Home Loan Servicing Solutions has agreed to pay $1.5 million to settle charges over its relationship with former Ocwen Financial Chairman William Erbey and its valuation of billions of dollars in mortgage servicing rights (MSRs) it acquired from Ocwen.

The charges are the latest fallout from regulatory investigations of Ocwen and affiiliated companies including HLSS, which was formed by Erbey to acquire mortgage servicing rights and other income streams from the servicing of mortgage loans. Erbey also served as chairman of HLSS.

According to the U.S. Securities and Exchange Commission, HLSS represented to investors that it required Erbey to recuse himself from deals with Ocwen to avoid conflicts of interest when, in fact, it had no recusal policies in place and Erbey himself approved many such transactions.

Due to difficulties encountered with transferring title to the MSRs to HLSS, Ocwen retained title and HLSS agreed to purchase rights to the MSRs. Among the deals Erbey approved was the purchase of rights to service mortgages with an unpaid principal balance of $67.5 billion in 2012.

“When [Erbey] reviewed and approved these transactions, he typically did the same on the Ocwen side of the transactions,” the SEC said Monday in an administrative order.

HLSS also misstated its net income in 2012, 2013, and the first quarter of 2014, the SEC alleged, by failing to value MSRs, its primary asset, in accordance with GAAP.

“Although HLSS disclosed that it valued these assets at their fair value … its actual approach was to assign a value equal to their carrying value, provided the carrying value was within five percent of a third-party’s fair market value estimate,” the regulator said.

To settle the charges, HLSS agreed to pay a $1.5 million civil penalty. The company “failed to meet requirements that are fundamental to ensuring that investors receive reliable information, including in matters involving complex assets,” Michael J. Osnato, chief of the SEC Enforcement Division’s complex financial instruments unit, said in a news release.

A related investigation by the New York Department of Financial Services ultimately led to Erbey’s resignation as chairman of both Ocwen and HLSS and a $150 million fine for Ocwen.

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