Ocwen Financial Corp’s executive chairman, William Erbey, will step down as part of a legal settlement with New York’s financial regulator, the Wall Street Journal reported, citing people familiar with the matter.
Under an agreement to be signed as soon as Monday, Ocwen will acknowledge that it didn’t properly deal with distressed homeowners, may have saddled them with excessive charges from affiliated companies and failed to maintain adequate systems for servicing hundreds of billions of dollars in mortgages, the Journal said.
New York Financial Services superintendent Benjamin Lawsky accused the company of harming hundreds of thousands of borrowers by sending backdated letters about loan modifications and foreclosures, which violated state and federal laws.
In October, Ocwen said it set aside $100 million for a potential settlement with the New York banking regulator.
Ocwen is also facing scrutiny from New York state and the federal government over whether the mortgage servicer improperly stalled short sales of property to collect more fees, Bloomberg reported last week.
Erbey will step down by mid-January as part of a wide-ranging proposed consent order with the state Department of Financial Services, the Journal reported.
Ocwen will also pay $150 million toward New York housing programs and aid to foreclosed homeowners and appoint two outside directors subject to state consultation, the report said.
The state will appoint a new outside monitor to scrutinize every aspect of the company’s operations to insure they are changed to better protect borrowers, the Journal said.
Ocwen will also be prevented from making acquisitions and expanding until it satisfies the state that it has reformed its systems to protect the rights of New York borrowers, the Journal reported.
Representatives of Ocwen and the New York Department of Financial Services could not immediately be reached for comment outside regular U.S. Business hours.