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Ocwen Financial Corp. released a statement today that it will be selling $25 billion in residential mortgage servicing rights. These loans are held by Fannie Mae and Freddie Mac and are being sold to Nationstar Mortgage Holdings—a mortgage servicer located in Dallas, Texas.
This follows Monday’s press release regarding the issuance of a deficiency letter to Ocwen on March 18 for not filing its Annual Report on Form 10-k on time. The letter was sent from the New York Stock Exchange.
Ocwen shares decreased by 11 percent and are at $7.80 in recent premarket trading, according to The Wall Street Journal.
Ocwen services high-risk loans and works with customers to help maximize their loans. It also purchases mortgage servicing rights, stand-by servicing, and sub-servicing.
On March 18, Ocwen announced that Walter Investment Management would purchase a $9.6 billion mortgage servicing portfolio. We blogged about this topic and gave a more in depth look into it.
Going back further, in February, Ocwen agreed to sell $9.8 billion in servicing rights to Nationstar, the subject of today’s announcement. In regards to this deal, Ronald M. Faris, the Chief Executive Officer of Ocwen stated, “this transaction represents the first step in the execution of our previously-announced strategy to transfer certain types of non-strategic servicing.”
In regards to Ocwen having to continuously pay fees, Ocwen and a California regulator have been in a dispute because Ocwen didn’t provide the California Department of Business Oversight with requested information regarding its servicing information. In January of this year, a settlement was reached and Ocwen agreed to pay $2.5 million in penalties, as well as paying additional funds to a third-party auditor.
It seems that there has been a pattern of Ocwen getting into hot water. In December of last year, Ocwen agreed to pay $150 million in “hard-dollar” assistance to citizens of New York, and its executive chairman, William Erbey stepped down after being accused of misconduct within the company. When asked why the company kept missing deadlines to make disclosures, it responded that it didn’t have enough time to “analyze and review an affiliated company thatfinances the purchase of mortgage-servicing rights for Ocwen, “ according to The Wall Street Journal.
We will see what else Ocwen has in store and if the company can be completely restored.