Shares of Ocwen Financial are crashing on Tuesday after Benjamin Lawsky, the Superintendent of the New York Department of Financial Services sent the company a letter that said his office has uncovered “serious issues” with the company’s “systems and controls.”
In afternoon trade, Ocwen shares were down as much 24% and had been halted at least twice due to volatility.
In his letter, Lawsky wrote that his office uncovered backdating of potentially “hundreds of thousands of letters to borrowers, likely causing them significant harm.”
Lawsky’s letter outlines backdating that created situations where borrowers facing foreclosure received letters that specified a date to cure their default that had passed months prior to their actual receipt of the letter.
“The existence and pervasiveness of these issues raises critical questions about Ocwen’s ability to perform its core function of servicing loans,” Lawsky writes. “Even worse, Ocwen did nothing to investigate or address the backdating issue when an employee questioned the accuracy of Ocwen’s letter dating processes and alerted the company’s Vice President of Compliance… Ocwen’s indifference to such a serious matter demonstrates a troubling corporate culture that disregards the needs to struggling borrowers.”
(1:40 pm ET update)
In an emailed statement to Business Insider, an Ocwen spokesman said:
We deeply regret the inconvenience to borrowers who received improperly dated letters as a result of errors in our correspondence systems. As always, our goal is to avoid foreclosure. In the case of the 283 borrowers in New York who received letters with incorrect dates, 281 are currently borrowers with us. We are continuing to review the rest of the cases.
We believe that we have resolved the letter dating issues that we have identified to date, and we continue our investigation as to whether there are additional letter dating issues that need to be resolved. We are working with the monitor on these issues.
We are working with and fully cooperating with DFS and monitors to address their concerns
Here’s the ugly chart of Ocwen shares on Tuesday.
And here’s the full letter from Ocwen.
More to come …