TheMReport

54 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T SERVICING THE LATEST SERVICING LOCAL EDITION More Modifications Focusing on Sustainability Report finds combination modifications the most common option. M ore mortgage modi- fications are focusing on the sustainability of a loan in addi- tion to focusing on affordability, according to a recent report from the Office of the Comptroller of the Currency (OCC). The OCC's Q1 Mortgage Metrics report found that out of the 34,481 modifications completed by the seven largest banks during Q1— Bank of America, Citibank, HSBC, JPMorgan Chase, PNC, U.S. Bank, and Wells Fargo—91 percent of them were of the "combination modification" variety. Combination modifications include multiple actions that affect both the afford - ability and sustainability of a mort- gage loan. Actions that may affect sustainability may include interest rate reduction and term extension, according to the OCC. The servicers completed an additional 2,681 modifications that received only a single action, the OCC reported. The total number of combina - tion modifications during the first quarter came to 31,450; out of those, 93 percent of them in- cluded capitalization or delinquent interest fees, according to OCC. Approximately 81 percent includ- ed an interest rate reduction or freeze while 88 percent featured a term extension. Finally, 8 percent of combination modifications in- cluded some amount of principal reduction, while 13 percent of them had some amount of princi- pal deferred, according to OCC. Out of the total number of loan modifications completed during Q1, about 80 percent of them—30,028—reduced the pre- modification monthly payment of the loan. Servicers also reported that about 6,058 modifications that were completed during the third quarter of 2015—which were at least six months old as of March 31, 2016—were either 60 days or more past due or in the process of foreclosure. Overall, the 58,921 new foreclo - sures initiated by servicers in Q1 was a 29 percent decline from a year earlier, and the percentage of mortgages that were current and performing rose from 94.2 percent at the end of Q1 2015 up to 94.9 percent at the end of Q1 2016, according to the OCC. The report covered approximately 21.1 million first-lien mortgage loans with $3.6 trillion in unpaid principal balances, and covered about 38 percent of all outstanding first-lien residential mortgage debt in the U.S. Ocwen Agrees to Settle Compliance Suits THE SERVICER WILL PAY $15 MILLION TO U.S. AND $15 MILLION IN PRIVATE CITIZEN ATTORNEY'S FEES. ATLANTA // Atlanta-based mortgage servicing firm Ocwen Financial has agreed to pay $30 million "in order to avoid the uncertain outcome of two trials" revolving around a pair of lawsuits that accused the company of falsely certify- ing its compliance with federal mortgage programs. The cases—known as the Fisher Cases because of whistle- blower Michael Fisher—stem from 2012 accusations that Ocwen lied to the Federal Housing Administration about its compliance with Home Affordable Modification Program (HAMP) rules, as well as FHA insurance programs. According to Ocwen's filing with the Securities and Exchange Commission on June 22, those suits sought dam - ages intended to triple the total HAMP and FHA payments made on Ocwen-serviced loans, or roughly $5,500 to $11,000 per alleged false claim. Ocwen's defense, according to the filing, was an assertion that it had "sound legal and factual defenses" to the allegations. Ocwen, however, announced that it would instead settle by paying $15 million to the United States—which made the HAMP and FHA payments on the Ocwen-serviced loans— and another $15 million for "private citizens' attorneys' fees costs." As part of the settlement, the company will not admit to any liability or wrongdoing for the alleged actions. According to the SEC filing, the Department of Justice agreed to seek final approval for the settlement. "We have accrued $30 million with respect to the settlement in principle, because we believe this amount is both probable and reasonably estimable based on current information," Ocwen wrote in its SEC filing, adding, "There can be no assurance that the settlement in principle will be finalized and approved by the United States and the Court." In the event the settlement in principle is not ultimately fi - nalized and approved by the Department of Justice, the Fisher Cases would continue and "we would vigorously defend the allegations made against Ocwen," the company wrote. Ocwen spokesperson John Lovallo issued the following statement: "We are pleased to have reached an agreement in principle to resolve these two cases. Even though we have solid legal and factual defenses, we decided to settle to avoid prolonged and distracting litigation and the associated legal costs. Ocwen believes the proposed settlement is in the best interests of the company, its borrowers, employees and share - holders. We look forward to returning our full focus to what we do best—helping homeowners stay in their homes." "Even though we have solid legal and factual defenses, we decided to settle to avoid prolonged and distracting litigation and the associated legal costs." —John Lovallo, Ocwen spokesperson 30,028 Out of the total number of loan modifications completed during Q1, about 80 percent of them—30,028—reduced the pre-modification monthly payment of the loan.

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