NEW YORK (TheStreet) -- Shares of Ocwen Financial (OCN) and four related companies overseen by Bill Erbey were plummeting Monday after Erbey was forced to resign as chairman of all of them in a stunning regulatory settlement with the New York Department of Financial Services.
Shares of Ocwen were down nearly 29%, shares of Altisources Porfolio (ASPS) Solutions were down 32% and shares of Altisource Asset Management (AAMC) were down 29%. Two less-volatile companies overseen by Erbey that pay large dividends, Home Loan Servicing Solutions (HLSS) and Altisource Residential, (RESI) were down roughly 6% and 8%, respectively.
The drops are even more stunning since shares of these companies had already sold off sharply this year as the NYDFS investigation dragged on. Many hedge funds had bought into shares of the different companies expecting the stocks to rebound following the settlements, but were already sitting on losses even before Monday's selloff.
Ocwen was built around the business of collecting mortgage debt -- also known as mortgage servicing. Along with other mortgage servicers such as Nationstar Mortgage Holdings (NSM) and Walter Investment Management (WAC) , it grew dramatically in the wake of the financial crisis as banks like Bank of America (BAC) and Wells Fargo (WFC) severely reduced their mortgage servicing businesses due to regulatory constraints and reputation issues. Nationstar shares were down nearly 9% and Walter shares were down nearly 10% Monday.