Ocwen Financial Corp. (NYSE: OCN) Monday morning had a strong response to law firm Gibbs & Bruns, regarding residential mortgage-backed securities investors the firm represents. The company released an open letter to Gibbs & Bruns countering allegations that there was any basis for a default under the trust agreements.
However, Ocwen did not stop there. Ocwen also responded to BlueMountain Capital Management, addressing its allegations directly with the indenture trustee. BlueMountain Capital is a purported holder of notes issued by Ocwen subsidiary Home Loan Servicing Solutions Ltd.’s (NASDAQ: HLSS) HLSS Servicer Advance Receivables Trust. The indenture trustee in this case is Deutsche Bank National Trust Company.
Recently the company has settled up with California and agreed to pay $2.5 million in the dispute. Prior to this, Ocwen had reached a comprehensive settlement with the New York Department of Financial Services regarding its recent investigation.
A key point in the Gibbs & Bruns open letter was:
Ocwen’s obligations under the various agreements are to service the loans to the benefit of the Trusts as a whole and in accordance with the terms of the pertinent governing agreements. Ocwen does not, will not, and indeed may not accede to the special interests of your institutional investor clients, based on their particular tranche positions, to the detriment of the Trusts as a whole.
Despite having to settle in both New York and California, Ocwen is claiming that it is not as broken as some might speculate.
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The letter further countered the law firm:
We note that your clients’ ill-conceived effort to push foreclosures and stop principal reduction is not directly solely at Ocwen but is part of their ongoing industry-wide pro-foreclosure campaign, which has been roundly criticized by numerous national housing, consumer protection and civil rights groups as anti-consumer and contrary to good public policy.
To finish off the letter, Ocwen stated:
Ocwen continues to be committed to meeting all of its servicing obligations in accordance with its contractual arrangements in the over 2,500 Trusts that it services, and in full cooperation and compliance with its industry regulators. Your clients, on the other hand, are asking Ocwen to turn its back on the Trusts as a whole, on the borrowers, and on public policy. Ocwen declines to do so and reserves all its rights and remedies.
Shares of Ocwen were up 15% at $7.30 Monday morning. The company has a consensus analyst price target of $15.07 and a 52-week trading range of $5.66 to $47.44.
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