An Atlanta mortgage servicing firm that has been struggling in the wake of regulators’ probes into its foreclosure practices disclosed this week that its auditor is evaluating its ability to continue operating as a “going concern.”
Ocwen Financial Corp. said in a press release that it had missed a deadline extension last week to file its 2014 annual report, triggering a warning from the New York Stock Exchange that could eventually result in the firm’s stock being delisted from the exchange.
Ocwen said it didn’t know when it will be able to file its annual report because it needs more time to determine whether a key subsidiary, Home Loan Servicing Solutions, will have sufficient finances to meet its mortgage servicing obligations.
“A failure by HLSS to fund new servicing advances could have a material negative impact on the company’s financial condition, and the company requires additional time to prepare information related to its ability to operate as a going concern and to provide such information to the auditors,” said Ocwen.
Often, when a company’s auditor raises questions about its ability to continue as a going concern, the firm faces bleak choices, such as seeking a buyer to rescue it, reorganizing in bankruptcy court, or shutting down.
Ocwen has been shrinking in recent weeks as it sells mortgage servicing rights and other assets, after recently reaching settlements with regulators in New York and California. Ocwen agreed to pay more than $150 million in the settlements, which also forced the company’s chairman to step down, and restricted its ability to take on new mortgage servicing business.
Ocwen has been hit by a barrage of challenges in the last two years, including a $2 billion settlement in 2013 of federal and state regulators’ allegations that it mishandled many homeowners’ troubled loans. Since then, the company has faced client and investor lawsuits and credit rating downgrades that could allow more clients to take away more business.
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