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Blue Mountain: Ocwen Financial In Default, Shorts Shares

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Ocwen Financial Corp (NYSE: OCN) shares plunged Friday after a creditor claimed the troubled mortgage servicing company and an affiliate is in default on its debt.

Note holder Blue Mountain Capital said that recent regulatory sanctions against Ocwen and the affiliated Home Loan Servicing Solutions Ltd (NASDAQ: HLSS) constitute a default under lending covenants.

Blue Mountain, a New York-based hedge fund, also disclosed it has taken a short position in Home Loan Servicing.

Ocwen changed hands recently at $6.24, down 18 percent; Home Loan Servicing fell more than 11 percent to $13.62.

California regulators launched proceedings earlier this month to suspend Ocwen's servicer license, while the company last month agreed to a consent order from the New York Department of Financial Services.

As part of the $150 million settlement with New York regulators, William Erbey, Ocwen's co-founder, resigned as Ocwen's chairman as well as chairman of Home Loan Servicing and the affiliated Altisource.

Blue Mountain cited those two developments as well as recent ratings action regarding the two companies by Moody's, which cited the regulatory sanctions.

Posted-In: Blue Mountain CapitalNews Short Sellers Financing

 

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