Ocwen Views Recent Settlement as Vindication from Investor’s Allegations of Default

Ocwen Financial Corporation views the agreement between Home Loan Servicing Solutions (HLSS) and Deutsche Bank announced earlier this week as a chance to dismiss a private investment firm's accusations of default against Ocwen, according to an announcement from Ocwen.

New York-based private investment firm BlueMountain Capital, a purported holder of notes issued by HLSS Servicer Advance Receivables Trust (HSART) wrote a letter last month accusing Ocwen, the largest non-bank mortgage servicer in the United States, of breach of contract and default on certain notes serviced by HLSS.  Ocwen subsequently issued a statement vowing to "vigorously defend itself" against BlueMountain's accusations.

Earlier this week, HLSS announced an agreement with Deutsche Bank, the indenture trustee for HSART, regarding similar claims of default by BlueMountain. The parties agreed they would not initiate any judiciary proceedings with regards to the merit of BlueMountain's allegations, and HLSS agreed to allow Deutsche Bank to withhold excess funds that would otherwise be eligible for distribution from the HSART trust to HLSS, according to an announcement from HLSS.

Ocwen announced that it consented to the agreement between the parties, believing that the agreement gave the servicer and the involved parties to dispel "false accusations of a default under the HSART Indenture," according to Ocwen.

"Ocwen refutes BlueMountain's allegations and believes no event of default has occurred under the HSART Indenture," Ocwen said in the statement issued Wednesday.  "As previously stated, Ocwen will continue to vigorously defend against BlueMountain's campaign, as a short seller of Ocwen stock, to undermine Ocwen's share price and financial position through misleading and inaccurate press releases."

One of the largest HLSS shareholders, New York-based investor Mangrove Partners, wrote two letters to the HLSS Board of Directors earlier this month requesting that HLSS terminate its relationship with Ocwen due to the embattled Atlanta-based servicer's much-publicized regulatory troubles in the last year. Last week, a Los Angeles law firm announced a class action lawsuit against HLSS over its relationship with Ocwen.