Ocwen Financial Corp. estimated its first-quarter profit dropped
43%, results that come after a year of steep regulatory hurdles and
continuing questions from its auditor about its financial
viability.
The mortgage servicing company said in the announcement of its
preliminary results, which were unaudited, that it had a profit of
$34.4 million, or 27 cents a share, down from $60.5 million, or 43
cents a share, a year earlier.
Ocwen posted revenue of $510.4 million, down 7% from the year
earlier.
This is the second quarter that Ocwen has had to report
preliminary, unaudited results because its accountants have raised
questions about the mortgage servicer's ability to continue as a
going concern.
"We made great progress on our asset sale strategy, have
returned to profitability and continue to generate substantial
operating cash flow," Chief Executive Ron Faris said. "However, I
am not satisfied with only making $34 million in the quarter. We
intend to do better."
Earlier this month, Ocwen said it had a preliminary loss of $546
million, or $4.18 a share, for 2014. Ocwen was hit with an array of
charges in 2014, totaling $728.1 million that included write-downs
and legal costs, among other things.
Thursday's results follow a challenging year in which Ocwen was
forced to pay $150 million to settle regulatory charges that it
mishandled distressed borrowers and its executive chairman, William
Erbey, was forced to resign.
In addition, some big investors in securities in which Ocwen
services the underlying mortgages sought to have the servicing
agreement transferred to another company, alleging that Ocwen had
performed poorly. Ocwen has rejected those charges.
In the wake of the regulatory actions, Ocwen announced it was
selling off the servicing rights to mortgages owned by
government-supported entities and would focus instead on what are
known as non-agency mortgages. Ocwen has announced agreements
covering about $90 billion of its servicing rights this year.
Write to James Sterngold at james.sterngold@wsj.com
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