Ocwen Financial Corp. on Wednesday afternoon announced its first quarterly profit in more than a year, posting a net income of $9.5 million for the third quarter of 2016.
The reported $9.5 million net income was welcome news for Ocwen, which endured losses of $111 million and $87 million in the first and second quarters of 2016, respectively.
One huge difference for Ocwen was in the servicing segment, which recorded a pre-tax income of $33.2 million in Q3—an improvement of $47.9 million over the second quarter. Ocwen attributes the turnaround to strong performance under the government’s Making Home Affordable streamline modification program, significant operating cost improvements, gains from the execution of servicing “clean up” call rights and MSR sales, and continued reductions in advances and match funded advances.
“We are very pleased with the financial result this quarter, recording our first quarterly profit since the second quarter of 2015,” said Ron Faris, President and CEO. “We saw terrific execution from our servicing team, which completed more than 21,000 modifications in the quarter, successfully delivered $12.0 million of gains on servicer ‘clean up’ call rights transactions and continued to reduce operating costs. Additionally, our Automotive Capital Services business continues to grow and move closer to profitability. Our mortgage lending business saw growth in origination volume, but we must improve margins.”
The year 2016 brought a new hope for Ocwen as Phyllis Caldwell assumed the role of independent Chairwoman for the company in March. With the change in leadership signaling a new era in the company's history, Ocwen hopes it can leave its troubled past behind.
“We remain focused on putting legacy matters behind us,” Caldwell said. “We received the much awaited Standard & Poor's upgrade to our servicer ranking in August. We continue to progress toward a potential resolution with the California Department of Business Oversight to end the current consent order and associated third party auditor before year-end. We are also continuing to achieve benchmarks and meet necessary conditions that we believe will result in the other remaining third-party monitorships concluding at their scheduled end dates.”
Caldwell continued, “I am also proud to say that despite some of the challenges of the past, we have continued to invest in our corporate culture, risk management, compliance, service excellence and technology. We have maintained our leadership in helping families struggling with their mortgage payments as evidenced by our number one status in the HAMP program. We are also making progress in building our new asset generation businesses. Most importantly, the entire Ocwen team is devoted to working in the best interest of homeowners and investors to deliver positive outcomes.”