Ocwen Financial continues to lose money, posting yet another loss, however, the company pointed out that the losses continue to grow smaller, though this one was still larger-than-expected by some.
Overall in 2017, the company reported a net loss of nearly $130 million, its fourth straight year of losses more than $100 million.
After seeing five straight quarters of net losses, Ocwen posted a net income of $3 million in the first quarter of 2018. However, the second quarter this year pulled the company back into the red, posting a loss of $30 million. This is still up by $15 million from the loss in the second quarter of 2017.
Much of the company’s losses can be contributed to ongoing court fees and legal battles, which it continues to face in states across the U.S., and an ongoing restructuring effort.
“Regarding legacy regulatory and legal matters, we believe that as a result of court rulings, settlements and ongoing negotiations, we are continuing to make progress on this front,” Ocwen CEO John Britti said. “We also continued the process of prudently deploying our excess cash in both short-term liquid and longer-term business investments.”
Last year, Ocwen faced a string of settlements with some of the 31 states that took regulatory actions against the nonbank over alleged escrow and other mortgage servicing issues. And many of those actions have carried over into 2018.
In addition to facing these regulatory fees, the company is also facing a changing business model as it seeks to finalize its merger with PHH Corp., which it announced the purchase of for $360 million earlier this year.
“Our primary emphasis, however, has been on developing our plans for integration upon closing of our merger with PHH,” Britti said. “We have made solid progress towards closing the transaction, and we are currently targeting closing the acquisition in the third quarter of 2018.”
The company announced its revenue sank slightly in the second quarter to $253.6 million, down from $260.3 million in the first quarter.
Divided by areas of business, Ocwen’s servicing segment posted $2.1 million in pre-tax income during the second quarter; the lending segment posted $1.4 million in pre-tax income and the corporate segment saw a $31.9 million pre-tax loss during the second quarter.
Of this loss, about $13.4 million was due to corporate interest expense, $7.4 million was due to ongoing strategic transaction and restructuring costs and $5.3 million was due to Consumer Financial Protection Bureau and other state regulatory related legal fees.