A top executive at mortgage servicer Ocwen Financial Corp. (NYSE:OCN) went on the defensive in an interview this week about his firm’s growth strategies and relationships with companies that are coming under regulatory scrutiny.
Executive chairman William Erbey defended Ocwen’s corporate structure and relationships the firm has with companies that have recently garnered regulatory scrutiny from the New York Department of Financial Services, reports the Wall Street Journal.
Benjamin Lawsky, superintendent of the NYDFS, sent a letter to Ocwen’s general counsel on February 26 expressing concern regarding potential “conflicts of interest” with other public companies the firm is affiliated with, including Altisource Portfolio Solutions. Lawsky has previously frozen Ocwen’s $2.7 billion agreement to buy mortgage servicing rights from Wells Fargo, citing concern about the firm’s ability to properly handle the additional volume.
“Presently, Ocwen’s management owns stock or stock options in the affiliated companies,” Lawsky said in the letter. “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.”
Erbey owned or controlled about 13% of Ocwen’s common stock, 26% of Altisource’s common stock, and 1% of Home Loan Servicing’s stock, according to a regulatory filing cited by WSJ.
But the way Ocwen’s corporate structure is set up provides investors with a “clear picture,” according to Erbey.
“Many of the businesses like Ocwen and Altisource by themselves are even complex to understand,” he told the WSJ. “By breaking them out separately, people are able to see a lot more clearly exactly what the business models are, and where those businesses can go strategically.”
Read the full article at the Wall Street Journal.
Written by Alyssa Gerace