Investors including Pimco and BlackRock are considering filing suit against Ocwen (OCN -7.6%) over its servicing practices and mortgage modifications which they claim hurt the performance of MBS they own, reports the FT. Working with the investor group is the law firm of Gibbs & Bruns which has successfully brought similar cases against the big banks.
The move comes following Ocwen's late-2013 $2.1B settlement with the CFPB, and the NY Dept. of Financial Services last week halting the sale of $2.7B in MSRs from Wells Fargo to Ocwen.
Non-bank mortgage servicers have rapidly growing over the past few years, taking on MSRs from banks who needed to sell because of onerous capital requirements. Ocwen has grown into the biggest, now managing a portfolio of $430B in unpaid principal balances.