Ocwen Shares Fall Amid Review of Accounting ControlsDakin Campbell and Zachary Tracer
Ocwen Financial Corp., the worst performer in the Russell 1000 Index for the past year, fell again today after saying investors shouldn’t rely on its financial statements as the firm’s auditor reviews accounting controls.
Ocwen, the largest nonbank mortgage servicer, fell 4.5 percent to $25.16 in New York. That extends its slide over the past 12 months to 51 percent, compared with a 15 percent gain for the 1,033-company benchmark. The company said it plans to restate results and delayed its quarterly filing for the three months ended June 30.
There may be “material weakness” in the firm’s accounting for how it booked a sale of mortgage-servicing rights to Home Loan Servicing Solutions Ltd., Atlanta-based Ocwen said today in a regulatory filing. Pretax income for 2013 probably increased by $17 million and declined by the same amount in this year’s first quarter, according to the filing.
“The company anticipates it will determine that a material weakness existed in the relevant time periods in the adequacy of our controls,” Ocwen said in the filing.
Benjamin Lawsky, superintendent of New York State’s Department of Financial Services, is reviewing Ocwen’s arrangement with Altisource Portfolio Solutions SA, which he said may be designed to funnel fees to an affiliate for minimal work. Ocwen declined to comment on Lawsky’s review earlier this month.
Ocwen created Home Loan Servicing Solutions, which it took public in 2012, to help finance investments in servicing contracts. Billionaire William Erbey is chairman of both firms, as well as other related companies.
Ocwen said it doesn’t anticipate any change to second-quarter results. Mortgage-servicing rights are contracts assigning the authority to collect home-loan payments from borrowers.