Exclusive: Big mortgage investors take first step toward suing Ocwen
By Karen Freifeld
NEW YORK (Reuters) - Major mortgage bond investors including BlackRock (BLK.N: Quote), MetLife (MET.N: Quote) and Pimco (ALVG.DE: Quote) on Friday took a first step toward suing Ocwen Financial Corp (OCN.N: Quote), accusing it of having failed to properly collect payments on $82 billion of home loans, according to a person familiar with the matter and to documents seen by Reuters.
The group sent a formal notice of non-performance to Ocwen and trustees for 119 residential mortgage-backed securities trusts, alleging improper loan modification practices, wrongfully recouped advances, and a failure to account for cash flows.
The notice said that Ocwen also steered work to affiliates such as Altisource Portfolio Solutions (ASPS.O: Quote) and Home Loan Servicing Solutions HLSS.O for allegedly unnecessary or overpriced mortgage servicing to the detriment of the trusts, investors and borrowers.
The investors said the trusts had losses of more than $1 billion because of Ocwen's failings.
Margaret Popper, a spokeswoman for Ocwen, had no immediate comment.
The case is the latest setback for Ocwen, which was recently threatened with the loss of its license in California, and whose stock has fallen 89 percent from its record high in October 2013 amid state and federal probes into its business practices.
Ocwen settled the California case on Friday after agreeing to pay $2.5 million in penalties, according to Tom Dressler, a spokesman for the California Department of Business Oversight. He said Ocwen would be barred from accepting new customers in California until the mortgage servicing company complies with certain requests for information.
Also, earlier on Friday, BlueMountain Capital Management said it delivered a notice of default in securities issued by Ocwen affiliate Home Loan Servicing Solutions. The hedge fund also said it was shorting stock of Ocwen and the affiliate. Continued...