Ocwen Financial has made a number of adjustments in recent months to better compete with other nonbank servicers. Perhaps most significantly, the special servicer has started to shift to an “equity light” business model. The shift occurred at the end of February when Home Loan Servicing Solutions completed a $186.2 million initial public offering. HLSS said it will use the proceeds to purchase the rights to receive servicing and other related fees, associated servicing advances and other related assets from Ocwen. HLSS was founded by William Erbey, chairman of Ocwen ...

Walter Investment Management is looking to leverage its subservicing relationships with the government-sponsored enterprises and avoid bidding wars to grow its servicing portfolio, according to officials at the special servicer. The company handled an $86 billion portfolio at the end of 2011, predominantly subserviced for others and added $57 billion in servicing during the year, all on a subservicing basis. Some $750 billion in mortgages are currently in the pipeline to potentially be transferred to special servicers, according to Denmar Dixon, vice chairman and executive vice president at Walter. The loans include potential sales of mortgage servicing rights as well as subservicing opportunities ...

The mortgage servicer American Home Mortgage Servicing Inc. recently announced a name change to Homeward Residential, reflecting its entrance into the correspondent and warehouse lending market in October 2011. AHMS ranked 18th on a list of top mortgage servicers in 2011 compiled by affiliated publication Inside Mortgage Finance. The company serviced $69.02 billion in residential mortgages at the end of 2011, down 9.7 percent from the year before, with most of its business in non-agency mortgages. The company plans to complete its rebranding as Homeward Residential by the second quarter of 2012. The business...

Acquisitions boosted Ocwen Financial to the top subprime servicer spot at the end of 2011, according to a new ranking and analysis by Inside Nonconforming Markets. However, that was not the only significant movement among the top five subprime servicers, as American Home Mortgage Servicing changed more than its name. Ocwen serviced an $84.73 billion subprime portfolio at the end of 2011, a whopping 49.9 percent increase compared with the end of 2010. During that time, the amount of subprime mortgages outstanding decreased by 9.2 percent to an estimated $545.0 billion ... [Includes one data chart]

Reaction among non-agency participants regarding the settlement by five large bank servicers announced last week has been mixed. Investors are divided on what impact principal forgiveness loan modifications will have on non-agency mortgage-backed securities – largely because the settlement terms have not been settled yet. “Once the bank modifies their own portfolio loans, where it makes sense to reduce principal, there is a huge incentive to do the rest of the modifications using investor money,” warned Amherst Securities Group. “This stems from the fact that the servicers are able to use investor funds to satisfy their own claims. And the conflicts of interest are exacerbated because of the second liens ...

The delinquency rate on subprime mortgages at the end of 2011 hit levels not seen since 2008, but analysts warn that subprime performance could worsen as borrowers are unable to refinance and negative equity increases. The seasonally adjusted delinquency rate for subprime mortgages fell to 20.8 percent at the end of 2011, according to the Mortgage Bankers Association. The rate has declined in each of the past seven quarters from a peak of 27.2 percent in the first quarter of 2010. However, a number of factors suggest that delinquency rates on non-agency mortgages will increase ...

The $25.0 billion servicing settlement is just the latest step toward standardized servicing regulation, according to industry analysts. Many non-agency servicers have taken major steps to prepare for an overhaul of servicing regulation, though increased costs are a concern. “It appears that non-agency MBS servicers have already made significant operational changes in an effort to address process deficiencies identified in this settlement and by regulators,” Fitch Ratings said. As with federal consent orders several servicers agreed to last year ...

American Home Mortgage Servicing and Carrington Capital Management agreed last week to settle a lawsuit regarding alleged improper servicing by American Home on $128.1 million in non-agency mortgage-backed securities owned by Carrington. The lawsuit was filed in 2009 by Carrington, which claimed American Home had conducted “fire sales” of delinquent properties in the securities in an effort to repay debt. At the time, American Home denied the charges. The terms of the settlement were not released. [Includes two briefs]

A settlement involving major servicers and state attorneys general could be close, as state AGs have until Feb. 6 to agree to a potential $25 billion settlement. Negotiations on the settlement have dragged on for 15 months and were previously slated to end Feb. 3. Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo would reportedly be included in the settlement. Some $17 billion in penalties paid by the banks would go toward principal reductions, $5 billion would go toward a reserve account that would ... [Includes three briefs]

Analysts are divided regarding the outlook for Ocwen Financial as the special servicer has grown significantly in the past two years. Fitch Ratings and Moody’s Investors Service recently downgraded Ocwen and Saxon Mortgage due to concerns about Ocwen’s growth strategy and financial standing while others have endorsed Ocwen and its practices. Ocwen handled a $106.1 billion portfolio at the end of the third quarter of 2011, including $74.9 billion in subprime mortgages. The total included some of the $38.6 billion in subprime loans the servicer acquired from Litton Loan Servicing. At the beginning of February, the company is set to close acquisitions of the Saxon platform and its $26.6 billion portfolio as well as $15.0 billion in non-prime mortgage servicing rights from ...