Ocwen Mulls Dropping Thrift Charter

Capital constraints on the growth of its servicing portfolio are forcing Ocwen Financial Corp. to consider dropping its federal thrift charter, according to an Aug. 13 filing with the Securities and Exchange Commission.Ocwen Federal Bank FSB, W. Palm Beach, Fla., is limiting its investment in mortgage servicing rights to 60% of core capital and 50% of shareholder equity under commitments to the Office of Thrift Supervision. "These commitments effectively limit the size of our residential loan servicing business," Ocwen says in its second-quarter report to the SEC. "Consistent with our strategy of growing that business, we are currently exploring the possibility of the Bank terminating its status as a federal savings bank...." Ocwen first disclosed its charter considerations in a July 13 news release. In the SEC filing, the company acknowledges that the process of shedding its charter may not be easy. "Were we to decide to do so, our ability to debank would be subject to a number of contingencies, many of which are beyond our control," the company says. Ocwen is also under a supervisory agreement with the OTS to improve its servicing practices, end certain billing practices, and expedite the handling of consumer complaints.