Guest roark33 Posted January 24, 2015 Share Posted January 24, 2015 I would happily read through one of these PSAs. They are listed on the law firm notice, any idea how to find these. I am specifically interested in the voting rights. Anyone? Link to comment Share on other sites More sharing options...
davidoosnk Posted January 24, 2015 Share Posted January 24, 2015 News is settlement with California http://www.latimes.com/business/la-fi-ocwen-california-settlement-20150123-story.html I smelled a rat this morning when a hedge fund did a "public service announcement" lol that they were short the stock and OCN had "defaulted." Bought some shares this morning at +- $6. Now up to $8 after hours on settlement news. This one is not for the fain of heart. Almost pulled trigger earlier this month around $10. Glad I didn't.. Love the analysis you guys have been doing. Bet the hedgies got wind of the settlement and thus BS news this morning to exit short... My take is there is too much money for Wall Street to make on both sides of the trade for there to be BK. But man, what a ride... Link to comment Share on other sites More sharing options...
MYDemaray Posted January 24, 2015 Share Posted January 24, 2015 Skimmed an HLSS PSA today...contains 25% threshold to direct trustee...so does Blue Mountain have the 25%? No position here. Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 24, 2015 Share Posted January 24, 2015 I think the loan mod issue is only one point. The other points are the affiliate fees (i.e. mark-ups through using altisource), advance recovery practices, etc. They claims these trusts have performed materially worse than those Trusts serviced by other Servicers. It will be interesting to see how this all plays out next week and going forward. Good little write-up of the firm that sent the notice of non-performance to OCN. Looks like they aren't really ambulance chasers... http://www.gibbsbruns.com/most-feared-plaintiffs-firm-gibbs--bruns-llp-11-06-2014/ Link to comment Share on other sites More sharing options...
MYDemaray Posted January 24, 2015 Share Posted January 24, 2015 Gibbs Bruns is no stranger to us BAC holders... Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 24, 2015 Share Posted January 24, 2015 MYDemarray, Any lead on a PSA for one of the RMBS mentioned in the Notice from Gibbs. I don't think the HLSS default is good, but not fatal, but forcing a servicer change would be fatal, in my mind... Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 24, 2015 Share Posted January 24, 2015 Finally found one.... http://www.sec.gov/cgi-bin/browse-edgar?CIK=0001391053&Find=Search&owner=exclude&action=getcompany Well, here is all the filing on this trust. Will update post when I find the specific PSA. here is the specific PSA: http://www.sec.gov/Archives/edgar/data/1391053/000139105307000004/sp1psafinal.htm Looks like they need 51% to force a servicer change. The leverage they have if they get the 51% is that I don't believe OCN can sells the MSRs if they are in default and the noteholders force a change. From my reading of the PSA, the note holders just get to swap out the servicer. I am sure NSM or WAC would line up to get those rights for free... Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 24, 2015 Share Posted January 24, 2015 From what I understand: The goal of the contract is to make it hard for the investors to remove the Master Servicer. If it was easy, then MSRs as an asset would be kind of sketchy. There might also be something to do with REMIC tax laws; the investors aren't supposed to have control over the trust. In practice, you'd have to actually read the PSA because the contract may not be very good at meeting its goals (e.g. they don't do a great job at solving the conflicts of interests between the servicer and the mortgage investors). As far as this particular PSA goes, the Master Servicer could get fired if there is an Event of Default as defined in Section 7.01. Here is the second clause of it: (ii) the Master Servicer shall fail to observe or perform in any material respect any other of the covenants or agreements on the part of the Master Servicer contained in the Certificates of any Class or in this Agreement and such failure shall continue unremedied for a period of 30 days (except that such number of days shall be 15 in the case of a failure to pay the premium for any Required Insurance Policy) after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Master Servicer by the Trustee or the Depositor, or to the Master Servicer, the Depositor and the Trustee by the Holders of Certificates of any Class evidencing, as to such Class, Percentage Interests aggregating not less than 25%; or If the Master Servicer screws up somehow, they have 30 days to remedy that failure. And if there is still a problem, then there might be an Event of Default. In practice a reason why you might file a lawsuit is to get the servicer to do a better job. For example, Nationstar settled a lawsuit because the RMBS holders were unhappy that Nationstar was selling non-performing loans at fire sale prices on auction.com, which Nationstar owns a piece of (or it owns the whole thing; I don't know). The reason why Nationstar wanted to do that was to lower its expenses. If it sold off the NPLs, it would get back all of its advances right away rather than having to wait a year or two for the foreclosure and REO process. Because Nationstar wanted to sell the NPLs at fire sale prices ASAP, bondholders would be hurt by the action. Nationstar would also make money from the sale because it owned a piece of auction.com In the end, Nationstar settled the lawsuit and cancelled the sale of the NPLs. They also got sued by the buyer of the NPLs because Nationstar reneged on the sale. (I'm not sure what happened with that other lawsuit.) Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 25, 2015 Share Posted January 25, 2015 The consent order with the California DBO is up on its website. http://www.dbo.ca.gov/ENF/List/O/ocwenloanservicingllc.asp Here are some highlights: Prohibition on Acquisition of Mortgage Servicing Rights 3. Upon the effective date of this Consent Order, Ocwen will cease acquiring any additional mortgage servicing rights, from any source, for loans secured by properties in California until the Department is satisfied that Ocwen can satisfactorily respond to the requests for information and documentation made in the course of a regulatory exam. Servicing Practices Review 14. The Auditor’s Servicing Practices Review will assess Ocwen’s operations with respect to loans on 1-4 family unit residential property located in the State of California. The Servicing Practices Review will, at a minimum, assess the following: a. The adequacy of Ocwen’s staffing levels and staff training in business programs responsible for statutory disclosures to a borrower once a loan is delinquent, assignment of a long-term single point of contact to a borrower, review of foreclosure prevention alternative applications and loans in risk of delinquency, risk of default and loans in foreclosure. b. The sufficiency and integration of Ocwen’s internal systems for storing and maintaining updated information once a borrower’s loan is acquired for servicing by Ocwen. c. The effectiveness of communication between third party vendors and Ocwen once a borrower has been referred for foreclosure. This analysis should include access by third parties to Ocwen’s systems and current borrower information, including pending applications for foreclosure prevention alternatives. d. The completeness and sufficiency of policies and procedures governing Ocwen’s loan servicing practices and that they enable compliance with the law. e. The accuracy of borrower account information for all loans serviced by Ocwen. Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 26, 2015 Share Posted January 26, 2015 Thanks for posting the consent order. Couldn't find it on Friday. I think the consent order and auditor is a path for California to seek monetary fines from Ocwen, similar in size and relation to NY DFS settlement. I can't see California allowing NY to get 10k for each foreclosed homeowner and California homeowners getting nothing (or a measly $1000) from the National Mortgage Settlement (not to mention the $100m slush fund that NY received). I can't imagine Ocwen's practices were any different in California than in NY. And queue the others states. The same source who mentioned to me earlier this week about the RMBS investors suing told me that Texas opened an investigation on Thursday this past week. Ocwen's stock will mostly likely skyrocket on Monday, but longer term, you have to start eyeballing the amount of settlements that are going to come from each state. People will think that the $2.5m settlement was a payment for the entire issue in California, but it was merely a slap on the wrist for not turning over the paperwork in an orderly manner. Now, that the paperwork is going to be turned over and an auditor on site, the first thing the auditor is going to do is look into any backdated letters to California homeowners in the past 6 months. Once they find a few of those, then the really monetary fines will come. As always, just great for the pure entertainment value. Link to comment Share on other sites More sharing options...
namo Posted January 26, 2015 Share Posted January 26, 2015 The best defense is offense: http://dealbook.nytimes.com/2015/01/26/ocwen-and-bondholders-clash-over-mortgage-services Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 26, 2015 Share Posted January 26, 2015 This is a great defense by Ocwen, taking the side of the homeowner against "certain hedge funds"...claiming the hedge funds want to foreclose and not do any modifications. Great PR spin... Glad to see Ocwen fighting back a little... Link to comment Share on other sites More sharing options...
philly value Posted January 26, 2015 Share Posted January 26, 2015 Market reaction to the news is (so far) somewhat subdued. The resolution of the news that drove Ocwen from $12 to $7 has seen it soar from $6 to $7. Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 26, 2015 Share Posted January 26, 2015 I really think people are realizing that the "settlement" was in no way comparable to the NY settlement. CA didn't have an on-site regulator like the DFS did. OCN agreed to an auditor in the process, which in my mind, is a precursor, to an actual monetary penalty down the road. CA will absolutely push for similar terms as those received by NY DFS, so 2500 homeowners foreclosed last year, that's at least 25m, plus no new MSRs. Just means the melting ice cube will continue. I also think people are starting to realize that the profitability of OCN and ASPS is going to be seriously hampered when you have a regulator looking over your every move. For example, lender forced placed insurance, and its associated kickbacks, were extremely profitable for servicers (and asps), but sketchy to the point that the have agreed to stop doing it. Do you really think that this was the only practice that was extremely sketchy that they are going to have to stop doing? Remember Cross Country mailing scam? Link to comment Share on other sites More sharing options...
mcmaaaaath Posted January 26, 2015 Share Posted January 26, 2015 I am not sure why you think all mistakes were released through the settlement. I am referring to ongoing mistakes, for example, the backdating of letters. A settlement for past errors doesn't give you cover on mistakes you make in the future. The national mortgage settlement effectively covers OCN for servicing mistakes, even beyond the settlement date Guowei-- are you sure you are reading the settlement correctly? I see a section titled "Release"-- which specifies that the period for which Ocwen has been released extends only to Dec 2012. Is it possible that the metrics and oversight laid out in the settlement is merely in addition to the State AG's ability to prosecute for ongoing (illegal) mistakes in Ocwen's servicing? http://www.dfi.wa.gov/sites/default/files/consumer-services/enforcement-actions/C-13-1153-14-CO01.pdf?q=CS%20Orders/C-13-1153-14-CO01.pdf It seems to me like this is a pretty important issue to understand, so trying to make sure I nail it down. Link to comment Share on other sites More sharing options...
guowei58 Posted January 26, 2015 Share Posted January 26, 2015 I am not sure why you think all mistakes were released through the settlement. I am referring to ongoing mistakes, for example, the backdating of letters. A settlement for past errors doesn't give you cover on mistakes you make in the future. The national mortgage settlement effectively covers OCN for servicing mistakes, even beyond the settlement date Guowei-- are you sure you are reading the settlement correctly? I see a section titled "Release"-- which specifies that the period for which Ocwen has been released extends only to Dec 2012. Is it possible that the metrics and oversight laid out in the settlement is merely in addition to the State AG's ability to prosecute for ongoing (illegal) mistakes in Ocwen's servicing? http://www.dfi.wa.gov/sites/default/files/consumer-services/enforcement-actions/C-13-1153-14-CO01.pdf?q=CS%20Orders/C-13-1153-14-CO01.pdf It seems to me like this is a pretty important issue to understand, so trying to make sure I nail it down. Read my previous post on this matter. In my opinion, all regulatory actions from state AGs and state mortgage regulators have to comply with the National Mortgage Settlement. Yes, technically the release only covers until Feb 2014, but in order for the states to bring legal actions for sloppy process, they need to make sure OCN fails the compliance framework (operating metrics) laid out by the settlement. Or else, what's the basis for the legal action if OCN meets the compliance requirements? Obviously, if there is fraud or bad faith, then all bets are off, and OCN will be in trouble...but if it's sloppy process, then OCN has a chance to cure. Your understanding is different? Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 26, 2015 Share Posted January 26, 2015 Guowei58--If that is your understand, please explain why OCN settled with NY DFS? Is your understand that since it was a different office, they didn't have to abide by the terms of the settlement? That seems somewhat absurd, or at least very likely to happen in every other state, as it appears to already begun in CA with the DBO. Link to comment Share on other sites More sharing options...
guowei58 Posted January 26, 2015 Share Posted January 26, 2015 Let's focus on the FCF of OCN for 2015. By my math, assuming the company doesn't sell any MSRs, the company generates $500M of unencumbered cash flow in 2015 despite the increasing cost of servicing, etc. This is surprising because the company doesn't need to purchase MSRs and there is repayment of advances (net of match funding repayments). OCN can do whatever it wants with this cash...Current market cap is around $900M. My guess is that they will pay down some debt and use the rest to buy stock. I'm not arguing that litigation and regulatory risks are not significant, but we have to look at the positives too:) If management has testicles at all, TBV per share would increase in 2015 from buybacks. If they sell some agency MSRs, then they would delever and shrink share count even faster. Link to comment Share on other sites More sharing options...
guowei58 Posted January 26, 2015 Share Posted January 26, 2015 Guowei58--If that is your understand, please explain why OCN settled with NY DFS? Is your understand that since it was a different office, they didn't have to abide by the terms of the settlement? That seems somewhat absurd, or at least very likely to happen in every other state, as it appears to already begun in CA with the DBO. NY DFS was not a party to the National Mortgage Settlement. CA DBO and almost every other state's mortgage regulators were involved with the settlement... There's a lot of history between OCN and NY DFS, dating back to 2011. NY DFS had a monitor in place at OCN before the National Mortgage Settlement. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 26, 2015 Share Posted January 26, 2015 Does anybody have a copy of Ocwen's fee schedule? They used to have it on their ocwencustomers.com website but they put it behind a login wall. Link to comment Share on other sites More sharing options...
mcmaaaaath Posted January 26, 2015 Share Posted January 26, 2015 Let's focus on the FCF of OCN for 2015. By my math, assuming the company doesn't sell any MSRs, the company generates $500M of unencumbered cash flow in 2015 despite the increasing cost of servicing, etc. This is surprising because the company doesn't need to purchase MSRs and there is repayment of advances (net of match funding repayments). OCN can do whatever it wants with this cash...Current market cap is around $900M. My guess is that they will pay down some debt and use the rest to buy stock. I'm not arguing that litigation and regulatory risks are not significant, but we have to look at the positives too:) If management has testicles at all, TBV per share would increase in 2015 from buybacks. If they sell some agency MSRs, then they would delever and shrink share count even faster. Guowei I agree. I am actually on your side here at the current share price. I think the stock is undervalued even though I'm not sure I agree with you that the national mortgage settlement significantly covers Ocwen going forward. I do hope management shows us their marbles. Link to comment Share on other sites More sharing options...
guowei58 Posted January 26, 2015 Share Posted January 26, 2015 Let's focus on the FCF of OCN for 2015. By my math, assuming the company doesn't sell any MSRs, the company generates $500M of unencumbered cash flow in 2015 despite the increasing cost of servicing, etc. This is surprising because the company doesn't need to purchase MSRs and there is repayment of advances (net of match funding repayments). OCN can do whatever it wants with this cash...Current market cap is around $900M. My guess is that they will pay down some debt and use the rest to buy stock. I'm not arguing that litigation and regulatory risks are not significant, but we have to look at the positives too:) If management has testicles at all, TBV per share would increase in 2015 from buybacks. If they sell some agency MSRs, then they would delever and shrink share count even faster. Guowei I agree. I am actually on your side here at the current share price. I think the stock is undervalued even though I'm not sure I agree with you that the national mortgage settlement significantly covers Ocwen going forward. I do hope management shows us their marbles. Just to be clear, I'm not saying that the National Mortgage Settlement is going to save OCN in all scenarios. There are two scenarios that the Settlement doesn't cover: 1) Fraud or bad will, and 2) Inability to cure failed operating metrics as laid out by the Settlement. The settlement covers OCN in the scenarios of sloppy processes that can be remediated. Lots of nuances I suppose. There's a lot of risk and uncertainty in OCN right now, so I don't want to discount any of that. I just think some people are drawing conclusions without any analysis, and that decreases the value of this forum. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted January 27, 2015 Share Posted January 27, 2015 The best defense is offense: http://dealbook.nytimes.com/2015/01/26/ocwen-and-bondholders-clash-over-mortgage-services Here is the scathing press release directed at Gibbs & Bruns: http://shareholders.ocwen.com/releasedetail.cfm?ReleaseID=892783 Oh and I learned a new word today: redound Link to comment Share on other sites More sharing options...
davidoosnk Posted January 28, 2015 Share Posted January 28, 2015 I like this type of reaction, bodes well that they are not just going to sit by and let the shorts eat them alive. Agree with guowei that FCF analysis ought to be a component. I'm an owner at $6. Only thing that scares me is that the big banks that Ocwen is messing with have the power to take them down. Still, this type of action from Ocwen is good in the sense that it shows the sharks they are not easy prey... Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 29, 2015 Share Posted January 29, 2015 When it rains, it really pours... http://www.housingwire.com/articles/32753-fitch-warns-ocwen-related-rmbs-deals-on-verge-of-major-downgrade?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire Link to comment Share on other sites More sharing options...
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