Five Minutes With Patrick Cox

The fluctuation in foreclosures and bankruptcies has impacted the way default servicing professionals do business significantly. How has the industry evolved since the housing crisis? Over the past several years, foreclosure and bankruptcy rules have seen continuous change and adjustments. Most of these changes have improved the default servicing process for borrowers, companies, and investors, and we expect to see more changes over the next few years. 

This ongoing evolution has required servicers to create stronger internal controls, tighten the relationship and oversight of vendors, and listen more thoroughly to borrower feedback and complaints. As a result, today bankruptcy and foreclosure practices are stronger overall, and they clearly recognize that there is a person or family on the other side of each loan. 

One area of concern among servicers is the potential disruption that could occur in the face of declining foreclosure volumes and consolidation in the industry. Certainly, fewer foreclosures are a positive outcome for borrowers and communities and we are pleased to see this trend; however, law firms need to adjust to a more normal rate of foreclosure than the high level we have experienced since 2008. We expect to see continued consolidation or outright exits from the market by law firms assisting with foreclosure and bankruptcy over the next couple of years. Ocwen has been vigilant in fostering strong and open relationships with its outside firms. These relationships will help ensure that the developments taking place in the industry do not result in short- to medium-term disruptions to the default servicing process.  

  

As the industry has changed, so have the companies in it. How has Ocwen evolved over time? Today Ocwen is a different company that has made significant progress and improvements that benefit borrowers. Over the past three years we have instituted significant improvements in customer service and communications. Ocwen is proud of its corporate-wide commitment to a sustainable culture of integrity, transparency, compliance, and service excellence. We continue working to fulfill our goal of leading the industry in quality service and compliance with laws and best practices.

Although my focus is on default servicing, I would like to note that Ocwen is the industry leader in helping borrowers remain in their homes through foreclosure prevention, including loan modifications and principal reductions. Since January 1, 2008, Ocwen has granted approximately 720,000 loan modifications and has completed more HAMP principal reduction loan modifications than the three largest servicers combined. 

A homeowner whose loan is serviced by Ocwen has a much better chance of avoiding foreclosure than if their loan is serviced by any other company. Independent third-party studies consistently illustrate that Ocwen has a superior record of helping borrowers bring their payments current, stay current, and repay their mortgage.

What proactive steps can servicers take to help their customers who are at risk of defaulting? The majority of borrowers that file for bankruptcy or fall delinquent on their mortgage payments could benefit from a helping hand. To ensure that the most vulnerable borrowers are protected and get the assistance they need, we have focused on these key areas of servicing.

First, Ocwen has established a strong culture of compliance, which is founded on a fundamental doctrine of continuous improvement and diligence in looking at every aspect of our control infrastructure. It is a core value and serves as an independent voice throughout the organization. To ensure that we follow both the ‘letter’ and ‘spirit’ of all applicable regulations, Ocwen’s first line of defense performs regular testing on critical processes and partners with a second line of defense to ensure redundancy in our quality assurance processes.

Second, we have in place transparent and interactive cross-functional teams to assist borrowers. Ocwen has invested a significant amount of time, thought, and resources into controlling and monitoring handoffs to ensure we mitigate risk at those critical intersections. The loss mitigation, pre-foreclosure, bankruptcy, and foreclosure teams have frequent interactions and insight into each other’s control reports. These close working relationships have allowed us to improve borrowers’ experiences as they work through resolving their delinquency. 

Finally, we have established very strong relationships with our outside firms, which allow us to openly discuss issues that may prevent Ocwen from meeting the expectations of all parties involved in our processes. Transparency and trust have allowed us to more quickly uncover inefficiencies that could slow a process or create a situation that can result in an incidence of non-compliance. 

Compliance continues to be an industry hot topic, and many of the discussions at the Legal League 100 Servicer Summit will center around it. What’s are some keys to managing compliance in today’s ever-changing environment? A robust change management process that involves several cross-functional departments working collaboratively to get changes implemented in a timely fashion in line with regulatory expectations is key. The most recent Consumer Financial Protection Bureau rule changes coming out late this year and early next year are great examples of our organization coming together and sharing ownership of our collective compliance with regulator expectations. Additionally, having input in how the rules were crafted, whether it be through industry forums or working directly with the regulator, makes for better outcomes and helps achieve effective implementation. Ocwen wants to have a significant role in improving the processes for all parties involved. 

Why do you think participating in professional events is important to the industry? Industry events bring together the best minds in the industry to discuss the implementation of new rules, collaboratively advocate for changes to proposed rules, and to suggest changes to current rules. 

Ocwen has a number of talented and experienced leaders who actively participate in industry forums and events. These forums provide opportunities to help shape policy, and they are an important avenue for our executives to positively impact the homeownership experience in the U.S.