Ocwen renews resolve to cut costs using scale as its loss deepens
Ocwen Financial Corp. recorded a deeper quarterly loss of $41 million after acquiring PHH Corp., but still expects the deal's economies of scale to eventually lower costs and restore profitability.
"We believe our acquisition of PHH on Oct. 4, 2018 provides us with the opportunity to transform to a stronger, more efficient company, better able to serve our customers and clients, and positions us for a return to growth," Glen Messina, president and CEO of Ocwen, said in a press release.
A year ago, Ocwen took a $6 million net loss in the third quarter. It took a $30 million net loss in the second quarter of this year. The company plans to ultimately realize $100 million in savings using resources from the acquisition.
"In the near term, our goal is returning to profitability in the shortest time frame possible, taking into consideration the robust, prudent integration process we are undertaking," Messina said. "We believe our return to profitability will largely depend on realization of acquisition synergies and our ability to replenish portfolio runoff, among other factors."
Runoff that diminished the unpaid principal balance of servicing held by Ocwen contributed to lower servicing revenue in the third quarter. Servicing revenue totaled $218 million during the period, down from $247 million a year ago and $254 million the previous quarter.
Lending revenue during the third quarter totaled $17 million, down from$32 million a year ago and $19 million the previous quarter. Both the company's traditional and reverse mortgage businesses "have been negatively impacted by higher interest rates," Ocwen noted in its earnings release.