Shares of Ocwen Financial Corp OCN fell more than 20 percent Monday following news that its Executive Chairman, William C. Erbey, will step down to address conflicts of interest and that it has reached a $150 million settlement with the State of New York.
The New York Department of Financial Services announced Monday that it uncovered “serious conflict of interest issues” with the company and that Mr. Erbey “will have no directorial, management, oversight, consulting, or any other role at Ocwen or any related party, or at any of Ocwen's or the related parties' affiliates or subsidiaries.”
According to the press release, “Ocwen — the fourth-largest mortgage servicer in the country and largest subprime mortgage servicer in the United States — will undertake significant operational reforms to address serious servicing misconduct and conflict of interest issues at the company; have an NYDFS-selected, independent monitor on site for up to an additional three years; and provide "hard-dollar" assistance to New Yorkers totaling $150 million.”
“In 2010 and 2011, NYDFS participated in a multistate examination of Ocwen, as well as entities ultimately acquired by Ocwen. The examination of Ocwen identified, among other things, deficiencies in Ocwen’s servicing platform and loss mitigation infrastructure, including (a) robo-signing, (b) inaccurate affidavits and failure to properly validate document execution processes, (c) missing documentation, (d) wrongful foreclosure, (e) failure to properly maintain books and records, and (f) initiation of foreclosure actions without proper legal standing,” according to the Department of Financial Services.
Ocwen Financial recently traded at $17.11, down 21.9 percent.
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