NEW YORK, Aug 4 (Reuters) - New York’s top banking regulator said on Monday that Ocwen Financial Corp, a mortgage servicing company, may be funneling as much as $65 million to an affiliated company even though his office has raised concerns about potential conflicts of interest between such entities.
Benjamin Lawsky, superintendent of New York’s Department of Financial Services, sent a letter to Ocwen questioning its new contracts to provide force-placed insurance with Southwest Business Corp, an agent that was recommended by Altisource Portfolio Solutions SA, an Ocwen affiliate.
Forced-place insurance policies are usually taken out by banks or other lenders on properties for which the owner does not have sufficient or any coverage. The premiums are passed onto borrowers.
“The contracts, dated as of June 1, 2014, indicated that Altisource will generate significant revenue from Ocwen’s new forced-place arrangement while apparently doing very little work,” Lawsky wrote in the letter.
Lawsky said that insurance agencies affiliated with mortgage servicing companies like Ocwen have an incentive to purchase force-placed insurance with high premiums, which “can push already struggling families over the foreclosure cliff.”
In February, Lawsky sent a letter to Ocwen raising questions about whether ties that its executives had to related mortgage companies, including Altisource, could encourage them to push borrowers into foreclosure. (Reporting by Peter Rudegeair and Karen Freifeld; Editing by Leslie Adler)