- Jeff Ostrowski Palm Beach Post Staff Writer
This story originally was published Sept. 14, 2012. Ocwen sold the mansion in 2016 for $3.6 million, 44 percent less than it paid Erbey.
In a generous perk for a billionaire businessman, mortgage firm Ocwen Financial Corp. bought Chairman William Erbey’s Atlanta mansion for $2 million more than he paid at the peak of the housing market.
Ocwen (NYSE: OCN) said in a regulatory filing last month that it paid $6.48 million for Erbey’s house in Atlanta so Erbey could move to St. Croix, where Ocwen opened a subsidiary earlier this year. Ocwen collects loan payments from subprime borrowers, some of whom accuse the company of hardball tactics that push them into foreclosure.
“It is really ironic that a company that is a subprime mortgage processor would give a sweet deal to its executive chairman that its own customers couldn’t get,” said Vineeta Anand, chief research analyst at the AFL-CIO’s Office of Investment.
Erbey paid $4.39 million for the 10,452-square-foot house in May 2006, according to property records. Since then, Atlanta home prices have plunged 31 percent, according to the Standard & Poor’s/Case-Shiller index.
The Fulton County Board of Assessors values the home at $3.11 million. Zillow.com says it’s worth $3.36 million.
Ocwen said it reimbursed Erbey for his “cost basis” in the home, indicating that he made improvements to the house after buying it. Ocwen also shelled out $24,000 for transaction costs.
“The purchase of Mr. Erbey’s residence in Atlanta by Ocwen is consistent with the company’s senior executive relocation policy and practice,” Ocwen said in a statement. “The purchase price was within the market value range provided by an independent third-party appraiser.”
But Anand called the transaction “inappropriate” and “a sweet deal.”
Now that Ocwen owns the house, it has not yet put it on the market, according to Realtor.com.
Erbey launched Ocwen in West Palm Beach in the 1980s and lived in Palm Beach until 2006, when he moved to Atlanta. While the company lists its corporate headquarters as a 2,000-square-foot office in Atlanta, many of its executives remain in West Palm Beach.
Ocwen paid Erbey a $500,000 salary and a $1.4 million incentive last year, but his real wealth lies in his large stakes in Ocwen and spin-off company Altisource Portfolio Solutions (Nasdaq: ASPS) of Luxembourg. Erbey’s 19.5 million shares of Ocwen are worth $534 million. His 6.6 million shares of Altisource are valued at $593 million.
Aaron Boyd, director of research at executive compensation company Equilar, said publicly traded companies increasingly have bought executives’ homes in recent years. During the housing boom, executives could sell homes without relying on their employers’ help.
“This has really become an issue over the past four years, as housing prices have dropped,” Boyd said.