Not one, but two, class action shareholder lawsuits are being initiated against Altisource Residential Corporation (RESI).
The complaints allege that the Altisource failed to fully disclose its exposure to loss of revenue, government investigations, and other issues associated with its relationship to Ocwen Financial (OCN), former Chairman William Erbey and other related parties.
On Dec. 22, 2014, Altisource announced that Erbey would step down as Chairman of the Board of Directors.
Erbey also stepped down from his post as executive chairman of Ocwen Financial following an investigation by New York Department of Financial Services that alleged conflicts of interest involving financial transactions involving Ocwen and related companies with financial ties to Ocwen, including Altisource, Altisource Portfolio Solutions (ASPS) and Home Loan Servicing Solutions, Ltd. (HLSS).
In that December agreement with the NYDFS, Ocwen agreed to pay $150 million to homeowners under an agreement with the New York Department of Financial Services.
Ocwen admitted in the agreement with the New York regulatory agency that it didn't properly deal with distressed homeowners and failed to maintain adequate systems for servicing hundreds of billions of dollars in mortgages.
The suits are both being filed in U.S. District Court for the District of the Virgin Islands.
One suit is being organized by Levi & Korsinsky, a national law firm with offices in New York, New Jersey, Connecticut and Washington D.C. The second suit is being organized by Glancy Binkow & Goldberg.
Altisource reported a 3% increase in net income in 2014, with the company’s income rising from $129.97 million in 2013 to $134.49 million in 2014.
But in the fourth quarter, Altisource reported a net loss of $1.5 million, compared to net income of $35.5 million in the same time period in 2013.
The company said that the loss was due several factors, including the discontinuation of its forced-placed insurance program in November. When Altisource announced it was discontinuing the program, it cited “uncertainties with industry-wide litigation and the regulatory environment” as reasons for the move.