Ocwen swings to profit, buys Saxon Mortgage Services
Ocwen also returned to a profit of $20.2 million profit, or 19 cents per share, for the third quarter from a loss of $13.2 million one year ago.
Revenue jumped to $122 million in the third quarter, up 28% from the year-ago period. The firm collected more than $112 million in servicing fees, up from $86 million the year before.
On Sept. 1, Ocwen completed its acquisition of Litton Loan Servicing from Goldman Sachs ($164.15 0%). A servicing portfolio of $38.6 billion in unpaid principal balance pushed its company-wide portfolio to $106.1 billion.
In the Saxon transaction, Ocwen receives $26.6 billion in mortgage servicing rights and $12.9 billion loans Saxon subserviced for its parent company Morgan Stanley. Ocwen paid $59.3 million for the rights to service these mortgages and agreed to pay an estimated $292.2 million in servicing advances due to Saxon.
The transaction is expected to close in the first quarter of 2012.
"The Litton acquisition is proceeding as planned," said Ocwen CEO Ron Faris. "The majority of loans transferred to Ocwen's platform on Sept. 1, and the remainder will move by Nov. 1."
The company reported more than $20 million in litigation expenses tied to a dispute with an unnamed vendor. The delinquency ratio on the Ocwen portfolio rose to 28.7% in the third quarter from 24.2% at the end of July.
Faris said the increase was tied to incoming loans from Litton.
Ocwen completed 15,743 modifications in the quarter, with an increasing amount through its Shared Appreciation Modification, or SAM program, which was designed to write down the principal for eligible borrowers and share future equity growth.
Write to Jon Prior.
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