In the current regulatory environment, Ocwen Financial Corp.’s service provider affiliate has decided to get out of the business of lender-placed insurance.
In April, New York Superintendent of Financial Services Benjamin M. Lawsky sent Ocwen a letter questioning fees earned by affiliate Altisource Portfolio Solutions S.A.
Lawsky wants to determine whether Ocwen is engaged in “self-dealing” and charging “inflated fees” — which the regulator claims “ultimately get passed on to the investors and struggling borrowers who are typically trying to mitigate their losses.”
Luxembourg-based Altisource issued a statement Wednesday indicating that it will discontinue its lender-placed insurance brokerage line of business.
Altisource claims its lender-placed insurance program offers unique benefits to consumers and investors — including competitive and lower premiums.
“However, given the uncertainties with industry-wide litigation and the regulatory environment, Altisource believes it is in the best interest of the company and its shareholders to discontinue this line of business and continue to focus attention and resources on developing and delivering leading innovative technology-driven products and services for the real estate and mortgage markets that will provide benefits to consumers, lenders, originators and other participants,” today’s statement said.
Borrowers who have already received coverage won’t be impacted by Altisource’s move.
Altisource estimates that its fourth-quarter income per share will take a $0.50 to $0.65 hit as a results of the decision to drop the insurance service.
