Ocwen improves overall reverse mortgage performance despite volume contraction

As the company prepares to overhaul its branding, it reported positive performance in reverse mortgages based on servicing and gains on loans held for sale

Ocwen Financial Corp., parent company of PHH Mortgage Corp. and Liberty Reverse Mortgage, reported an overall improvement in its business performance for the first quarter of 2024 — including better reverse mortgage performance attributed to servicing and higher gains on loans held for sale.

Under generally accepted accounting principles (GAAP), Ocwen reported GAAP net income of $30 million or diluted earnings per share of $3.74, which company CEO Glen Messina characterized as the “highest level in six quarters.” It was driven primarily by improvements in servicing and origination. In Q4 2023, the company reported a GAAP net loss of $47 million.

Reverse mortgage performance

On a Thursday earnings call, Ocwen leadership touted the company’s reverse mortgage division maintaining a top-five position among the leading lenders in the country, as well as continued positive performance of its forward and reverse mortgage servicing operations.

“Reverse servicing increased its profitable contribution with higher gains on loans held for sale, even as volume contracted,” said Sean O’Neill, Ocwen’s chief financial officer. “Underlying the strong results is the ongoing effort on continued cost improvements, driven by technology […] and traditional process improvements across both forward and reverse servicing, as well as lower advances on our legacy book, which have decreased 14% year over year.”

The company’s origination segment also returned to profitability, O’Neill said, despite challenges presented by persistently high mortgage rates and a contraction in reverse mortgage volume.

“Despite rising rates, further depressing seasonally low origination volume, we are pleased to say all of our channels returned to profitability in the quarter,” he said. “Higher margins on lower volumes drove the profitability, with reverse origination seeing the largest improvement. Lower profits and correspondence were offset by gains in reverse and bringing consumer direct back to break-even.”

Company leaders also said they will prioritize capitalizing on asset management opportunities to further grow the servicing portfolio, including for reverse mortgages.

“We also continue to dynamically manage our owned MSR portfolio to capitalize on differing views of market values amongst top market participants. As always, we remain flexible and committed to considering all options in this dynamic market to maximize value for shareholders,” Ocwen CEO Glen Messina said.

Rebranding efforts

Initially announced in early April, Messina made reference to the company’s rebranding initiative, which will touch on all of its subsidiaries. The company will be known as Onity Group Inc., and the change will roll out to the PHH and Liberty divisions later in the year.

“Concurrent with our name change, we will begin trading on the New York Stock Exchange (NYSE) under the new symbol ONIT,” Messina said. “Our primary operating brands, PHH Mortgage and Liberty Reverse Mortgage, will retain their names at this time. We expect to rebrand PHH and Liberty to Onity Mortgage later this year. We’re excited about this new chapter for the company and we look forward to operating under the Onity brand.”

A company spokesperson previously told RMD that the rebrand is subject to shareholder approval. Once it is secured, the new NYSE symbol will begin to be used. Shareholders will have the chance to vote on the initiative at their annual meeting on May 28

A timeline for the name change’s application to Liberty and PHH was not specified outside of “later” in 2024.

According to Home Equity Conversion Mortgage (HECM) endorsement data compiled by Reverse Market Insight (RMI), Liberty was the fourth-largest reverse mortgage lender in the country with 1,363 endorsements during the 12-month period ending in April 2024.

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