Billions worth of mortgages once handled by Saxon Mortgage Services received more principal write downs since Ocwen Financial Corp. (OCN) took over the portfolio.

Ocwen, now the largest subprime servicer in the U.S., completed its October 2011 acquisition of Saxon from Morgan Stanley (MS) in April 2012.

More than $22 billion in mortgages transferred through the deal.

Just 11% of all modifications done on these loans included a principal reduction as of May. But in the three months since, Ocwen wrote down principal on 56% of modifications on Saxon loans, according to Laurie Goodman, chief analyst at Amherst Securities.

"This is not a surprise as Ocwen is in the process of on‐boarding Saxon servicing and is known to do principal modifications," Goodman wrote in a note to mortgage bond investors.

Principal was reduced on 48% of all private-label mortgage modifications in August, the highest percentage of any type of workout, according to Amherst.

Roughly one year ago, Ocwen released a program that would reduce principal for underwater borrowers to 95% of the home's value over three years. In return, the borrower shares 25% of the appreciated value afterward.

Nearly 19,000 borrowers took advantage of the program in the first year.

jprior@housingwire.com