Ocwen Financial Corp., Atlanta, the nation's largest servicer of subprime loans, reported net earnings of $20.2 million in the third quarter, compared to a year ago loss of $8.8 million.
Total revenue in the third quarter was $122.5 million, a 28% increase compared to the same quarter in 2010 that saw $95 million in revenue.
One reason for the higher earnings in the last quarter was the September acquisition of Litton Loan Servicing, which brought in a portfolio of $38.6 billion in unpaid principal balance. This acquisition increased Ocwen's total residential servicing portfolio to $106 billion in unpaid principal balance.
Another highlight from the third quarter was that the servicer completed 15,743 loan modifications, with 16% of these being HAMP modifications. Ron Faris, president and CEO of Ocwen, said there was also a high number of modifications because of the company's shared appreciation modification program, which allows delinquent borrowers with underwater mortgages who stay current on their modified loan to receive forgiven principal over a three-year period.
Ocwen also generated approximately $173 million in cash flow from operations in the third quarter.
A negative quarter-over-quarter highlight was that the delinquency rate increased from 24.2% to 28.7%. Faris said the Litton acquisition, which contains a high number of delinquent loans, was the main reason for this increase.
