Mortgage Modification Datapoint of the Day, Ocwen Edition

Shahien Nasiripour does some more digging into the HAMP mortgage-modification figures today, following on from last week’s analysis. This time he’s looking at the percentage of trial loan mods which have been converted to permanent status, and the numbers are startling, to say the least:

Total number of trial modifications at the end of May: 50,130

Number of those being serviced by Ocwen: 1,058

Total number of permanent modifications as of September 1: 1,711

Number of those being serviced by Ocwen: 763

To put it another way, Ocwen (OCN) has managed to convert more than 72% of its end-May trial loan mods to permanent status. The equivalent number for everybody else? 1.9%.

Ocwen’s looking good on other fronts, too, such as its redefault rate, which is much lower than the rest of the industry.

Is there any way to import Ocwen’s best practices to other servicers? Shahien quotes Valparaiso University’s Alan White as saying that Treasury “should start firing the under-performing servicers and bidding their work out to the successful companies”; what’s more, White is a law professor, which means that might even be legal.

More helpfully, Shahien explains one big difference between Ocwen and everybody else: Ocwen insists on having proof of income before it starts any trial modification. (And this doesn’t seem to have slowed it down at all; quite the contrary.) Other servicers might do well to follow suit.

Comments

[Karen Consumer:]

If Ocwen's so good, why are they being sued more than average? Also:

TUESDAY 29 SEPTEMBER 2009
Fitch Ratings has affirmed and removed from Rating Watch Negative Ocwen Financial Corp.'s residential primary servicer rating for subprime product, as well as the company’s special servicer rating. The former rating was affirmed at RPS2, and the latter at RSS2.

Fitch says its rating actions reflect Ocwen's seasoned management team, focused operational and default management capabilities, as well as its proficient use of technology. The ratings also reflect Ocwen's long-term Issuer Default Rating of B+, which was removed from Rating Watch Negative and assigned a stable rating outlook by Fitch on June 3. The removal of the Negative Watch reflects Ocwen's improved financial flexibility.

Ocwen operates its servicing platform from sites in West Palm Beach and Orlando, Fla., and global servicing offices in Bangalore and Mumbai, India, as well as a new operating site in Montevideo, Uruguay. Ocwen continues to expand its offshore strategy with nearly 80% of its servicing operations managed from Bangalore, Mumbai and Montevideo, including customer-facing operations. All of the worldwide operations are wholly owned and operated by Ocwen.

As of April, Ocwen serviced a portfolio of over 298,000 loans with an unpaid principal balance of $39.9 billion. Since Fitch's prior review, Ocwen continued to make incremental enhancements across the servicing platform in expanded training hours for all staff and new hires, enhanced customer Web site and IVR technologies, highly adaptable and extensive scripting technology, and increased resolution opportunities.

Fitch believes Ocwen continues to operate a reliable servicing platform with the appropriate staff, internal control environment and technology to manage its servicing operations and ongoing initiatives. However, Fitch will continue to monitor Ocwen's large-scale offshore operations, as its ability to relocate its servicing functions back to the U.S. quickly is limited.

SOURCE: Fitch Ratings

If 80% of its servicing operations are outside the US, how do we know that their modification numbers are accurate, and not just BS'd into positive advertising.

Oct 14 02:57 AM