New York's top financial regulator is probing mortgage-servicing
firm Ocwen Financial Corp.'s relationships with several business
affiliates, raising concerns that borrowers may be harmed because
of the companies' close ties.
Benjamin Lawsky, the state's superintendent of financial
services, sent a letter Wednesday to Ocwen seeking information
about the company's financial interests in affiliated firms,
services that the other firms provide Ocwen and agreements between
the firms and other details.
The agency's "ongoing review of Ocwen's mortgage servicing
practices has uncovered a number of potential conflicts of interest
between Ocwen and other public companies with which Ocwen is
closely affiliated," Mr. Lawsky said in the letter, adding that
"this tangled web of conflicts could create incentives that harm
borrowers and push homeowners unduly into foreclosure."
Ocwen's shares were down 2% at $38.70 in recent trading
Wednesday.
The companies cited in the letter, a copy of which was reviewed
by The Wall Street Journal, include Altisource Portfolio Solutions
SA, which provides various technology services to Ocwen, and Home
Loan Servicing Solutions Ltd., which has acquired
mortgage-servicing rights from Ocwen. Representatives of Ocwen,
Altisource and Home Loan Servicing Solutions weren't available for
immediate comment.
Ocwen's executive chairman, William Erbey, is also chairman of
Altisource, Home Loan Servicing and other related firms, and is the
largest shareholder of each company, according to Mr. Lawsky's
letter. A recent regulatory filing from Altisource said that Ocwen
was its largest customer, accounting for 65% of its revenue in
2013.
Mr. Lawsky has been scrutinizing Ocwen's business amid concerns
that the company isn't equipped to handle the growth of its
servicing portfolio. Earlier this month the regulator halted a deal
in which Ocwen agreed to buy the rights to service $39 billion of
mortgages from Wells Fargo & Co.
Ocwen more than doubled the size of its servicing portfolio last
year, making it the fourth-largest servicer of mortgage loans,
according to industry publication Inside Mortgage Finance.
"Ocwen will continue to work closely with the NY DFS to resolve
its concerns about Ocwen's servicing portfolio," the company said
earlier this month.
Write to Andrew R. Johnson at andrewr.johnson@wsj.com
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