By Karen Freifeld

NEW YORK, Feb 11 (Reuters) - A number of institutional investors including BlackRock Inc are considering the possibility of legal action against Ocwen Financial Corp over its mortgage servicing practices, a person familiar with the matter said on Tuesday.

The investors want greater transparency on how Ocwen, the country's largest nonbank mortgage servicer, manages its mortgages, particularly loan modifications, the person said.

Richard Gillespie, a spokesman for Atlanta-based Ocwen, declined to comment about any possible action by investors. Ocwen said in a statement, "Helping people avoid foreclosure via sustainable modifications are good for our business, the investors who own the mortgages, homeowners and communities."

Ocwen is among a number of specialty servicers whose growth since the housing bust has drawn the attention of state and federal regulators. The regulators are questioning whether the companies have the systems in place to collect mortgage payments in large volumes.

In December, it agreed to provide $2 billion in relief to homeowners as part of a settlement with federal and state authorities over accusations of deceptive mortgage servicing.

Investors in mortgage-backed securities may be concerned that Ocwen's loan servicing practices are affecting the performance of the securities.

Kathy Patrick of Gibbs & Bruns, a Houston-based law firm whose clients include BlackRock and Allianz SE's Pimco, has been talking to clients about various ways to proceed, the person familiar with the situation said. The source was not authorized to speak publicly and spoke on condition of anonymity.

Legal action against the company is one possibility and is not imminent, the person said. The investors also could apply pressure on trustees overseeing the securities to take unspecified action against Ocwen, according to the source.

News of the possible legal action against Ocwen was first reported by the Financial Times, which said Pimco also was considering action.

A spokesman for Pimco did not return a call for comment. A spokeswoman for BlackRock declined to comment, as did Patrick.

Last Thursday, Ocwen said New York's banking regulator halted its purchase of servicing rights on a portfolio of mortgages from Wells Fargo & Co. The regulator is concerned that Ocwen does not have the ability to handle the load, a person familiar with the matter said. [ID: nL2N0LB265]

Gibbs & Bruns' represents groups of institutional investors who reached an $8.5 billion settlement with Bank of America Corp and a $4.5 billion proposed deal with JPMorgan Chase & Co.