By Dow Jones Business News, March 01, 2013, 07:24:00 PM EDT
By Andrew R. Johnson
The U.S. Justice Department is investigating a subsidiary of mortgage servicer Ocwen Financial Corp. ( OCN ) in
connection with its participation in a mortgage-modification program.
Ocwen said in a regulatory filing Friday that the Justice Department'sEastern District of Texas issued two civil
investigative demands to Homeward Residential Inc. on Nov. 30--prior to Ocwen closing its acquisition of the business.
The Justice Department is investigating whether Homeward violated the False Claims Act in connection with its
participation in the Home Affordable Mortgage Program, or HAMP.
"The investigation remains open, and we intend to cooperate in the event there are further information requests,"
Ocwen said in its annual 10-K filed with the Securities and Exchange Commission.
A spokeswoman for Ocwen declined to comment Friday.
Ocwen announced plans in October to acquire Homeward for $750 million from Wilbur Ross's W.L. Ross & Co. and closed
the deal in December.
Ocwen also said that on Feb. 26 the Consumer Financial Protection Bureau, state attorneys general and the Multi-State
Mortgage Committee requested that it consider contributing to a "consumer relief fund" to provide cash payments to
borrowers that had been foreclosed upon by the company. The Multi-State Mortgage Committee was created by state
financial regulators to coordinate supervision of mortgage lenders operating in multiple states.
"We do not believe such a contribution from us is warranted under the circumstances," Ocwen said, though it estimated
its maximum liability under the proposal could be $135 million.
Ocwen is a rising player in the business of collecting payments and distributing bills to mortgage borrowers. The
company has grown quickly in recent years by scooping up mortgage-servicing portfolios from banks that have exited or
scaled back in the business.
It recently closed on a $2.1 billion purchase of loan-servicing assets from Ally Financial Inc.'s Residential Capital
mortgage subsidiary, which is in bankruptcy.
Ocwen won the assets as part of a bankruptcy auction in October.
Ocwen's shares were down 1.6% at $39.42 in after-hours trading Friday. Its shares have more than doubled over the last
year through Friday's close of $40.06.
Write to Andrew R. Johnson at firstname.lastname@example.org
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