Ocwen Financial CorporationNYSE
Ocwen: Death By A Thousand Regulator Cuts?
Michael Boyd • 91 Comments
Michael Boyd • 91 Comments
What Went Wrong At Ocwen, And What Happens Next?
Alpha Gen Capital • 56 Comments
Alpha Gen Capital • 56 Comments
Thu, Nov. 17, 1:16 PM
- The refinance of the company's bank loan out of the way, Ocwen (OCN +2%) moves to refinance its Senior Secured Term Loan, with Bloomberg reporting pricing on the $335M deal in the area of Libor +575 basis points and (like the bank loan) a 2022 maturity.
- It wasn't long ago that the SSTL had a balance well north of $1B, and Ocwen faced a major penalty if it didn't refinance by next June.
- The debt extensions out of the way, Ocwen is presumably in position to go on offense, i.e. start buying MSRs again. The regulators, of course, will have to sign off first, but that's looking more hopeful now than it would have a few months back.
- The news is also of interest to Altisource Portfolio Solutions (ASPS), which counts Ocwen as its largest client.
Wed, Nov. 16, 11:21 AM
- Ocwen Financial (OCN +1%) announces the tender of nearly all of its 6.625% Senior Notes due in 2019; to be exchanged for Senior Secured Second Lien Notes due in 2022 at 8.375%.
- Altisource Portfolio Solutions (ASPS +1.6%) investors are pressing that company to consider a similar extension as that would give the management team the "runway" to execute on its strategic initiatives.
- Further, some are urging Altisource to fry the shorts by issuing up to $100M in convertible preferred debt and using the proceeds to tender for common stock. Considering the limited float and average volume in the area of 400K shares per day, it could set off quite the squeeze.
Fri, Nov. 4, 11:00 AM
- According to Debtwire, Ocwen (OCN +3.3%) is in talks to raise more than $200M in fresh debt. The move suggests the company - more or less in runoff mode for some time - is getting set to focus on growth in its mortgage origination and auto loan businesses, not to mention the idea of resuming MSR purchases.
- This news is in addition to this week's announcement of a deal to refinance $230M of senior notes.
Tue, Nov. 1, 9:30 AM
Thu, Oct. 27, 1:06 PM
Thu, Oct. 27, 12:50 PM
Thu, Oct. 27, 11:29 AM
- While no agreement with California has been reached, management believes good progress has been made and the $25M reserved so far (including $10M more reserved in Q3) should be adequate. A settlement with CA would greatly cut into third-party monitor fees, which in Q3 summed to $15M.
- Faris notes settlement accruals and monitor expenses cost the company more than $30M in Q3 vs. reported operating expense of $271.7M, and reported pretax profit of $2M.
- On the East Coast, Ocwen (OCN +22.7%) expects within weeks to formally request the NYDFS's ban on the company acquiring MSRs be lifted.
- Not all is positive though as the lending segment had a "disappointing" quarter with just $3.6M of pretax income despite originations rising 8%. Faris expects better results in the future as progress is made on rolling out improved technology. He also notes the company is reaching only about 25% of customers that can benefit from lower rates or payments. "We’ve intentionally ramped up slowly and carefully to maintain quality in an environment with intense regulatory scrutiny on the entire mortgage market."
- Earnings call presentation slides
- Previously: Profit returns to Ocwen Financial; +12% after hours (Oct. 26)
Thu, Oct. 27, 9:14 AM
Wed, Oct. 26, 5:35 PM
Wed, Oct. 26, 4:39 PM
- After a number of one-off items, the company saw pretax income of $2.4M during Q3, bettering Q2's result by nearly $100M. GAAP income of $9.5M or $0.08 per share vs. estimates for a loss of $0.32.
- Cash from operating activities of $178M was up $47M from Q2. Cash in the bank of $264M, up $44.6M. More than $50M in earlier-announced settlements have not yet been paid out.
- Servicing segment pretax income of $33.2M vs. a loss $14.7M in Q2. More than 21K loan mods during quarter, with $12M of gains on servicer "clean up" call rights transactions.
- Lending segment pretax income of $3.6M down from $7.5M.
- Automotive Capital Services boosted receivables by $11M, or 66%. It's now operating in 32 markets with 57 active auto dealers, and has approved credit facilities of $67M.
- Conference call at 5 ET
- OCN +12% in active after hours action.
- Previously: Ocwen Financial EPS of $0.08 (Oct. 26)
Wed, Oct. 26, 4:32 PM
Tue, Oct. 25, 5:35 PM
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Fri, Oct. 21, 1:00 PM
Tue, Oct. 18, 1:00 PM
Mon, Oct. 17, 2:36 PM
- "After 18 months of intense corporate challenges caused by their prior rapid growth, regulatory fines and sanctions, and spillover from what I consider bad behavior from a conflicted lobby group, Ocwen (NYSE:OCN) has now turned the corner and is on road profitability," writes John Devaney updating his bull thesis on the company in a sizable report, which also touches on other industry participants like ASPS, NRZ, NSM, WAC, and PHH.
- "The past four months have seen a series of meaningful events that have greatly de-risked the company and added credibility to the management and the company’s reputation."
- The stock represents deep value, says Devaney, noting tangible book value north of $10 per share, a stock price of just $3.60, and possibly $1 per share in earnings next year. He's got a price target of $6.75 by year-end 2017.
Fri, Sep. 16, 11:25 AM
- Ocwen Financial (OCN +3%) bulls have long proclaimed the company simply does a better job than peers for both the RMBS holders and struggling homeowners.
- A recent Treasury report gives more evidence with regards to the homeowners. Compiling results in Q2, the report says Ocwen was responsible for 53% of the 7,811 Streamline HAMP modifications completed industrywide.
- Totaling all HAMP programs through the end of Q2, Ocwen has granted just shy of 325K loan mods, or 20% of all loan mods, and 52% more than the next best servicer. Ocwen's also granted 48% of all HAMP principal reduction mods completed nationwide.
- The Q2 report also gives Ocwen three-star ratings (the highest) across all compliance categories.
- Looking at seven sizable servicers, Ocwen is among four who are said to need minor improvements, while two (Citi and Nationstar) need moderate improvement, and one (Bank of America) needs substantial improvement.
- CEO Ron Faris: "Ocwen is a new company with a management team and Board of Directors that is committed to a culture of compliance and service excellence."