Monday Morning Cup of Coffee takes a look at news coming across the HousingWire weekend desk, with more coverage to come on bigger issues.
It’d be pretty safe to say that the last few years have been rough for Ocwen Financial.
Ocwen’s troubles began in earnest late in 2014 when the New York Department of Financial Services forced William Erbey to resign from his position as chairman of the board of directors of Ocwen, and four associated companies,over allegations into Ocwen’s servicing practices and its relationships with its affiliated companies.
But more importantly for the company, which is built on mortgage servicing, the NYDFS settlement prohibited Ocwen from acquiring any new mortgage servicing rights without approval from the NYDFS.
Erbey’s forced departure and Ocwen’s subsequent troubles with the California Department of Business Oversight, which eventually led to the company being prohibited from acquiring new mortgage servicing rights in California without CDBO approval, sent Ocwen’s stock into a tailspin.
Ocwen’s stock, which once closed trading at nearly $60 per share (in October 2013), fell throughout 2014, 2015 and into 2016, all the way to $1.52 per share in July of this year.
But for the first time in a long time, Ocwen is on a bit of a winning streak.
In July, when Ocwen posted its second quarter earnings (another quarterly loss, by the way), company executives stated that they believed the nonbank could return to profitability as it puts “legacy” issues behind it.
One of the issues facing Ocwen was a threat that New Residential Investment could pull subservicing rights from Ocwen based upon Ocwen’s servicer rankings from Standard & Poor’s. But that threat disappeared after S&P upgraded Ocwen’s servicer rankings, citing a number of internal operational improvements undertaken at the nonbank.
Ocwen also disclosed during its second quarter earnings that it is it trying to buy its way out from under the servicing restrictions placed upon it by its settlement with the CDBO, going so far as to set aside $15 million in the second quarter to pay for a potential settlement.
Wall Street seems to have taken notice of Ocwen’s positivity because the stock, which again, bottomed out at $1.52 on July 6, closed Friday’s trading at $3.39, the highest closing price for an Ocwen share since Feb. 29 of this year.
And while the climb from $1.52 to $3.39 may not seem like a lot, especially considering that the stock once traded at around 18 times that amount, Ocwen is still up more than 123% in a month and a half.
According to Google, Ocwen’s current market cap (at least as of close of business on Friday) is $411.26 million, a far cry from its approximate market cap of $186.05 million on July 6.
Then again, having a market cap of $411.26 million is still an even farther cry from a market cap in the tens of billions, like Ocwen used to have.
But it’s not all sunshine and roses for Ocwen either. In fact, sometimes it feels like it’s two steps forward, two steps back for the beleaguered nonbank.
Just this past week, Ocwen agreed to pay $900,000 to the state of Washington after an investigation conducted by the state found that Ocwen used unlicensed companies in India and the Philippines to service mortgage loans.
And more good/bad news came out for Ocwen last week, when a federal judge dismissed a racketeering lawsuit against the nonbank.
According to Reuters and Westlaw News, Ocwen stood accused of “overcharging thousands of homeowners for property inspections as well as taking kickbacks” from a scheme that allegedly involved Ocwen and Altisource Portfolio Solutions, a company that is closely affiliated with Ocwen.
The Reuters report provides scant details, but a review of the court filing shows that a pair of homeowners sought class action status and sued Ocwen and Altisource for allegedly overcharging for property inspection and broker price opinions, with Altisource allegedly providing “kickbacks” to Ocwen in exchange for using its services and passing those increased costs onto the borrowers.
The plaintiffs in the case claimed that Ocwen, Erbey and Altisource engaged in an “abusive, predatory and illegal home mortgage loan servicing business,” and in some cases, performed multiple property inspections and BPOs to “run up unnecessary fees.”
The good news for Ocwen is that the lawsuit was dismissed, as in the eyes of the judge, the plaintiffs’ claims didn’t hold water. Specifically, the judge said the plaintiffs’ case “failed to allege facts that are sufficient to make out a viable claim for relief.”
But Ocwen didn’t get off scot-free. In fact, the judge called the charges levied against Ocwen and Altisource “extremely troubling,” as the plaintiffs allegations are “bolstered” by other consent orders and settlements Ocwen has previously entered into, like in New York, for example.
So, while Ocwen dodged this lawsuit, the question now becomes are the company’s next steps forward? Backward? Or right into the eye of another storm?
And now, in decidedly non-Ocwen news, the loss of more mortgage servicing at PHH Corp. is about to lead to layoffs in the state of New York.
Late last week, PHH announced that it recently received notice from HSBC Bank that it plans to sell the mortgage servicing rights on approximately 139,000 mortgage loans currently subserviced by PHH to an unknown buyer.
And worse for PHH, HSBC informed the company that the purchaser of the mortgage servicing rights does not plan to continue using PHH as a subservicer.
According to a report from Buffalo Business First, HSBC’s decision will lead to PHH laying off a number of employees from its Amherst location.
Buffalo Business First reported that the number of job cuts is currently unknown, but stated that the company has 300 employees currently at its Amherst location.
And finally, a little sign of just how crazy the real estate market in Washington, D.C. might be these days.
Try this one. How about a 1,500-square-foot house that’s a total gut job? Asking price: $495,000.
Seems too good to be true? Or too bad to be true, as it were, right? Well, apparently it is.
Brandon Friedman, who is currently the CEO of the McPherson Square Group and is also a former deputy assistant secretary for public affairs at the Department of Housing and Urban Development, pointed this one out on Friday evening on Twitter.
The tweet, seen below, referenced a new listing in Washington, D.C.
The listing, which can be seen here on Redfin, currently shows the home to be a five bedroom, two bathroom house that sold in December 2015. But that’s not what the listing said on Friday when HousingWire reviewed it.
On Friday, the listing showed the house to be a six bedroom, three bathroom house.
But the description is what really put it over the top, before it was deleted of course.
From the listing, captured on Friday:
LOCATION, LOCATION, LOCATION. PLEASE NOTE PROJECTS IN PROGRESS TWO DOORS DOWN & IN THE NEIGHBORHOOD, NEED TOTAL REHAB. SOME COPPER PIPES HAS BEEN STOLEN. SOLD IN AS-IS CONDITION. . TAKE A FLASH LIGHT.
“Take a flash light.”
The pictures associated with the listing (at least as of Friday) show boarded up windows, a taped-up toilet, damaged carpet and garbage in the house.
Total rehab indeed.
But, hey, at least the listing was honest. That’s more than can be said for a lot of other house listings. But alas, nothing good lasts anymore.
Ah well, have a great week everyone!