A New York regulator that has recently scrutinized large non-bank mortgage servicing companies warned Ocwen (NYSE: OCN) today on another issue: potential conflicts of interest between Ocwen and some of its affiliate companies.
In a letter to Ocwen’s general counsel released Wednesday, New York’s Superintendent of Financial Services Benjamin Lawsky cited findings he calls a “tangled web of conflicts” that could be damaging to homeowners whose mortgages are serviced by the company.
The Department’s ongoing review of Ocwen’s mortgage servicing practices has uncovered a number of potential conflicts of interest between Ocwen and other public companies with which Ocwen is closely affiliated,” the letter states. “Indeed, the facts our review has uncovered to date cast serious doubts on recent public statements made by the company that Ocwen has a ‘strictly arms-length business relationship’ with those companies.”
The conflicts could cause borrower harm and undue foreclosure, the letter continues.
The potential conflict lies among Ocwen, Altisource Portfolio Solutions, S.A., Altisource Residential Corporation, Altisource Asset Management Corporation, and Home Loan Servicing Solutions Ltd. Those affiliated companies are all chaired by Ocwen’s executive chairman William Erbey, whom is also the largest shareholder of each of the affiliates.
“Presently, Ocwen’s management owns stock or stock options in the affiliated companies,” the regulator states. “This raises the possibility that management has the opportunity and incentive to make decisions concerning Ocwen that are intended to benefit the share price of affiliated companies, resulting in harm to borrowers, mortgage investors, or Ocwen shareholders as a result.”
Lawsky requests that Ocwen submit documents detailing the relationships among the companies and the parties involved, including service agreements, so that it may investigate further.
Ocwen is the parent company of Liberty Home Equity Solutions as of a deal closed in 2012.
Written by Elizabeth Ecker
