Tags: Ocwen | foreclosure | New York | mortgage

Ocwen Shares Slide after NY Finds Backdated Foreclosure Letters

Tuesday, 21 October 2014 02:13 PM

Shares of Ocwen Financial Corp tumbled on Tuesday after New York's financial regulator said the company, one of the largest U.S. collectors of mortgage payments, may have harmed hundreds of thousands of borrowers by sending letters about loan modifications and foreclosures that were dated months earlier.

The company, which has been under scrutiny by New York's Department of Financial Services for loan-servicing problems, denied loan modifications in letters borrowers received more than 30 days after they were mailed, according to an Oct. 21 letter the regulator sent to Ocwen. Receiving the letter so late would have cut off the opportunity to appeal.

Ocwen's shares slid as much as 29.3 percent to $18.57, their lowest level since July 2012, after news of the regulator's letter. In afternoon trading, the shares were down $6.56, or 25 percent, at $19.70 on the New York Stock Exchange.

Ocwen also sent backdated letters to borrowers facing foreclosure that may have left them unable to avoid default, Benjamin Lawsky, the department's superintendent, wrote in the letter to Ocwen general counsel Timothy Hayes.

Lawsky said that when Ocwen was alerted to the backdating issues, it ignored the problem and still has not resolved the issue. He demanded the company "fix its systems without delay."

An Ocwen spokeswoman said the company believes it has resolved letter-dating issues it has identified to date and continues to investigate any further problems.

"We deeply regret the inconvenience to borrowers," the spokeswoman said.

An Ocwen employee alerted a compliance executive to backdating problems about a year ago and raised the issue again after being ignored for five months, according to the letter. Even then, the company failed to launch an appropriate investigation, the letter said.

'Troubling Corporate Culture'

"Ocwen's indifference to such a serious matter demonstrates a troubling corporate culture that disregards the needs of struggling borrowers," Lawsky said. He said the company is not complying with state and federal law.

In June, a monitor discovered a letter to borrowers in 2012 denying a loan modification that was backdated by 41 days. The company told the regulator over the summer it discovered the issue in April or May of 2014. It said it involved around 6,100 letters and it had changed its system to fix the problem.

"Each of these representations turned out to be false," Lawsky said in his letter, adding that the monitor uncovered additional problems. Lawsky said it may be impossible to determine the scope of the problem given issues with Ocwen's systems.

"If Ocwen intentionally misdated letters to deprive borrowers of modifications, then it could be exposed to serious legal liability," Jaret Seiberg, an analyst at Guggenheim Partners, said in a note in response to the news.

Seiberg said there also could be a "more benign explanation," and that perhaps only a small number of letters got delayed.

Ocwen has faced more intense supervision from the New York regulator since February, when its proposed purchase of servicing rights on $39 billion of Wells Fargo mortgages was indefinitely halted. Lawsky and the U.S. Securities and Exchange Commission have also questioned Ocwen's business ties to affiliates.

Shares of Nationstar Mortgage Holdings Inc, an Ocwen rival, were down 4.9 percent in afternoon trading.

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Shares of Ocwen Financial tumbled on Tuesday after New York's financial regulator said the company, one of the largest U.S. collectors of mortgage payments, may have harmed hundreds of thousands of borrowers.
Ocwen, foreclosure, New York, mortgage
Tuesday, 21 October 2014 02:13 PM
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