The effects of the 2007 subprime mortgage crisis continue to reverberate across the housing and financial markets to this day. The factors that caused the crisis are well-known and documented: increased liquidity in the marketplace due to low interest rates, subprime mortgages being extended to less qualified borrowers with poor credit, speculation on continuously rising home prices, nontraditional mortgages that carried hidden risks, and banks and lenders selling volumes of subprime mortgages to the secondary mortgage market to collect originating fees. A decade later, those hardest hit by the crisis are still digging out. Ocwen, one of the country’s largest nonbank mortgage servicers, has been a major player in dealing with the fallout of the crisis and experienced significant challenges during the crisis and beyond. The company is only now rebounding, with the help of Kramer Levin, from numerous legacy issues that stemmed from the 2007 crisis. The confluence of several events stalled the company’s progress:
Although painted with the same negative brushstrokes as were other players in the mortgage landscape, Ocwen played a significant role in stabilizing the mortgage market while operating in an environment in which the regulatory and legal headwinds have remained unusually strong. One of the largest servicers of subprime loans, Ocwen worked diligently to avoid foreclosure on properties in distressed situations and to keep people in their homes whenever possible. Indeed, Ocwen has to date modified upward of 800,000 mortgages under the Home Affordable Modification Program, designed to help financially struggling homeowners avoid foreclosure through loan adjustments that make the payments more affordable, and sustainable long term, for borrowers.
Working together since early 2014, Ocwen and Kramer Levin have defended a range of civil litigation matters and resolved issues arising from investigations by regulatory bodies, including:
Today, Ocwen is well on its way to leaving its legacy issues behind and focusing its energies on future growth.