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."

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