By Karen Freifeld
NEW YORK Feb 11 A number of institutional
investors including BlackRock Inc are considering the
possibility of legal action against Ocwen Financial Corp
over its mortgage servicing practices, a person familiar with
the matter said on Tuesday.
The investors want greater transparency on how Ocwen, the
country's largest nonbank mortgage servicer, manages its
mortgages, particularly loan modifications, the person said.
Richard Gillespie, a spokesman for Atlanta-based Ocwen,
declined to comment about any possible action by investors.
Ocwen said in a statement, "Helping people avoid foreclosure via
sustainable modifications are good for our business, the
investors who own the mortgages, homeowners and communities."
Ocwen is among a number of specialty servicers whose growth
since the housing bust has drawn the attention of state and
federal regulators. The regulators are questioning whether the
companies have the systems in place to collect mortgage payments
in large volumes.
In December, it agreed to provide $2 billion in relief to
homeowners as part of a settlement with federal and state
authorities over accusations of deceptive mortgage servicing.
Investors in mortgage-backed securities may be concerned
that Ocwen's loan servicing practices are affecting the
performance of the securities.
Kathy Patrick of Gibbs & Bruns, a Houston-based law firm
whose clients include BlackRock and Allianz SE's
Pimco, has been talking to clients about various ways to
proceed, the person familiar with the situation said. The source
was not authorized to speak publicly and spoke on condition of
Legal action against the company is one possibility and is
not imminent, the person said. The investors also could apply
pressure on trustees overseeing the securities to take
unspecified action against Ocwen, according to the source.
News of the possible legal action against Ocwen was first
reported by the Financial Times, which said Pimco also was
A spokesman for Pimco did not return a call for comment. A
spokeswoman for BlackRock declined to comment, as did Patrick.
Last Thursday, Ocwen said New York's banking regulator
halted its purchase of servicing rights on a portfolio of
mortgages from Wells Fargo & Co. The regulator is
concerned that Ocwen does not have the ability to handle the
load, a person familiar with the matter said. [ID: nL2N0LB265]
Gibbs & Bruns' represents groups of institutional investors
who reached an $8.5 billion settlement with Bank of America Corp
and a $4.5 billion proposed deal with JPMorgan Chase &