NYDFS Forces OCWEN To Show CEO Erbey Shown The Door

James Sterngold and Alan Zibel at the Wall Street Journal report that the New York Department of Financial Services and Ocwen Financial have reached a settlement in the NYDFS’s claims of servicing fraud against New York homeowners.

As part of the deal, Ocwen also will pay $150 million toward New York housing programs and aid to foreclosed homeowners and appoint two outside directors subject to state consultation. New York State will also appoint a new outside monitor to scrutinize nearly every aspect of the company’s operations to insure they are changed to better protect borrowers.

Under an agreement, Ocwen will acknowledge that they did not properly deal with distressed homeowners and may have saddled them with excessive charges from affiliated companies and failed to maintain adequate systems for servicing hundreds of billions of dollars in mortgages.

The piece de resistance in the deal is that Ocwen’s Board of Directors gave exiting NYDFS Benjamin Lawsky the proverbial head of Ocwen CEO William Erbey. Errbey, who built Ocwen into the powerhouse servicer it is today is being forced to resign. This not only benefits New York homeowners but for homeowners nationwide with mortgages serviced by Ocwen. MFI-Miami’s sources at Ocwen say Erbey called the shots.