Liberty Parent Continues Inching Back into the Black

Ocwen Financial Corporation, parent company to reverse mortgage lender Liberty Home Equity Solutions, is beginning to see its reorganization efforts steer the company back toward financial profitability, however it endured a loss in the third quarter of 2019 that is slightly higher than the recorded loss the same time one year prior, according to financial documents released this week and a Tuesday morning earnings call.

“Our third quarter 2019 reported net loss of $43 million was impacted by $18 million of reengineering costs, $6 million of unfavorable net valuation impacts, and a $5 million gain on repurchase of senior secured notes, among other items,” said Ocwen CFO June Campbell on the call announcing Q3 earnings.

Results specifically in the company’s reverse mortgage division were offset slightly due to extenuating factors not present in the second quarter, Campbell said. Still, both the revenue and volume recorded by the reverse mortgage division saw increases.

“The reverse lending business recorded pretax income of $9 million compared to $12 million in the prior quarter, largely driven by $5 million less of favorable net fair value change compared to the second quarter,” she said. “Reverse lending revenue of $21 million was in line with prior quarter. Excluding the less favorable net fair value change, revenue improved $5 million, driven in part by 32% higher volumes in the quarter.”

Ocwen’s reorganization strategies to return the company to profitability appear to be working, and company leadership is encouraged by early results that offer an indication of a timetable for that return.

“During the third quarter, we made substantial progress against our key business initiatives while proactively addressing a more volatile and uncertain and straight environment,” said Glen Messina, Ocwen CEO on the conference call. “With integration activities winding down, we are intensifying our focus and resource allocation on growth and continuous cost improvement. I continue to be encouraged by our high level of execution.”

Messina also detailed that Ocwen’s long-awaited return to profitability is projected to take place by Q3 2020, and that finances appear to be approaching break-even status for Q4 2019.

Liberty President Mike Kent related that the company is encouraged particularly by the launch of its proprietary offering, EquityIQ, which he described in an interview released for episode 6 of The RMD Podcast.

“It’s gone really well,” Kent said. “We launched it in late June, and it was in just five states. Then in August, we added an additional five states. And then before by year end, we’ll add another five states. So by year end, we’ll have 15 states that the product is being offered in.”

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