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Ocwen to Acquire MSRs on Nearly $40 Billion in Loans

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As Ocwen Financial Corp. announced a planned acquisition of the servicing on a non-agency portfolio, a new report raises concerns about its rapid growth.

Ocwen disclosed Wednesday that it has reached an agreement for its servicing arm to buy mortgage servicing rights on 184,000 home loans.

The Atlanta-based company noted that the underlying loans in the portfolio are included in private-label mortgage-backed securities.

The aggregate principal balance on the mortgages is $39 billion.

The buyer in the transaction is Ocwen Loan Servicing LLC, while the seller is Wells Fargo Bank, N.A.

“The sale will be finalized as servicing is transferred, which Ocwen expects will occur during 2014,” Wednesday’s announcement said.

A statement from Wells Fargo & Co. indicated that the loans involved in the transaction account for around 2 percent of its total residential servicing portfolio as of the end of fourth quarter 2013.

Wells said that it didn’t originate the loans, which are serviced under the trade name, America’s Servicing Co.

Word of the sale came the same day that Moody’s Investors Service expressed concern about the rapid growth of Ocwen’s servicing portfolio.

Although Ocwen’s servicer quality metrics have remained stable — with collection and loan administration abilities showing no deterioration yet — continued growth could stress its servicing abilities.

“In 2013, Ocwen added almost 2.8 million loans to its servicing portfolio,” Moody’s Assistant Vice President and Analyst Gene Berman said in the report. “It could be a challenge for Ocwen to maintain servicing quality as it scales its operations so quickly.”

The ratings agency noted that a recent MSR acquisition from OneWest Bank, FSB, has pushed Ocwen’s servicing portfolio past $518 billion from just $55 billion in mid-2010.

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