Ocwen Financial Corp OCN shares are down another 4.0 percent in early Friday trading after plummeting more than 50 percent on Thursday. More than 20 states issued cease-and-desist orders against the company related to alleged mismanagement of escrow accounts and the company’s poor financial state, and the Consumer Financial Protection Bureau has filed a lawsuit against Ocwen for similar alleged abuses.
Height Securities analyst Edwin Groshans believes the lawsuit may be the beginning of the end of Ocwen. According to Groshans, Ocwen is going to have an extremely difficult time finding customers from this point forward.
“We believe that any risk manager reading the CFPB’s complaint would be very concerned not just about the claims but also the pervasiveness of the claims throughout the servicing process, and that risk manager would consider switching servicing platforms to mitigate the risks to which his or her firm could be exposed,” Groshans explained.
Other stocks are getting hammered in the wake of Ocwen’s downfall as well. Altisource Portfolio Solutions S.A. ASPS, which owns Ocwens servicing platform REALService, plummeted 42.0 percent on Thursday. In addition, New Residential Investment Corp NRZ, which owns some of Ocwen’s servicing rights, was down 7.6 percent as well.
Related Link: New Residential Investment Corp Hammered By Ocwen News
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