Feb 26 New York's banking regulator on Wednesday requested financial information from Ocwen Financial Corp about executives' holdings and connections to affiliated companies that raise conflict of interest questions about the company that collects payments on mortgages.
Benjamin Lawsky, Superintendent of New York's Department of Financial Services, sent a letter to Ocwen seeking information about stock holdings and other ties between Ocwen's officers and directors and four affiliated companies.
Lawsky said in the letter that he was concerned that a "tangled web of conflicts could create incentives that harm borrowers and push homeowners unduly into foreclosure."
A spokeswoman for Ocwen did not immediately respond to a request for comment.
The letter comes amid increased scrutiny of mortgage servicers like Ocwen whose explosive growth since the financial crisis has raised questions about whether they are properly handling home loans. The specialty companies have taken over much of the business of servicing mortgages from traditional banks.
In early February, Lawsky's office halted Ocwen's purchase from Wells Fargo of the servicing rights on 184,000 home loans with a total principal balance of $39 billion. The office was concerned with Ocwen's ability to take on the additional servicing load, a person familiar with the matter said at the time.
Ocwen executive chairman William Erbey also chairs four other affiliated residential real-estate companies: Altisource Portfolio Solutions SA, Altisource Residential Corp , Altisource Asset Management Corp and Home Loan Servicing Solutions Ltd.
In a mid-February speech, Lawsky urged regulators to hinder the growth of specialty mortgage servicers like Ocwen in order to protect homeowners.
"We are seeing far too many struggling homeowners getting caught in a vortex of lost paperwork, unexplained fees and avoidable foreclosures," Lawsky said.
Ocwen collects mortgage payments on nearly one out of every twenty U.S. home loans, making it the fourth largest mortgage servicer behind Wells Fargo & Co, JPMorgan Chase & Co and Bank of America Corp, according to industry publication Inside Mortgage Finance.