They are AT It Again: Ocwen Securitizing Gov.-Backed Mortgages

Just in case you were wondering if anything is changing in the world of finance, the answer is no, not really. Ocwen here is announcing that they are securitizing mortgages backed by the government, and selling the pieces to investors, who really ought to know better by now.

They are doubling down on a failed strategy in the hope that it will bring the housing market out of its slump. Maybe it will work for a time, but the net result is that the fundamental dysfunction of the financial markets are being ignored. Trust is the basic component of everything that happens in the financial markets and trust is what was broken completely in the mortgage crisis.

They lied, cheated, stole and then fabricated documents out of thin air, forged with the signatures of unsophisticated office workers who were told that if they want a paycheck they need to do what they were told. That gave birth to what was eventually called robo-signing and surrogate signing, forging of signatures and invalid documentation unsupported by either authority or consideration. It looks to me that no lessons were learned on Wall Street except that if you make the crime big enough, nothing will happen to you.

This is why in the Full day seminar on August 25 in Emeryville (San Francisco) we delve into the components of discovery and pleading so that homeowners stop making or allowing records on appeal to contain matters that are in dispute appear as though they are not in dispute.

One interesting question that should be asked is that if the risk of loss is covered by BOTH securitization (diversification) and government backing, what benefits are the consumers getting in rates?

This article from Housing Wire by Jon Prior, is one of many to come as the policy of “doing what works” continues to dominate over “doing what is right.” With these policies in effect the vast majority of homeowners are being left out in the cold and the few who litigate successfully will get reasonable settlements or modifications. The bottom line is that housing as a keystone component of our economy will continue to drag the economy even as we try to spike activity in other sectors.

Ocwen to securitize FHA mortgages

A special vehicle put together by subprime mortgage servicer Ocwen Financial Corp. ($24.38 0.29%) plans to acquire government-backed loans soon and package them into bonds for investors.

Ocwen and its former asset management firm Altisource built Correspondent One last year. The vehicle will buy mortgages originated by Lenders One, which Ocwen estimates wrote 8% of all home loans in the U.S. last year. Lenders One is a national alliance of mortgage bankers, correspondent lenders and suppliers of mortgage products and services.

Correspondent One will also acquire Federal Housing Administration mortgages soon for future securitizations, Ocwen disclosed to investors in its second quarter filing. Currently, roughly 98% of FHA loans are securitized through Ginnie Mae bonds.

The company said Correspondent One acquired roughly $17 million in conventional loans from Lenders One in the first half of 2012.

“Correspondent One has seen significant, positive environmental changes in the correspondent lending market. There has been a contraction in correspondent lending,” Ocwen said, alluding to recent exits by Bank of America ($7.91 0.035%), Ally Financial and others.

In July, Ocwen also began setting up agreements to purchase servicing on newly originated loans. Under the arrangements with undisclosed firms, lenders would sell the loan to either Fannie Mae or Freddie Mac or issue a Ginnie Mae security backed by FHA loans. The servicing on those loans would automatically transfer to Ocwen.

The company serviced nearly $128 billion in mortgages as of June 30, nearly double the $70 billion portfolio it held one year prior.

The funding pipeline for Correspondent One and these special arrangements reached nearly $195 million at the end of July, Ocwen said.

Ginnie may raise its minimum net-worth requirement for issuers of its FHA-backed mortgage bonds, American Banker reported this week. Smaller lenders are becoming shut out and could turn to more creative and private deals like the one Ocwen has set up in order to fund their new loans.


32 Responses


    Mortgage re-defaults increasing at an ‘alarming rate’.

    for those of us with a HAMP, sure looks like the servicer’s and banks can & do redefine the terms to a supposedly permanent re-modificaiton.

    yeah, i am worried. and of course “OCWEN” seems to be front and center, again.

    why give someone a HAMP and then not honor it and the federal gov do nothing (its their program, our taxes)?

  2. >>A special vehicle put together by subprime mortgage servicer Ocwen Financial Corp. ($24.38 0.29%) plans to acquire government-backed loans soon and package them into bonds for investors.

    i really don’t see how OCWEN and the many other banks are gettting away with this – again. seems homes owners and legal professionals aren’t able to tame this Goliath either.

    i’m worried OCWEN will not honor the fixed loan agreement signed 2yrs ago with AHMSI. i’m told they have to as long as i pay my monthly mrtg. but look on the internet and see how many people have/are being duped by this company after buying their loan. and their website doesn’t support online payments!

    maybe you legal types could form a lawyer revolution or something and take these crooks down.

  3. just got a letter from Homeward (AHMSI) that my loan is now to be serviced by OCWEN. i see on ripoff report one can’t make payments on line to them. i went through hell to get a refi and now this. should i be worried?

  4. It’s like Ocwen is trying to bail itself out now instead of asking for another handout, which it knows it won’t get.

    No major consequences for them, so they keep steamrolling ahead.

    Sad state of affairs.

  5. totally off point
    a gold ETF bank disintegrated yesterday in Poland—guy sold interests and took savings based on a non existent pile of gold—note the rise in gold price today–the VIX is down but gold up–hmmmm

    does this mean dollar devaluing–or volume gold shrinking

  6. Assange and his group will expose more and more. And I expect a lot of developing countries will line up to grant him asylum: too much dirt to pass on unearthing… and they all have an axe to grind against the western countries. It’s going to get good.

    Guest Post: Assange Or Corzine?
    Submitted by Tyler Durden on 08/16/2012 15:34 -0400

    Priorities are a bitch.

    The United States won’t prosecute Corzine for raiding segregated customer accounts, but will happily convene a Grand Jury in preparation for prosecuting Julian Assange for exposing the truth about war crimes.

    From the New York Times:

    A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.

    Corzine is considering opening a new hedge fund, though the notion that anyone — even a slack-jawed muppet happy to buy whatever Goldman ‘s prop traders want to sell — would seed Corzine money so he can trade or steal it away seems absurd — rather like putting a child molester in charge of a day-care.

    But nobody knows how much dirt Corzine has on other Wall Street crooks. Not only may Corzine get away with corzining MF Global’s clients’ funds, he may well end up with a whole raft of seed money to play with from those former colleagues and associates who might prefer he remain silent regarding other indiscretions he may be aware of.

    But the issue at hand is the sense that we have entered a phase of exponential criminality and corruption. A slavering crook like Corzine who stole $200 million of clients’ funds can walk free. Meanwhile, a man who exposed evidence of serious war crimes is for that act so keenly wanted by US authorities that Britain has threatened to throw hundreds of years of diplomatic protocol and treaties into the trash and raid the embassy of another sovereign state to deliver him to a power that seems intent not only to criminalise him, but perhaps even to summarily execute him. The Obama administration, of course, has made a habit of summary extrajudicial executions of those that it suspects of terrorism, and the detention and prosecution of whistleblowers. And the ooze of large-scale financial corruption, rate-rigging, theft and fraud goes on unpunished.

  7. @DCB,

    “Is there no integrity left—they truly think this woman on her own sent customer money away???”

    Low-hanging fruit. At some point though, you run out and you have to start going higher and higher in order to harvest something, anything. O’Brien has no money to fill anyone’s coffers and, as we know, America is broke. Politically, she may be a good choice to make an example but she ain’t gonna fix what ails America. Regulators will have to go after the heads. No two ways about it. Just a question of time. Hang on a little longer and you’ll see it. i promise. It’s called Divine justice. it’s never failed before. Can’t see why it should fail this time…

    And I promise that Robotman will have to produce his taxes. I’m waiting for that too.

  8. From post:

    “Ginnie may raise its minimum net-worth requirement for issuers of its FHA-backed mortgage bonds, American Banker reported this week.”

    The misrepresentation in that statement is not harmless. FHA insures loans, it’s true. FHA does not back bonds. The way it is cast would lead to a faulty conclusion by the reader: that if the payor on the note defaults, FHA will just step right in under its insurance and pay the bondholder. NOT.
    First of all, the FHA insurance probably applies only to net loss. Throw out sec’n for a minute. If NoFreedom Mtg makes a loan and kept it, for ease, NoFreedom is the loss payee. Think NoFreedom or its alleged successors send in a form to FHA showing the bondholders as loss payees? HA! Not sure FHA would do anything other than disregard it, long and short, anyway. They only deal with FHA approved entities. Period. (which is why some bankster-servicer’s
    claims were denied last year -it was not an FHA approved servicer) NoFreedom’s successors must have to send in a loss-payee change in order to get that little blue paper known as an MIC = mortgage insurance certificate. It may be all electronic these days for all I know, but they need the current insured on the mic even if they’re no longer little blue pieces of paper.
    FHA insurance kicks in on the net loss after the re-sale after foreclosure. If it’s otherwise (pays on default), FHA is just too dumb. Even if FHA insurance does kick in at the instant of the payor’s default, making them just too ignorant with taxpayer’s moolah, that does not make the bond, the derivative, insured or backed by FHA. And we know who’s going to end up with that insurance.
    They ought to be outlawed from saying this stuff. And it should be FHA outlawing it.
    I’m somewhat nervous about the formation of what I see as an
    umbrella group mentioned in this post. Now what are they trying?


    Is it just me or this circular?
    “As the government’s focus shifts away from Mr. Corzine, it remains interested in a lower-level employee in the firm’s Chicago office, who was known as the “keeper of the books” at MF Global. That employee, Edith O’Brien, oversaw the transfer of customer money during the firm’s final week, when the client cash vanished into the hands of banks, clearinghouses and even other customers.

    Ms. O’Brien, an assistant treasurer, has declined to cooperate with authorities without receiving immunity from criminal prosecution. The government is hesitating to grant her request, suspecting that Ms. O’Brien is the highest-ranking employee with potential liability, one of the people involved in the case said. Ms. O’Brien has not been accused of any wrongdoing.

    I JUST CANT STAND IT? How can the enforcement people? Is there no integrity left—they truly think this woman on her own sent customer money away?????

    The immunity has to be conditioned on something useful–if they want evidence they must get it—this undermines the integrity of the entire administration—-a democrat gets away with murder—

  10. B of A can’t get their modification machine churning BECAUSE THEY’RE TOO DAMNED BUSY FORECLOSING ON EVERYONE!

    And the AGs look on with their palms in the air….

  11. NOPE—you are plain right—nobody is gonna blame them for anything–corzine was testing the limit—-he got away with stealing a billion and bolder than brass–no fear–hat proves it—the contrast between assange and corzine on same day is compelling

  12. @DCB,

    it was a figure of speech…

  13. Can’t blame them for trying to push the envelope and see if they still can get by with blaming, scamming, shamming, lying, stealing and cheating.???????????????

    If cant blame them for what the DID DO—and cant blame them for what they ARE DOING

    And cant blame them for what they INTEND TO DO

    whats left?

  14. You mean his “FAMILY” as in mob–or family as in children—-im sure they got independently wealthy ——“considering” it now before election is spitting in the face of the supposed enforcement community–

  15. Can’t blame them for trying to push the envelope and see if they still can get by with blaming, scamming, shamming, lying, stealing and cheating. It’s served them so well for so long, it’s become a second nature…

    Bank Of America Fails To Hold Up Its End Of Foreclosure Fraud Settlement

    By Pat Garofalo on Aug 16, 2012 at 5:15 pm

    When it comes to getting borrowers through foreclosure prevention programs, Bank of America has lagged the other large mortgage servicers in the country for years. Initially, the bank blamed its borrowers for the lack of success, before eventually acknowledging that its mortgage modification processes are wholly inadequate.

    According to a report today in Bloomberg News, things still haven’t changed:

    Bank of America Corp., plagued by complaints about customer service in its mortgage unit, said it hasn’t yet refinanced a “significant number” of loans as part of the industry’s $25 billion settlement of foreclosure abuses.

    The lender blamed the “time required to underwrite” loans for why it hasn’t completed many of its planned $1 billion in modifications, according to a filing earlier this month. By contrast, JPMorgan Chase & Co. (JPM) said last week it has already finished a “significant portion” of its $500 million program and Wells Fargo (WFC) & Co. said it expected to complete its $900 million requirement two years ahead of the 2015 deadline.

    Under the terms of the $25 billion foreclosure fraud settlement that the nation’s five biggest banks cut with a coalition of attorneys generals and the federal government, the banks are required to provide a certain amount of relief to struggling homeowners. So far, Bank of America has failed to keep up.

    Bank of America has managed to produce some spectacular messes when it comes to foreclosures, including foreclosing on a homeowner over an 80 cent typo. The bank also foreclosed on a home that no longer exists, incorrectly repossessed a pet parrot, and foreclosed on an elderly couple for paying their mortgage too early.

    Meanwhile, one whistleblower alleged that the bank intentionally blocked homeowners from getting federal mortgage aid. But, remember, the bank will give you a modification if you promise to erase the mean things you said about it on Twitter.

  16. the chinese did reverse mergers of crooked ops with pumped numbers into existing public penny stocks already issued to use SEC loopholes—then resold the shares at big marups—took the money and are now returning to china with us investor money—do you think jamie dimon got burned or a retired teacher and dr schmedlock?

    once again SEC at the ready—falling all over itself to let the chinese steal us citizens blind—after the theft occurs —sec says–maybe we need some us auditor–apparently a condition of employment at sec was demonstrate no greater than IQ 85—or crooked as the proverbial dogs hind leg——-ask corzine i guess which it is

  17. @DCB,

    Corzine is only “considering” starting a new hedge fund and he is currently playing with his family’s money. Well, the fruit doesn’t fall far from the tree or, as we say in my country, cats don’t birth dogs. If his family is willing to enable his addiction, so be it. I doubt serious investors will touch him with a 20 foot pole. The Chinese and the Russian won’t for sure!

    Come on! He wasn’t declared criminal but careless. Well, careless with other people’s money is actionable. The guy is being delusional. they all are. it is crumbling and that’s that. And quite frankly, I don’t even want to see them all in jail. Not on taxpayers’ dime. I just want to see them to lose everything, be permanently barred from handling finances and have to find an honest job in a manufacturing plant or a farm somewhere, with hefty fines to repay for the rest of their lives.

  18. i think assaange hiding in ecuador is less telling than corzine starting a hedge fund with stolen money—-at least it will be stolen later if it hasnt already

    the banks out in the midwest are having a field day—now they are siezing farms that were burnt out by the drought—–anything here sound familiar–i know you are not born here but youv seen grapes….

  19. Chinese money is going bye bye… WS is going to find itself is a real deep doodoo. Let’s just sit and wait. The collapse is now manifesting one day at a time.

    BEIJING (AP) — Just a few years after Chinese companies lined up to sell shares on Wall Street, a growing number are reversing course and pulling out of U.S. exchanges.

    This week, Focus Media Holding Ltd., announced its chairman and private equity firms want to buy back its U.S.-traded shares and take the Shanghai-based advertising company private. The deal would value Focus Media at $3.5 billion, according to financial information firm Dealogic.

    Smaller companies also are withdrawing from U.S. exchanges. In a sign of official encouragement, a Chinese business magazine said a state bank has provided $1 billion in loans to help companies with listings abroad move them to domestic exchanges.

    The withdrawals follow accusations of improper accounting by some companies and a deadlock between Beijing and Washington over whether U.S. regulators can oversee their China-based auditors.

    Some Chinese companies say they are pulling out of U.S. markets because a low share price fails to reflect the strength of their business. Withdrawing also eliminates the cost of complying with American financial reporting rules.

  20. @DCB,

    Why do you want to send me to Ecuador? No hablo espanol. No intiendo nada!

    But i definitely like the stand they took against the UK. Assange has been granted asylum by Ecuador!!! Yeppeeeeeeeeeeeeeeee! He can now resume snooping around and disclosing all the malfeasance of the banks.

    This is getting really good! With all that truth coming out, we’re gona be so free, i can’t stand it!

    Julian Assange granted asylum by Ecuador – live coverage

    LiveGet the latest news and reaction as WikiLeaks founder Julian Assange’s application for political asylum is accepted by Ecuador’s foreign minister

    Ecuador has granted asylum to Wikileaks founder Julian Assange two months after he took refuge in its London embassy while fighting extradition from the UK.

    It cited fears that Mr Assange’s human rights might be violated.

    Foreign Secretary William Hague said the UK would not allow Mr Assange safe passage out of the country.

    But Ecuador’s Foreign Minister Ricardo Patino said his government would seek to negotiate with Britain over arrangements for Mr Assange to leave.

    “We don’t think it is reasonable that, after a sovereign government has made the decision of granting political asylum, a citizen is forced to live in an embassy for a long period,” he said.

    Mr Assange took refuge at the embassy in June to avoid extradition to Sweden, where he faces questioning over assault and rape claims, which he denies.

    Mr Patino had accused the UK of making an “open threat” to enter its embassy to arrest Mr Assange, an Australian national.

    Ecuador’s foreign minister Ricardo Patino: “We believe that his fears are legitimate”

    Mr Assange said being granted political asylum by Ecuador was a “significant victory” and thanked staff in the Ecuadorean embassy in London.

  21. I give up. Its hopeless. Jon corzine is starting up a hedge fund. People wonder who will invest with him–even CNBC condemns it—but then thy never found the $billion so that just went missing.

    If this can happen –there is not a shred of justice–his investment victims havent even gotten an acctg of what to deduct as a theft loss.
    Its true Corzine hedge fund: ENRAGED you better figure where’s Ecuador?

  22. Obama, Bank Enabler In Training, stumping on October 13, 2008:

    Finally, this crisis has taught us that we cannot have a sound economy with a dysfunctional financial system. We passed a financial rescue plan that has the promise to help stabilize the financial system, but only if we act quickly, effectively and aggressively. The Treasury Department must move quickly with their plan to put more money into struggling banks so they have enough to lend, and they should do it in a way that protects taxpayers instead of enriching CEOs.

    So, Obama played along with the storyline and endlessly wrote OUR checks to Wall Street under the threat of mass lending seizures….and here’s a recently released report on that venture, that states it was an abysmal failure:

    We also examine the relative changes in business lending by banks that did, and did not, receive TARP funds from the U.S. Treasury following onset of the crisis in 2008. Our analysis reveals that banks receiving capital injections from the TARP failed to increase their small-business lending; instead, they decreased their lending by even more than other banks. This evidence shows that the TARP’s Capital Purchase Program was largely a failure.

    So what did we get for our money and suffering? Surely Romney will save the day. Oh wait…Romney’s purchasers…I mean, top campaign contributors:

    1. Goldman Sachs – $636,080
    2. JP Morgan Chase – $502, 874
    3. Morgan Stanley – $476,300
    4. B of A – $465,850
    5. Credit Suisse Group – $421,310

    We have to end this thing before it goes on any further.


    ROMNEY sure he paid at least 13% taxes last decade—-thats the sales tax rate in NYC—and Caymans

    I think my views are changing with them putting up this Ryan with his plan to hand out checks for a few devalued dollars instad of medicare—and “privatize” the social security–sure nobody affected over 50, or was that 60 or 68—–that number is really a variable—obviously the Ryan thing todo would be just award my upkeep contract to the lowest bidder—-give them a lump sum payment from treasury with newly minted Fed notes as payout of my social security —let Jamie Dimon hire some outsourced Indian to administer my payouts of monthly upkeep and meds—–sure i believe they can get by on 25 cents per day there—thats their poverty line—-so i should easily be able to get by on $1.25 with room to spare

    ryan was an “in your face” selection—–worse I think that romney meant it when he said “let me introduce you to the next President of the United States” [in 2016]

  25. @Poppy,

    “If they are not punished now…” Not only have they not been punished but, by the size of their bonuses over the past 5 years (those we know of, of course. They’ve been getting bonuses since long before you and i were ever born…) banks and mortgage servicers have, in fact, been systematically rewarded for such a job well done. Why should they make amend and change their ways?

    Don’t anyone tell me that fees and fines work. The only thing that works is to make a few examples of what happens to cheaters and liars.

    And until people like us stop paying what they are alleged to owe (No, DCB, it no longer is immoral. We paid forward when we gave all that public money to them, no question asked) and “investors” decide to go put their money elsewhere, it will continue.

    have any idea what sort of names put their current trusts under?

    just a thought–but if they use obscure trust names—then maybe fishy

    OCWEN—is it private company—–?

  27. If they privatize social security it means they put it in the hands of these creeps, once again. What do you think is going to happen? Betting, risky behavior, etc…with impunity. If they are not punished now, do anyone think if they steal all of the social security money they will be then? NOT! They are being rewarded for lying, cheating and stealing other peoples’ money. What a great country…

  28. I have Ocwen….bums, absolute bums….everything they give you, tell you and have on ledgers are lies. Be very careful with them. They have been trouble for me since day ONE!

  29. This just proves that investors are just as ignorant as home buyers.
    Nothing has changed. As long as the Federal Reserve keeps interest rate artificially low, investors are desperate to invest in anything that yields more than the published inflation rate “it’s much higher” and they make 0% if left uninvested.
    I am sure they have a new line of assurances for the underwater pension fund manager.

  30. maybe it would be interestig to examine the sec filing and see if they are originating ARMs ——and if they are filing the loan schedules manually or electronically—and if manually—are they really doing the filing—–SEC used to scan the manual filings and they would show up on the docket as a very obvious large pdf——however after i began asking questions and requesting certified copies of these filings—they removed the manually filed docket material —thus filed and unfiled “manual” listings appeared the same after that—early 2010

    this covered up the missing loan schedule issue—–nothing to do with privacy—more to do with secrecy re failure to file and SEC permitting that fraud on investors to occur. This is about as bad as I can imagine in agency conduct—–SEC is supposed to be there to protect investors: after granting permission to the fly by nite crowd of small securitizers to make “manual filings” —rather than as part of the electronic submissions of the securitization docs–normally required, then SEC never made sure the filing was made—then covered it up

    this enabled crappy loans to be included in the securitations—-it enabled air loans–it enabled overvalued loans—one could look at an address–google earth it–and say wow—that is a 1500 foot ranchhouse in podunk by the railroad tracks—not worth $750,000

    SEC did this to the investors–then covered it up so neither homeowners nor investors could see what was included in the actual filed manua submissions—-and concealed the complete lack of filing by the worst predators in 60% of their securitizations—

    after SEC pulled the manually filed ones [40%] that were filed off its site edgar—–you cant tell whether the trust was filed or not—-you cant look up your address on the trust in which it was placed—you have to beg for a copy—probably by now file FOIA

    How much worse can a govt agency be? SEC had little action—little responsibility –except posting things online—–and they either couldnt bother to follow up wiuth unfiled stuff—-or at least individuals or the agency itself conspired with the non-filers—the latter seems more credible in light of the agency conduct to conceal the matter

    no matter how much one complains—who has ever heard of any press on this—or govt investigation of this? none—its just really sad–and these guys supposedly are the front line to prevent us being robbed of IRA/410K———-?????

    Sure lets go with Ryan’s privatizatrion of social security—put every last nickel in SEC’s capable protective hands

    Question is are they doing it again?

  31. Whybaren’t the sessions taped and
    made available for sale

    San Francisco might as well be the moon for such as I

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