Ocwen playing mind games?

I couldn't help but notice Ocwen's hopelessly poor attempt at mind games via the article titled "A House With a Modified Loan Is a Symbol of Servicers’ Tug of War With Investors", yesterday, on the New York Times website. Ocwen, through its PR firm, Sommerfield Communications, attempted to convey to the reporter an image of Ocwen as a loan servicer who are desperately trying to help homeowners keep their home but are under pressure from investors to foreclose. Nothing could be further from the truth!

Let's begin with Ocwen's claim that they do a very good job of helping homeowners. Let's do our own research to see if that is true. According to the data made available by the Departments of Treasury and Housing and Urban Development, Ocwen approved 23% of the modifications they processed under HAMP since the program's inception. Compare this with Bank of America's 44%, CitiMortgage's 43% and Wells Fargo's 35%. When you see this you realize why regulators, borrowers, investors and foreclosure prevention activists are worried when a large loan servicing portfolio moves from a Wells Fargo to an Ocwen.

To put it very simply - Ocwen and Altisource's common shareholders like William Erbey stand to gain from Altisource's growth. The more the properties foreclosed by Ocwen, the more the properties they can sell on HUBZU.com and earn real estate listing commissions, Buyer's Premium, Web Technology Fee, Escrow and Title Fees, Property Preservation Fee, Closing Coordination Fees and more!

Investors have very little information about Ocwen and Altisource's dealings and must rely on information supplied by Ocwen. Investors naturally would like to avoid foreclosures because Altisource sell foreclosed properties at very low prices through their website HUBZU.com. The only beneficiary from foreclosure are Altisource, its subsidiaries and certain firms who regularly buy properties through Altisource with the intention of selling them.

Concerns have been raised that due to the fact that Altisource sell properties on HUBZU through their own listing agency, Real Home Services and Solutions, they fetch lower values compared to properties sold by local real estate agents. RHSS agents are located miles away from the properties they sell and are unable to provide much information to homebuyers about the condition of the property. It has been claimed that their inability to turn on utilities, in many cases, makes it impossible for buyers to obtain loan approvals to buy the homes.  It has been claimed that the Buyer's Premium charged by HUBZU forces many potential buyers to look elsewhere. Some homebuyers have claimed that their lender did not allow Buyer's Premium on the HUD forcing them to back out. It has been reported that some lenders refused to finance homes if the title company were Premium Title (an Altisource unit). Many homebuyers have complained that Altisource take too long to fix title issues and that the slow functioning of Premium Title leads to loan lock expirations and additional costs to the buyer, which at times are credited back to the buyer leading to lower net to the investor.

Ocwen, according to their Purchase and Sale Agreement, pay for the title insurance and related search fees should the buyer agree to use Premium Title as escrow and title company. This is a direct conflict of interest between the investors and Altisource. Investors see lower net due to the title insurance fees being slapped on them, while Altisource benefit from the same. Were Ocwen not acting in a manner that helps Altisource profit, they would provide the same terms to all title companies. Ocwen also pay out Property Preservation Fees and Closing Coordination fees to Altisource units on behalf of the investors.

Altisource also coordinate foreclosures, evictions and cash for relocation program on behalf of Ocwen. They carry out foreclosures in states like California through their subsidiary Western Progressive. Altisource employees execute Purchase and Sales Agreements and HUDs on behalf of Ocwen and its investors. Altisource make the all-important decisions that impact Ocwen and its investors. From accepting or rejecting offers to determining if repairs are to be carried out to approving HOA, utility and other payments, they pretty much determine the investor's net. Altisource also own Springhouse AMC, a company that provides property appraisal reports.

I don't see how the investors benefit from foreclosure. The only one winner is Altisource and in turn its shareholders like William Erbey, who also happens to be an Ocwen shareholder. What a coincidence!

Investors are naturally hurt and probably feel that they did not get a fair deal. I sympathize with them. It is my belief that Ocwen-Altisource are driven by greed. Those who are driven by greed are never fair to others. They deprive investors of the returns they deserve. They deprive real estate agents of the commissions they deserve. They deprive borrowers of the home they deserve and homebuyers of the service they deserve. What about employees? One employee termed his work experience with Altisource "an epic swindle".

(The author, Saurabh Singh, is a student of the Buddhist monk Thich Nhat Hanh. He is a Foreclosure Prevention Activist and a vegan. He is also a member of People for Ethical Treatment of Animals(India), Consumer Advocates in American Real Estate, UNITES Professionals and supports various charitable causes and crowdfunding.)