Ocwen Exits Correspondent Channel, Lending Sinks

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8 · 02 · 17

An exit from the correspondent lending channel had quarterly mortgage originations plunging at Ocwen Financial Corp. The slowdown was accompanied by continued losses.

The West Palm Beach, Florida-based mortgage banker disclosed in its second-quarter earnings
report that it suffered a $42 million pre-tax loss.

Losses widened from $30 million during the previous three-month period. But Ocwen cut its losses compared to $96 million during the same three months last year.

Ocwen President and Chief Executive Officer Ron Faris noted in the report that despite recent regulatory setbacks, progress was made with transferring mortgage servicing rights to New Residential Investment Corp.

In addition, Faris said additional legacy litigation matters were resolved. Legal settlement-related expenses were reported at $34 million for the quarter.

Single-family loan originations, including forward and reverse mortgages, from April 1, 2017, through mid-year came to $0.700 billion. Business tumbled from $1.114 billion in the first quarter. The quarter-over-quarter decline was in contrast to
most lenders that have so far reported gains from the preceding quarter.

The drop in lending was attributed to a decision to exit the correspondent channel. Correspondent acquisitions made up $1.730 billion of last year’s $5.014 billion in total originations.

Ocwen said it will focus instead on higher-margin retail and wholesale originations.

Ocwen’s latest lending total also came up short of the $1.320 billion closed in the second-quarter 2016.

Full first-half mortgage production amounted to $1.814 billion.

The total unpaid principal balance of single-family loans
and real-estate-owned serviced was $194.798 billion. The total includes sub-servicing and loans for which New Residential has acquired the mortgage-servicing rights.

In its first-quarter 2017 10-Q filing with the Securities and Exchange Commission, Ocwen reported a sub-servicing portfolio of $4.197 billion, putting the estimated June 30, 2017, primary servicing portfolio at
$190.601 billion.

The total servicing portfolio was $202.369 billion as of March 31 and $229.276 billion as of June 30, 2016.

Loans held for investment were $4.224 billion at fair value as of mid-2017.
The total was $3.916 billion as of the conclusion of the first quarter..

finished the first half at 9.6 percent. That was a nice improvement from 10.7 percent three months earlier. The declined was more significant versus 11.2 percent a year earlier.


Mortgage Daily Staff


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