Ocwen Financial – which is poised to become the nation’s fifth largest home servicer – earned $51.4 million in the third quarter, more than doubling profits of a year ago while generating huge cash flow from its operations.
In an earnings statement unveiled before the market opened, the specialty servicer said it took in $534 million of cash in third quarter and $1.4 billion through the first nine months of 2012.
Although the publicly traded nonbank is known for processing troubled home mortgages, it is rapidly diversifying into ‘A’ paper markets as indicated by
ResCap services $374 billion of mortgages, Homeward $74 billion.
It is also branching out into originations and reverse mortgage lending.
At mid-year Ocwen was the nation’s largest subprime servicer in the U.S. with almost $100 billion of receivables on its books, according to figures compiled by National Mortgage News and the
During the quarter it was actively viewing other servicing-related deals and completed these transactions: $6.1 billion of MSRs (deal boarded); $1.1 billion of flow non-performing loan subservicing portfolio; and $2.5 billion of MSRs from a “large bank.”
It also purchased $2.2 billion of Fannie Mae MSRs which it boarded on October 1 and a smaller portfolio of $316 million.
The company also provided new details on its ResCap purchase. When all is said and done, Ocwen estimates it will wind up with $126.6 billion of ResCap MSRs and $31 billion of subservicing. “These numbers exclude approximately $120 billion of subservicing for Ally Bank that is likely to be sold prior to closing,” the firm said. “Under the joint bidding arrangement, Walter Investment Management Corp. will acquire the Fannie Mae mortgage servicing rights (MSR) portion of ResCap's servicing portfolio, representing approximately $50.4 billion in UPB, as well as the origination and capital markets platform.”
Ocwen also noted that in late October it entered into an agreement with Genworth Financial Corp., to buy Genworth Financial Home Equity Access, Inc. for approximately $22 million in cash.
The company, which will be renamed Liberty Home Equity Solutions, Inc. is the number one reverse lender in the U.S. with retail and wholesale channels -- according to Ocwen.
The acquisition is expected to close in the first quarter of 2013.
