The world is looking up for Ocwen Financial Corporation [1]. According to preliminary operating results released on Wednesday, the company lost an estimated $32.6 million—or $0.26 per share—for the first quarter of 2017. Though it might seem a hefty number, the loss pales in comparison to Q1 2016, when Ocwen reported a net loss of more than $111 million.
In total, Ocwen generated $321.9 million in revenues for Q1 2017—down 2.7 percent from Q1 last year. Cash flow from operating activities was also down, coming in at $85.7 million, compared to the $140.9 million of 2016. The organization ended Q1 with $268 million in cash flow.
Ocwen’s servicing segment reported $3.1 million in pre-tax income—up nearly $70 million from Q1 2016. Lower legal fees, a rise in MSR Fair Value, and fewer indemnification payments helped drive the jump in servicing income.
“I am pleased that our servicing business had its third consecutive profitable quarter and that our origination business returned to profitability this quarter,” said Ron Faris, CEO and President of Ocwen.
The company completed more than 18,000 loan modifications for the quarter, 4 percent of which were HAMP-related. Overall delinquencies dropped a half-percent, reaching 10.7 percent. Ocwen attributes the dip to the company’s many loss mitigation efforts.
“I am especially proud of the strong modification results during the quarter, which helped over 18,000 struggling families,” Faris said. “The financial crisis has not ended for many families in this country, and the Ocwen team continues to provide caring solutions that work.”
Ocwen recently made headlines when the Consumer Financial Protection Bureau, as well as 21 state regulators, [2] filed suit against it, alleging the lender engaged in “significant and systemic misconduct at nearly every stage of the mortgage servicing process” and improperly foreclosed on more than 1,000 homeowners.
“Despite recent regulatory allegations, which we believe unfairly characterize our progress and current performance, our recent reviews have not identified past or present systematic issues with our foreclosure sale processes, which is always a last resort for us.”
The allegations prompted Fitch Ratings to downgrade Ocwen’s Service Rating from “Stable” to “Negative.” [3]
Ocwen announced earlier this week that New Residential Corporation would be acquiring its mortgage servicing rights, as well as a 4.9 percent equity stake in the corporation. Since the announcement, Ocwen shares have spiked. [4]
See the full results at Ocwen.com. [5]