No Options With Ocwen

Yesterday I wrote about mortgage loan servicer Ocwen stopping all short sale negotiations.

I proposed that Ocwen might be taking a self centered approach by forcing the homeowner into default in order to maximize the fees it can collect.  I lost sleep last night thinking about the far reaching implications involved.

BUSINESS IS WAR!

Or so some say.  This theory most aptly applies to your competitors.   Beating your competition is business 101.  Read Ocwen's Code of Ethics, specifically page 13 if you are in doubt.  I don't agree, but I can understand that.

What about your clients?  Do you treat them like you do your competitors?  Of course not.  Not to debate the concept  in depth here but that's how Ocwen is treating it's clients.

Who are Ocwen's clients?  They have two.  The homeowners that Ocwen services and the Note Holders that Ocwen collects mortgage payments for.  Ocwen has a page for it's Clients: LINK

SCREWING THE HOMEOWNER

You are a homeowner.  You didn't go to Ocwen to get your loan but the payment servicing was sold to them.  You find yourself in trouble and can't make your payments. 

You have options.  We explain 7 of these other options available to everyone of our short sale clients.  Typically one of them would be to sell the property for what you can, which might be less than what you owe.  This is a short sale.  Unfortunately for you, Ocwen has closed that door! 

While a short sale wasn't your only option, it might have been the best.  Chances are ,of the remaining 7 options, the last one might be the only one that works.  That's letting the home go to foreclosure.  That's what Ocwen is forcing you into.

SCREWING THE NOTE HOLDER

The Note Holder has employed the servicing to Ocwen.  It's part of what a servicer does.  They collect payments.   I would think Ocwen would have a fiduciary responsibility to best preserve the value of the portfolio the Note Holder has entrusted them with.

By refusing to entertain any short sale offers,  they are forcing more homeowners into foreclosure.  That process is costly.  To recoup any money the Note Holder will have to sell the property as an REO (bank owned).  Everyone knows that the net loss resulting from an REO is much higher.  That's why you hear that banks don't want your property.  That's also why they'll happily negotiate a short sale.  It's better to take a smaller loss in a short sale now than to take a larger loss later.

OCWEN HAS MOTIVE

I suggested yesterday that Ocwen is taking this course of action because their plans to sell the company fell through.  I proposed that they can collect more in fee income by forcing the home into foreclosure.  The greater loss by the resulting REO will not be Ocwen's.  It all transfers to the Note Holder.

Last night I realized there was more.  When a loan starts to get behind, Ocwen's servicing people will call the homeowner to remind them that they missed their payment.  When it gets severely behind, the loan file is sold to a collection company.  Did you know that Ocwen also runs a collection company?  That's right. The  Ocwen Recovery Group 

From their front page...

To make your loans worth more, it is critical to collect as much of your assets as possible - to recover more! Since 1988, Ocwen has focused on making loans worth more. We started by working on improving the liquidation rate of non-performing assets. We studied high performing collectors and utilized psychologists to determine best practices and then embedded this knowledge into our technology, recruiting and training programs. In 2007, Nationwide Credit, Inc. joined Ocwen, establishing Ocwen as the 5th largest collection agency in the nation. By implementing these best practices into our wholly owned global delivery centers, Ocwen and Nationwide Credit, Inc. have created the only proven "Global Collections Platform".

Is Ocwen's new plan to drive more collection contracts to their other company?  It certainly is a growth industry right now.

Just thinking...