Ocwen Returns to Profit as Mortgage Services Soar
Ocwen Financial (OCN) posted a $15.1m profit -- $0.24 per share -- for Q109 despite a $4.6m net unrealized loss on loans held for sale, compared with a $5.3m profit in the year-ago period. The gain comes after Ocwen lost a net $3.7m in Q408. Income from operations of $42.3m represents a 5.4% gain over the year-ago quarter. Income from continuing operations before taxes was $23.3m, up from $8.4m in the year-ago quarter. Lowered operating and interest expenses drove the increased income, executives said in the earnings statement. Ocwen chairman and CEO William Erbey said the company's unused borrowing capacity at quarter end rose 64% from December 31 to $438.7m. "Therefore, our focus has shifted to extending the term of our borrowings," he adds. "The inclusion of our servicer advances in [the Term Asset-Backed Loan Facility] has greatly increased the prospect of additional term financing." The company's mortgage services segment experienced a 7.5% increase in revenue, to $18m this quarter compared with $16.8m in the year-ago quarter. New lines of business and higher order volumes existing businesses drove the increase, company executives said in the statement. Ocwen completed 20,651 loan modifications through participation in the Home Affordable Modification Plan. In late April, Ocwen became the seventh servicer to receive Troubled Asset Relief Program (TARP) funds -- $659m -- as part of the modification incentive program. Freddie Mac (FRE) in February said it selected Ocwen as one of the initial servicers selected for a pilot third-party servicing program for Alt-A and other at-risk non-performing mortgages. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.