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Ocwen dumps Fitch, names interim CEO

Ending contract with ratings agency, also names replacement for departing CEO

Over the years, Fitch Ratings has frequently commented about Ocwen Financial, issuing reports and ratings actions about the nonbank’s business dealings, trials and tribulations.

Well, that’s about to come to an end.

Ocwen announced Monday that as “part of its ongoing efforts to reduce costs,” the company is electing not to renew its contract with Fitch for “various corporate ratings.”

The brief announcement does not state what specific ratings will be no longer be issued by Fitch in the wake of the contract termination, but Ocwen states that its “Residential Mortgage Primary Servicer and other servicer ratings” will continue to be issued by Fitch.

According to the company, the servicer ratings are part of separate agreements with Fitch and are “not impacted” by the company’s decision in this matter.

Earlier this month, Fitch affirmed its Long- and Short-Term Issuer Default Ratings of Ocwen Financial at “B-“ and “B,” respectively. Additionally, Fitch affirmed the Long-Term IDR of Ocwen Loan Servicing at “B-.”

At the time, Fitch said its rating outlook for Ocwen was negative.

The ratings agency noted Ocwen’s pending $360 million acquisition of PHH as both a positive and a negative for the future of the company.

“The potential strategic and financial benefits of the PHH acquisition are offset, in Fitch's opinion, by execution risk with respect to Ocwen's ability to achieve stated integration, overhead, servicing and origination synergies, supporting the Negative Outlook,” the ratings agency stated earlier this month.

Fitch’s report also noted Ocwen’s cost-cutting measures, stating that the company faces financial pressures due to portfolio runoff and elevated costs.

“Ocwen has actively worked to reduce costs over the past year, both within its servicing segment and general corporate overhead,” Fitch said. “A return to sustainable profitability will be dependent on management's successful execution of its asset generation strategy post-acquisition, while continuing to reduce controllable costs and improve operating margins.”

Fitch said that it believes Ocwen’s strategy to be “reasonable” but cautioned that that it will be achieved “over a longer period.”

Apparently Ocwen wants to shorten that timeframe, and it believes that ending part of its relationship with Fitch is a way to get there.

HousingWire attempted to contact Fitch about Ocwen’s decision, but the company has not yet responded. This article will be updated should the company respond.

Another new boss

Ocwen ending its contract with Fitch wasn’t the only news the company made on Monday.

Ocwen also announced Monday that John Britti, the company’s executive vice president and chief investment officer, has been named interim CEO.

Britti will take over on a temporary basis for the retiring Ronald Faris, who announced earlier this year that he plans to step down on June 30, 2018.

According to the company, Britti will take over as CEO on July 1 and continue to serve as CEO until the culmination of the PHH acquisition, at which time former PHH CEO Glen Messina will assume the role of Ocwen CEO.

The company said that Britti, who was promoted from chief financial officer to chief investment officer in 2014, will continue to serve as CIO while also serving as CEO.

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