Residential loans originations were down at Ocwen Financial Corp., and the mortgage servicing portfolio was lower as the company moved some of its servicing to related entities. Earnings, however, surged.
Homeward Residential originated approximately $2.2 billion in the three months ended June 30, quarterly earnings released Friday indicated.
Residential originations slowed from the previous three-month period, when volume totaled $2.8 billion.
Partnerships were responsible for around $0.568 billion of first-quarter production at the Atlanta-based company, better than the $0.4 billion in the previous period.
The volume of loans closed through the Home Affordable Refinance Program jumped by half from the first quarter. Ocwen previously reported $0.415 billion in HARP volume for the three months ended March 31.
Subsidiaries of Altisource Portfolio Solutions S.A. acquired the diversified fee-based businesses that Ocwen acquired on April 12 from ResCap for $129 million. Altisource is a related company.
Ocwen Chairman Bill Erbey said in the report that rising interest rates will have little negative impact on earnings because of the modest share of income generated through originations. The majority of income comes from the higher-return nonprime portfolio.
Mortgage servicing rights on $87 billion in Fannie Mae and Freddie Mac loans were acquired from Ally Bank through a series of previously announced closings. Ocwen said it previously sub-serviced all but $1.5 billion of the Ally portfolio.
MSRs on around $83.6 billion in loans were moved to Home Loan Servicing Solutions on July 1, while MSRs on $10.6 billion were moved to the related company on May 21.
Ocwen previously disclosed a deal reached to buy MSRs on $78 billion from OneWest Bank. That deal is expected to be done in stages during the next several months.
A June 26 agreement with Greenpoint Mortgage Funding Inc. has Ocwen acquiring MSRs on $8.3 billion in mostly non-agency loans. Ocwen will close on the acquisition in stages over the next several months.
The mortgage servicing portfolio, including servicing on real-estate-owned assets, closed out June at $436.255 billion.
The servicing portfolio was down from a revised $467.072 billion serviced as of March 31.
But the portfolio has grown substantially from $127.873 billion serviced as of a year earlier.
“Our current pipeline of potential new business opportunities on a probability-weighted basis exceeds $400 billion in unpaid principal balance,” Erbey said. “Moreover, regulatory and market trends, including greater prospects for GSE legislation and more private capital flowing into mortgage credit, provide excellent long-term prospects for Ocwen.”
Ocwen President and Chief Executive Officer Ron Faris noted that progress is being made with state and federal agencies on servicing practices covering Homeward, Litton and Ocwen.
Income before taxes jumped to $88 million from $51 million in the first quarter and $70 million in the second-quarter 2012.
