Ocwen Financial Corp., one of the biggest U.S. mortgage servicers, fell the most ever after a newspaper reported that California is seeking to suspend its license.
Ocwen plunged 36% to $7.82 at 10:50 a.m. in New York, the biggest drop since the firm went public in 1996. The Los Angeles Times said yesterday that California’s Department of Business Oversight notified Ocwen in October that it intended to suspend its license for a year, an action that would force Ocwen to sell its mortgage-servicing rights in the state.
Ocwen, founded by William Erbey, has declined 86% in the past year amid a review by its auditor and investigations by the New York Department of Financial Services and the U.S. Consumer Financial Protection Bureau. Erbey, 65, agreed last month to step down from his positions at Atlanta-based Ocwen and related companies in a settlement with New York regulators.
“We think the issues outlined in the article can be addressed by actions OCN is already taking, especially since near-term profitability is not important, but we need to speak to management,” Bose George, an analyst at Keefe Bruyette Woods Inc. in New York, wrote in a report today, using Ocwen’s ticker symbol to refer to the company.
Ocwen failed to comply with a California subpoena for information, the Times said. A spokesman for the company told the newspaper that it is cooperating fully and recently turned over the information requested. Calls to the agency and Ocwen weren’t immediately returned.
Home Loan Servicing Solutions, which buys mortgage servicing rights from Ocwen then hires it to collect loan payments, fell 24% to $12.30. Nationstar Mortgage Holdings Inc. also dropped, declining 8.4% to $23.90. Other nonbank servicers may be at risk of similar investigations, Jaret Seiberg, a managing director at Guggenheim Securities LLC in Washington, wrote in a report.