Servicing deal payment returns Ocwen Financial to profitability
Ocwen Financial Corp. got back in the black during the first quarter after selling New Residential Investment Corp. $110 million in economic rights to mortgage servicing.
Net income for the quarter was almost $3 million, up from a loss of more than $35 million during the same quarter a year ago, and a net loss of more than $32 million during the fourth quarter of 2017.
"The first quarter of 2018 was an important one for Ocwen, and we accomplished a great deal," said Ron Faris, Ocwen's departing president and CEO, in a press release.
"In addition to starting out the year with a $2.6 million profit, we received $280 million in cash from New Residential, we announced an agreement to acquire PHH Corp., and we helped almost 11,600 struggling families remain in their homes through loan modifications that included $59 million in debt forgiveness."
Ocwen also "largely completed the liquidation of Automotive Capital Services," Faris said. The company took an almost $3 million loss related to ACS.
Other notable line items during the quarter included more than $20 million in "favorable Ginnie Mae and [government-sponsored enterprise mortgage servicing rights] fair value adjustments as the result of rising interest rates," according to the company's press release.
However, these were offset by a $21 million loss due to costs from "ongoing strategic transactions and restructuring costs, regulatory related legal fees and other litigation and regulatory settlement expenses." Consumer Financial Protection Bureau and state regulatory-related legal fees and other litigation and regulatory-related settlement expenses cost the company $5.5 million during the first quarter. Ocwen also paid more than $13 million in corporate interest expense in 1Q18.