Ocwen Financial Corp. said earlier this week that it is the latest major mortgage operation to feel the sting of the mortgage downturn — net income fell to $6 million during the third quarter, off 65 percent from $17 million in the year-ago period. Ocwen said that delinquencies and REO volume have skyrocketed within the company’s own portfolio — 14.6 percent of loan portfolio volume (or $8.1 billion) fell into this bucket at the end of the third quarter, compared to 7.2 percent one year earlier. From the press statement, a highlight you don’t often see — discussion of how rising delinquencies can squeeze a servicing shop:

… certain components of our servicing and subservicing fees, including servicing fees and late fees, are recognized when they are collected. Increasing delinquencies have resulted in lower collections relative to the size of our portfolio. Delinquencies affect the timing of servicing fee revenue recognition, but not the ultimate collection of servicing fees because servicing fees have priority over any interest or principal payments by the securitization trust on the bonds.

Ocwen said it absorbed $5.9 in write-downs to securities and loans held for sale, while it also recorded a loss of $8.7 million on the sale of certain securities. For more information, visit http://www.ocwen.com.