Ocwen Financial shocked many in the financial services industry when it announced earlier this year that it plans to buy PHH Corp. for $360 million in cash.
Now, the PHH relationship is about to get a little more complex, as Ocwen announced Thursday morning that it is naming former PHH CEO Glen Messina as its new CEO and president.
Messina, who left PHH just over a year ago amid an executive shakeup, will replace Ron Faris as Ocwen president and CEO.
According to details provided by the company, Faris is set to retire as Ocwen’s chief executive later this year.
Faris spent the last 27 years with Ocwen, rising steadily through the ranks over the years. According to his Ocwen bio, Faris joined the company in 1991, serving as controller for an Ocwen subsidiary.
From there, Faris served as vice president and chief accounting officer of Ocwen from June 1995 to May 1997; senior vice president from May 1997 to May 1998; and executive vice president from May 1998 to March 2001; before being promoted to president of the company in 2001.
Faris took a seat on the company’s board of directors in 2003 and was elevated to CEO in 2010.
During that time, Faris piloted Ocwen through some rough waters, including the Consumer Financial Protection Bureau and more than 30 states taking action against Ocwen last year for mortgage servicing issues.
Ocwen announced earlier this year that it reached a settlement with the Massachusetts Office of Consumer Affairs & Business Regulation’s Division of Banks, the last of the state regulators that took action against the bank.
The CFPB matter, a separate lawsuit from the Massachusetts attorney general, and another lawsuit from the state of Florida are still outstanding, but Ocwen’s servicing troubles are nearly behind it.
The company has also been through some significant business changes in the last few years.
Back in August 2017, Ocwen said that it planned to exit correspondent lending to focus on its “higher margin” channels of retail and wholesale. But that plan lasted just two months, as Ocwen disclosed in October that it planned to exit its wholesale forward lending business, its largest mortgage origination channel.
As a result in Ocwen’s lending business changes, the company’s lending volume dropped by $1.4 billion in 2017.
In 2016, the company originated just over $5 billion in mortgages. Of that, $4.19 billion were forward mortgages, while $825 million were reverse mortgages.
By comparison, Ocwen originated approximately $3.56 billion in mortgages in 2017. Of that, $2.52 billion were forward mortgages, while $1.04 billion were reverse mortgages.
In its most recent earnings statement, Ocwen said that the decrease in forward originations was due to the company’s decision to exit the “unprofitable correspondent and wholesale businesses.”
But soon, it will be Messina leading Ocwen into the future.
According to Ocwen, Messina will officially take over as president and CEO when the company’s acquisition of PHH is finalized. Messina will also take a spot on Ocwen’s board at the time.
The company currently expects the deal to close in the second half of the year.
Faris will remain as president and CEO until June 30, 2018, and will remain as a consultant with the company to “ensure a smooth leadership transition and to assist with the integration process for Ocwen’s pending combination with PHH,” the company said.
According to the company, its board may appoint an interim CEO on or before June 30 if the board “determines it appropriate.” That interim CEO would lead the company until Messina officially takes over.
In its release, Ocwen said that Faris made the decision to retire after consulting with the company’s board, which undertook a long-term succession planning process that culminated in naming Messina as Faris’ replacement.
“We thank Ron for his leadership and for all of his contributions over the years,” said Phyllis Caldwell, chair of Ocwen’s Board.
“As president and CEO, Ron guided Ocwen through a period of significant change, both in the mortgage industry and at our company,” Caldwell continued. “Ron redesigned the way we conduct business and, because of Ron’s leadership, we are strategically positioned to move forward into the future through our pending merger with PHH.”
Messina comes to Ocwen after overseeing a time of change at PHH before his departure last year.
Back in 2014, PHH sold off its fleet business in an attempt to focus on the company’s struggling mortgage performance. Then, Bank of America and HSBC both pulled massive servicing portfolios from the company.
The company also sold off its entire mortgage servicing rights portfolio in late 2016, and then shifted its mortgage origination focus significantly, exiting private-label originations and ending its joint mortgage venture with Realogy Holdings Corp.
Messina served as president and CEO of PHH from January 2012 to June 2017. Messina came to PHH as chief operating officer in 2011 after spending 17 years at General Electric Company, including most recently serving as CEO of GE Chemical and Monitoring Solutions from 2008 through 2011.
According to details provided by Ocwen, Messina served as a consultant with PHH through February 2018.
“We are very pleased that Glen Messina has decided to join Ocwen as our new president and CEO,” Caldwell said.
“Glen is one of the recognized leaders in the mortgage industry and his disciplined approach to top and bottom line results in his previous roles is widely respected. He also has a successful record of bringing together strong teams to strategically build stability and structure across an enterprise,” Caldwell added. “Glen’s significant experience leading change as a public company CEO and his deep understanding of PHH will help accelerate Ocwen’s transformation.”
Upon completion of the merger with PHH, the combined company would service 1.9 million loans with an unpaid principal balance of $328 billion and originate more than $3 billion of residential mortgage loans, including reverse mortgages, annually.
“I am extremely excited to join Ocwen at this important time for the company,” Messina said.
“I believe Ocwen’s pending combination with PHH will create a stronger, more efficient mortgage servicer, positioned for a return to growth,” Messina continued.
“I believe the merger with PHH, combined with the major overhaul that Ocwen has undertaken in recent years of its risk and compliance infrastructure, will mark the beginning of a new chapter in the company’s history,” Messina concluded. “I look forward to partnering with all team members to help Ocwen continue as a leading mortgage servicer that delivers significant benefits to consumers, employees, clients, and investors.”