Ocwen agreed to improve Litton’s internal controls. Regulators had been inundated with complaints from borrowers about Litton, such as the improper charging of penalties in foreclosure cases, according to the Consumer Financial Protection Bureau.
Nonbank mortgage firms were growing quickly as large banks retreated from the $9.4 trillion market for collecting loan payments because of new capital requirements. Lawsky, 44, started looking at Atlanta-based Ocwen in June 2011, two weeks into his new job, after the firm announced its intention to acquire Litton Loan Servicing from Goldman Sachs Group Inc. Matthew Anderson, a department spokesman, declined to comment for this story. The superintendent probably will depart next year to take a job in the private sector, a person familiar with the matter who asked not to be identified said last week. “By stepping into this role at a formative stage for the regulator, he created a footprint. “Similar to what we saw Eliot Spitzer doing as attorney general, being in New York allowed Lawsky to step in where federal regulators hadn’t,” Judge said. As the department’s first superintendent, Lawsky hired experienced lawyers from the New York Attorney General’s office, creating a strong enforcement culture that will continue after he’s gone, said Kathryn Judge, an associate professor focusing on financial institutions at Columbia University Law School. In three years as New York’s financial watchdog, Lawsky extracted more than $3 billion in fines from global banks, called for the firing of executives and questioned whether the lightly regulated nonbank servicers are properly handling modifications and defaults. “Ocwen has been rallying on the view that with him gone that will lift the burden, but I would be surprised if the next person didn’t at least follow through in the way Lawsky was going to,” said Miller, whose fund, which invests in Nationstar Mortgage Holdings Inc., has gained an annual 38 percent since 2011.
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