Ocwen Financial Corp. raised less than underwriters expected by selling bonds tied to fees from managing government-backed loans as the mortgage servicer’s shares fell to the lowest since December 2012.
The sale raised $123.6 million, compared with projected proceeds of about $136 million, according to a person with knowledge of the offering, who asked not to be named because the information isn’t public. The notes, which are secured by mortgage-servicing rights, are subject to Ocwen’s credit risk and offer payments that will shrink as the related loans are retired, the person said.
Ocwen slumped as much 7.6% today in New York trading to $33.54, before paring the decline to 5% at 2:47 p.m., as mortgage servicers’ shares tumbled following a
“In this speech to the Mortgage Bankers Association, CFPB Deputy Director Steve Antonakes left no doubt that the agency expects servicers to do a better job,” Jaret Seiberg, a policy analyst at Guggenheim Securities LLC’s Washington Research Group, wrote today in a report. “That means servicing is an expensive business where companies that try to cut costs may find themselves in regulatory hot water.”
Katarina Wenk-Bodenmiller, a spokeswoman for Atlanta-based Ocwen at Sommerfield Communications Inc., declined to comment on its bond sales.
Ocwen said Feb. 6 that it had agreed “to put an indefinite hold” on its plans to purchase servicing rights on $39 billion of loans without government backing from Wells Fargo & Co.
The deal was blocked by Benjamin M. Lawsky, head of New York’s Department of Financial Services, who said independent servicers were getting “too big, too fast.”
Ocwen, the largest non-bank servicer, has a speculative-grade issuer rating of B from Fitch Ratings partly because of its “aggressive acquisition strategy,” the rankings firm said in a Feb. 11 statement.
Barclays and Morgan Stanley managed its bond sale, which was expected to offer cash for the company to finance or refinance purchases or originations of servicing rights, the person said.
