Almost a month after taking office as president and CEO of Ocwen Financial Corporation [1], Glen Messina led a conference call with investors on Tuesday to outline the company’s path to “transform to a stronger, more efficient company,” amidst a GAAP net loss of $41.1 million, and a pre-tax loss of $40.3 million. The company generated a revenue $283 million and cash flows from operating activities of $93.7 million--ending the quarter with $254.8 million of cash.
Ocwen also recorded pre-tax losses in its servicing segment ($13.9 million), lending segment ($2.1 million), and reverse mortgage lending business ($0.9 million).
However Messina spoke about factors outside of these results which point toward growth in the future—primarily the company’s recent acquisition of PHH. Under the terms of the Merger, Ocwen acquired all outstanding shares of common stock of PHH for $358 million in cash.
[Read more about the PHH acquisition here [2]]
“In the near term, our goal is returning to profitability in the shortest time-frame possible, taking into consideration the robust, prudent integration process we are undertaking. We believe our return to profitability will largely depend on realization of acquisition synergies and our ability to replenish portfolio runoff, among other factors,” he added.
Ocwen attributed its Q3 losses to lower revenue from smaller portfolio and higher professional fees. In addition, reverse mortgage lending industry continues to adjust to the impact of HUD program changes introduced in the fourth quarter of 2017.
Other key highlights:
- The combined Ocwen and PHH servicing portfolio totaled 1.7 million loans representing unpaid principal balance of $287 billion as of September 30, 2018.
- The company completed 9,179 modifications in the quarter to help struggling families stay in their homes, 15 percent of which included debt forgiveness totaling $44 million.
- Delinquencies decreased from 8.3 percent at June 30, 2018 to 7.8 percent at September 30, 2018, primarily driven by loss mitigation efforts.
- In the third quarter of 2018, Ocwen originated forward and reverse mortgage loans with unpaid principal balances of $172.3 million and $147.5 million, respectively.
To view the full financial results, click here [3].