Ocwen Financial Corp. posted a quarterly profit for the first time since 2015.
The West Palm Beach, Fla.-based servicer reported third-quarter net income of $9.5 million versus a net loss of $66.8 million a year ago. The last time that Ocwen stayed out of the red was in the second quarter of 2015.
Earnings per share totaled 8 cents.
"We remain focused on putting legacy matters behind us," Ocwen Chairwoman Phyllis Caldwell said in a news release.
"We continue to progress towards 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."
The major contributing factor that led to Ocwen's return to profitability was a reduction in costs. Expenses fell 30% to $271.7 million, mostly on lower costs associated with the company's servicing activities, occupancy and equipment.
Ocwen also reported a $7.1 million income tax benefit, as compared with an income tax expense of $10.8 million during the period in 2015.
Overall, total revenue remained down from a year ago, at $359.4 million versus $404.9 million. The company did make $12 million from gains on the execution of servicer "clean up" call rights and $5.7 million from the sale of agency mortgage servicing rights on approximately $3.3 billion of unpaid principal balance.
On a segment basis, the company's servicing division swung to income of $33.2 million from a $12.7 million loss. The lending segment reported a 58% drop in income to $3.6 million despite higher origination volume, prompting Ocwen Chief Executive and President Ron Faris to say in a news release that the company "must improve margins."
