- "The increased cost of maintaining the relationship with HLSS, combined with operational changes required by regulators, will have a material adverse impact on Ocwen's (NYSE:OCN) servicing margins over the long-term," says analyst Kevin Barker after further review of New Residential's purchase of Home Loan Servicing Solutions. He downgrades to Sell from Neutral, with price target cut to $7 from $7.50.
- Despite New Residential management's protests otherwise, Barker believes the risk of having servicing pulled on private label trusts or transferred by NRZ is high. "If this were to occur, it would have a serious adverse impact on the sustainability of OCN's business model."
- "Finally, the revelation from Gibbs & Bruns that they believe OCN's servicing practices caused $26B of damages to the RMBS trusts that the company serviced from 2008 to 2013 creates an enormous litigation and operational risk."
- Shares -6.3% premarket