California Stares Down Subprime Lender Ocwen

SACRAMENTO (CN) - Fresh off fines and regulations in New York state, subprime mortgage lender Ocwen is facing the prospect of suspension of its license from the California Department of Business Oversight.

Officials at the California regulator seek a 12-month suspension of Ocwen's license, claiming say Ocwen has not turned over information or cooperated with a subpoena. The regulator began investigating Ocwen a year ago, reviewing whether the mortgage servicer has complied with the California Homeowners Bill of Rights.

"They failed to comply with requests for information. They failed to comply with a subpoena for information. They violated a lawful order from the commissioner," Tom Dresslar, spokesman for the Department of Business Oversight told the Los Angeles Times. "We can't countenance that kind of behavior."

News of Ocwen's possible suspension caused an immediate reaction on Wall Street. Ocwen shares closed at $6.99 Wednesday, down 43 percent in the two days since the announcement. Ocwen stock prices have been on a steady decline since January 2014, when its share price was over $50.

The New York Department of Financial Services reached a settlement with Ocwen in December, fining the corporation $100 million and requiring its founder William Erbey to step down.

Ocwen CEO Ron Faris claims the company has complied with the California regulator's requests.

"We believe we have provided the requested information in the format requested," Faris said in a statement. "We expect that we will receive follow-up requests or clarifications and that further document and information exchanges may take place. "

Ocwen, the fourth-largest mortgage servicer in the nation, executed more than 13,000 loan modifications in California in 2014, the company says.

An administrative law judge will oversee Ocwen suspension hearings in February. A ruling is expected this summer.

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