New York's banking regulator asked Ocwen Financial Corp. for information about an insurance agreement that it says may be designed to funnel fees to an Ocwen affiliate for minimal work.

Benjamin Lawsky, the superintendent of the Department of Financial Services, is reviewing Ocwen's force-placed insurance arrangement with Altisource Portfolio Solutions, which he described as "troubling," according to a letter dated today obtained by Bloomberg News.

"Altisource will generate significant revenue from Ocwen's new force-placed arrangement while apparently doing very little work," Lawsky said in the letter. Documents suggest "Ocwen hired Altisource to design Ocwen's new force-placed program with the expectation and intent that Altisource would use this opportunity to steer profits to itself."

Lawsky is probing possible conflicts of interest at Ocwen, which has grown in recent years by acquiring the mortgage-servicing rights to distressed loans from large banks.

In February, he requested information about Ocwen's relationships with vendors, saying that William Erbey, the firm's chairman, was the largest shareholder in several affiliates that provide services to the company.

A phone call to an Ocwen spokesperson wasn't immediately returned.

Bloomberg News