Thursday, February 6, 2014

Regulator to halt Wells Fargo sale of mortgage-servicing rights

Wells Fargo's sale of residential-mortgage servicing rights to Atlanta's Ocwen Financial Corp. is in limbo, after a New York State regulator has indefinitely halted the $2.7 billion deal, The Wall Street Journal reported Thursday, citing a person familiar with the matter.

The person said the office of Benjamin Lawsky, superintendent of New York's financial services department, has concerns over Ocwen's ability to take on more loans. Lawsky supervises insurance companies in the state and all banks chartered by the state.

The Ocwen deal, announced last month, calls for San Francisco-basedWells Fargo to sell servicing rights on $39 billion in loans. According to the Consumer Financial Protection Bureau, Ocwen is the largest nonbank mortgage loan-servicer in the U.S.

In December, Ocwen entered into a $2.1 billion settlement with the Consumer Financial Protection Bureau and 49 states and the District of Columbia to resolve allegations that it mistreated homeowners whose mortgages it serviced. According to the allegations, the company illegally foreclosed on homes, charged homeowners unauthorized fees and deceived them about loan modifications.

The Ocwen deal comes after Wells Fargo Chief Financial Officer Tim Sloan said in March that Wells Fargo might want to "test" the sale of its mortgage-servicing rights.