BlackRock and Pimco are considering suing Ocwen Financial for not properly servicing residential mortgages.
The suit, if it is filed, would add an ironic twist to the relationship between the three companies.
In fall 2012, Pimco and BlackRock led a creditor group that — over the objection of ResCap trustees — supported the sale of bankrupt ResCap’s massive $300 billion-plus mortgage servicing portfolio to Ocwen, a source said.
“The ResCap trustees were dead set against a sale to Ocwen.”
ResCap (formerly GMAC) believed Ocwen, given its poor customer service record, would not properly service its roughly 2 million home mortgages.
Still, the 17-strong institutional investor group, including BlackRock and Pimco, who held the most senior claims against bankrupt ResCap, wanted the sale since Ocwen and its partner, Walter Investment Management, bid $3 billion, the highest offer, the source said.
Now, the lawyer who represented those investors — Kathy Patrick of Gibbs & Bruns — is preparing the suit against Ocwen over not properly handling the mortgages and keeping enough borrowers out of foreclosure, a source said.
That hurts mortgage-securities owners BlackRock and Pimco.
The Financial Times first reported news of the possible suit against Ocwen.
Ocwen’s shares Tuesday fell by 9 percent to $38.07.
The ResCap trustees were not the only ones in 2012 who raised concerns about Ocwen.
Ocwen was forced to partner with Walter Investment to buy the ResCap portfolio after Fannie Mae said it would not let Ocwen buy the loans ResCap serviced for them.
Fannie was uncomfortable with Ocwen’s mostly India-based service reps.
Walter acquired the Fannie portfolio.
The concerns over Ocwen have grown in recent weeks.
Last week, Benjamin Lawsky’s NY Department of Financial Services stopped Ocwen from completing its acquisition of $39 billion of residential-mortgage servicing rights from Wells Fargo.
Kathy Patrick and BlackRock declined to comment. Ocwen and Pimco did not return calls.