Ocwen set to become nation's largest subprime servicer
Mortgage servicing specialist Ocwen Financial Corp. (OCN) earned $26.4 million or 25 cents per share in the second quarter, up 65% from one year ago as the company took on more loans from previous acquisitions. And it is growth from those acquisitions, Ocwen chairman William Erbey said, that will make the firm the nation's largest subprime mortgage servicer. In 2010, Ocwen ranked fourth in subprime mortgage servicing, at $56 billion in volume. That was behind American Home Servicing ($78 billion), Bank of America/Countrywide ($82 billion) and Chase Home Finance ($90 billion). Ocwen claims its recent acquisition activity will catapult its volume to close to $100 billion per year. During the quarter, Ocwen acquired Litton Loan Servicing from Goldman Sachs (GS). Mortgages totaling more than $41 billion in unpaid principal balance came over in the deal along with the servicing platforms based in Texas and Georgia. Ocwen also repaid the remaining $26.3 million owed on a loan obtained last year to buy another servicing shop HomEq from Barclays Capital. Also during the quarter, Ocwen took in more than 13,300 private-label mortgages with an unpaid principal balance of $2.9 billion under a separate subservicing contract. Revenue totaled $105.8 million in the second quarter, a 39% growth from one year ago. Ocwen CEO Ron Faris said more loans will be coming in. "In the second quarter, we combined solid operating results with strong new business activity. When we close the Litton acquisition in the third quarter, it will increase the UPB that we service to over $100 billion," Faris said. Ocwen mortgage modifications totaled 16,825 during the second quarter, down 31% from the previous quarter. However, nonperforming loans and REO as a percentage of its serviced unpaid principal balance declined 50 basis points to 24.2%. Faris said had the firm not boarded the highly delinquent subservicing portfolio, the drop would have been a full percentage point. "Upon closing the Litton acquisition, Ocwen will become the largest non-prime servicer," said Ocwen Chairman William Erbey. "The company is well-positioned to take advantage of unique growth opportunities offered by continued consolidation of private-label servicing and increased demand for special servicing." Write to Jon Prior. Follow him on Twitter @JonAPrior.