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Beleaguered Bill Erbey exiting Ocwen Financial after 27 years

  

nypost.com | January 19, 2015

By Kevin Dugan

Bill Erbey is walking toward the exit.

The chairman of Ocwen Financial, the beleaguered mortgage servicing company, is expected to step down from his position Friday after more than 27 years on the job — his reputation shredded and his net worth tattered.

Years of regulatory investigations into alleged foreclosure and mortgage-financing shenanigans caught up with Erbey last year.

A settlement with New York’s top financial services regulator included a promise that he step away from Ocwen and four related companies.

Subsequent investor and shareholder actions knocked the stuffing out of Ocwen shares.

They were down 80 percent last year — erasing about $1.7 billion of his net worth in 12 months.

Not that he needs a telethon or anything. As he exits Ocwen as chairman for the last time, he’s down to his last $450 million in riches.

The breathtaking fall of Erbey as a darling of the mortgage world comes after Ben Lawsky, superintendent of the New York Department of Financial Services, ousted him as part of a $150 million settlement that promised greater oversight.

“We view the settlement as an opportunity for a fresh start for Ocwen,” Lawsky told The Post on Thursday. “We want to see the company improve and are committed to working constructively with its new leadership to help make that happen.”

The companies have been accused by shareholders of widespread fraud, including self-dealing, backdating letters to distressed homeowners, conflicts of interest, and deliberately relying on outdated technology platforms to handle almost $500 billion worth of home loans, according to lawsuits.

Ocwen has not been found liable for any civil wrongs.

Ocwen, which Erbey founded in 1988, is the largest collector of subprime mortgage debt.

Its rapid rise to power — and Erbey’s tremendous wealth — came in the wake of the Dodd-Frank financial regulatory laws that made it expensive for banks to hold onto the riskier debt.

Therefore, they sold subprime mortgages to Ocwen.

Ocwen got into regulatory hot water when it used Erbey-related companies to manage the mortgages, create debt-collection technology and other matters.

Regulators looked into conflict-of-interest allegations.

Erbey’s companies also used inefficient programs to keep records on homeowners “to avoid incurring the $24 million a year necessary to operate” a more up-to-date program, according to a Florida lawsuit.

Ocwen also shared a chief risk officer with another Erbey-chaired company that was in charge of some of its investment technology.

“They’ve had process challenges, but ultimately their market presence reflects the fact that they are more successful than other people in actually keeping distressed homeowners in their homes,” said Orin Kramer, general partner of hedge fund Boston Provident.

Even though Erbey is stepping down, it’s unlikely he or his companies will see any respite from legal action.

Several pension funds and shareholders have filed suits against him, alleging fraud, and a California regulator has threatened to pull Ocwen’s license to do business in the state, claiming a lack of cooperation with an investigation into whether it’s broken state laws.

 

Back to January 2015 Archive

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