More turmoil at Ocwen as company nears merger

Ocwen Financial Corp.'s CFO and CEO plan to leave company next month

May 30, 2018 06:22 PM

Ocwen CFO Michael Bourque and Ocwen headquarters

A second top executive at the troubled mortgage service provider Ocwen Financial Corp. is leaving the company.

Ocwen’s CFO Michael Bourque plans to depart on June 22, according to a Securities and Exchange Commission filing. The news comes just a month after the West Palm Beach-based company’s top executive Ron Faris announced he would resign when the company completes its $360 million acquisition of PHH Corp. The former CEO of PHH Corp, Glen Messina, will become the CEO of Ocwen when the deal finalizes.

Bourque is leaving the company to accept a position with another financial services company, according to the SEC filing. He will accept a payment of $125,000 and will receive $50,000 in connection with his relocation from the U.S. Virgin Islands.

Ocwen Financial once had a market capitalization of more than $6 billion and made a fortune servicing subprime mortgages from banks after the financial crisis. U.S. Commerce Secretary Wilbur Ross was a member of its board of directors and its founder, Bill Erbey, was valued at $2.8 billion, according to Forbes.

In the last few years, however, the company has faced numerous financial and legal challenges. Regulators alleged that Ocwen mishandled consumers’ mortgage payments and illegally foreclosed on people’s homes. In 2013, Ocwen reached a $2.1 billion settlement with the federal government and 49 states to address such allegations of mortgage servicing misconduct.

These fines and heightened regulatory scrutiny caused Ocwen’s stock to plummet. The stock closed at at $4.42 on Wednesday, down from about $60 in 2013.

Ocwen has since settled most of its outstanding litigation with regulators, including 31 state attorney generals. But its past earnings paint a bleak financial picture.

The company exited the wholesale forward lending business last year, which was one of its biggest lines of business. Ocwen also reported a net loss of $128.5 million in 2017 and its mortgage portfolio declined 61.4 percent since 2013.

In February, Ocwen announced it would acquire PHH Corp., a New Jersey-based mortgage provider that is dealing with its own legal issues. In August 2017, the company agreed to pay $74.5 million to the U.S. Department of Justice to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the federal government.

As part of the yet-to-be-completed acquisition, Ocwen agreed to assume $119 million of PHH’s outstanding corporate debt.

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