In addition to swinging to a big quarterly loss, Ocwen Financial Corp.’s originations moved lower, and its mortgage servicing portfolio contracted.
During the three months ended Sept. 30, Ocwen originated 7,112 loans for $1.251 billion, third-quarter earnings data indicate.
Business slipped from 7,838 loans closed for $1.309 billion during the previous three-month period.
Mortgage production was also worse than during the third-quarter 2013, when volume was $1.684 billion.
Year-to-date Sept. 30, originations amounted to 22,858 loans for $3.863 billion.
The third-quarter 2014 total included 5,505 forward mortgages for $1.083 billion and 1,607 reverse mortgages for $0.168 billion.
Direct originations accounted for $0.310 billion of the latest volume, while correspondent acquisitions made up another $0.619 billion and the wholesale channel originated $0.322 billion.
The Atlanta-based company said it serviced $360.919 billion as of Sept. 30. The servicing portfolio shrank from $379.571 billion three months earlier and $362.792 billion a year earlier.
Included in the most recent number were $160.8 billion in loans serviced by Home Loan Servicing Solutions LTD.
In addition, Ocwen had a sub-servicing portfolio of $50.360 billion as of Sept. 30, 2014.
Ocwen’s investment portfolio included $1.315 billion in reverse mortgages, more than the $1.108 billion owned as of mid-year 2014.
As of the close of the third quarter, there were $108 million in outstanding repurchase demands on 578 loans.
Ocwen explained that the recent discovery by the New York Department of Financial Services of back-dated letters was due to its previous practice of dating letter when the decision was made versus when the letter was actually created.
“In most cases, the difference between these dates was three days or less,” the report said. “In certain instances, however, there was a significant gap between the date on the letter and the date it was actually generated.”
Five pages of Ocwen’s 24-page investor presentation were dedicated to the back-dating incident.
Ocwen noted that it recorded a $100 million charge for a potential settlement with New York. In all, Ocwen set aside $120 million in reserves for various regulatory and legal matters.
The disclosure of back dating was followed by Morningstar Credit Ratings LLC’s downgrading of Ocwen Loan Servicing LLC’s outstanding residential nonprime mortgage servicer and residential mortgage special servicer rankings to MOR RS2 from MOR RS1.
Moody’s Investors Service also lowered the subprime primary servicer rating of Ocwen Loan Servicing to SQ3 from SQ3+.
Income before taxes swung to a $72 million loss from a $77 million second-quarter profit and a $69 million profit in the third-quarter 2013.
Average U.S. employment was 2,445 as of Sept. 30. Ocwen reduced headcount from 2,519 as of second quarter and 3,275 as of the third-quarter 2013.
Another 6,748 average employees were located outside the United States, more than 6,603 in the prior quarter and 5,120 in the year-earlier quarter.
