Ocwen Ratings Affirmed After Loss Report

Standard & Poor's has affirmed its ratings on Ocwen Financial Corp., West Palm Beach, Fla., in the wake of Ocwen's announcement that it had taken a prepayment-linked $77.6 million writedown in the second quarter, resulting in a net loss of $37.9 million.Ocwen reported that "unprecedented" prepayment levels and "a continued inversion in the shape of the yield curve" had caused it to write down the book value of its interest-only and inverse IO securities and to "discontinue this investment activity." S&P attributed its rating action to Ocwen's continued strength. "Although the realized loss in the IO portfolio represented nearly 15% of consolidated capital, capital levels remain commensurate with the company's rating and credit profile," S&P said, citing high internal capital generation and strong financial performance from core operations. S&P also noted Ocwen's announcement that it has engaged an investment bank to identify strategic partners for further expansion of its core business lines. S&P's website address is http://www.ratings.standardpoor.com.