April 21 New York's banking regulator is probing
Ocwen Financial Corp, which collects mortgage payments,
for potentially over charging borrowers and investors to auction
off foreclosed properties it services.
Benjamin Lawsky, superintendent of New York's Department of
Financial Services, sent a letter to Ocwen saying he was
concerned the company and an affiliate, Altisource Portfolio
Solutions SA, were engaged in so-called self dealing
through an online auction site called Hubzu.
Self dealing is when a company represents its own interests
in a transaction, rather than those of a client.
Ocwen uses Hubzu, an Altisource Portfolio subsidiary, to
auction off borrower homes facing foreclosure and foreclosed
investor-owned properties. When Ocwen selects Hubzu to host
foreclosure or short sale auctions, the letter said, the Hubzu
auction fee is 4.5 percent; when Hubzu is competing for business
on the open market, its fee is as low as 1.5 percent.
"The relationship between Ocwen, Altisource Portfolio and
Hubzu raises significant concerns regarding self-dealing," the
letter said, adding that it raises questions about whether the
companies are charging inflated fees through conflicted business
relationships that may hurt homeowners and investors.
Ocwen did not immediately respond to a request seeking
Monday's letter follows another that Lawsky's office sent to
the company in February raising concerns about conflicts of
interest between Ocwen and four of its affiliates, including
Altisource Portfolio, that may encourage them to push borrowers
Ocwen was the fourth largest mortgage servicer in the United
States in 2013, collecting payments on nearly one out of every
twenty home loans.
(Reporting by Karen Freifeld and Peter Rudegeair; editing by