Ocwen Financial, the mortgage-servicing giant controlled by William Erbey, misstated the value of mortgages sold to a second Erbey-founded company over a 15-month period, a company regulatory filing Tuesday revealed.
The misstatements happened as the billionaire businessman moved his stake in that second company, Home Loan Servicing Solutions, to an overseas tax shelter, separate regulatory filings show.
Erbey’s financial moves came to light Tuesday after Ocwen, the country’s largest non-bank mortgage servicer, warned investors audited financial filings for last year and the first three months of 2014 “should no longer be relied upon.”
That period coincides with Erbey transferring his stake in HLSS, which bought the Ocwen mortgages, from a US fund to one based in the US Virgin Islands, according to public filings.
The Virgin Island provides investors with a low-tax haven.
Erbey, the CEO of Ocwen, a company that has spun off multiple other public companies, such as HLSS, that have found themselves in the crosshairs of regulators.
Both the US fund, FF Plaza Limited Partnership, and the Virgin Island fund, Salt Pond Holdings, are controlled by Erbey and his wife, E. Elaine, according to the filings.
Erbey didn’t do anything wrong with transferring the stock over to Salt Pond, James Lauter, HLSS’s CFO, told The Post.
“His stake in HLSS is fully disclosed,” he said. “[Erbey] owns them in other entities rather than in his own name.”
Last week, Ben Lawsky, superintendent of the New York Department of Financial Services, sent a letter to Ocwen accusing the company of hiding at least $65 million in funds to enrich its CEO.
The DFS, New York’s top financial-services regulator, which installed a monitor inside Ocwen in 2012 to oversee the mortgage servicer, is looking into potential abuses at HLSS, one person familiar with probe told The Post.
On Tuesday, Ocwen said that it had botched five quarters’ worth of financial statements, leaving a $17 million hole in last year’s pre-tax income.
The company misjudged its own accounts by placing the wrong value on its right to service mortgages — which it sold to HLSS, the company said in Tuesday’s filing.
Since at least the beginning of 2013, Ocwen allowed itself a plus-or-minus 5 percent buffer when booking the value of mortgage servicing rights (MSRs) — even though it relied on a third party to do the valuing for them.
That value of those MSRs with the price buffer “is the cause of the restatement,” Ocwen said.
HLSS, the company that bought the MSRs, might reinstate the buffer zones, Lauter said.
“What we’re going to do in the future is a little different,” he said, without disclosing how much buffer HLSS would use.
The company said those mortgage rights were worth $634.4 million at the time, according to the statement.
Shares of Ocwen fell 4.5 percent on Tuesday, to $25.16, in heavy trading.
Matt Anderson, a spokesman for the DFS, declined to comment.