Investing in Ocwen Financial is Like Buying a Share in the Titanic

The product being sold by OCWEN FINANCIAL SERVICES is its common stock — and probably its integrity
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At least the Titanic has historical and maybe even archaeological significance.
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Let’s be clear. The product being sold by OCWEN FINANCIAL SERVICES is its common stock — and probably its integrity (if it ever had any). In plain language, the wealth of its owners is entirely dependent upon the greater fool theory — i.e., that someone will come along to pay a higher price for the common stock despite the lack of any fundamental assets or earnings to support a price of even half the current market.
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Now to be fair and fully transparent I will say that that if appearances are sustained, owners of Ocwen common stock will be rewarded. My point it is that appearances are never sustained and that eventually reality always sets in. But I could be wrong. This is an opinion piece — maybe my information and opinions are wrong. I firmly believe I am right.
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This company was created by William Erbey.  “In 2014 he stepped down as board chairman as part of a settlement with the New York Department of Financial Services, and resigned from positions at several related companies, over what the New York regulator called “serious conflicts of interest.”[6][7][8] (Wikipedia) Erbey chaired, and was the largest stakeholder for, four companies which had close business relationships with Ocwen; by directing default-related business to these companies, Erbey was able to profit by putting borrowers in default.[10][6] In order to do so, Ocwen used backdated letters to borrowers to make it appear as if they had not replied in the required timeframe and violated over a thousand of its other legal obligations.[6][10][11] As part of his resignation, Erbey received a lump-sum payment of $1.2 million dollars from Ocwen.[7]” Wikipedia [e.s.]
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Note that the business of Ocwen is generally understood to be “Default-Related.” And that is why I am writing this article. The business of Ocwen is to pose as a creditor or an agent representing a creditor when in fact it is neither. Despite correspondence and notices posted under the name of Ocwen by unknown people who sign nothing, it actually does not receive nor disburse any money. The entire business model is devoted to steering consumers into default with false statements of authority and false reports that are not related to any data input by any Ocwen employee. They also like to lie about “audits” when “loans” are “boarded,” which seems to be something that never actually happens.
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What is Ocwen? Nobody actually says what Ocwen is or what Ocwen does. It often poses as creditor when it is in fact acting as an agent for third parties. In litigation, those third parties, when pushed, cannot supply any corroborative evidence that they own any debt, note or mortgage. So what is it worth being an agent for a nonentity? Not much apparently, and even less if you go by standard metrics.
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But it is not just that it really doesn’t perform any duties related to the receipt and disbursement of “borrower” payments. The reference to the Titanic is applicable because that ship was torn apart by an underwater jag in an iceberg. The iceberg, in this case, is the fact that Ocwen regularly commits numerous civil violations of statutes that might include criminal statutes. In a word, in my opinion, it could be shut down overnight. And that is what the investment banks on Wall Street set it up to do if there was blowback on the fabrication of false documents, payment histories, and other things that create or maintain the illusion that a loan account really exists.
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Just as they did with David Stern and other law firms who were responsible for fabricating false documentation for purposes of foreclosure, Ocwen will be blamed for “exceeding its authority without the knowledge or consent” of the REMIC trustees who act for the investment banks for whom Ocwen owes its very existence (see registrations and offerings underwritten by Wall Street investment banks) — and that is OK with Ocwen management.
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They know that when the time comes that Ocwen implodes, they will suffer the same fate as David Stern —- living offshore with his Yacht and around $70 million. Stripped of his bar license why would he care. He already made more money than he would have ever made doing something else. Somehow his back-office operation — i.e., the center of the fraud — was purchased by interests supported by Wall Street banks.
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Who cares if they lied? Who cares if there is a new multibillion-dollar fine? And who cares about the stockholders of Ocwen who got suckered into making an investment that may have served only to benefit the investment banks and Ocwen management.
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THIS IS AN OPINION PIECE. CONSULT PROFESSIONAL ADVICE BEFORE MAKING ANY INVESTMENT DECISION.

3 Responses

  1. The same apply to other “servicers” like Countrywide Mob now acting under PennyMac name.

    No need to guess, read PennyMac’s Prospectus for Total Idiots.

    PennyMac only “expects” or “anticipates” to INVEST (not buy) non-perfoming loans IF FDIC would provide any financing; and all their “capital” is depends on LEVERAGE (???) coming from some third parties – Big Banks and their sham conduits like Black Rock

    So, PennyMac does not have ANY of its own funds to make any payments to investors and somehow plans to make substantial revenue from loans (which they call “assets”) where homeowners do not pay.

    Does it sounds absurd only to me? PennyMac plans to make 8% payments to investors on 320,000,000 million of 16,000,000 shares from ASSETS which PennyMac does not OWN and cannot even accrue unless someone decide to give them LEVERAGE which MAY be available; and these dividends will be coming from “assets” which do not perform. ???

    Here is how PennyMac describe their “investment business” – absurd even to a non-securities person.

    What word “LEVERAGE” means in this situation? Some new form of money which are not even available for PennyMac?

    “Leverage, the level of which may vary and MAY be available IF the program is established” .

    Sounds like a very attractive investment opportunity .

    What level of education Pension Funds managers have? Former pizza delivery guys kicked out from elementary schools?

    “We plan to finance our investments with leverage, the level of which may vary based upon the
    particular characteristics of our portfolio and on market conditions. However, in light of current market
    conditions, we anticipate initially utilizing limited leverage on our portfolio as part of our financing
    strategy. (SERIOUSLY??? Someone can INVEST in this junk?)

    With regard to mortgage loans, we anticipate that leverage may be available to us in
    connection with our acquisitions, if any, of mortgage assets from the FDIC as receiver for failed
    depository institutions. Although the amount of any leverage for this type of acquisition would be
    determined on a case-by-case basis, we anticipate that leverage may be available which would provide
    for a debt-to-equity ratio for acquisitions in the range of 2:1 to 3:1, and would likely not exceed 6:1.
    Direct acquisitions of mortgage loans from financial institutions may include seller financing, although
    the amount of potential leverage available, if any, would vary depending upon the seller. Our financing
    sources will include the net proceeds of this offering, our concurrent offering and the direct offering
    and, if and to the extent available at the relevant time, may include borrowings in the form of bank
    credit facilities (including term loans and revolving facilities), repurchase agreements, warehouse
    facilities, structured financing arrangements, public and private equity and debt issuances and derivative
    instruments, in addition to transaction or asset specific funding arrangements. We may also utilize
    leverage to the extent available through participation in the Legacy Loans Program, if the program is
    established.

    We intend to use leverage for the primary purpose of financing our
    portfolio and not for the purpose of speculating on changes in interest rates. We are not required to
    maintain any specific debt-to-equity ratio, and we believe the appropriate leverage for the particular
    assets we may finance depends on, among other things, the credit quality and risk of such assets”

    https://www.stifel.com/prospectusfiles/pd_687.pdf

  2. Excellent, Mr. Garfield. Good description of the template of all these servicers – Fargo, SLS, Wilson and Assoc., Citi , Greentree. Confuse the borrowers, lie to the alphabet agencies and stampede to the the Caymans with the money. Morals and truth be d—ed.

  3. Excellent Neil. And, some here will negate my kudos for excellency. I expect that. But Neil is correct. And, there is more. Because – Ocwen (and others) took bad records from prior servicers and manipulated them to generate fees to make sure all profit goes to them (and WHY bad records? – no one knows- but we know – no accounting). This is the crux of the CFPB action against Ocwen — prior servicer records to Ocwen are FALSE. Ocwen claims – too bad — you did not state this in settlement in early 2014 — so tough luck on you the CFPB. CFPB says — settlement did not exclude concealment of documents and failure to correct. Well — let’s see what the 11th Circuit does. I suspect, given worldwide problems – they won’t care. So first we have to fix worldwide problems — and that is NOT going to be easy and not going to happen anytime soon. We are in a devastating worldwide situation. Thanks Neil. Appreciate this. I have been here a long time. I am confident that you get all that has been done. And, your help may be the ONLY way to survive. I am not an attorney, and I am not affiliated with this blog or Neil. I have just seen so much in so long – that I know that the government will not help. You need to pinpoint the problems, and I think Neil does. Thanks, and God Bless.

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