New York Regulators Question Ocwen's Business Ties

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 Ocwen's 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 arm's-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 halted the firm's agreement to buy a mortgage servicing portfolio from Wells Fargo in early February, citing Ocwen's growth as a concern.

"We have serious concerns that some of these nonbank mortgage servicers are getting too big, too fast," Lawsky said at an annual meeting of the New York Bankers Association early this month. "We see far too many struggling homeowners getting caught in a vortex of lost paperwork, unexplained fees and avoidable foreclosures."

Comments (7)
As someone that does short sale switch with Ocwen...no they are not one of the best by far. All you have to do is look at the short sale forums/blogs from realtors to see there are tons of issues with Ocwen.

BOA sold one of my personal mortgages with Ocwen - didn't get the notice until after I went to pay my mortgage on my online BOA account. Branch did not know who they sold it to and when I got home I had the official announcement it was sold. Then when I went to pay it on Ocwen's website they wanted to charge me to pay it on the phone and would not allow me to pay it online unless I paid the past due and a $10 surcharge because it was 10 days late.

Hard to do when you don't even know they are servicing your mortgage. It's this type of behaviour that drives homeowners nuts and as a realtor who deals with short sales I can write a book about all the servicers that I deal with and how they abuse the law. Please who are we kidding!
Posted by dynamicbroker | Friday, February 28 2014 at 3:45PM ET
It is probably all very legal. Incorporating offshore. Interlocking directories. Exclusively using Altisource and all of its subsequence companies which were spun off in 2004 when Ocwen decided they didnt want to be regulated as a bank anymore. Establishing a "network" of lenders but still not a bank.
Posted by CECE F | Thursday, February 27 2014 at 10:11PM ET
Get over yourselves, Ocwen is acting in a manner that is legal and fully upholding their rights. Furthermore, they are one of the better servicers in the space today.
Posted by Rob w | Thursday, February 27 2014 at 3:18PM ET
It may be just be easier to pay your obligations on time.
Posted by Frank D | Thursday, February 27 2014 at 9:03AM ET
It may be just be easier to pay your obligations on time.
Posted by Frank D | Thursday, February 27 2014 at 9:03AM ET
ocwen is an ongoing criminal enterprise and its management belongs in prison.
Posted by liam n | Wednesday, February 26 2014 at 5:41PM ET
Arms length....not a problem.... disclosed.... BAH!!!! Is that meant to be a joke?
Posted by Rick H | Wednesday, February 26 2014 at 4:00PM ET
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