New York's top financial regulator is ramping up a probe of
mortgage-servicing firm Ocwen Financial Corp., zeroing in on the
company's use of a property auction site that he says may be
driving up costs for mortgage investors and borrowers.
Benjamin Lawsky, superintendent of the New York Department of
Financial Services, sent a letter to Ocwen Monday seeking
information about its relationship with Hubzu, which is used to
auction off properties facing foreclosure.
Hubzu is owned by Altisource Portfolio Solutions SA, a company
that was spun out of Ocwen in 2009. Ocwen Executive Chairman
William Erbey also serves as chairman of Altisource and owns stakes
in both Ocwen and Altisource.
"Hubzu appears to be charging auction fees on Ocwen-serviced
properties that are up to three times the fees charged to non-Ocwen
customers," Mr. Lawsky wrote in the letter. The higher fees
"ultimately get passed on to the investors and struggling borrowers
who are typically trying to mitigate their losses and are not not
involved in the selection of Hubzu as the host site."
Representatives of Ocwen and Altisource could not immediately be
reached for comment.
Mr. Lawsky, who has called the rapid growth of nonbank mortgage
servicers "eyebrow raising," is concerned that companies such as
Ocwen and competing non-bank mortgage servicer Nationstar Mortgage
Holdings Inc. aren't equipped to handle the massive amount of loan
volume they have taken on in recent years.
Earlier this year, Mr. Lawsky halted indefinitely a deal in
which Ocwen agreed to acquire the rights to service $39 billion of
mortgages from Wells Fargo & Co. In February, he also raised
concerns about Ocwen's relationships with several affiliated
businesses that he said could create incentives that harm borrowers
and increase the likelihood of foreclosure. He later announced he
was also probing Nationstar over similar concerns.
Mr. Erbey, who also chairs the affiliated businesses, defended
the companies' relationships in an interview with The Wall Street
Journal last month.
Write to Andrew R. Johnson at andrewr.johnson@wsj.com
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