Ocwen Pays $2 Million to Settle Financial Misstatement Claimby
SEC says company misstated net income in 2013 and 2014
Ocwen paid $150 million over N.Y. regulator's claims in 2014
Ocwen Financial Corp. agreed to pay $2 million to resolve U.S. Securities and Exchange Commission claims that it misstated financial results by relying on valuations performed by a related party.
The agreement announced by the SEC in a statement Wednesday grows out of the agency’s probe of the mortgage-servicing company’s internal controls and its restatement of earnings from three quarters of 2013 and the first quarter of 2014.
In December 2014, Ocwen reached a $150 million settlement with New York’s Department of Financial Services over allegations that it improperly funneled business to related entities controlled by William Erbey, who was the company’s chairman until January of last year. He stepped down from his roles at Ocwen and the related companies as part of the DFS accord.
At the time, Ocwen had been accused by then-DFS superintendent Benjamin Lawsky of backdating letters to homeowners, making it more difficult for them to get mortgage modifications. The New York settlement required the company to add two independent directors who wouldn’t own shares in related entities.
According to Wednesday’s SEC administrative order, Ocwen inaccurately told investors that it independently valued complex mortgage assets at fair value under generally accepted accounting principles. Instead, the company used valuations provided by the related party that received certain mortgage servicing rights from Ocwen. Further, the SEC found that even though Erbey usually recused himself from negotiations and approvals of related-party transactions, the process was inconsistent and ad hoc.
“Ocwen remains committed to full compliance with all legal and regulatory requirements and will continue to fully cooperate with regulators on any matter brought to its attention,” the company said in a statement. Ocwen consented to the regulator’s order without admitting or denying the findings, according to the SEC.