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2 Servicers See Success with Outsourcing

Despite a decline in international outsourcing by many servicers, two companies have found offshoring to be a cost-effective alternative. One of the two companies is acquiring the other.

Some U.S. mortgage servicers have cut back in their use of offshore employees.

But two companies have overcome the challenges of outsourcing to India.

Those two firms are Ocwen Loan Servicing LLC and Homeward Residential Inc., according to report from Standard & Poor’s Ratings Services, Two U.S. Mortgage Servicers in India Have Efficient Operations But Still Face Difficulties.

The report analyzes four areas critical for servicers that offshore activities involving interaction with U.S. borrowers: platform integration, training, staff retention, and experience/tenure.

“Ocwen Loan Servicing LLC and Homeward Residential Inc. are among the few such companies we rate that have found that the benefits of offshoring outweigh the potential complications,” the ratings agency stated.

S&P drew its conclusions after visiting the Indian operations of both companies. The New York-based company said it conducts periodic surveillance reviews of its servicer rankings. S&P provides an assessment about whether the offshore operations performed the same as those in the United States.

Ocwen reported that it serviced $127.9 billion in mortgages as of June 30.

Homeward Residential — which previously operated as American Home Mortgage Servicing Inc. — reported that its mortgage servicing portfolio was $74.1 billion as of June’s end.

On Oct. 3, an announcement indicated Ocwen Financial Corp. will acquire Homeward Residential Holdings Inc. for around $588 million in cash and $162 million in Ocwen convertible stock in a transaction that is expected to close by the end of next month.

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