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46 | Th e M Rep o RT O r i g i nat i O n S e r v i c i n g a na ly t i c S S e c O n da r y m a r k e t SERVICING LocaL Edition SERVICING Firms announce class actions against Ocwen Spin-Off Home Loan Servicing SoLutionS faceS aLLegationS it conceaLed tHe extent of itS reLationSHip and dependency on ocwen, wHicH currentLy faceS reguLatory troubLeS. california // A Los Angeles law firm announced a new class action lawsuit against Home Loan Servicing Solutions (HLSS), making it the latest in a line of suits filed against the mortgage company over its rela- tionship with Ocwen. Glancy Binkow & Goldberg, LLP, alerted HLSS sharehold- ers in February about the suit, which targets HLSS for not being open about the company's close relationship with Ocwen, which has suffered wave after wave of regulatory setbacks in the last year. In its complaint, the firm al- leged that HLSS, which deals in the acquisition of mortgage servicing assets, made misleading statements and failed to disclose to investors how much its own busi- ness depended on Ocwen's and the extent of Ocwen's troubles. The complaint comes after a year of investigations by New York's top financial watchdog into Ocwen's relationships with affili- ated companies, which regulators say created conflicts of interest in the companies' daily business. Late last year, Ocwen resolved the investigation with a $150 mil- lion settlement that also saw the resignation of its founder and ex- ecutive chairman, William Erbey. Erbey had also served as non-ex- ecutive chairman on HLSS' board, a position he was forced to vacate. Shares of HLSS plummeted in the weeks following the announce- ment of Erbey's resignation. The complaint also brought up a notice issued in late January by private investment firm BlueMountain Capital Management notifying both HLSS and Ocwen that regulatory sanctions against Ocwen constituted a breach of contract and default on certain notes serviced by HLSS. Glancy Binkow & Goldberg isn't the only firm taking action against HLSS. New York firms Levi & Korsinsky and Pomerantz, LLP, also made similar filings. Each class action comprises investors who purchased shares in HLSS from February 7, 2013 through January 23, 2015. On top of that, the company fielded complaints from New York investor Mangrove Solutions, which threatened to nominate a new slate of directors based on HLSS' ongo- ing dealings with Ocwen. Update: As promised, Mangrove introduced its list of nominations for HLSS' board of directors, citing the "significant value destruction shareholders are facing" from the company's relationship with Ocwen and the failure of HLSS' current board to address the issue. "While we remain open to further discussion with the board and are amenable to reaching a mutually agreeable resolution that benefits all shareholders, we re- main firm in our position on this matter—HLSS must terminate its relationship with Ocwen. If this board continues to refuse to take action, we look forward to pre- senting shareholders with what we believe will represent the far superior choice of leadership at the company's 2015 Annual Meeting," said Mangrove founder and president Nathaniel August in a statement. August is also one of the nomi- nees offered by Mangrove.