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Ocwen earnings call highlights; shares up 23%

Published 10/27/2016, 11:29 AM
Ocwen earnings call highlights; shares up 23%
  • While no agreement with California has been reached, management believes good progress has been made and the $25M reserved so far (including $10M more reserved in Q3) should be adequate. A settlement with CA would greatly cut into third-party monitor fees, which in Q3 summed to $15M.
  • Faris notes settlement accruals and monitor expenses cost the company more than $30M in Q3 vs. reported operating expense of $271.7M, and reported pretax profit of $2M.
  • On the East Coast, Ocwen (OCN +22.7%) expects within weeks to formally request the NYDFS's ban on the company acquiring MSRs be lifted.
  • Not all is positive though as the lending segment had a "disappointing" quarter with just $3.6M of pretax income despite originations rising 8%. Faris expects better results in the future as progress is made on rolling out improved technology. He also notes the company is reaching only about 25% of customers that can benefit from lower rates or payments. "We’ve intentionally ramped up slowly and carefully to maintain quality in an environment with intense regulatory scrutiny on the entire mortgage market."
  • Earnings call presentation slides
  • Transcript
  • Previously: Profit returns to Ocwen Financial; +12% after hours (Oct. 26)

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