Benjamin Lawsky, The NY superintendent of the Department of Financial services stated in a letter today that he “intends to take whatever action is necessary” with Ocwen Financial Corp (NYSE:OCN) after saying the company backdated as many as “hundreds of thousands” of loan modification letters to mortgage borrowers.
Something is rotten in Atlanta
Lawsky was already conducting a probe of the Atlanta-based lender, after an employee brought the fact that Ocwen Financial Corp (NYSE:OCN) was backdating letters to borrowers to the firm’s attention. The unnamed employee apparently discovered the error in November of 2013. The letter today showed a growing distrust in Ocwen by Lawsky. Ocwen claimed earlier this year that it had found the backdating problem internally in April and fixed it sometime in May. However, Ocwen later admitted that that was a false statement.
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“Given the issues with Ocwen’s systems, it may be impossible to determine the scope of Ocwen’s non-compliance,” Lawsky said in his letter properly dated today.
“Ocwen’s indifference to such a serious matter demonstrates a troubling corporate culture that disregards the needs of struggling borrowers,” Lawsky wrote.
The backdating saw borrowers receiving a letter wherein Ocwen Financial Corp (NYSE:OCN) denied a loan modification, but dated in over 30 days before physically sending the letter according to Lawsky. That made it impossible for borrowers to appeal as they only had 30 days to do so.
“In light of these serious issues and the likelihood that thousands of new, inaccurate records are created with each passing day, Ocwen has not approached this problem with the urgency it demands,” Lawsky said in the letter. “Ocwen must fix its systems without delay.”
“We deeply regret the inconvenience to borrowers who received improperly dated letters as a result of errors in our correspondence systems,” according to an Ocwen Financial Corp (NYSE:OCN) spokesperson, in a release to CNBC earlier today. “As always, our goal is to avoid foreclosure. In the case of the 283 borrowers in New York who received letters with incorrect dates, 281 are currently borrowers with us. We are continuing to review the rest of the cases.”
Following word of the letter, Ocwen which opened the day at $26.48, saw its shares plunge to as low as $18.99. It has since recovered and is presently (3:47PM EDT) trading at $21.28 down $4.98 or 18.96%.