As of the beginning of October, Ocwen placed its servicing operations–which account for the vast majority of its revenue–into a subsidiary domiciled in St. Croix. Analysts expect the move to drive down Ocwen’s effective tax rate, which averaged nearly 37% in the last several quarters, into the single digits, saving the company tens of millions of dollars each quarter. The company officially has its headquarters in Atlanta.

It is the third such Ocwen-related entity to be domiciled in a foreign tax haven, joining others in Luxembourg and the Cayman Islands.

The Luxembourg company, Altisource Portfolio Solutions SA (ASPS), was spun off from Ocwen in 2009, and the shares have more than quintupled since. The company uses a team of psychologists to develop computer-generated scripts that Ocwen employees use to talk borrowers through loan workouts. In a securities filing, Altisource said: “Our services are primarily centered on our relationship with Ocwen.” Its effective tax rate over the last six quarters has been 9.3%.

Michelle Esterman, Altisource’s chief financial officer, said the company based itself in Luxembourg to be in a time zone closer to its employees in India, where a majority of its workforce is located, as well as the tax benefits afforded to technology companies by the western European nation.

She said that while Ocwen accounts for 60% of Altisource’s revenue, it could be a viable stand-alone company in its own right without Ocwen’s business. She said the company maintains an arms-length relationship with Ocwen and that Mr. Erbey abstains from any board vote involving both companies.

The Cayman Islands company, Home Loan Servicing Solutions Ltd. (HLSS), purchases mortgage rights to be serviced by Ocwen. It was founded by Mr. Erbey as a separate entity in 2010 and went public earlier this year, raising $200 million in an offering to finance acquisitions of mortgage assets and servicing rights. Its effective tax rate over its three quarters as a public company has been 1.2%, and it has paid out more than 80% of its profits to shareholders.

Since the IPO, the shares have gained nearly 40%.

John Van Vlack, the president of HLSS, said in an interview that the dividend payout was intended to be similar to those of real estate investment trusts or business development companies, to attract similar kinds of income-seeking investors, which help keep capital costs low if the company goes back to the market for additional fundraisings. He said the company is domiciled in the Caymans so it would receive similar tax treatment to a REIT, and that all transactions between HLSS and Ocwen are done at a fair market-value price.

Mr. Erbey is chairman of all three companies. He owns 25.5% of Altisource and 2.8% of HLSS, in addition to his 13.2% ownership of Ocwen’s common stock, according to company stock ownership filings. Mr. Erbey drew $1.87 million in compensation from Ocwen in 2011, $135,000 as a board member of HLSS and $163,000 as a board member of Altisource, the companies’ most recent proxy and incorporation filings show.

HLSS’s prospectus, meanwhile, said it could have conflicts of interest with both Ocwen and Altisource because of Mr. Erbey’s role as chairman of all three companies and executives who have moved between them, and that certain agreements between the companies were “not negotiated on an arm’s length basis.”

In a prepared statement, the company said the formation of the St. Croix subsidiary “is part of our initiative to cost-effectively expand our U.S.-based servicing activities.” The statement said Altisource and HLSS handle discrete functions different from Ocwen’s mission and allow Ocwen to focus more on its core loan servicing business. The statement said strong corporate governance is a priority for Mr. Erbey and that the companies maintain “arm’s length business relationships” with separate boards of directors.

“Tight governance is what makes the relationship between the companies work,” the statement said.

Write to Christian Berthelsen at [email protected] and Andrew R. Johnson at andrew.r.johnson@ dowjones.com