Ocwen Stock Is Riskier Than Investors Know

the truth is there for anyone who wants to see it, which means that the entire prospect for Ocwen is that of an actor with only one foot on the edge of a cliff.

This article represents the analysis and opinion of the writer. Take no action with consulting a legal and financial adviser. 

The common stock of Ocwen Loan Servicing is traded actively. The company is backed by the largest banks in the world and its reported income is generally rising. BUT Ocwen has also been positioned by its backers (Goldman, BofA, Citi, etc.) to be thrown under the bus if the going gets rough.

The stock is currently valued based upon the presumption of economic viability because all the mortgages claimed to be servicing are generating revenue and Ocwen is receiving revenue and making a profit.

But another scenario is emerging from the shadows even if it appears unlikely. The number and percentage of homeowner successes in foreclosure is increasing. Those successes are all based upon one single fact, whether explicitly stated in court findings or not — that the named creditor on whose behalf Ocwen says it is collecting was not the owner of the debt. Hence Ocwen’s claims, notices, and testimony are not based upon its relationship with such named creditors or claimants.

If it is further revealed that Ocwen was in fact acting at the behest of an investment bank rather than a trustee of a named REMIC trust, the result could be catastrophic for both Ocwen and the investment bank. That scenario occurs if the investment bank was giving instructions on loan administration and foreclosure while it had no financial interest in the underlying debt.

That would mean that Ocwen never had any nexus to the debt owner. And that in turn would mean that Ocwen, in many and perhaps most cases, does not have any right to administer or service the loan “portfolio” it claims to be managing. And it would mean that all “modification” applications were improperly directed and processed. It could also mean that Ocwen is being paid to pretend it possesses such rights.

Ocwen could be the target of even more lawsuits alleging fraud and other intentional torts. On a more granular level the absence of any agency relationship with an identified creditor who owned the debt by reason of having paid for it would disqualify an Ocwen representative from testifying as the robowitness and would fail the exception test to hearsay objections as to their records, since they would not be records of either the named claimant nor of the actual owner of the debt.

If the facts are revealed and finally accepted by American courts, most foreclosures would grind to a halt. American law requires that paper title and actual payment of value for the debt must be combined into one party before any foreclosure action is filed. Under the weird securitization scheme adopted by the major investment banks no such party exists. The whole point of what they were doing was to sell parts of the debt for amounts vastly exceeding the market value of the actual debt.

By using Ocwen as the front for enforcing foreclosure actions, Ocwen is primed to be the one thrown under the bus wherein the inevitable finger pointing from investment banks will be directed at Ocwen and other servicing entities like it. Acting without authority and knowingly contributing to windfall illicit gains from foreclosures also places Ocwen at risk for actions by Attorneys General of all 50 states and several regulatory authorities.

The combined administrative and legal risks vastly exceeds the market valuation of the entire company. If and when these facts are finally accepted in the courts, Ocwen would be forced into bankruptcy and would most likely file under Chapter 7 or Chapter 11 as a liquidation in bankruptcy. Either way, the outlook for  the valuation of Ocwen shares would be bleak at best.

If somehow the investment banks are either able to maintain the ruse or continue the current governmental attitude of wink and nod, none of those scenarios are applicable. But the truth is there for anyone who wants to see it, which means that the entire prospect for Ocwen is that of an actor with only one foot on the edge of a cliff.

10 Responses

  1. Not getting any more emails….checking to see if he blocked me?

  2. OK — Wells Fargo Home Mortgage — remains the only residential borrower servicer. Wells Fargo Bank N.A. is the servicer only for RMBS — The association or disassociation remains. Check the rating agencies.

    Wells Fargo — doesn’t matter what name they use. Congress does not like them.

    But they will shut down anyone who challenges. They claim the economy will collapse if exposed.

    Politics in la- la land.

    Their life against ours. That is the way it is.

    Power is huge.

  3. @ Kalifornia ,

    With WELLS FARGO BANK, N.A. as plaintiff and defined as a depositary bank how do they assert damages as they are simply an intermediary?

    @ Usedcarguy ,

    I was a Stopa client ,, great guy … asked too many pointed questions , wasn’t afraid to object, made the banks nervous… I’d like to meet him again for lunch and find some way to give him his due vengeance.

  4. It is quite normal as is the case in all MBD and really all other stock traded on the stock casino that the value thereof is determined by “the greater fool” to pay more for it than you did – it WILL break and the time is close.

  5. Wells Fargo Home Mortgage was absorbed by Wells Fargo Bank, N.A., but I forgot the date.
    Anybody hear about Mark Stopa?

    TALLAHASSEE – The Florida Supreme Court has permanently disbarred Pinellas County lawyer Mark Stopa, once among the state’s best-known foreclosure defense attorneys. The court late last week also ordered Stopa to pay $31,620 in costs related to the Florida Bar’s investigation of him for numerous violations of Bar rules.

  6. Ocwen has been using defaulted loans to divert trust funds to its own master servicing fund. It maintains two sets of books: one reported to the trusts with paid down balance using servicer advances even though defaulted loans no longer in the trusts; other set of books with accrued interests billed to the to-be foreclosed on homeowners. The difference is to be realised at foreclosure. I have proof with my own mortgage. My loan was reported by Bloomberg had balance of $239K while they are trying to collect $450K from me. The difference is to be pocketed by Ocwen.

  7. @ ALL

    An example:

    a) WELLS FARGO & COMPANY is exclusively a BANK HOLDING company;

    b) WELLS FARGO BANK, N.A. is a depositary bank; and

    c) WELLS FARGO HOME MORTGAGE is a separate corporation — NOT A DEPOSITARY ENTITY — performing NON-BANKING ACTIVITIES such as servicing.

  8. Excellent article Neil!!! May I just add that since 2017, Ocwen has not acted as Master Servicer for anything. By letter to the SEC, Ocwen’s Master Servicing rights were sold to New Residential Investment Corporation (NRIC) n 2017, But, NRIC did not have a licence to service. So they formed New Residential Mortgage Corporation who obtained a license to service. Ocwen then became a sub-servicer (Oh – those Powers of Attorney? Now worthless). Ocwen then merged with PHH Mortgage in NJ, and sub-servicing went to PHH (those Powers of Attorney – again, worthless). PHH now operates under another subsidiary – New Rez LLC.

    Thus, Ocwen has been slowly disposing of everything. I think they only do reverse mortgages now — watch out for those as foreclosures are increasing on reverse mortgages.

    Excellent point too Neil -QUOTE – “If it is further revealed that Ocwen was in fact acting at the behest of an investment bank rather than a trustee of a named REMIC trust, the result could be catastrophic for both Ocwen and the investment bank. That scenario occurs if the investment bank was giving instructions on loan administration and foreclosure while it had no financial interest in the underlying debt.”

    Your “Ifs,” Neil, may just come to fruition.

    THANK YOU — And, Happy New Year to my Jewish friends!.

  9. Counsel Garfield has accurately and trenchantly described what Ocwen, and its various backers, are up to. As does poster John Reed. What I constantly see is some attorney pleading that Ocwen Loan Servicing LLC is “an indirect subsidiary entity of Ocwen Financial Corporation.” Thus there is yet again even another “Ocwen” entity in that stream who remains unidentified. The foreclosure atty. then goes on to say the plaintiff is “Ocwen.”

    By describing all the Ocwen entities with one shorthand, as “Ocwen,” these attys carefully avoid pointing out that their witness, who is inevitably an employee of Ocwen Financial, is NOT an employee of the plaintiff corporation Ocwen Loan Servicing. The witness at trial first learned of the case a few weeks before trial – as short as two weeks. He claims to have studied the “spreadsheets” on some computer monitor, and the atty tries to make that part OK by the corporate records rule. The problem is that the “records,” if you can call them that, are screen entries with some other corporation! And this guy never worked there! He knows nobody at that other Ocwen-named entity, does not have any knowledge, even vague gossip ideas, of how the data entry system works, who inputs what, who verifies what, and so forth. He is a zombie, basically the “travelling foreclosure man (or woman),” who goes from Courtroom to Courtroom telling the same coached gossip. To put it awkwardly, he is a paid professional liar.

    It is my view that you cannot, at trial, let these guys start in on their testimony stream. So you have to raise Objections and challenge his credentials, then ask to inquire on voir dire right out of the gate as to just who signs his paychecks and where he physically works out of. If you don’t stop them first, the Judge is likely to just let him prattle on and let the foreclosing atty lead him through a morass of paperwork which he knows nothing about but is being slid in under that “corporate records rule.” Except: “Mr. Jones, just exactly what corporation maintains those records? What employee of which Ocwen entity does the data inputting? Oh, it is the loan-servicing corporation? But you testified you worked at Ocwen Financial Corporation? Is that not a different Corporation? It is? Your Honor, I object to this witness being allowed to testify as to these records, he does not work there.”

    When did you first come into contact with the records of this case? Oh only four weeks ago? How did that come about? Did someone at Ocwen Loan Servicing ask you to take a look at them? No? Who did? Oh, this attorney over here? So you really have no understanding of anything as respects the history of this case, isn’t that fair to say? OK, Your Honor, I object to this witness being allowed to testify as to this loan matter. He has no personal knowledge, and he does not even work at that company that maintains these records. He is a rank outsider. Whatever he says is rank speculation. I object.”

  10. I totally agree. How many times have we seen this scenario already. Upon checking though I found “Ocwen” listed as being 4 seperate entities listed on the stock exchanges.

    1.) Ocwen Financial Corporation (OCN) NYSE-Nasdaq
    2.) Ocwen Financial Corp. Registere (OW0.SG) Stuttgart
    3.) Ocwen Financial Corporation (OWo.F) Frankfurt and
    4.) Ocwen Loan Servicing LLC “Private Comapny”

    Probably be kinda interesting to see just who is doing what….

Leave a Reply

%d bloggers like this: