Rumors of Benjamin Lawksy’s potential departure from the New York Department of Financial Services sent the stocks of Ocwen Financial (OCN) and its affiliated companies soaring Tuesday.
Ocwen has been in Lawsky’s sights since February, when when the NYDFS Superintendent put a $2.7 billion mortgage servicing rights deal between Ocwen and Wells Fargo (WFC) on an indefinite hold.
Ocwen’s close relationship with Altisource Residential (RESI), Altisource Asset Management Corp (AAMC), Altisource Portfolio (ASPS), and Home Loan Servicing Solutions (HLSS) has also been in Lawsky’s crosshairs since the NYDFS first sent a letter to Ocwen’s general counsel about the dealings between the affiliated companies in February.
Lawsky’s letter, a copy of which can be read or downloaded here, says that his office is looking at the relationship between Ocwen and Altisource Portfolio, and Altisource Portfolio’s subsidiary, Hubzu, which Ocwen uses as its principal online auction site for the sale of its borrowers’ homes facing foreclosure, as well as investor-owned properties following foreclosure.
Lawsky has also targeted Ocwen over the practice of force-placed insurance by Ocwen’s affiliate Altisource Portfolio Solutions.
In an open letter to Ocwen’s general counsel, Timothy Hayes, Lawsky raises a series of questions in August, alleging that there exists a complex arrangement related to force-placement that “appears designed to funnel as much as $65 million in fees annually from already-distressed homeowners to Altisource for minimal work.”
Ocwen announced two weeks ago in its own earnings statement that it booked a $100 million charge for a potential settlement with the New York Department of Financial Services over allegations that it was backdating letters to borrowers.
On Monday, reports began circulating that Lawsky would step down in 2015. And Tuesday, the stocks of Ocwen and its affiliates jumped upon the news that Ocwen’s main antagonist may be leaving.
Ocwen Financial was up nearly 5%, rising $1.08 to $23.04. When Lawsky sent the letter about the backdated letters, Ocwen’s stock immediately plummeted from $26.25 to $19.10.
Altisource Residential was up 1.87%, rising $0.39 to $21.30.
Altisource Asset Management’s stock jumped significantly, rising by $45.43 (nearly 8.5%) in the day’s trading on Tuesday.
Altisource Portfolio Solutions’ stock rose by $2.47 on Tuesday, a jump of 3.51% for the day, closing at $72.78.
And Home Loan Servicing Solutions’ stock was up $0.16 for the day, rising 0.84% to $19.23.
