NEW YORK (The Deal) -- Restructuring advisor Goldin Associates has been appointed operations monitor of Ocwen Financial (OCN), in conjunction with a settlement the embattled mortgage debt collector reached with New York's main financial services regulator on Dec. 19.
Goldin, will "among other responsibilities, review and assess the adequacy and effectiveness of [Ocwen's] operations, including providing periodic reporting on findings and progress," Ocwen stated in a delayed quarterly filing released Monday. Goldin will also review Ocwen's transactions with four related companies: Altisource Portfolio Solutions (ASPS), Home Loan Servicing Solutions (HLSS), Altisource Asset Management (AAMC) and Altisource Residential (RESI).
On Dec. 19, 2014, Ocwen reached a settlement with the New York Department of Financial Services (NYDFS) requiring it to pay $150 million in penalties and compensation to homeowners for improper foreclosures. The NYDFS also said it found "widespread conflicts of interest" between Ocwen, ASPS, HLSS, RESI and AAMC. As part of the settlement, Bill Erbey resigned from the chairmanship of all five companies, and agreed to have no "directorial, management, oversight, consulting, or any other role at Ocwen or any related party." Erbey remains a major shareholder in all five companies.
Ocwen grew rapidly from 2010-2013 as it acquired mortgage servicing rights from banks including Bank of America (BAC) and ResCap (the former GMAC), mainly on delinquent loans. That growth, however, attracted the attention of the NYDFS and other regulators. Since the settlement was reached, Ocwen shares have fallen some 50% as the company has become a magnet for lawsuits, activists and short sellers. It faces a liquidity crunch and has sold off some of its better-performing mortgage servicing rights to focus on its principal business of servicing delinquent mortgages. While it's 10-K and 10-Q filings had been delayed, it released its 10-K last week and its 10-Q Monday, and announced it was now "in full compliance" with the listing standards of New York Stock Exchange.
Mortgage servicing essentially refers to debt collection. Mortgage servicing rights, or MSRs, allow servicers such as Ocwen to collect a fee in exchange for collecting mortgage debt and, in some cases, foreclosing on borrowers who are unable to pay.
Founded by former New York City Comptroller Harrison J. Goldin, Goldin Associates had an advisory, monitoring or similar role in the bankruptcies of Enron, Refco, the City of Detroit, Drexel Burnham Lambert, and MBIA, according to the firm's website.
A call to Goldin was not returned, and spokesmen for Ocwen and the NYDFS did not respond to questions.