According to the latest subprime servicer ranking from Inside Nonconforming Markets, only two major servicers increased their subprime portfolios at the end of the third quarter of 2012 compared with either the previous quarter or the third quarter of 2011: Ocwen Financial and Homeward Residential, which Ocwen intends to acquire in December. Both of the servicers – and eight of the top 15 subprime servicers – are nonbanks. Nonbank special servicers have increased their ... [Includes one data chart]

After winning multiple bids to acquire mortgage servicing rights and subservicing on nonprime loans and agency mortgages, nonbank servicers were outbid last week for the latest major agency MSR acquisition. Industry analysts suggest that the somewhat unexpected competition from banks could hinder planned expansion by Ocwen Financial, Nationstar Mortgage and Walter Investment Management. JPMorgan Chase Bank is set to acquire $70.0 billion in agency MSRs from MetLife. “The acquisition of this ...

With the planned acquisition of Homeward Residential, Ocwen Financial fired the latest shot as nonbank special servicers compete to grow their portfolios. While officials at Ocwen noted the “synergistic” benefits of the planned purchase, industry analysts warned that the move puts Ocwen in a shaky financial position. The company announced last week that it plans to acquire Homeward for $588 million in cash and $162 million in Ocwen stock. The acquisition will strengthen Ocwen’s position as the largest ...

Numerous small servicers submitted comments to the Consumer Financial Protection Bureau warning that proposed servicing rules will result in consolidation – to the benefit of large special servicers. The comment period on the proposed rules closed this week, with small servicers seeking exemptions from potential new servicing standards. The CFPB issued proposed servicing rules in August, some of which were required by the Dodd-Frank Act. Industry analysts suggest that large servicers will have fewer problems complying ...

After years of holding off, Homeward Residential last week launched a principal forgiveness program for proprietary loan modifications. The program follows a settlement with the Massachusetts attorney general and success with principal reduction by other nonprime servicers. “We view this program as an additional safety net for borrowers who have limited options,” said Javid Jaberi, an executive vice president of servicing operations at Homeward Residential, formerly known as American Home Mortgage Servicing ...

Ocwen Financial announced last week that its executive chairman has relocated to the U.S. Virgin Islands as part of the company’s efforts to reduce its tax rate. William Erbey, the executive chairman of Ocwen, said the company worked for nearly three years on the tax maneuver, which will reduce Ocwen’s effective tax rate by more than half. The strategy included the establishment of a new corporation, Ocwen Mortgage Servicing, in February. The wholly owned subsidiary of Ocwen was formed under the laws of ...

Boosted by its acquisition of Saxon Mortgage Services, Ocwen Financial was the only major servicer to increase its subprime portfolio in the second quarter of 2012. And after three consecutive quarters of improvement, subprime performance deteriorated in the second quarter. An estimated $505.0 billion in subprime mortgages were outstanding as of the end of the second quarter of 2012, according to Inside Nonconforming Markets, down 3.4 percent from the previous quarter as subprime mortgage originations ... [Includes one chart]

Two servicing rules proposed last week by the Consumer Financial Protection Bureau could shift more business to special servicers, according to industry analysts. While senior CFPB officials said that was not the intent of the proposals, special servicers appear to be better equipped than others to handle the complex new requirements. “The inadequate performance of many mortgage servicers has helped widen the misery for many Americans,” said CFPB Director Richard Cordray. He noted that the regulator ...

Standard & Poor’s last week updated its criteria for ratings on non-agency mortgage-backed securities with collateral originated before 2009. The standards update criteria for credit, cash flows and rating stability and apply immediately. The rating service said the changes will result in more downgrades than upgrades. This week, S&P placed 16,872 ratings from 3,364 securities with a par amount of $253.95 billion on CreditWatch. About 70.0 percent of the ratings are on watch for potential downgrades ... [Includes three briefs]

Officials at Ocwen Financial revealed this week that the servicer hired more employees than operationally necessary in an effort to win bids for servicing and subservicing. They said they are now in the process of right-sizing staffing levels through a number of different techniques. “We over-hired to make sure we could hit the cover off the ball on the deals that we knew we had in-hand,” Ron Faris, president and CEO of Ocwen, said during the servicer’s earnings presentation for the second quarter of 2012. Ocwen completed ...