Ocwen Financial Corp. has reported a 67% drop in second-quarter profits due to increased expenses and lower property intake under a Department of Veterans Affairs real-estate-owned contract.The West Palm Beach, Fla., servicing company posted second quarter earnings of $2.9 million, compared with $9.1 million in the second quarter of 2004. Ocwen chairman and chief executive William Erbey said the company's servicing and loan processing units achieved revenue growth, but a "sharply reduced" number of VA foreclosed properties and other factors offset those positive trends. In early 2004, Ocwen took over the management of 11,000 foreclosed single-family homes from the VA. VA foreclosures have slowed since then, and the department is delivering fewer properties as the REO is sold off. "They're selling at a pretty rapid rate but they are getting fewer properties," a VA official said. The company also reported the completion of its "debanking" initiative in the second quarter through selling the deposits of Ocwen Federal Bank FSB and surrendering its thrift charter. All the remaining assets and liabilities of the bank have been transferred to Ocwen Loan Servicing LLC, a new subsidiary of OFC, the company said.

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