Ocwen Rejects 'Baseless Allegations' of Mortgage Investors

By James Sterngold 

An attorney for Ocwen Financial Corp., the embattled mortgage-servicing company, on Monday issued a letter rejecting efforts by a group of large investors seeking to remove the firm as servicer of $82 billion of residential mortgage-backed securities.

Richard Jacobsen, an attorney with Orrick Herrington & Sutcliffe LLP, said the investors had made "baseless allegations," and that their letter late last week had "an inflammatory tone, with misleading content."

Mr. Jacobsen's letter didn't address the specific claims in the investors' letter, which was released late Friday. The investors, who hold 25% of the private-label mortgage securities, include asset managers Pacific Investment Management Co., Kore Capital LP, MetLife Inc. and BlackRock Inc.

The investors said in their letter that they had conducted a lengthy investigation and alleged that Ocwen had improperly enriched itself, made imprudent loan modifications, and failed to maintain adequate records or account for all the funds it was handling for the investors.

Mr. Jacobsen said group didn't represent the interests of all investors in the securities and that they objected to Ocwen's legitimate efforts to modify loans of distressed borrowers so they could remain in their homes. He said the investors were on a "pro-foreclosure campaign."

Representatives for the investors couldn't immediately be reached for comment about the Ocwen letter Monday morning.

The $82 billion in mortgage securities accounts for about 20% of the mortgages that Ocwen services.

The trustees for the securities have 60 days to consider the claims and then decide whether to remove Ocwen as the servicer.

Ocwen shares fell 17% on Friday and are down 58% in the early weeks of 2015.

Ocwen has had a string of regulatory problems in the past year. After a series of claims by New York state's Department of Financial Services that Ocwen had engaged in improper servicing practices for distressed mortgage borrowers and had questionable dealings with affiliated companies, the company agreed in December to pay $150 million and William Erbey, its executive chairman and largest shareholder, agreed to step down.

Write to James Sterngold at [e-mail]

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