Ocwen Sale: ResCap’s Servicing Employees Fear Outsourcing

If all goes as planned, within six months Ocwen Financial Corp. can crow that it is the nation’s fourth largest servicer with MSRs north of $500 billion. But now the hard part comes: integrating Residential Capital Corp.’s $374 billion of servicing rights into its existing operations.

“It’s not going to be easy,” said one servicing investor who’s been tracking the deal. “It never is.”

Those familiar with the publicly traded Ocwen’s fast growing MSR portfolio realize that the nonbank is a subprime and ‘high touch’ specialist – not an ‘A’ paper processor. That’s where ResCap comes in.

Meanwhile, late last week, when Ocwen’s winning bid of ResCap was unveiled, there was palatable fear among ResCap’s servicing employees that their jobs might be at stake because Ocwen is well known for housing most of its servicing employees overseas – in India and Ecuador.

In a memo to employees, ResCap CEO Tom Marano tried to allay the fears of his  employees concerning layoffs, informing them that “Given the scope of the U.S. footprint between ResCap, Ocwen and Walter we expect there will be ample employment opportunities.”

The company adds: “Ocwen has expressed an interest in expanding their on-shore presence and investing in new technology to benefit employees.”

The Walter reference is to Walter Investment Management Co., Ocwen’s partner on the $3 billion purchase. It’s anticipated that Walter will be handed all of ResCap’s Fannie Mae servicing rights. (Ocwen is a specialty servicer for Freddie Mac, not Fannie.)

Ocwen is also in the process of buying Homeward Residential, which also has servicing workers housed overseas, noted one source close to the company. (For the full story see the Monday print edition of NMN.)