By Peter Rudegeair and Karen Freifeld
Feb 26 (Reuters) - New York's banking regulator said on Wednesday that executives at Ocwen Financial Corp, a company that collects home loan payments, have ties to related mortgage companies that may give them an incentive to push borrowers into foreclosure.
Benjamin Lawsky, Superintendent of New York's Department of Financial Services, sent a letter to Ocwen seeking information about stock holdings and other relationships among Ocwen's officers and directors and four affiliates.
William Erbey, Ocwen's executive chairman, chairs four related companies: Altisource Portfolio Solutions SA, Altisource Residential Corp, Altisource Asset Management Corp and Home Loan Servicing Solutions Ltd . The companies provide an array of real-estate services, from purchasing and renting out single-family homes to managing real-estate investment trust assets.
The letter comes amid increased scrutiny of mortgage servicers like Ocwen whose explosive growth since the financial crisis has raised questions about whether they are properly handling home loans. The specialty companies have taken over much of the business of servicing mortgages from traditional banks.
Ocwen collects mortgage payments on nearly one out of every twenty U.S. home loans, making it the fourth largest mortgage servicer behind Wells Fargo & Co, JPMorgan Chase & Co and Bank of America Corp, according to industry publication Inside Mortgage Finance.
Lawsky said in the letter that he was concerned that a "tangled web of conflicts could create incentives that harm borrowers and push homeowners unduly into foreclosure."
Ocwen said in a statement that its relationships with the four companies Lawsky cited are "fully disclosed in our public filings, and we believe them to be on an arms length basis."
The company agreed to install an independent monitor in December 2012 after Lawsky's office found evidence of possible abuses.
In early February, Lawsky's office halted Ocwen's purchase from Wells Fargo of the servicing rights on 184,000 home loans with a total principal balance of $39 billion. The office was concerned with Ocwen's ability to take on the additional servicing load, a person familiar with the matter said at the time.
In a mid-February speech, Lawsky urged regulators to hinder the growth of specialty mortgage servicers like Ocwen in order to protect homeowners.
"We are seeing far too many struggling homeowners getting caught in a vortex of lost paperwork, unexplained fees and avoidable foreclosures," Lawsky said.
Lawsky said on Wednesday that the independent monitor at Ocwen found that the company's chief risk officer served in a similar role for Altisource Portfolio. The monitor asked Altisource to name a new chief risk officer, Lawsky said.
Ocwen's shares closed down 7 percent at $36.76.
- Financials Industry
- Benjamin Lawsky