Subprime servicing giant Ocwen Financial Corp. (OCN) took the unusual step of launching a press offensive Thursday, touting a recent drop in subprime delinquencies among the loans it services. The company's portfolio covers a significant portion of the subprime market -- through its subsidiary, Ocwen Loan Servicing, LLC, the company services approximately 350,000 mortgages, about 85 percent of which are subprime. Ocwen said that delinquency rates in every category (60, 90 and 90+ days) have either declined or remained flat over the last three months, the "first sign of stability in Ocwen-serviced loans since the inception of the subprime crisis in 2007." "While it's still too early to signal an end to the subprime mortgage crisis," said Ocwen president Ronald Faris, "this represents a welcome reversal of spiking delinquencies." And, indeed, any drop in borrower delinquencies should be welcomed. Seasonality may possibly have played some role in the three month drop, however, servicing experts told HW. Borrower defaults typically will ease through the summer months and begin to pick up pace August; and as we reported Aug. 21, subprime delinquencies across all servicers surged in July -- earlier than most had expected. It's also not known how the servicer's own use of repayment plans and/or loan modifications may have impacted its reported delinquency numbers; HW has covered extensively in the past how a heavy reliance on repayment plans can massage key default statistics. Investor shortfalls Ocwen has undertaken a clear effort to step up loan modification efforts for troubled borrowers, and while rightfully cheered by consumer groups, the move has been a mixed bag thus far for investors. HW reported on June 20 that a huge surge in Ocwen-modified subprime loans left MBS investors both angry and nervous after several deals serviced by the company experienced significant interest shortfalls on senior ABS securities in the month of May. Monthly loan modification activity at Ocwen rose more than six fold between the end of last year and April of this year -- in fact, the servicer modified nearly 900 loans in April, after modifiying less than 200 in January and well below 25 loans in December 2007, according to a review of available data by HousingWire. The company modified more loans in the first four months of this year than it modified during all of 2007; in fact, Ocwen modified more loans in April 2008 alone than it modified during all of last year. It's a trend that has continued since that time, our sources confirmed. "Ocwen had materially increased its modification program activity and many modifications involved principal reductions in addition to interest rate reduction and/or forgiveness of other payment and cost amounts," said Diane Pendley, a managing director at Fitch Ratings, in an earlier press statement. Fitch has said it is reviewing the surge in modifications to determine if downgrades to Ocwen-backed mortgage bonds may be needed. All of which means that Ocwen is most certainly seeing reported delinquency numbers decrease; but it also means that such an observed decrease may say less about market tenor than it does about an individual servicer's own efforts to both help troubled borrowers and manage cash flow appropriately. Faris suggested that Ocwen's loan modification program was similar to the program being implemented at IndyMac Federal Bank by the Federal Deposit Insurance Corporation. Disclosure: The author held no positions in OCN 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.