Ocwen is the biggest loser on the HW 30
Other stocks soar after Yellen paints optimistic economy
Ocwen Financial Corporation (OCN) is not getting too much of a break in the news lately as constant threats of lawsuits due to faulty mortgages fill its desk.
According to a report in the Financial Times, “Investors including Pimco and BlackRock are considering filing suits against Ocwen over its servicing practices and mortgage modifications which they claim hurt the performance of MBS they own.”
In light of this, Ocwen’s stock took a massive hit and dropped 9.03% on Tuesday.
And this is not even a week after a New York regulator announced that it put an indefinite freeze on the mortgager servicer’s $2.7 billion mortgage servicing-rights deal with Wells Fargo (WFC).
The DFS said it is concerned about Ocwen’s ability to handle Wells Fargo’s portfolio of mortgage servicing rights, a deal that was announced last month and which would have given Ocwen the right to service some $39 billion in mortgages.
But it is not necessarily all bad new for Ocwen.
According to a report from Fitch Ratings, a pause in the pace of Ocwen's acquisitions would help the company to fully complete its integration of its recent acquisitions, while the company works to maintain servicing standards in all areas.
"Ocwen currently has a long-term issuer default rating of 'B'. The IDR reflects good operating performance, stress tests indicating sufficient operating cash flow generation to support debt holders, and appropriate capitalization and leverage for its current ratings," Fitch reported.
Meanwhile, Fed Chair Janet Yellen spoke for the first time since taking over for Ben Bernanke and told the House Financial Service Committee she is optimistic about the economy, unemployment and the prospect of inflation, helping to raise all major indices.
“I am committed to achieving both parts of our dual mandate – helping the economy return to full employment and returning inflation to 2% while ensuring that it does not run persistently above or below that level,” she said.
The HW 30 finished the day up .83%, but despite the index being up, stocks still recorded a mixed bag of results, with Ocwen posting the largest decline.
However, the DOW recorded a much more profitable day and ended up 1.22%.
According to an article from CNBC, U.S. stocks surged on Tuesday, with the Dow Jones Industrial Average rising triple digits and the Nasdaq Composite turning positive for the year, as Federal Reserve Chair Janet Yellen reassured Wall Street that the Fed would continue the central bank's policy of providing monetary stimulus to bolster the economy.
"The market does not want uncertainty, and she certainly didn't deliver any surprises," said Dorothy Weaver, co-founder of Collins Capital and former chairman of the Federal Reserve Bank in Miami.