Ocwen Posts $15.6 Million Q3 Profit
Despite the pressures pushing and pulling on any servicer these days, Ocwen Financial Corp. (OCN) said Thursday that it made $15.6 million, or $.23/share, during the third quarter, more than 160 percent above year-ago's $6.0 million, or $.09/share, in reported net income. The West Palm Beach, Fla.-based company maintains a large non-prime servicing platform and a substantial mortgage and finance technology solutions business. The company's servicing portfolio continued to contract during the quarter, however, falling 33 percent to $41.8 billion; one year ago, Ocwen's servicing portfolio stood at $55.7 billion. Ocwen ranked as the nation's 24th largest servicer in 2007, according to statistics provided by Inside Mortgage Finance, an industry trade publication. CEO William Erby stressed Ocwen's recent strong focus on loan workouts, saying that the company completed 22,257 workouts during the third quarter and 54,868 for the year. "Every successful workout makes the loan cash flow again and avoids substantial losses that the investor would otherwise incur in a foreclosure -- loss severity is at an all time high now at 50 percent," he said, suggesting the loan workouts were a "win-win" for investors and borrowers. They also were clearly a win for Ocwen's own cash flow: by limiting delinquencies, Ocwen has been able to reduce its advance balances by $147.2 million since the end of June. The company did not specify how many of its workouts were repayment plans versus executed loan modifications. Despite stronger financial performance, collateral in the company's servicing portfolio continues to deteriorate, reflecting the national state of housing. Ocwen said that non-performing assets reached 22.7 percent of the servicing portfolio -- or $9.5 billion -- during the third quarter; that's up substantially from 14.6 percent one year ago, and a slight increase from the prior quarter, despite all of the servicer's loan workouts. Erbey also said that Ocwen is actively considering a spin-off of its technology solutions company into a separate, publicly-traded entity. Revenues in the technology business line rose 30 percent to $11.7 million during the third quarter. Operating income rose to $2.1 million for Q3, compared to a $0.3 million loss from operations in the third quarter of 2007. Shares in Ocwen were up 5.21 percent to $6.87 in afternoon trading Thursday, bucking a trend of broader stock declines in the Dow Jones Industrials. Write to Paul Jackson at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.