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Mortgage Business Contracts at Ocwen

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Mortgage Daily

                                                 February 29, 2016

Quarterly lending at Ocwen Financial Corp. slowed to the lowest level in three years, while the servicing portfolio diminished and losses continued.

During the final three months of last year, Ocwen originated $0.987 billion in residential loans.

It was the slowest quarterly lending volume since 2012.

Activity was down from the 7,800 mortgages closed for $1.315 billion in the third quarter.

The operational results were delivered as part of the Atlanta-based mortgage banking firm’s fourth-quarter 2015 earnings report released on Monday.

In the last three months of 2014, mortgage production came to 6,500 loans for $1.112 billion.

Full-year 2015 originations amounted to $4.741 billion, less than the $4.933 billion in production during all of 2014.

Last year’s total consisted of $0.890 billion in retail production, $1.705 billion in wholesale lending and $2.146 billion in correspondent acquisitions.

Included in the overall 2015 total was $0.810 billion in reverse mortgage production.

“As a result of uncertainty regarding our ability to achieve meaningful profitability in our servicing business in its current state and our ability to grow our servicing portfolio, for both regulatory and market-based reasons, we are seeking to become a much larger asset generator to provide Ocwen with not only future servicing rights but also other future income streams,” a FORM 10-K with the Securities and Exchange Commission stated. “We intend to transform Ocwen over time by reinvesting cash flows generated by the servicing business to grow not only our residential mortgage lending business but also to grow other new business lines.”

Ocwen said it aspires to be a “top-10” lender, though it intends to prioritize “profitable growth that includes under-served markets.” Helping to achieve this will be an expansion of retail call centers.

The report indicated that annual retail production is expected to expand to $5 billion, wholesale lending is intended to grow to $5 billion, and reverse mortgage production is projected to double from $1 billion.

Mortgage servicing rights on $1 billion in non-performing agency loans were sold during the quarter.

Ocwen serviced $230.133 billion at the close of 2015.

The servicing portfolio was off from $238.108 billion as of Sept. 30, 2015, and $361.288 billion as of Dec. 31, 2014.

In addition, Ocwen sub-serviced $23.833 billion as of the most-recent date.

Delinquency on the servicing portfolio climbed to 13.7 percent at the end of last year from 13.1 as of the end of the third quarter.
The deterioration was attributed to the sale of agency MSRs.

The balance sheet included $2.488 billion in reverse mortgages. The assets expanded from $2.320 billion three months earlier and $1.550 billion a year earlier.

Prior to income taxes, Ocwen had a $129 million loss, worsening from the $56 million third-quarter loss but not quite as bad as the $520 million loss in the fourth-quarter 2014.

Total staffing was 10,500 as of Dec. 31, 2015 — including 6,900 people in India and 700 employees in the Philippines.

Headcount was 11,400 as of Dec. 31, 2014.

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