Ocwen’s reverse mortgage business has stellar Q1

Liberty Home Equity Solutions reaps profits despite down HECM market

Ocwen Financial’s business didn’t fare so well in the first quarter of the year, but it seems its reverse mortgage business is doing just fine.

Liberty Home Equity Solutions, the reverse mortgage division of Ocwen based in Rancho Cordova, California, boosted its parent company’s profits with a $24 million gain of pre-tax income in Q1 2019 – no small feat considering the HECM market’s staggeringly low volume as of late.

The gain is a marked improvement from last quarter when Liberty earned just $8.3 million in pre-tax income.

Meanwhile, Ocwen’s traditional lending arm posted a $19.9 million gain of pre-tax income in Q1. But this wasn’t enough to pull the mortgage company out of the red.

Ocwen posted a net loss of $44.5 million in Q1, a sizable shift from the $2.3 million gain it saw the previous quarter.

The company attributed the bulk of the loss to employee severance, retention and restructuring costs, blaming the remaining $14 million on unfavorable interest rates and valuation assumptions.

But business for Liberty is looking pretty solid these days. The lender originated reverse mortgage loans with an unpaid principal balance of $141.3 million, Ocwen said in a release detailing its Q1 earnings.

Ocwen also said its reverse mortgage portfolio closed out the quarter with approximately $64 million in discounted future gains from forecasted future draws on existing loans.

And, just last week, Liberty topped Reverse Market Insight’s list of HECM lenders with the greatest gains in April, with its business rising 53.1% to 222 loans – closing more loans last month that it has during any month in the last year.

Currently, Liberty is No. 5 on the Top HECM Lenders list with 5.5% of the market share.

But it looks like the lender may soon expand its offerings beyond the government-insured HECM.

In March, Ocwen indicated that Liberty was on the brink of releasing a proprietary reverse mortgage product, revealing in its fourth quarter earnings report that the lender successfully test drove a non-agency reverse product.

No word yet from either company on a release date.

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