Shares of mortgage servicing company Ocwen are crashing on Tuesday after a report in The Los Angeles Times said California is looking to suspend the company’s mortgage licence in the state.
In afternoon trade on Tuesday, Ocwen shares were down as much as 38% bringing the stock’s losses over the last year to about 85% in what has been a complete disaster of a year for the company.
Here’s the LA Times on Tuesday:
California’s action accuses Ocwen of defying requests for information by the California Department of Business Oversight, which licenses nonbank mortgage lenders and providers of collection and foreclosure services.
Ocwen, which specialises in handling troubled home loans, is the largest mortgage servicer not affiliated with a bank and the nation’s fourth-largest servicer overall.
Losing a California licence would mean that Ocwen, based in Atlanta, would have to sell its rights to handle bill collection and foreclosures in the state, said Tom Dresslar, spokesman for the state agency.
The Times’ report added that Ocwen counts California as its largest source of business.
Back in October, shares of Ocwen crashed after regulators in New York sent a letter to the company saying it uncovered “serious issues” with some of Ocwen’s systems and controls, including the uncovering of backdated letters that saw borrowers unwitting face foreclosure.
In December, Ocwen agreed to pay a $US100 million settlement to the state of New York.
The massive drop in Ocwen shares of Tuesday brings the stock’s loss to more than 85% over the last year, giving up more than all of the gains the company enjoyed as the stock rallied from around $US14 per share at the beginning of 2012 to just less than $US60 per share at its October 2013 peak.
Ocwen did not respond to Business Insider’s request for comment.
Here’s the last year of trade in Ocwen shares, which has been a total disaster.