July 2012

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 52 of 84

THE LATEST SERVICING Fitch Knocks Down F quisition by Ocwen Financial Corp. The agency cut Litton's prod- itch Ratings downgraded mortgage servicer ratings for Litton Loan Servicing, LLP, following Litton's ac- uct servicer ratings in a number of categories, dropping them from RPS1 to RPS3. In addi- tion, Litton's servicer rating for manufactured housing product dropped to RPS3 from RPS2, and its residential special servicer rat- ing fell to RSS3 from RPS1. These declines illustrate a fall from Fitch's highest standards of servicing to average. Litton's Servicer Ratings Citing "insufficient information," Fitch downgrades the servicing company, giving Litton an "average" rating. in light of Ocwen's acquisition of Litton last year. Fitch said in a statement that there was "insuf- ficient information regarding the Litton platform being provided to Fitch to maintain the rat- ings following the acquisition of Litton by Ocwen." Litton's ratings were placed The ratings downgrade comes on Rating Watch Negative in June 2011 after it was announced that Ocwen would be acquiring Litton. The financial company purchased Litton from Goldman Sachs in a $263.7 million deal. Settlement Monitor Talks Selection Process for Primary Firm North Carolina-based firm wins appointment, strong support from the leader of servicer compliance for the government's settlement proceedings. T Large Banks Seeking nearly $100 million in damages, the organization moves forward with a major lawsuit stemming from lending activities in 2009. T to recoup some $92 million for two banks that failed in 2009. The suit alleges that banks like the big four are responsible for misrepresenting mortgage-backed securities to Citizens National Bank and Strategic Capital Bank. Speaking with MReport, FDIC including Bank of America, Citigroup, Deutsche Bank, and JPMorgan Chase. Reuters reported the FDIC seeks he FDIC reportedly has filed suit against a number of large bank holding companies, filed the suit on behalf of the agen- cy, according to Reuters, seeking a total $77 million in federal districts in Los Angeles and New York. The news outlet said that Bank spokesman David Barr declined to comment on the story. Law firm Grais & Ellsworth of America and Citigroup appear as the only defendants cited in all three cases, with Deutsche Bank and JPMorgan in two. Ally Financial, Credit Suisse Group, HSBC Holdings, the Royal Bank of Scotland Group, and UBS each reportedly appear in other suits. FDIC Reportedly Files Suit Against Several monitor, a widely respected banking and housing finance chief, takes on new help from accounting and legal firms. Joseph A. Smith Jr., onetime he Office of Mortgage Settlement Oversight continues to evolve as the Federal Housing Finance Agency director-nominee, now responsible for overseeing ser- vicer compliance under the $25 billion settlement, revealed that BDO USA, LLP, would serve as the Raleigh, North Carolina- based office's eyes and ears. In a recent interview with ing a [primary professional firm] because that gives me what I need to complete this work in a timely and effective way," he adds. Speculation ran high on MReport, Smith stated the selection process was "fairly expensive and exhaustive," en- tailing requests for statements of interest from 40 or more ac- counting firms. It took a series of interviews and sit-downs to clear finalists. The benchmark: whether how Smith and his office would gauge the abilities of servicers to meet terms and conditions in the lead-up to the selection of BDO. The monitor, one full-time the secondary firms. We're going to do that at the same time that we approve works plans," the reporting processes and procedures servicers will need to undertake in order to satisfactorily meet settlement terms and conditions. "I feel really great in select- they could work well with the monitor himself. "We selected [BDO] and firm will work alongside new office personnel, secondary firms, and legal teams as Smith reviews the transmission of funds from the big five—Ally Financial, Bank of America, Chase, Citigroup, and Wells Fargo—to coffers in 49 states and the federal government. He tells us the next move the office will make is "hire The national accounting " he says. they're working right now—like a house is on fire, staff member, other contrac- tors, and other firms will personally oversee billions in settlement funds over the next three to four years. These include $10 billion in princi- pal reductions, $7 billion in forbearance for unemployed homeowners, $3 billion in refinance opportunities for current homeowners, plus an- other $5 billion in payments to government authorities. Asked how the firm will interact with servicers, Smith elabo- rates by saying that the office continues to hold weekly calls with bank representatives. "I think they can expect to continue to be engaged with me on a weekly basis," he tells us. "The same will be true of BDO." THE M REPORT | 51 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET

Articles in this issue

Archives of this issue

view archives of TheMReport - July 2012