News of Ocwen Financial Corporation’s tanking shares is reportedly being associated with litigation claims against the mortgage servicers by a group of institutional investors. Ocwen’s stock price fell 9.03 percent to $38.07 per share.
According to a recent report, the investors are contemplating filing a legal case against Ocwen over its mortgage servicing practices and loan modifications. Coincidentally enough, the investors’ group, which includes Pimco and BlackRock, is being represented by Gibbs & Bruns, the same law firm that has represented big banks like JPMorgan Chase and Bank of America in similar cases.
Ocwen continues to face increased scrutiny over its practices after it announced a $2.1 billion settlement with the Consumer Financial Protection Bureau (CFPB) and other regulators, along with 49 states and the District of Columbia in Dec 2013.
In addition, last week Benjamin Lawsky, superintendent of New York’s Department of Financial Services stopped a cash-deal worth $2.7 billion between Wells Fargo & Co. and Ocwen last month. Ocwen planned to purchase residential mortgage-servicing rights on 1,84,000 loans with total principal balance of about $39 billion from Wells Fargo. Due to concerns regarding Ocwen handling increase in service volume, Lawsky has revoked Ocwen’s recent deal.
The mortgage servicer allegedly used deceptive and unfair means while working with borrowers who were delinquent. The company was accused of misrepresenting facts while filing foreclosure documents, charging unjustified fees for default-related services and forcing borrowers to buy unnecessary insurance policies, among others.
Ocwen is expected to release its fourth-quarter 2013 results at the end of this month, keeping in mind that if the lawsuit against Ocwen is pursued and the financial institution is found guilty, it will drive the price per share of their stock down further.
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