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New York's banking regulator unleashed a verbal assault on nonbank servicer Ocwen Financial Wednesday, saying the company's use of technology to better handle distressed loans is "too good to be true."
February 13 -
The New York regulator questioned Ocwen's ability to handle more volume after an independent monitor reviewed the mortgage servicer's operations, a person familiar with the situation says.
February 6 -
Regulatory intervention throws a monkey wrench into a mortgage servicer's growth plans -- and calls into question whether there are enough nonbanks to absorb all the servicing banks want to sell.
February 10
New York regulator Benjamin Lawsky raised concern about conflicts of interest in mortgage servicer Ocwen Financial's business relationships, warning that a "tangled web of conflicts could create incentives that harm borrowers and push homeowners unduly into foreclosure."
The New York Department of Financial Service superintendent demanded that Ocwen provide additional information and documentation about its ties to a group of companies chaired by William Erbey, who is also Ocwen's executive chairman. The affiliated companies are Altisource Portfolio Solutions, Altisource Residentail Corp., Altisource Asset Management Corp., and Home Loan Servicing Solutions.
Members of Ocwen's management team currently own stock or stock options in the group of Altisource companies, Lawsky said in a letter to Ocwens general counsel released Wednesday.
"This raises the possibility that management has the opportunity and incentive to make decisions concerning Ocwen that are intended to benefit the share price of affiliated companies, resulting in harm to borrowers, mortgage investors, or Ocwen shareholders," Lawsky said.
Ocwen defended its ties with the group of companies. The relationships "are fully disclosed in our public filings, and we believe them to be on an arms-length basis," the company said in an email.
"We look forward to addressing the matters raised by NY DFS and will fully cooperate," Ocwen said.
The rapidly expanding Ocwen has attracted increased regulatory scrutiny in recent months. Lawsky
"We have serious concerns that some of these nonbank mortgage servicers are getting too big, too fast,"
The Department of Financial Services issued a consent order against Ocwen in December 2012 and has since monitored the company's operations. Its review found an earlier conflict of interest in the role of Ocwen's chief risk officer, who also served as the chief risk officer of Altisource Portfolio. The individual, who was not named in the letter, has since been removed from his position at Altisource Portfolio.
