Some securities class actions were recently filed on the behalf of shareholders of Altisource Residential Corporation, which trades on the New York Stock Exchange under the ticker symbol RESI.
Altisource Residential Corporation purchases and manages single-family rental properties in the U.S. through Altisource Residential, L.P., its subsidiary. The real estate investor acquires these assets by buying mortgages that are either nonperforming or subperforming. In addition, the organization obtains homes during their foreclosure or after this event.
Glancy Binkow lawsuit
On March 30, 2015, Glancy Binkow & Goldberg LLP announced the filing of a securities class action on the behalf of all investors that bought the securities of Altisource Residential Corporation between Feb. 7, 2013, and Jan. 23, 2015. These dates are inclusive and represent the class period.
The lawsuit, which was brought forth in the United States District Court for the District of the Virgin Islands, claimed that during the aforementioned class period, the company failed to reveal how it was affected by key developments that involved former chairman William Erbey and loan servicer Ocwen Financial Corporation.
Pomerantz LLP suit
On March 31, 2015, Pomerantz LLP declared the filing of a securities class action representing all organizations or individuals who bought the securities of Altisource Residential Corporation between Feb. 7, 2013, and Jan. 23, 2015.
This particular legal claim, brought forth in the United States District Court, District of the Virgin Islands, Division of St. Croix, named both the real estate investor, as well as certain officers, as defendants. The lawsuit attempted to recover damages from defendants because of alleged breaches of the the Securities Exchange Act of 1934.
The securities class action filed by Pomerantz LLP contained more detailed allegations than those contained in the Glancy Binkow legal claim. The Pomerantz LLP suit alleged that during the class period, defendants made statements that were false and or misleading, and also neglected to reveal facts about the operations, business and prospects of the company that were materially adverse.
“The lawsuit attempted to recover damages from defendants.”
More specifically, the defendants did not reveal the company’s relationship with Ocwen and the perils that stemmed from this connection. In addition, the suit claims the defendants did not reveal the extent to which Altisource Residential Corporation had a related party relationship with the loan servicer.
The New York State Department of Financial Services sent a letter to Ocwen on Feb. 26, 2014. This document pertained to the conflict of interest stemming from Erbey’s involvement in Altisource Residential Corporation, Home Loan Servicing Solutions, Ltd., Altisource Portfolio Solutions S.A. and Ocwen. When this letter was published and reported on, markets responded by sending company securities down more than 7 percent.
On Dec. 22, 2014, Ocwen revealed it resolved the inquiry with the NY DFS through a Consent Order when it released a statement titled “Ocwen Financial Agrees to Settlement with New York Dept. of Financial Services.”
“As a result, company shares fell more than 7 percent.”
That same day, RESI filed a Form 8-K with the U.S. Securities and Exchange Commission stating that as of Jan. 16, 2015, Erbey was leaving his post as director and chairman of the board at Altisource Residential Corporation. According to the document, the former executive vacated this position in connection with the consent order.
As a result, company shares fell more than 7 percent to a closing value of $18.65 Dec. 22, 2014.
On Jan. 13, 2015, Investor’s Business Daily reported that trading of Ocwen shares had halted, and that the loan servicer’s mortgage license may be suspended by the state of California.
The firm’s shares dropped 30 percent during the session, falling to their lowest value since 2009, the media outlet reported. The real estate investor’s securities dropped roughly 6 percent to close at $16.76 on Jan. 13, 2015.
The state claimed that in the prior two years, the loan servicer had not supplied the proper information in order to confirm its compliance with laws surrounding foreclosure proceedings, according to the Los Angeles Times.
Notice of default
On Jan. 23, 2015, hedge fund BlueMountain Capital Management, LLC sent a notice of default to both Ocwen and HLSS about specific notes serviced by HLSS. The notice constituted a breach under the terms of the lending agreement because of the recent regulatory problems suffered by Ocwen, which in turn affected HLSS. As a result of all this, HLSS defaulted on notes with a value of roughly $1 billion.
Later that same day, Forbes released an article titled “Ocwen Financial Keeps California Mortgage License, Sued by Bondholders,” which talked about the notice of default that Ocwen received from BlueMountain, as well as the settlement between Ocwen and The California Department of Business Oversight.
What shareholders can do
If eligible investors want to serve as lead plaintiff in the Pomerantz lawsuit, they have until May 26, 2015, to move the court. Shareholders interested in serving in this same role in the Glancy Binkow securities class action have the same time frame from taking action.