Ocwen Financial Corp plummeted on report that it could lose its mortgage license in California. The stock declined more than 36% to $7.78 per share on Tuesday.
Authorities in the state are seeking to suspend its license on allegations that it is resisting their request for information.
Formal notice sent to suspend Ocwen Financial’s license
The Californian Department of Business Oversight said Ocwen Financial failed to submit documentation showing that it complies with regulations protecting homeowners. The agency is responsible in providing licenses to non-bank mortgage lenders and payment collection and foreclosure service providers in the state.
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The agency already sent a formal notice of intent to suspend Ocwen Financial’s license for one year. The agency also compiled 10 separate requests over a period of 18 months with incomplete responses from the company.
It is investigating Ocwen Financial for potential violations of the California Homeowners Bill of Rights and the California Residential Mortgage lending Act.
Ocwen Financial provided little information to determine whether it complies with the California Homeowners Bill of Rights despite a series of escalating demands and eventually a judicial order. The agency pointed out that the company failed to provide all the necessary information it requested including reports on a sample of 1,320 loans, according to the agency.
According to Tom Dresslar, spokesman for the California Department of Business Oversight, Ocwen Financial will need to sell its rights to collect bills and handle foreclosures in the state if it license will be suspended.
“They failed to comply with requests for information. They failed to comply with a subpoena for information. They violated a lawful order from the commissioner. And they failed to comply with an order from an administrative law judge.We can’t countenance that kind of behavior,” said Dresslar.
Dresslar said the agency received complaints against Ocwen Financial from January to October 2013. The complaints include issues under the Homeowners Bill of Rights.
Ocwen Financial is cooperating with authorities in California
Ocwen Financial said it is working constructively with the agency to comply with its demand for documentation. The company also emphasized that it focused on the continued improvement if its processes and procedures.
“Under the oversight of our newly hired chief risk officer, we are cooperating fully with the [state agency] and recently provided what we believe to be accurate and complete information,” according to the statement of Ocwen Financial.
Ocwen Financial is one of the largest mortgage service provider not affiliated with any bank. The company specializes in handling troubled mortgages.