Ocwen Financial is one of at least three investors recently invited in by Goldman Sachs to make a final round of bids on Litton Loan Servicing, the Wall Street firm’s specialty servicing division, according to investment bankers and others close to the situation.
But advisors familiar with the company say Ocwen also is actively looking at other acquisitions as well, including Saxon Mortgage, the servicing arm of Morgan Stanley. “They’re interested into doing ‘roll-ups,’” said one servicing manager.
At press time, all of the companies involved either declined to comment or did not return telephone calls about the matter. Ocwen, Goldman and Morgan are all publicly traded.
Industry advisors and firms that do business with West Palm Beach, Fla.-based Ocwen say it would love to purchase the MSR contracts of both firms, but not much else. “They want the assets, not the people,” said one source.
At last check, Litton ranked fifth nationwide among all subprime servicers with about $46 billion in contracts on hand. (It has back office operations in India.)
Goldman made the decision earlier this year to sell Litton. (The Wall Street firm bought the servicer in late 2007 from the struggling Credit-Based Asset Servicing and Securitization LLC, C-BASS.)
Ocwen services about $58 billion in nonconforming product. In some cases it owns the MSRs, and in others it acts as a subservicer, specializing in “high-touch” product.
If it winds up with Litton it would become the nation’s largest servicer of nonconforming mortgages with $104 billion in receivables, according to figures compiled by National Mortgage News and the Quarterly Data Report.
The subprime servicing business has been shrinking steadily since the financial crisis of 2008. Today, about $600 billion in subprime mortgages are outstanding compared to $1 trillion during the peak of the market.
With servicers of all stripes struggling with an array of delinquent loans (including prime) Ocwen is trying to become the subservicer of choice for both the megabanks and midsized servicers. It also does contract for one of the GSEs.
