 million. Borrowers who receive payments will not have to release any claims and will be free to seek additional relief in the courts. Ocwen will also pay $2.3 million to administer the refund process. Eligible consumers can expect to hear from the settlement administrator about potential payments.

• Stop robo-signing official documents: Ocwen must ensure that facts asserted in its documents about

borrowers’ loans used in foreclosure and bankruptcy proceedings are accurate and supported by reliable evidence. Affidavits and sworn statements must be based on personal knowledge.

• Adhere to significant new homeowner protections: Ocwen must change the way it services mortgages

to ensure that borrowers are protected from the illegal behavior that puts them in danger of losing their homes. To ensure this, the CFPB and the states are proposing that Ocwen follow the servicing standards set up by the 2012 National Mortgage Settlement with the five largest banks. Because of Ocwen’s track record of problems handling the large volume of mortgage servicing rights it has quickly acquired in recent years, Ocwen is also being ordered to adhere to additional consumer protections, including how it manages transferred loans. Among other things, Ocwen must:

o Properly process pending requests: For loans that are transferred to Ocwen, the company must

determine the status of in-process loss mitigation requests pending within 60 days of transfer. Until then, Ocwen cannot start, refer to, or proceed with foreclosure.

o Honor previous loan modification agreements: If the borrower has a loan modification agreement, Ocwen must honor it under the terms of the company that transferred the loan.

o Ensure continuity of contact for consumers: Ocwen will have to ensure that consumers get regular and dependable assistance when they call for help. This includes requiring more than just a single point of contact assigned to each borrower, but also that other Ocwen employees with

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access to the borrower’s information be available if the borrower wants to speak to someone immediately.

o Restrict servicing fees: All servicing fees must be reasonable, bona fide, and disclosed in detail to borrowers. For example, Ocwen cannot collect any late fees if a loan modification application is under review or if the borrower is making timely trial modification payments.

o Notify consumers of loss mitigation options and restrict dual tracking: Ocwen generally cannot refer a borrower’s account to foreclosure while the borrower’s application for loan modification is still pending. If the loan modification request is denied, the borrower can appeal that decision and Ocwen cannot proceed to foreclosure until that appeal has been resolved.

C FPB’s Mortg ag e Serv ici ng R ul es Every mortgage servicer will have to follow the CFPB’s rules once they take effect on Jan. 10, 2014. The standards that Ocwen must adhere to according to the CFPB court order are in addition to the protections offered to consumers under these new rules.

The CFPB’s new mortgage servicing rules were written to address the many problems and bad practices seen in the mortgage servicing marketplace. The rules establish strong protections for homeowners facing foreclosure. They protect consumers from getting the runaround and being hit with surprises. For more information about the new mortgage servicing rules, go to www.consumerfinance.gov/mortgage.

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12/16/2014 Ocwen Backdating Draws Attention of Attorneys General - Bloomberg

http://www.bloomberg.com/news/print/2014-10-23/ocwen-backdating-draws-attention-of-attorneys-general.html 1/2

Ocwen Backdating Draws Attention of AttorneysGeneralBy Andrew Harris - Oct 23, 2014

Ocwen Financial Corp.’s backdating of letters rejecting homeowner requests to modify mortgages has

drawn the attention of at least three state attorneys general who were part of a $2.1 billion agreement

to curb the company’s alleged abuse of borrowers just last year.

The backdating left some consumers with insufficient time to appeal the denials, according to a letter

sent to the loan servicing company by Benjamin Lawsky, the head of New York’s Department of

Financial Services.

Ocwen’s actions may have also breached its December accord with the federal Consumer Financial

Protection Bureau and attorneys general from 49 states.

“We’re monitoring the issue and looking into other issues as well,” Illinois Attorney General Lisa

Madigan’s spokeswoman, Natalie Bauer, said in a phone interview yesterday. Bauer declined to

describe the other issues being looked at by Madigan, a Democrat.

Florida Attorney General Pam Bondi, a Republican, and Iowa’s Tom Miller, a Democrat, are also

looking at a potential breach of the December settlement, spokesmen for those officials said.

The accord required Ocwen, the biggest non-bank mortgage servicing business in the U.S., to provide

$2.1 billion in borrower relief, with $125 million of that to compensate people who lost their homes to

foreclosure and the bulk of it in the form of loan principal forgiveness, according to a CFPB statement

issued in December.

Independent Monitor

Ocwen also consented to the appointment of attorney Joseph A. Smith, a former North Carolina

banking commissioner, as an independent monitor of its compliance.

Lawsky said Ocwen backdated thousands of loan modification denial notices starting in 2012 and

continuing into this year, likely causing “significant harm” to borrowers left with no time to challenge

those determinations.

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12/16/2014 Ocwen Backdating Draws Attention of Attorneys General - Bloomberg

http://www.bloomberg.com/news/print/2014-10-23/ocwen-backdating-draws-attention-of-attorneys-general.html 2/2

“The existence and pervasiveness of these issues raise critical questions about Ocwen’s ability to

perform its core function” of loan servicing, according to Lawsky’s letter, which was made public two

days ago.

His letter was cited by Moody’s Investors Service yesterday in a decision to downgrade its quality

assessment of an Ocwen unit servicing residential and subprime-residential loans.

Risks Cited

“Both assessments remain on review for further downgrade,” the ratings company said. Allegations

raised in Lawsky’s letter “raise the risk of actions that restrict Ocwen’s activities, the levying of of

monetary fines against Ocwen, or additional actions that negatively affect Ocwen’s servicing

stability,” Moody’s said.

Ocwen closed at $19.51 today, down almost 26 percent from its close on Oct. 20.

Under a consent order signed by U.S. District Judge Rosemary M. Collyer in Washington in February,

the CFPB could seek penalties for any violation of the agreement.

David Millar, a spokesman for Atlanta-based Ocwen, said Oct. 21 that the company deeply regrets the

improperly-dated correspondence that resulted from “errors” in its systems.

Millar, who is affiliated with Sard Verbinnen & Co., declined to comment on the consent order.

Smith is due to file a compliance report by the end of this year.

Matthew Anderson, a spokesman for Lawsky, declined to comment on the matter. Sam Gilford, a

Consumer Financial Protection Bureau spokesman, also declined to comment.

The case is Consumer Financial Protection Bureau v. Ocwen Financial Corp. (OCN), 13-cv-2025, U.S.

District Court, District of Columbia (Washington).

To contact the reporter on this story: Andrew Harris in federal court in Chicago at

aharris16@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net David

Glovin

®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.

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Benjamin M. Lawsky

Superintendent

Andrew M. Cuomo

Governor

August 4, 2014

Timothy Hayes

General Counsel

Ocwen Financial Corporation

1661 Worthington Road, Suite 100

West Palm Beach, FL 33409

Dear Mr. Hayes:

As part of the Department’s ongoing examination of Ocwen’s mortgage servicing practices, we

are reviewing a troubling transaction involving Ocwen’s related company, Altisource Portfolio

Solutions, S.A. (“Altisource”), and the provision of force-placed insurance. Indeed, this complex

arrangement appears designed to funnel as much as $65 million in fees annually from already-

distressed homeowners to Altisource for minimal work. Additionally, the role that Ocwen’s

Executive Chairman William C. Erbey played in approving this arrangement appears to be

inconsistent with public statements Ocwen has made, as well as representations in company SEC

filings. As discussed below, we require certain information about this force-placed insurance

arrangement and about Mr. Erbey’s role in approving the arrangement.

Background

As you know, the Department has previously expressed concerns about Ocwen’s use of related

companies to provide fee-based services such as property inspections, online auction sites,

foreclosure sales, real estate brokers, debt collection, and many others. Because mortgage

servicing presents the extraordinary circumstance where there is effectively no customer to select

a vendor for ancillary services, Ocwen’s use of related companies to provide such services raises

concerns about whether such transactions are priced fairly and conducted at arms-length.

The Department now seeks additional information about Ocwen’s provision of force-placed

insurance through related companies. As you are aware, the Department’s recent investigation

into force-placed insurance revealed that mortgage servicers were setting up affiliated insurance

agencies to collect commissions on force-placed insurance, and funneling all of their borrowers’

force-placed business through their own agencies, in violation of New York Insurance Law

section 2324’s anti-inducement provisions. The Department discovered that servicers’ own

insurance agencies had an incentive to purchase force-placed insurance with high premiums

because the higher the premiums, the higher the commissions kicked back by insurers to the

servicers or their affiliates. The extra expense of higher premiums, in turn, can push already

struggling families over the foreclosure cliff. In light of this investigation, the Department last

year imposed further prohibitions on these kickbacks to servicers or their affiliates.

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However, as part of our broader review of ancillary services provided by non-bank mortgage

servicers, we are concerned that certain non-bank mortgage servicers are seeking to side-step

those borrower protections through complex arrangements with subsidiaries and affiliated

companies. Indeed, in recent weeks, we halted one such arrangement at another non-bank

mortgage servicing company.

Agreements with SWBC and Altisource

Based on its investigation and through the Monitor’s work, the Department understands that

Ocwen’s force-placed arrangement with Altisource features the use of an unaffiliated insurance

agent, Southwest Business Corporation (“SWBC”), apparently as a pass-through so that Ocwen

and Altisource are not directly contracting with each other, but Altisource can still receive

insurance commissions and certain fees seemingly for doing very little work.

These are the facts established by documents Ocwen provided to the Monitor: In August 2013,

Ocwen appointed an Altisource subsidiary called Beltline Road Insurance Agency, Inc.

(“Beltline”) as its exclusive insurance representative, purportedly to negotiate and place a new

force-placed insurance program for Ocwen. Ocwen’s existing force-placed arrangement with the

insurer Assurant was set to expire in March 2014, and Beltline’s stated task was to find an

alternative arrangement. In January 2014, Altisource provided a memo to the Credit Committee

of Ocwen Mortgage Servicing, Inc., recommending, among other things, replacing Assurant with

SWBC as Ocwen’s managing general agent. SWBC would then be charged with managing

Ocwen’s force-placed insurance program, including negotiating premiums with insurers. As part

of this arrangement, Altisource recommended itself to provide fee-based services to SWBC.

In emails dated January 15 and 16, 2014, the transaction was approved by the three members of

the Credit Committee: William Erbey, Duo Zhang, and Richard Cooperstein. The Credit

Committee did not meet to discuss this proposal, no minutes were taken of the Credit

Committee’s consideration of this proposed transaction, and the proposed transaction apparently

was not presented for review or approval to any member of the Ocwen Board of Directors except

Mr. Erbey, as Mr. Zhang and Mr. Cooperstein are not members of the Ocwen Board of

Directors.

Just one month after this Credit Committee approval, on February 26, 2014, the company

received the Department’s letter raising concerns about potential conflicts of interest between

Ocwen and its related public companies. In that letter, we identified facts that “cast serious

doubts on recent public statements made by the company that Ocwen has a ‘strictly arms-length

business relationship’ with those companies,” and we specifically referenced the multiple roles

played by Mr. Erbey as an area of concern.

Disregarding the concerns raised in our letter, Ocwen proceeded to execute contracts formalizing

this new force-placed arrangement, apparently without further consideration by any Board

member other than Mr. Erbey. Those contracts, dated as of June 1, 2014, indicate that Altisource

will generate significant revenue from Ocwen’s new force-placed arrangement while apparently

doing very little work. Indeed, a careful review of these and other documents suggests that

Ocwen hired Altisource to design Ocwen’s new force-placed program with the expectation and

intent that Altisource would use this opportunity to steer profits to itself.

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First, Altisource will reap enormous insurance commissions for having recommended that

Ocwen hire SWBC. Under the contracts, Ocwen promises to give its force-placed insurance

business to SWBC. SWBC does the work of negotiating premiums, preparing policies, and

handling renewals and cancellations. For these services, SWBC receives commissions from

insurers. SWBC then passes on a portion of those commissions, constituting 15% of net written

premium on the policies, to Altisource subsidiary Beltline, for “insurance placement services.”

Documents indicate that Ocwen expects to force-place policies on its borrowers in excess of

$400 million net written premium per year; a 15% commission on $400 million would be $60

million per year. It is unclear what insurance placement services, if any, Altisource is providing

to justify these commissions.

Second, Altisource will be paid a substantial annual fee for providing technology support that it

appears to be already obligated to provide. This fee relates to monitoring services, whereby

Ocwen pays a company to monitor whether its borrowers’ insurance remains in effect. Such

monitoring is necessary to establish which borrowers have lapsed on their payments and need to

have insurance force-placed upon them. Prior to 2014, Ocwen was paying ten cents per loan per

month to Assurant for monitoring. In this new arrangement, however, Ocwen agrees to pay

double the prior amount – twenty cents per loan per month now paid to SWBC, for each of the

approximately 2.8 million borrowers serviced by Ocwen. SWBC, in turn, agrees to pass on

fifteen out of that twenty cents to Altisource, or an estimated $5 million per year. Altisource

provides only one service in exchange for this fee: granting SWBC access to Ocwen’s loan files.

Altisource, of course, only has access to Ocwen’s loan files through its own separate services

agreements with Ocwen, which appear to contractually obligate Altisource to provide this access

to business users designated by Ocwen to receive such access.

Third, the contracts require SWBC to use Altisource to provide loss draft management services

for Ocwen borrowers; to pay Altisource $75 per loss draft for these services; and to pay

Altisource an additional $10,000 per month for certain other services.

In an effort to better understand this arrangement, the Department requests that Ocwen provide

the following information and documents:

1. Is Altisource already obligated to provide access to Ocwen’s loan files to SWBC

pursuant to separate agreements with Ocwen? If your answer is no, please specifically

explain how the Technology Products Letter between Ocwen and Altisource, produced to

the Department beginning at OFC00002496, does not impose this obligation.

2. What services, if any, does Altisource or its subsidiary provide to SWBC in exchange for

SWBC paying the Altisource subsidiary a commission of 15% of insurance premiums?

In addition, it appears that payment of this commission excludes premium generated by

policies issued on properties in New York State. Please describe the negotiations that

resulted in this exclusion, and identify any alternate compensation to be paid to

Altisource or any affiliate to make up for the excluded commissions on New York

properties.

3. What services, if any, does Altisource provide to SWBC in exchange for SWBC paying

Altisource fifteen cents per loan per month?

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4. What services, if any, does Altisource provide to SWBC in exchange for an additional

$10,000 per month?

5. Under what circumstances do Ocwen policies and procedures permit approval of

transactions solely through the Credit Committee? Did this force-placed insurance

arrangement meet those requirements? Do Ocwen policies and procedures require any

additional review or approvals for transactions involving related companies? If so, did

Ocwen engage in that review or obtain those approvals for this arrangement?

6. Were any options presented to the Credit Committee other than the proposed SWBC

transaction? If so, did all such options feature the retention of Altisource to provide fee-

based services? Or were options presented that did not involve payments to Altisource?

7. Throughout this process, did members of the Credit Committee or any Ocwen personnel

give any consideration to the impact that Altisource fees and commissions would have in

increasing insurance premiums to be paid by struggling families?

8. After the Credit Committee approved Altisource’s January 2014 proposal for Ocwen’s

new forced-placed insurance program, it appears that certain changes were made to the

proposal, including an expansion of SWBC’s and Altisource’s roles in the program and

their associated compensation. Please describe those changes and the negotiations that

led to those changes, and identify all personnel involved in negotiating and approving

those changes.

9. What process resulted in the August 2013 appointment of Altisource’s subsidiary as

Ocwen’s exclusive insurance representative? Was this process competitive? What

Ocwen Board members or personnel were involved in this appointment? Which Board

members, if any, authorized this appointment? Did those Ocwen Board members or

personnel know or anticipate that Altisource would return with a plan that would appear

to be highly profitable for itself?

10. What amount of revenue has Altisource or its affiliates realized, and what amount of

revenue is it projected to realize, from the services it is providing pursuant to this force-

placed insurance arrangement? What are its costs for providing those services? How

many employees at Altisource or its subsidiaries work on providing those services, and

how much of their time is dedicated to this work?

11. Altisource’s presentation to the Credit Committee stated that “Altisource will establish its

own managing general underwriter during 2014 to provide LPI underwriting services

starting in 2015.” Please explain Altisource’s intention to establish a managing general

underwriter, state whether Ocwen supports Altisource’s plan, and explain how this

development will affect Ocwen’s force-placed program, Altisource’s revenue, and the

fees to be charged to Ocwen borrowers or mortgage investors.

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Ocwen’s Public Statements Concerning Transactions with Related Companies

In addition to the issues raised above, the Department has serious concerns about the apparently

conflicted role played by Ocwen Executive Chairman William Erbey and potentially other

Ocwen officers and directors in directing profits to Altisource, which is “related” to Ocwen but is

formally a separate, publicly-traded company. As you know, Mr. Erbey is Ocwen’s largest

shareholder and is also the Chairman of and largest shareholder in Altisource. In fact, Mr.

Erbey’s stake in Altisource is nearly double his stake in Ocwen: 29 percent versus 15 percent.

Thus, for every dollar Ocwen makes, Mr. Erbey’s share is 15 cents, but for every dollar

Altisource makes, his share is 29 cents.

The Department and its Monitor have uncovered a growing body of evidence that Mr. Erbey has

approved a number of transactions with the related companies, despite Ocwen’s and Altisource’s

public claims – including in SEC filings1 – that he recuses himself from decisions involving

related companies. Mr. Erbey’s approval of this force-placed insurance arrangement as

described above appears to be a gross violation of this supposed recusal policy.

12. Please explain how and why Mr. Erbey approved the arrangement between Ocwen,

SWBC, and Altisource.

13. Please provide every instance where Mr. Erbey has approved a transaction involving a

related company notwithstanding Ocwen’s statements to the contrary.

Finally, Ocwen and Altisource state in their public filings that rates charged under agreements

with related companies are market rate,2 but Ocwen has not been able to provide the Monitor

with any analysis to support this assertion.

14. Please advise whether Ocwen has performed any independent analysis to determine

whether the rates charged in the SWBC arrangement are market rate.

15. Please address whether Ocwen has performed any independent analysis to support the

assertion that the rates charged under other related party agreements are market rate.

1 Ocwen Financial Corporation 2013 Form 10-K Annual Report, at 18 (“We have adopted policies, procedures and

practices to avoid potential conflicts with respect to our dealings with Altisource, HLSS, AAMC and Residential,

including our Executive Chairmen recusing himself from negotiations regarding, and approvals of, transactions

with these entities.”); Altisource Portfolio Solutions S.A. 2013 Form 10-K Annual Report, at 17 (“We follow

policies, procedures and practices to avoid potential conflicts with respect to our dealings with Ocwen, HLSS,

AAMC and Residential, including our Chairman recusing himself from negotiations regarding, and approvals of,

transactions with these entities.”). 2 Ocwen Financial Corporation 2013 Form 10-K Annual Report, at F-60 (“We believe the rates charged under

[agreements with Altisource] are market rates as they are materially consistent with one or more of the following:

the fees charged by Altisource to other customers for comparable services and the rates Ocwen pays to or

observes from other service providers.”); Altisource Portfolio Solutions S.A. 2013 Form 10-K Annual Report, at 7

(“We record revenue we earn from Ocwen and its subsidiaries under various long-term servicing contracts at rates

we believe to be market rates as they are consistent with one or more of the following: the fees we charge to other

customers for comparable services; the fees Ocwen pays to other service providers; and fees charged by our

competitors.”).

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We intend to fully review all of the issues raised above. Please also provide documents that

support your responses. We ask and expect that Ocwen will preserve all documents concerning

the matters discussed in this letter.

Sincerely,

Benjamin M. Lawsky

Superintendent of Financial Services

cc: William C. Erbey, Executive Chairman, Ocwen Board of Directors

Ronald M. Faris, Ocwen Board of Directors

Ronald J. Korn, Ocwen Board of Directors

William H. Lacy, Ocwen Board of Directors

Wilbur L. Ross, Jr., Ocwen Board of Directors

Robert A. Salcetti, Ocwen Board of Directors

Barry N. Wish, Ocwen Board of Directors

Mitra Hormozi, Zuckerman Spaeder LLP

James Sottile, Zuckerman Spaeder LLP

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Ocwen Reaches $2B Deal In Mortgage ServicingSuit

By Juan Carlos Rodriguez

Law360, New York (December 19, 2013, 5:18 PM ET) -- Mortgage servicer Ocwen Financial Corp. onThursday agreed to a $2.1 billion settlement with the federal government and 49 states over allegations it had

engaged in “significant and systemic” misconduct at every stage of the mortgage servicing process. The proposed agreement, which must be approved by a judge, comes just shy of two years after five of the

largest banks in the U.S. reached a $25 billion settlement over similar allegations. It promises homeowners ameasure of relief in the form of principal reductions facilitated by Ocwen, which specializes in servicing subprime

or delinquent loans.

According to a complaint filed by the states and the Consumer Financial Protection Bureau, Ocwen took

advantage of homeowners with servicing shortcuts and unauthorized fees, deceived consumers about foreclosurealternatives and improperly denied loan modifications, and engaged in illegal foreclosure practices.

Ocwen — which has tangled with state and federal officials in the past over its servicing practices, including

in Texas and New York — did not respond to a request for comment Thursday.

Under the settlement, Ocwen will provide $125 million in refunds to consumers who lost their homes toforeclosure while being serviced by Ocwen or subsidiaries Homeward Residential Holdings or Litton Loan

Servicing between 2009 and 2012.

In addition, over a three-year period, Ocwen is responsible for seeing to it that $2 billion in principal reductions

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go to homeowners, meaning that Ocwen will have to work with the mortgage holders to reach that goal. IfOcwen doesn’t succeed, the difference between the relief achieved and $2 billion will be assessed againstOcwen as a penalty and distributed to the CFPB and the offices of the states’ attorneys general, CFPB Director

Richard Cordray said Thursday.

Cordray said that while some of Ocwen’s portfolio was part of the 2012 settlement, the majority of it was not,and the new settlement bridges that gap. According to the CFPB, Ocwen is the largest nonbank mortgage

servicer, and ranks as the fourth-largest mortgage servicer overall in the U.S. It has recently acquired smallercompetitors such as Homeward and Litton, and has taken on servicing duties for some of the big banks, the

bureau said.

“Today’s action extends the standards of that settlement to the full portfolio of the largest nonbank servicer,”

Cordray said. “This result furthers the Consumer Bureau’s objective of extending its oversight over the entiremortgage servicing market, including both bank and nonbank participants.”

In January the CFPB’s new mortgage servicing rules will take effect and Ocwen, like other servicers, will be

subject to the stricter standards, which, among other things, ban robo-signing and prohibit borrowers from beingreferred to foreclosure before an application can be reviewed.

“But because of its conduct, as described in our complaint, Ocwen will be subject to standards above and

beyond the rest of the industry,” Cordray said.

He said the agreement aims to solve problems surrounding Ocwen’s handling of modifications in transferred

loans by forbidding the company from initiating or continuing a foreclosure process within 60 days after a loan istransferred to it. During that time, Ocwen must determine the status of any loss mitigation requests already in

process.

Florida Attorney General Pam Bondi estimates that her state’s share of the $2 billion in principal reductions —17 percent — will be larger than any other state’s, based on the number of Florida homeowners who qualify.

The average principal reduction would be $50,000 per loan, she said.

“That is a substantial savings, and it will hopefully help ease their mortgage burden considerably, helping

homeowners to stay in their homes,” Bondi said.

Tom Miller, Iowa’s attorney general, said the agreement was a good sign of the kind of collaboration that canoccur between states and the CFPB on this type of issue.

“Principal reduction works, works well and does not have all the negatives that were feared, the moral hazard

kinds of negatives,” Miller said, referring to a worry expressed by servicers in the 2012 agreement that principal

reduction would reward people who simply don’t pay their mortgages.

Oklahoma was the only state not to participate in the settlement.

Counsel information for Ocwen was not available Thursday.

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The case is Consumer Financial Protection Bureau et al. v. Ocwen Financial Corp. et al., number 1:13-cv-02025, in the U.S. District Court for the District of Columbia.

--Additional reporting by Evan Weinberger, Brian Mahoney and Karlee Weinmann. Editing by Kat Laskowski.

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Case Information

Case Title

CONSUMER FINANCIAL PROTECTION BUREAU et al v. OCWEN FINANCIAL CORPORATION et

al

Case Number

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1:13-cv-02025

Court

District Of Columbia

Nature of Suit

Other Statutory Actions

Judge

Rosemary M. Collyer

Date Filed

December 18, 2013

Companies

Ocwen Financial Corporation

Government Agencies

Consumer Financial Protection Bureau

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