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Ocwen Accused of Stalling Short Sales

(Reuters) - Ocwen Financial Corp is facing scrutiny from New York state and the federal government over whether the mortgage servicer improperly stalled short sales of property to collect more fees, Bloomberg reported, citing sources.

Ocwen shares were down 3.3 percent at $20.50 in late morning trading.

In a short sale, a lender sells a property for less than the amount outstanding against it, while the borrower is freed from the loan.

A new rule requires mortgage servicers to approve or deny a short sale within 30 days of an application.

The New York Department of Financial Services and the U.S. Consumer Financial Protection Bureau are looking into whether Ocwen has been sidestepping that requirement, Bloomberg said, citing two people with knowledge of the matter.

"Ocwen has no desire to delay short sales," company spokeswoman Margaret Popper told Reuters.

"Sometimes maximizing proceeds for borrowers and investors requires additional time and processes," she said.

Shares of Ocwen, which reported a loss in the third quarter, have fallen about 62 percent this year through Wednesday.

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