By Dow Jones Business News, March 13, 2013, 02:09:00 PM EDT
--Mr. Ross had been serving as an observer to Ocwen's board since Homeward deal closed in December
--Ocwen's purchase of Homeward included $162 million of preferred shares granted to Mr. Ross' firm
--Mr. Ross' appointment brings number of Ocwen board members to seven
(Updated with details about Ocwen's acquisition of Homeward in second paragraph, details about Homeward business in
paragraph seven and new details throughout.)
By Andrew R. Johnson
Billionaire investor Wilbur L. Ross is joining the board of directors of Ocwen Financial Corp. ( OCN ), which bought a
mortgage business from Mr. Ross's private-equity firm last year.
Ocwen closed its acquisition of Homeward Residential Holdings Inc. from W.L. Ross & Co. LLC in December, paying about
$766 million, of which $162 million was in the form of 162,000 shares of preferred stock, which may be converted to
common stock. Since then, Mr. Ross has been serving as an "observer" to Ocwen's board, which is a non-paid, non-voting
position, an Ocwen spokeswoman said Wednesday.
Mr. Ross's appointment to director brings Ocwen's board to seven members from six, the spokeswoman said.
"Mr. Ross's significant experience in finance and outstanding track record as an investor will provide excellent
insight to our board to help us achieve our strategic goals," William Erbey, executive chairman of Ocwen, said in a
Mr. Ross said in a statement that he has been impressed with Ocwen's "exceptional growth and innovative approach to
the mortgage industry."
Ocwen has quickly become one of the nation's largest mortgage servicers, which send bills to and collect payments from
borrowers. The company has fueled its growth by acquiring portfolios of mortgage-servicing rights disposed by larger
companies that have exited the business.
With the Homeward deal, Ocwen gained mortgage-servicing and subservicing rights for about 421,000 loans totaling $77
billion in balances.
Ocwen also teamed up in October with competing mortgage servicer Walter Investment Management Corp. ( WAC ) for the $3
billion acquisition of mortgage-servicing and origination assets from Residential Capital, the bankrupt mortgage
subsidiary of Ally Financial Inc. Ocwen's portion of the deal closed last month.
Ally announced Tuesday it was selling a separate portfolio of servicing rights on $90 billion of mortgages to Ocwen
for about $585 million.
Some large banks, including Bank of America Corp. ( BAC ), have scaled back in the servicing business amid pending new
capital requirements that could make such operations more costly for lenders as well as increased regulatory scrutiny.
Ocwen said in a regulatory filing earlier this month that the U.S. Justice Department had issued two civil
investigative demands to Homeward last year before Ocwen closed its acquisition of the business. The agency is
investigating whether Homeward violated the False Claims Act in connect with its participation in the federal mortgage-
assistance program called 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 the filing.
Ocwen's shares were down slightly at $40.32 in recent trading on Wednesday. The shares are up more than 16% this year.
Write to Andrew R. Johnson at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.