An Ocwen Financial office in Florida in 2009 where employees work on loan modifications.Credit Barbara P. Fernandez for The New York Times
Ocwen Financial, a mortgage-servicing firm that promised to improve on the loan-modification process for struggling homeowners, faces new regulatory scrutiny.
In a securities filing this week, Ocwen said that it had received a subpoena from the Securities and Exchange Commission requesting documents related to a group of companies with which it conducts business.
Ocwen’s executive chairman, William C. Erbey, is also chairman of some of the other companies, which do things like buy up delinquent loans and rent out foreclosed houses.
Investors worry that these businesses ties are rife with potential conflicts.
Earlier this year, New York State’s top banking regulator, Benjamin M. Lawsky, said he was concerned that Ocwen and one of the other companies, Altisource Portfolio Solutions, were employing the same chief risk officer, who was reporting directly to Mr. Erbey in both jobs.
Ocwen has also contracted with some of Mr. Erbey’s other companies. And some of the other companies have hired Ocwen.
According to executives at Ocwen, all transactions between the companies are at “arm’s length.” But to some investors, it is not clear whether the companies are overcharging for their service and whether those costs are being passed on to the mortgage bond investors. In an interview in February, Mr. Erbey said that the company disclosed these costs, and they were consistent with industry standards.
Ocwen had been benefiting from a shift in the mortgage industry, as large banks seek to shed the servicing of their most troubled subprime loans. Regulators initially supported the move of mortgage servicing to firms like Ocwen because such companies were believed to be more responsive to borrowers than large banks, especially troubled loans that require additional attention.
As a result, Ocwen’s servicing business, and its share price, rose rapidly. But homeowners have reported problems with the nonbank servicers similar to those they had with the banks, including questionable loan modifications.
Mr. Lawsky, who is the superintendent of the New York State Department of Financial Services, has installed an independent monitor at Ocwen that has cited problems with the record-keeping. Earlier this year, Mr. Lawsky halted the transfer of $39 billion of mortgage servicing rights to Ocwen from Wells Fargo.
The S.E.C. also plans to issue an additional subpoena related to Ocwen’s announcement last week that it was amending some of its financial statements because of an accounting change related to how it valued certain mortgage-servicing rights.
Ocwen said in its filing that it was cooperating with the S.E.C.’s requests.
As the company struggled with its regulatory issues, its share price has plummeted, falling 52 percent since the start of the year.
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