Seeking Alpha

Servicers recoup yesterday's lost ground

  • Looking golden at the moment is Compass Point's Kevin Barker, who stepped into yesterday's major decline in the specialty servicers with an upgrade to Ocwen Financial (OCN +3.9%). The decline was sparked by a story - later confirmed by Ocwen - that Ben Lawsky's NY Dept. of Financial Services had blocked Ocwen's purchase of MSR's from Wells Fargo.
  • If Lawsky's concern is Ocwen's ability to properly service a massive influx of new loans, this isn't an issue, says Barker as the company can take steps to ensure compliance. If Lawsky is upset about Ocwen's current servicing practices, that's a more complicated issue, but Barker doesn't believe this to be so.
  • He's got a price target of $60 assuming the Wells deal gets done and Ocwen continues buying MSRs, and utilizes free cash flow for stock repurchases or an accretive acquisition.
  • Down 14% at one point yesterday, Ocwen is back to near where it was before the news hit. Also bouncing back are Nationstar (NSM +8.3%) and Walter Investment (WAC +3.1%).
  • Others of interest: PennyMac Mortgage (PMT +0.7%), New Residential (NRZ +1.2%).
Comments (3)
  • Micah
    , contributor
    Comments (462) | Send Message
     
    the recent high for $OCN is $60, so this guy isn't exactly sticking his neck out.
    7 Feb, 02:39 PM Reply Like
  • Matthew Mazurczak
    , contributor
    Comments (914) | Send Message
     
    He isnt exactly sticking his neck out but calling for 30% upside in the stock. Take a look at the chart. Takes some stones for an analyst to come out on a day like yesterday and say the stock is work 30% more then its trading after it had been getting pounded for a month straight.
    7 Feb, 11:24 PM Reply Like
  • Matthew Mazurczak
    , contributor
    Comments (914) | Send Message
     
    My question to anyone oppossed to the deal is if OCN or NSM does not service the mortgages who will? OCN has only a 5% marketshare and you have TRILLIONS of MSRs that the banks want to get rid of. The WFC deal was only 2% of their MSR portfolio!!!!! Then you have Citi, etc.
    OCN has stated multiple times there is going to be a large shift in servicing. Doesnt it make sense then that are able to absorb the servicing and prepared for it, when they have mentioned it coming for over a year?
    7 Feb, 11:27 PM Reply Like
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