The company, formerly based in Atlanta, made the disclosure in its 10-K filing on Monday. That news, along with the announcement of a full-year loss of $247 million and a fourth-quarter loss of $224 million, has caused Ocwen's stock price when adjusted for splits to plunge to levels not seen since the spring of 2008, according to data from Yahoo Finance.
Ocwen shares fell nearly 45% Tuesday, to $2.10 apiece, with a low point during the day of $2.05. Almost 34 million shares changed hands.
On Monday the low during the day was $3.73, and the trading volume was almost 12.7 million shares.
On Friday, Ocwen closed at $6.15 per share, with a trading volume of 2.6 million shares.
According to the 10-K, on Feb. 11 of this year the SEC sent a letter informing Ocwen that the agency was conducting an investigation of fees and expenses charged regarding liquidated loans and real-estate-owned properties held in nonagency residential mortgage-backed securities trusts.
As previously disclosed, nearly a year earlier the SEC sent a letter to Ocwen stating it was conducting an investigation into the use of collection agents by mortgage servicers. Ocwen said it believes that letter "was also sent to other companies in the industry."
An SEC spokesman, Ryan White, declined to comment on either investigation.
During Ocwen's conference call Monday, when asked about the fees and expenses investigation, President and Chief Executive Ronald Faris said that he could not comment but that Ocwen feels confident that the fees that are part of the servicing business that are either assessed to borrowers or passed on to RMBS investors are monitored closely by master servicers and trustees.
"We've had various third parties look at them," Faris said. "We have a good sense as to what others servicers have done since we've acquired a lot of servicing portfolios and have been able to see what industry practice has been, and we feel comfortable that our process is within industry practice."
Ocwen has had its share of legal and regulatory battles over its servicing practices. The company's portfolio activities are monitored as part of the $25 million national mortgage settlement. It also paid $2.5 million to settle a case with California regulators in January 2015 and $150 million to New York in a December 2014 deal that forced its founder, William Erbey, to resign as chairman.
"We must continue to work with California and New York to both lift our restrictions on servicing rights acquisitions and to allow us to operate in a more normalized business environment which includes winding down the monitorships and associated costs," Faris said on the call Monday.
In January Ocwen paid $2 million to the SEC to settle charges it misstated its financial results.
A press release from Zacks Investment Research said "the magnitude of the [fourth-quarter] loss took the market by surprise."
As for the two latest probes, Zacks commented, "We remain concerned about the impact of mounting compliance and monitoring expenses, apart from the endless regulatory probes into the company's near-term financials."