The New York Department of Financial Services has accused Ocwen Financial Corp. of profiting improperly from auction fees, according to a New York Newsday report. DFS Superintendent Benjamin Lawsky on Monday sent a letter to Ocwen Monday stating that the department was investigating whether the company was engaged in “self-dealing” and charging inflated fees.
The investigation centers on Ocwen’s relationship with online auction site Hubzu, Newsday reported. Lawsky said Huzbu charges a 4.5% auction fee for Ocwen properties – up to three times the fee charged to other clients.
Hubzu is owned by Altisource Portfolio Solutions, a company spun off from Ocwen in 2009, according to Newsday. Ocwen’s executive chairman, William Erbey, also serve’s as Altisource’s chairman and owns stakes in both companies.
Hubzu is the principal auction site for Ocwen’s foreclosed properties and short sales, Newsday reported.
Lawsky wrote that the higher fees charged by Hubzu “ultimately get passed on to the investors and struggling borrowers who are trying to mitigate their losses.”
Ocwen serviced nearly $435 billion in mortgages in the third quarter of last year, Newsday reported. That’s up $128 billion from the year before. The company has been plagued with allegations
that it has mishandled borrowers’ loans. As part of a settlement with regulators last year, Ocwen agreed to pay $2.1bn in relief to homeowners.
One of the nation’s largest mortgage servicers has been accused by New York state regulators of gouging mortgage investors and distressed homeowners.