It appears that BlackRock (BLK) has far more interest in housing than just the mortgage bonds it owns.
The company, which is reportedly part of a group of mortgage bond investors that is currently threatening to sue Ocwen Financial (OCN) for failing to properly collect payments on $82 billion of home loans, disclosed recently that it owns 7.5% of the stock in Ocwen’s associated company, Altisource Residential Corporation (RESI). Those shares are currently worth $77.38 million.
But that’s not the only housing stock BlackRock owns. In fact, according to recent filings with the Securities and Exchange Commission, BlackRock owns a substantial stake in another of Ocwen’s associates, Home Loan Servicing Solutions (HLSS), as well as considerable interests in CoreLogic (CLGX) and Lowe’s (LOW).
According to the SEC filings, BlackRock owns 4,811,797 shares in Home Loan Servicing Solutions, which represents 6.8% of the outstanding shares.
Home Loan Servicing Solutions’ stock closed at $12.06 on Friday, making BlackRock’s stake in the company worth $58 million.
BlackRock’s ownership in HLSS is notable because the notice of non-performance sent to Ocwen and the trustees for 119 residential mortgage-backed securities trusts, via the law firm of Gibbs & Bruns, specifically mentions “conflicted servicing practices” between Ocwen and its affiliates, including Altisource Portfolio Solutions (ASPS) and Home Loan Servicing Solutions.
Home Loan Servicing Solutions has also come under fire from another investor, hedge fund BlueMountain Capital Management sent notices of default to Ocwen and Home Loan Servicing Solutions, saying that Ocwen’s regulatory troubles have caused an “irrefutable” default on notes the hedge fund holds in connection with the HLSS Servicer Advance Receivables Trust.
In addition to announcing that it sent the notices of default to HLSS, BlueMountain also said that that holds a short position in the stocks of both Ocwen and HLSS. But according to HLSS, that short position is BlueMountain’s true motivation for accusing HLLS of default.
“We have very serious concerns about BlueMountain’s motivations for publicly filing their letter, James Lauter, Home Loan Servicing Solutions’ senior vice president and chief financial officer, said in a letter sent to Deutsche Bank National Trust Company, the indenture trustee.
“It appears that BlueMountain’s assertions may be motivated by its financial interest in profiting from these short positions, rather than by any interest it may have as a holder of notes issued by the trust,” Lauter also said in the letter, which was revealed in a SEC filing.
BlackRock’s motivation in accusing Ocwen of mortgage payment negligence was also questioned.
“Your letter obscures the ultimate objective of your investor clients: to stop servicers from modifying loans and force them to foreclose on and evict as many struggling homeowners as quickly as possible,” Ocwen said in the letter of response.
“While knee-jerk foreclosures may redound to the special economic interests of your clients, they are not in the best interests of the trusts as a whole, not consistent with industry practice, and therefore prohibited under the servicing agreements,” Ocwen added.
What isn’t in question, at least as of now, is BlackRock’s motivation in holding its positions in CoreLogic and Lowes, both of which are sizeable.
In addition to its 6.8% ownership interest in HLSS, BlackRock also owns 6% of CoreLogic, a total of 5,347,854 shares. At CoreLogic’s Friday closing price of $33.20, BlackRock’s shares are worth $177.5 million.
BlackRock’s ownership stake in Lowes takes the cake though. BlackRock currently owns 59,104,604 shares of the home improvement store’s stock, which represents 6.1% of the outstanding shares in Lowe’s.
At Lowe’s Friday closing price of $67.76, BlackRock’s shares are worth $4 billion.