The superintendent of New York State’s Department of Financial Services (NYDFS), Benjamin Lawsky, must be feeling left out of the party currently going on over in the Big Apple. I mean the en vogue trend seems to be sock it to anyone making more than minimum wage vis-a-vis Bill de Blasio’s Regime. Ironic, really, when the State of New York is driving out the very same people whom are paying for the free ride. Take a listen to some of the Power Brokers on Talk Radio. It would appear that an Exodus — LONG OVERDUE — may be in the cards! I digress, though. We are going to talk about the Ocwen, Hubzu and Altisource Trifecta currently under siege by an out-of-control Fascist Regime.
American Banker, HousingWire and National Mortgage News which had generally always been stalwart backers of Capitalism must have been slipped some of the Kool Aid being passed out in New York. Hell, even the Wall Street Journal must have gotten a good dose as they all seem to have formulated what I consider to be unwise positions — unwise as it is difficult to extricate oneself from error. Even more on point, the Drive By Media’s Maginot Lines are dangerous in a High Frequency World.
The jest of Lawsky’s claims are that Ocwen Financial Corporation is unfairly utilizing Hubzu, an Altisource Portfolio Solutions SA subsidiary, to ramp up the costs of mortgages for investors and borrowers. More specifically, though, Lawsky has a hard on for Ocwen Executive Chairman William Erbey. Erbey also serves as Chairman of Altisource and owns pieces of both Ocwen and Altisource. The result of this insanity? That’s right Lawsky has shuttered, Capitalism for the time being, in New York.
“Hubzu appears to be charging auction fees on Ocwen-serviced properties that are up to three times the fees charged to non-Ocwen customers,” Mr. Lawsky wrote in the letter. The higher fees “ultimately get passed on to the investors and struggling borrowers who are typically trying to mitigate their losses and are not not involved in the selection of Hubzu as the host site.” — From the Wall Street Journal about six hours ago.
Really, what Lawsky is driving at, are unsubstantiated concerns over the fact that someone other than the VERY SAME BANKS which spun up the Sub Prime Crisis might actually be better suited to handle mortgage servicing. Nothing but a wild goose chase; a pedestrian fishing expedition. I mean this is a rerun of the Nationstar issue back in March,
In a letter to Nationstar on Wednesday [05MAR14], the regulator, Benjamin M. Lawsky, superintendent of financial services, said his office had received “hundreds of complaints from New York consumers” about problems related to the company’s mortgage modifications, improper fees and lost paperwork.
“Our department has significant concerns that the explosive growth at Nationstar and other nonbank mortgage servicers may create capacity issues that put homeowners at risk,” Mr. Lawsky said in the letter.
Starting to sound like a broken record? Significant concerns, huh?! One would think that perhaps Lawsky’s significant concerns are that he is not getting enough Social Media exposure. A quick perusal of Lawsky’s Twitter Page shows what would be Significant Concerns if placed in front of a Quantico Profiler. — Note to self: Determine whether or not the Twitter, Instagram, ad nauseum postings, during business hours, are on the taxpayer’s dime. To say that Lawsky is awkward; to say that couth is not his best suit, is to put it mildly. In 2012, Lawsky seemed poised to reignite the Revolutionary War with the dust up over his ill suited comments about Standard Chartered. Across the Pond, the British did not seem too enamored with Lawsky’s stick in the eye which would appear to be calculated to put him on the radar,
Boris Johnson, the mayor of London, also warned that regulation in New York should not become “a self-interested attack on London’s status as the pre-eminent financial centre.”
Here is the reality: New York Governor Andrew Cuomo co-wrote the playbook with Lawsky in the first 13 months Cuomo held the New York Attorney General’s office. In essence, what we are seeing is nothing more glamorous than a mob style shakedown. Lest one think I am spouting off, let’s take a look at the Standard Chartered settlement: $670 Million alone. Not too shabby. When you look, though, at the fact that out of the $250 Billion dollars alleged, only $14 Million were theoretically up for contention; when you really drill down and find that only 0.001% of that amount of the $250 Billion was questionable, does the penalty really fit the alleged violation?! I mean you get it right 99.99% of the time, but that pesky one one thousandth of a percent of the time does you in with Lawsky, huh?!
This certainly wasn’t the first nor will it be the last Shakedown Lawsky and Company are going to undertake. These type of people always want to relive the rush. The reality is that how the Market works is that the Regulatory Muggings are going to continue to crank up. New York is the epicenter for the majority of financial transactions. To play ball in New York, the Regulators hold hostage Banking and Insurance Licenses until they get their proverbial cut. How big is that cut? Well, conservative estimates are that around $7.1 Trillion dollars worth of assets are under the DFS umbrella. Read: This is Shakedown 101 on Steroids.
Section 1047 of the Dodd – Frank Act was problematic for Cuomo. The visitorial powers just didn’t jive with his belief system. You see, good ‘ol Cuomo is at odds with the presumed legal caretaker of such the New York Attorney General Eric T. Schneiderman. Never fear, though. Like any good Emperor, Cuomo enacted Decrees from Upon High. The usurpation; the prima facie power grab by and through the creation of the New York Department of Financial Services (NYDFS), is a testament for the contempt that Cuomo and his lapdog Lawsky have for both the Constitution of the State of New York and the US Constitution.
The reality is that the Cuomo – Lawsky Shakedown Machine has been fine tuned over the years; no separating the two. Lawsky was the special assistant to NY Attorney General Andrew Cuomo. He then became the General Counsel for Cuomo’s Gubernatorial Campaign. He additionally got his political wings as the Chief Counsel for New York Senator Charles Schumer in 1999 through 2001.
Let’s get down to some brass tacks, though. A lot of the media pundits out there seem to have some difficulties finding hard numbers. Foreclosurepedia didn’t have that problem. An Altisource – Hubzu Source, speaking on condition of anonymity, spoke fairly candidly.
Lawsky is definitely out trying to grind an axe – and not sure why. The letter is a complete and total lie. Hubzu charges 3.5%-4.5% for all sellers on Hubzu. Auction.com charges 5% – Williams & Williams – 5% – JP King 10% …. We charge less than anyone – and we have sold more assets that the other auction companies ([Redacted] in 2 years).
So, I am puzzled. If the Lawsky Shakedown Machine has a fatal flaw; if in fact Lawsky’s Demand Letter to Ocwen isn’t worth the paper it is written upon, why all of the Paper Tiger action? One Word: Leverage. As early as 2011, Ocwen agreed to Lawsky’s first set of Draconian Mandates when they committed to the DFS’ Mortgage Servicing Practices. In December, 2012, Lawsky needed yet another fix in the jugular so he visited a Decree upon Ocwen for a Monitor. Beginning to realize that Erbey wasn’t exactly the type of person to lay down and lick boots, the coup de grâce came in Lawsky’s most recent intervention in the Ocwen – Wells Fargo Affair. Or, so Lawsky thought. My Source continued,
I think the bigger picture is he is trying for more money out of the settlement and Ocwen has said ‘NO’. And now he is attacking them. At least that’s my best guess / opinion. And Ocwen is an easy target because they are a non-bank servicer than made money through the financial crash and they use a lot of overseas labor. Pretty easy target…. But, no investors or banks are complaining about Ocwen’s use of Altisource or Hubzu….. they see the value and enjoy the interrelated business relationships which save them money. In fact, banks are still trying to sell their servicing rights to Ocwen but Lawsky has essentially frozen the market. Government is interfering and trying to tell a corporation how best to run their business.
The reality is that the Ocwen – Altisource – Hubzu Trifecta is a natural extension of wise business practices. It is the controlling of the supply chain for want of better words. Let’s take a can of soda, for example. So, the Grape Soda Company has a great product. They realize that there is a good deal on an aluminum can manufacturer and they buy it. They buy it because the long term benefits of owning the production facility outweigh the long term expenditures in purchasing them. Then, they buy a trucking firm to be able to control the logistics to and from their facilities and to expedite their product. They realize that the advertising firm whom is marketing the Grape Soda are hacks, so they build, train and staff their own firm. You get the point. How about Google? Or Facebook? You really get the point now.
Lawsky is the quintessential ambulance chaser. Like any good shark — I mean lawyer — Lawsky knows that Settlement is the Name of the Game. When you begin to track the amount of Settlements the New York Department of Financial Services (NYDFS) has extorted, it begins to sound like Professional Economic Hitmen.
The moral of the story is Lawsky is going to have an uphill battle with Erbey. That’s good; it is good when megalomaniacs like Lawksy are taken down a notch. Oh, I am sure that Lawsky will get his Tribute; render unto the Economic Hitmen that which is theirs, but it will come at a price. Whereas, the Pound of Flesh — or Pile of Lucre — is All the Rave in New York, Financial Institutions have a VERY LONG MEMORY. I do not opine upon whether or not the non traditional servicers are making too much money; I am simply setting the record straight in that Bullies always get what’s coming to them. Cuomo is not going to be Governor forever. Everyone has skeletons in their closet. The question that is most fitting is whether or not now is the time to begin to get Front Row Seats for this Match.