In the firm’s latest 8-K securities filing with the Securities and Exchange Commission, Ocwen Financial (OCN) provided an MSR boarding list, which shows the servicer’s average boarding time when transferring certain assets. Some of the boarding of assets occurred in as little as 11 days, while at least one other transaction stretched out to 150 days. In that particular deal, Ocwen was boarding 87,000 loans with an unpaid balance of $14.7 billion in late 2011. The MSRs involved were linked to former Litton Loan Servicing loans.
Meanwhile, the boarding project that took only 11 days involved Freddie Mac loans acquired back in 2009 — 24,000 of which were boarded with a total UPB of $4.2 billion.
The boarding times count the approximate days it took from notice to boarding, Ocwen's report said. THe company more than doubled its 2012 profit as revenue soared 70% above 2011 levels, after it spent the year gobbling up mortgage servicing rights. More recently, Ocwen performed extremely well on the stock market. This success came on the coat tails of analysis from market research firm SmarTrend identifying an Uptrend for Ocwen on July 15, 2013, setting a price estimate of $45.95.
The firm’s fourth-quarter 2012 acquisition of Homeward Residential loans took approximately 60 days to board with the portfolio carrying a UPB of $55.6 billion, with 300,700 loans involved in that particular transfer.
Meanwhile, a massive Fannie Mae bulk MSR transfer took 90 days last year, while it took the firm 120 days to board 1.7 million loans acquired from the ResCap portfolio.
ResCap, however, was placed in bankruptcy, which created a different situation when Ocwen boarded those MSRs since they were pulled out of a bankruptcy situation. In the third quarter, Ocwen reported a 60-day boarding timeframe for 19,400 large bank subservicing loans valued at $3 billion with 19,400 loans moved onboard.
Clarity on boarding issues is essential since the Consumer Financial Protection Bureau recently published a report suggesting the ongoing occurrence of sloppy boardings remains a concern, a Deloitte regulatory risk report noted this week.
In a new report, Deloitte advises the servicing industry to be mindful of the CFPB’s highlighted concerns over “sloppy account transfers” when MSRs are moved between firms. Other concerns highlighted by regulators included disorganized paperwork, poor payment processing, errors in loss mitigation and a failure to notify consumers when a loan is transferred to a new servicer.
An executive with a mid-tier lender/servicer acknowledged the extra scrutiny over servicing transfers as a definite problem for servicers who are not prepared. So what's the solution?
"Lenders and servicers need to hire up risk management. If they haven't put aside at least $250,000 per year for the salaries of those individuals, they will not be ready and the CFPB will take notice. It's the best way to show compliance," the executive said.
