By Peter Rudegeair and Karen Freifeld
Feb 26 New York's banking regulator said on
Wednesday that executives at Ocwen Financial Corp, a
company that collects home loan payments, have ties to related
mortgage companies that may give them an incentive to push
borrowers into foreclosure.
Benjamin Lawsky, Superintendent of New York's Department of
Financial Services, sent a letter to Ocwen seeking information
about stock holdings and other relationships among Ocwen's
officers and directors and four affiliates.
William Erbey, Ocwen's executive chairman, chairs four
related companies: Altisource Portfolio Solutions SA,
Altisource Residential Corp, Altisource Asset
Management Corp and Home Loan Servicing Solutions Ltd
. The companies provide an array of real-estate
services, from purchasing and renting out single-family homes to
managing real-estate investment trust assets.
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
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.
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."
Ocwen said in a statement that its relationships with the
four companies Lawsky cited are "fully disclosed in our public
filings, and we believe them to be on an arms length basis."
The company agreed to install an independent monitor in
December 2012 after Lawsky's office found evidence of possible
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.
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.
Lawsky said on Wednesday that the independent monitor at
Ocwen found that the company's chief risk officer served in a
similar role for Altisource Portfolio. The monitor asked
Altisource to name a new chief risk officer, Lawsky said.
Ocwen's shares closed down 7 percent at $36.76.