Ocwen Loan Servicing, LLC recently received an upgrade in their rating outlook from stable to positive due to stronger risk management framework and management oversight, according to a Servicer Report from Fitch Ratings.
In February 2015, Ocwen experienced rating downgrades to stable due to weak corporate governance and operational control framework. However, in June 2015, the company’s ratings were pushed up to positive as Ocwen strengthened their risk management framework and management oversight.
Among the ratings, which were all labeled as RPS4 were: Primary Prime, Primary Alt-A, Primary Subprime, Primary HELOC, and Specialty Closed-End Second Lien.
One of the key rating drivers was Ocwen’s commitment to alleviate governance and operational control weaknesses within the company, which include changes to its “three lines of defense” approach to risk management, expansion of regulatory compliance and compliance testing departments, and completion of a risk and control self-assessment (RCSA) process.
Another contributor to Ocwen’s rating change a shift in focus on PLS servicing, where the company initiated a strategy to sell off a large portion of it mortgage servicing rights (MSRs). The company has closed or entered agreements to sell MSRs on about $90 billon in unpaid balance (UPB) of performing agency loans.
Fitch also reported that Ocwen’s use of a highly integrated technology environment and concentration on off-shore servicing operations were also major contributors to the upgrade.
Although Ocwen’s servicing operation has grown more than 300 percent in the past serveral years, their portfolio continues to decrease. Fitch found that the company has serviced 2,361,220 loans totaling $376.6 billion including 1,252,409 totaling $195.6 billion in non-agency residential mortgage-backed securities (RMBS) transactions as of March 31, 2015.
Ocwen’s portfolio also includes 3.9 percent non-agency first lien prime, 8.1 percent first lien Alt-A, 28.6 percent first lien subprime, 1.7 percent HELOC, and 2.0 percent closed-end second liens by loan count.
Click here to view Fitch Ratings’ complete Servicer Report.