Ocwen's Loan Origination: What You Need To Know

Ocwen, now known as Onity Group Inc., is a financial services company that provides mortgage servicing and origination solutions. As of 2014, it was the biggest non-bank servicer of U.S. mortgages, with rights to service a mortgage portfolio of over $500 billion in unpaid principal balance (UPB). Ocwen has been the subject of regulatory actions and settlements in multiple states due to alleged escrow issues and restrictions on its ability to acquire new mortgage servicing rights and originate new loans. The company has reached agreements with many states to lift these restrictions and has implemented plans to enhance its handling of consumer complaints and improve its financial transparency. With its acquisition of PHH Corporation in 2018, Ocwen expanded its capabilities in mortgage origination and refinancing.

Ocwen's acquisition of HomEq servicing from Barclays Bank PLC

Ocwen, now known as Onity Group Inc., is a financial services company that provides mortgage servicing and origination solutions. On September 1, 2010, Ocwen completed the acquisition of HomEq Servicing, the U.S. non-prime mortgage servicing business of Barclays Bank PLC, for $1.3 billion. The acquisition was made through Ocwen Loan Servicing, LLC (OLS), a wholly-owned subsidiary of Ocwen.

The HomEq acquisition added approximately 134,000 residential mortgage loans with an aggregate UPB of approximately $22.4 billion to Ocwen's servicing platform. The transaction did not involve the transfer of ownership of any legal entities, but OLS acquired the mortgage servicing rights (MSRs) and associated servicer advances of the business, as well as servicing platforms based in Sacramento, California, and Raleigh, North Carolina.

The purchase of HomEq Servicing was aligned with Ocwen's strategic planning to expand its servicing platform and increase revenues. The combined entity of Ocwen and HomEq became the top two converters of mortgage modifications under the Home Affordable Modification Program (HAMP). This acquisition further solidified Ocwen's position as a leading provider of residential and commercial mortgage loan servicing, special servicing, and asset management services.

Following the HomEq acquisition, Ocwen continued to expand its business through various acquisitions and mergers. In September 2011, Ocwen acquired outstanding partnership interests from Goldman Sachs & Co., becoming the largest subprime mortgage servicer in the U.S. In June 2013, Ocwen Financial Corp. agreed to buy contracts to handle payment collections on about $78 billion of mortgages from OneWest Bank FSB for $2.53 billion. In 2018, Ocwen Financial Corporation acquired PHH Corporation, further enhancing its capabilities in the mortgage industry.

Ocwen's acquisition of Litton Loan Servicing LP

Ocwen, now known as Onity Group Inc., is a leading financial services company that provides mortgage servicing and origination solutions to homeowners, clients, investors and others. In September 2011, Ocwen completed its acquisition of outstanding partnership interests of Litton Loan Servicing LP, a residential mortgage loan provider, and certain interest-only servicing securities previously owned by Goldman Sachs & Co. The $247.2 million acquisition made Ocwen the largest subprime mortgage servicer in the US.

The acquisition of Litton Loan Servicing LP added approximately 245,000 residential mortgage loans to Ocwen's servicing portfolio, with an aggregate UPB of about $38.6 billion. Litton Loan Servicing also signed a consent order regarding their loan servicing practices. Following the acquisition, Ocwen continued to expand its business through various purchases and mergers. For example, in April 2012, Ocwen purchased approximately $22 billion of mortgage servicing rights from Saxon Mortgage Services, a unit of Morgan Stanley.

In June 2012, Ocwen completed the acquisition of Aurora Bank's commercial servicing rights portfolio, and in October of the same year, it announced plans to buy Homeward Residential Holdings, Inc. from WL Ross & Co. for $750 million. The acquisition was finalized in December 2012 and included mortgage servicing from American Home Mortgage and Option One Mortgage.

In June 2013, Ocwen Financial Corp. (OCN) agreed to buy contracts to handle payment collections on about $78 billion of mortgages from OneWest Bank FSB for $2.53 billion. Ocwen continued to make strategic acquisitions and, on February 27, 2018, entered into a definitive agreement to acquire PHH Corporation for approximately $360 million. This acquisition was officially completed on October 4, 2018, with Glen A. Messina appointed as the President and CEO of Ocwen Financial Corporation.

Through these acquisitions and mergers, Ocwen, now Onity Group, has solidified its position as a leading financial services company, providing mortgage servicing and origination solutions.

Ocwen's acquisition of Saxon Mortgage Services

Ocwen Financial Corporation, now known as Onity Group Inc., is a leading financial services company that provides mortgage servicing and origination solutions to homeowners, clients, investors, and others. On April 2, 2012, Ocwen completed its acquisition of certain mortgage servicing rights (MSRs) and related assets from Saxon Mortgage Services, a unit of Morgan Stanley. This transaction, known as the Saxon Transaction, resulted in Ocwen acquiring an MSR portfolio of approximately $22.2 billion in unpaid principal balance (UPB) of securitized agency and non-agency residential mortgage loans.

The Saxon Transaction also included the acquisition of Saxon's subservicing agreements, totalling approximately $2.7 billion in UPB of agency and non-agency residential mortgage loans. To finance this deal, Ocwen utilised a combination of cash on hand, cash generated through operations, and proceeds from a public offering of common stock and servicing advance facilities with Wells Fargo Bank and Credit Suisse AG. The purchase agreement for the Saxon Transaction was amended so that Ocwen acquired the servicing business and assets, including the MSR portfolio and subservicing agreements, rather than stock and employees.

The acquisition of Saxon Mortgage Services contributed to Ocwen's growth and profitability. In the third quarter following the acquisition, Ocwen reported a profit of $20.2 million, or 19 cents per share, compared to a loss of $13.2 million in the previous year. Revenue increased to $122 million, a 28% jump from the same period in the previous year. The firm's collection of servicing fees also increased to over $112 million, up from $86 million the previous year.

Ocwen's acquisition of PHH Corporation

Ocwen, now known as Onity Group Inc., is a financial services company that provides mortgage servicing and origination solutions to homeowners, clients, and investors. On February 27, 2018, Ocwen Financial Corporation announced its plan to acquire PHH Corporation for $360 million. The acquisition was completed on October 4, 2018, and PHH Corporation became a wholly-owned subsidiary of Ocwen Financial Corp.

The acquisition of PHH Corporation by Ocwen Financial Corporation was a significant step for the company. PHH Mortgage Corporation, the primary operating subsidiary of PHH, offered new mortgages and refinancing options, which complemented Ocwen's existing loan servicing business. This merger allowed Ocwen to expand its offerings and provide a more comprehensive range of services to its customers.

Prior to the acquisition, Ocwen had already established itself as a prominent player in the mortgage servicing industry. In June 2013, Ocwen Financial Corp. (OCN) purchased contracts to handle payment collections on approximately $78 billion of mortgages from OneWest Bank FSB for $2.53 billion. This move solidified Ocwen's position as one of the largest mortgage servicers in the nation.

Additionally, Ocwen had made several strategic acquisitions over the years to strengthen its position in the market. In September 2010, through its subsidiary Ocwen Loan Servicing, LLC (OLS), Ocwen acquired the U.S. non-prime mortgage servicing business of Barclays Bank PLC, known as HomEq servicing. This acquisition added approximately 134,000 residential mortgage loans to Ocwen's portfolio, with an aggregate UPB of about $22.4 billion. In September 2011, Ocwen acquired outstanding partnership interests of Litton Loan Servicing LP from Goldman Sachs & Co., becoming the largest subprime mortgage servicer in the U.S.

The acquisition of PHH Corporation further solidified Ocwen's presence in the mortgage industry and expanded its capabilities. By integrating PHH's business and leveraging its relationships, Ocwen was able to enhance its servicing, subservicing, and other business offerings. This move demonstrated Ocwen's commitment to growth and innovation in the financial services sector.

Ocwen's settlement with Texas

Ocwen, now known as Onity Group Inc., is a leading financial services company that provides mortgage servicing and origination solutions. In 2020, Ocwen reached a settlement with Texas, bringing the total number of states with which the company had resolved regulatory issues to 21. The settlement pertained to alleged escrow issues and restrictions on Ocwen's ability to acquire new mortgage servicing rights and originate new loans.

As part of the agreement with Texas, Ocwen was prohibited from acquiring any new residential mortgage servicing rights until April 30, 2018. Additionally, Ocwen agreed to move away from its proprietary REALServicing platform, which was used to process borrower payments, communicate payment information, and maintain loan balance information. The Texas settlement, like those with other states, restricted Ocwen from boarding new loans through REALServicing. However, this restriction did not apply to loans already serviced on the platform, including modifications or loans where Ocwen acted as a subservicer.

Furthermore, Ocwen was required to develop an enhanced plan for handling consumer complaints and provide reports on its financial condition to the state for three years. This settlement was part of a broader trend, with Ocwen reaching agreements with 20 other states to address similar regulatory concerns. These settlements carried conditions aimed at improving Ocwen's servicing practices and protecting consumers.

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