Profile: Ocwen Financial Corp (OCN)
3 Dec 2013
Ocwen Financial Corporation, incorporated on August 22, 1991, is a financial services holding company. The Company through its subsidiaries is engaged in the servicing and origination of mortgage loans. The Company develops new programs, such as Shared Appreciation Modification (SAM) which incorporates principal reductions and lower payments for borrowers while providing a net present value positive loss mitigation outcome for investors, including the ability to recoup losses if property values increase over time. The Company operates in three segments: Servicing, Lending, and Corporate Items and Other. In February 2013, Gleacher & Company Inc closed the sale of all of the assets of its ClearPoint subsidiary to Homeward Residential, Inc. On February 15, 2013, we completed the acquisition of certain assets of Residential Capital, LLC (ResCap). On April 2, 2012, it e completed an acquisition from Saxon Mortgage Services, Inc. (Saxon). On April 2, 2012, it also completed an acquisition of mortgage servicing rights (MSRs) from JPMorgan Chase Bank, N.A. (JPMCB). On May 31, 2012, it completed the acquisition of MSRs from Aurora Bank FSB (Aurora). On June 11, 2012, it purchased residential MSRs from Bank of America, N.A. (BANA). On December 27, 2012, it completed the merger (the Homeward Acquisition) of O&H Acquisition Corp. (O&H), a wholly owned subsidiary of the Company, and Homeward Residential Holdings, Inc. (Homeward), all of the stock of which was owned by certain private equity firms that are ultimately controlled by WL Ross & Co. LLC. In April 2013, it completed the purchase of Liberty Home Equity Solutions (Liberty) from Genworth Financial Inc.
The Company earns fees for providing services to owners of mortgages loans and foreclosed real estate. In most cases, the Company provides these services either because the Company purchased the mortgage servicing rights (MSRs) from the owner of the mortgage or because the Company entered into a subservicing or special servicing agreement with the entity that owns the MSRs. Servicing involves the collection and remittance of principal and interest payments received from borrowers, the administration of mortgage escrow accounts, the collection of insurance claims, the management of loans that are delinquent or in foreclosure or bankruptcy, including making servicing advances, evaluating loans for modification and other loss mitigation activities and, if necessary, foreclosure referrals and real estate owned (REO) sales.
The Company is a third party servicers of subprime residential mortgage loans in the United States. As of December 31, 2012, the Company serviced 1,219,956 loans and real estate properties under approximately 2,000 servicing agreements. The Company's servicing clients include institutions, such as Freddie Mac, Morgan Stanley, Deutsche Bank, Credit Suisse, Goldman Sachs and Barclays. The mortgaged properties securing the loans that the Company service are geographically dispersed throughout all 50 states, the District of Columbia and two United States territories. The five largest concentrations of properties are located in California, Florida, New York, Texas and Illinois which, taken together, consisted of 42% of the loans serviced at December 31, 2012. Subprime mortgage loan servicing involves special loss mitigation challenges that are not present to the same extent in prime loan servicing. The Company's largest source of revenue is servicing fees. The Company also earns subservicing fees on a per loan basis.
Servicing fees, which comprised 74% of total servicing and subservicing fees during the eyar ended December 31, 2012, are supplemented by ancillary income, including fees from the federal government for Home Affordable Modification Program (HAMP); interest earned on loan payments that it has collected but has not yet remitted to the owner of the mortgage (float earnings); referral commissions from brokers for real estate owned (REO) properties sold through the Company’s network of brokers; Speedpay fees from borrowers who pay by telephone or through the Internet, and late fees from borrowers who were delinquent in remitting their monthly mortgage payments but have subsequently become current.
The Company’s lending business primarily originates and purchases agency-conforming mortgage loans, mainly through correspondent lending. After origination, the Company packages the loans and sells them in the secondary mortgage market, while retaining the associated MSRs for its mortgage servicing business. In addition, in 2012, Homeward commenced a direct lending business initially to pursue refinancing opportunities from its existing servicing portfolio, where permitted. The lending business creates an organic source of growth for the Company's servicing business through the MSRs retained from originated loans that are sold into the secondary market. Lending revenues include interest income earned for the period the loans are on the Company's balance sheet, gain on sale income representing the difference between the origination value and the sale value of the loan and fee income earned at origination. Through Homeward, the Company originates a variety of agency-conforming residential mortgage loans through two businesses, correspondent lending and direct lending.
The Company finances the loans the Company holds on its balance sheet through a variety of lending facilities provided by third parties. The Company's correspondent lending business operates through a network of approved third party originators to purchase residential mortgage loans that have been originated by the third party originators, which the Company then package and resells on the secondary market while retaining the associated MSRs. The Company also originates mortgage loans directly with borrowers through its direct lending business. The Company's direct lending business is focused on originating loans that are eligible for refinancing under the expanded federal government’s Home Affordable Refinance Program (HARP) program also referred to as HARP 2.0.
Corporate Items and Other
The Company reports items of revenue and expenses that are not directly related to a business, business activities that are individually insignificant, interest income on short-term investments of cash and certain corporate expenses. The Company's cash balances are also included in Corporate Items and Other. In December 2012, the Company sold the subprime residual securities the Company held that were issued by the four loan securitization trusts that the Company began. Corporate Items and Other also includes certain diversified fee-based business activities that the Company acquired as part of the Homeward acquisition. These activities include valuation services through, which Homeward provides analysis and quality assurance of property valuations nationwide and manages a network of independent appraisers and real estate brokers, REO management services, title and closing services, advisory services, and other fee-based services.
Ocwen Financial Corp
6th Floor, 2002 Summit Boulevard
ATLANTA GA 30319
Company Web Links
- ResCap presents creditor payout plan to judge, criticizes bondholders
- Ocwen to buy mortgage servicing rights from OneWest Bank for $2.53 billion
- UPDATE 1-Ocwen to buy mortgage servicing rights from OneWest Bank for $2.53 bln
- Ocwen to buy mortgage servicing rights from OneWest Bank for $2.53 bln
- RPT-INSIGHT-Rapid growth of US mortgage servicers draws scrutiny