Put simply, it was the same song, different verse for Ocwen Financial in the third quarter. Another quarter, another loss.
Ocwen reported Tuesday that it posted a net loss of $41.1 million in the third quarter, a significant drop over last year, when the company lost $6.1 million in the same time period.
The third quarter loss is also larger than in the second quarter of this year, when the company posted a loss of $30 million.
On the (slightly) positive side, Ocwen’s total net loss for the year now checks in at $68.3 million, up from its loss of $83.2 million in the first three quarters of last year.
According to the company, the overall loss was driven by losses in each of its business segments. Ocwen’s servicing business recorded a pre-tax loss of $13.9 million in the third quarter. The company said that its business was “negatively impacted” by lower revenue from a smaller portfolio and higher professional fees.
The company’s lending business also showed a pre-tax loss of $2.1 million. Broken down by segment, the company’s reverse mortgage business recorded a $0.9 million pre-tax loss, while its forward lending recapture business saw a pre-tax loss of $1.2 million.
“Both businesses have been negatively impacted by higher interest rates,” Ocwen said in its earnings release. “In addition, the reverse mortgage lending industry continues to adjust to the impact of HUD program changes introduced in the fourth quarter of 2017.”
The company’s corporate segment also saw a pre-tax loss of $24.3 million, which included a loss of $12.5 million in corporate interest expense and $9.1 million of Consumer Financial Protection Bureau and state regulatory related legal fees and escrow related testing expenses.
But the company believes it’s nearing a path back to profitability, despite suffering a net loss in seven of the last eight quarters. The big difference, the company says, is the just completed acquisition of PHH Corp.
“We believe our acquisition of PHH on October 4, 2018 provides us with the opportunity to transform to a stronger, more efficient company, better able to serve our customers and clients, and positions us for a return to growth and profitability,” newly installed Ocwen CEO Glen Messina said.
“In the near term, our goal is returning to profitability in the shortest timeframe possible, taking into consideration the robust, prudent integration process we are undertaking. We believe our return to profitability will largely depend on realization of acquisition synergies and our ability to replenish portfolio runoff, among other factors,” Messina continued.
“Based on the company’s current situation and our assessment of the current industry environment, we have established a set of initiatives to enable our return to profitability and improve our competitive position. In the near term, we will be focused on executing the integration, re-engineering our cost structure, returning to growth and fulfilling our regulatory commitments,” Messina concluded. “Throughout this process, Ocwen will continue its long-standing commitment to enabling and preserving homeownership for underserved and at-risk customers, and this core value will continue to be a guiding principle as we move the company forward.”