Feb 27 (Reuters) - Mortgage servicer Ocwen Financial Corp’s quarterly profit jumped 60 percent and revenue more than doubled as banks sell more servicing rights to meet stricter regulations.
However, operating expenses more than tripled and the largest U.S. non-bank mortgage servicer reported results that fell slightly short of analysts’ expectations.
Mortgage servicers are paid by owners of loans, typically banks and investors, to collect payments and handle delinquencies and foreclosures - major headaches for banks.
Net income attributable to Ocwen’s common shareholders rose to $104.3 million, or 74 cents per share, in the fourth quarter ended Dec. 31, from $65.2 million, or 47 cents per share, a year earlier.
Revenue grew to $556 million from $236.6 million.
Analysts on average expected the earnings of 76 cents per share on revenue of $559.7 million, according to Thomson Reuters I/B/E/S.
Operating expenses increased to $340.9 million from $99.1 million.
While the mortgage servicing business has grown rapidly in the wake of the financial crisis, it is not without controversy.
New York’s Department of Financial Services said on Wednesday that executives at Ocwen have ties with related mortgage companies. This may give them an incentive to push borrowers into foreclosure, the banking regulator said.
The department earlier this month halted Ocwen’s purchase of servicing rights on a portfolio of mortgages from Wells Fargo & Co on concerns that the company does not have the ability to handle the load.
Other state and federal authorities have expressed concerns about the practices of non-bank mortgage servicers.
“We continue to focus our attention on regulatory compliance and on assisting struggling homeowners,” Ocwen Chief Executive Ron Faris said in a statement on Thursday.
“During 2013 we made significant progress in enhancing our compliance management system.”
Ocwen shares, which have fallen about 34 percent since the beginning of the year, closed at $36.76 on the New York Stock Exchange on Wednesday.