Regulator zeroes in on mortgage servicer’s ties to auction site

Ocwen customers allegedly charged up to three times regular rate by Hubzu

Ocwen's Ronald Faris
Ocwen's Ronald Faris

The New York Department of Financial Services is ramping up an investigation of mortgage firm Ocwen Financial, targeting the company’s relationship with foreclosure auction site Hubzu.

Benjamin Lawsky, superintendent of the state financial regulator, sent a letter to Ocwen yesterday seeking additional information about the company’s work with Hubzu, a site that auctions off properties facing foreclosure. Altisource Portfolio Solutions, a spinoff from Ocwen back in 2009, owns Hubzu.

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“Hubzu appears to be charging auction fees on Ocwen-serviced properties that are up to three times the fee charged to non-Ocwen customers,” Lawsky wrote in the letter. The fees, he said, “ultimately get passed on to the investors and struggling borrowers who are typically trying to mitigate their losses and are not involved in the selection of Hubzu as the host site.”

The relationship between Ocwen — the largest non-bank mortgage servicer in the U.S. — and Altisource and Hubzu, Lawsky added, “raises significant concerns regarding self-dealing.”

The move is part of Lawsky’s wider probe into Ocwen and other independent mortgage servicers that have raised concerns about their ability to handle the volume of servicing rights recently assumed. New York state regulators halted a $39 billion mortgage servicing rights transfer from Wells Fargo to Ocwen in February, and fund giants BlackRock and Pimco reportedly mulled a suit against the servicer for improperly handling residential mortgages. [WSJ]Julie Strickland