California is trying to suspend the mortgage license of Ocwen Financial (OCN) saying that the nonbank servicer failed to turn over documentation showing that it complies with the states laws. Per the LA Times.
Ocwen has been under severe scrutiny lately. At the end of December, HousingWire broke the news that Ocwen Executive Chairman William Erbey would resign from the Ocwen family of companies in January, and Ocwen would pay $150 million to homeowners under an agreement with the New York Department of Financial Services.
California's action accuses Ocwen of defying requests for information by the California Department of Business Oversight, which licenses nonbank mortgage lenders and providers of collection and foreclosure services.
Losing a California license would mean that Ocwen, based in Atlanta, would have to sell its rights to handle bill collection and foreclosures in the state, said Tom Dresslar, spokesman for the state agency.
That could be a big blow to Ocwen, which counts California as its biggest source of business. As of Sept. 30, the company serviced 378,132 home loans in California with unpaid principal of $95 billion. That amounts to 15% of Ocwen's total loans and 23% of the total balance due.
Ocwen's stock is tanking on the news of California's push to banish it from the state. As of 10:45 ET, the company's shares are currently trading at $7.93, down nearly 35% for the day. One year ago today, Ocwen's stock was trading at $55.20.