(Reuters) - Mortgage servicer Ocwen Financial Group said on Monday a group of investors had no basis for claiming it failed to live up to its agreements to collect payments on $82 billion worth of home loans.
Ocwen's shares were up 47 percent in premarket trading after the company reached a $2.5 million settlement with the California Department of Business Oversight, which had threatened to suspend Ocwen's license to operate in the state.
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The investor group's demands stem from its special interests and are not in the best interests of the trusts as a whole, a lawyer for Ocwen said in a Jan. 26 letter.
The investors claim Ocwen performed worse than other servicers and that the trusts had losses of more than $1 billion because of the company's performance.
Ocwen used conflicted servicing practices that enriched its affiliates, engaged in improper loan modification and advance recovery practices and failed to properly account for trust cash flows, the investors said.
They also say the company should not use trust funds to "pay" Ocwen's borrower relief obligations under a national mortgage settlement.
"Ocwen denies that there is any basis for a default under the trust agreements," attorney Richard Jacobsen, who represents Ocwen, wrote in the letter to Kathy Patrick, a lawyer for the investor group.
The investors, he said, were "asking Ocwen to turn its back on the trusts as whole, on the borrowers, and on public policy."
Up to Friday's close, Ocwen's stock had fallen 86.4 percent in the last 12 months.
(Reporting by Karen Freifeld in New York; Additional reporting by Tanya Agrawal in Bengaluru; Editing by Saumyadeb Chakrabarty)