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In a report originally in Reuters, Ocwen will stop requiring gag orders, which disallowed some homeowners from criticizing the company publicly in exchange for having their loan terms modified, according to New York State's Superintendent of Financial Services Benjamin Lawsky.
As previously reported, the company, along with Bank of America and PNC, required some litigious homeowners, upon receiving loan modifications from the companies, to sign non-disparagement clauses as a part of their mortgage settlement.
"In discussions with our Department, Ocwen has agreed to no longer seek gag rules as part of settlement agreements or loan modifications with borrowers," Lawsky, the superintendent of New York's Department of Financial Services, said in an emailed statement to Reuters. "Additionally, the company has stated it will not enforce gag rule provisions in existing agreements."
Lawsky said he is reviewing the issue with the other financial institutions.
Bank of America clarified their position, noting that they do not use non-disparagement clauses in normal modification agreements.
The company said, "We do not include non-disparagement clauses or releases of claims in normal modification agreements. Only when a customer is part of a negotiated settlement that provide additional consideration to the customer is a non-disparagement and related confidentiality clause considered, and in those cases it does not preclude the customer from filing suits on post-settlement issues."
Ocwen said that it had only used non-disparagement clauses in the "highly unusual situation where there is a legal settlement agreement with a borrower." The company claims these specific situations account for less than 1 percent of the loans in its total portfolio.
"We are gratified that Ocwen worked constructively with us to resolve this matter, and our Department intends to review this issue at other financial institutions," Lawsky said.
PNC Financial Services could not be reached for comment.
