Ocwen Acquires Genworth Reverse Mortgage Division for $22 Million (Update 2)

Ocwen Financial Corporation (NYSE:OCN) announced it has entered into an agreement on October 26th to acquire Genworth Financial Home Equity Access (GFHEA) for $22 million in cash.

The company says the deal will complement its existing mortgage related businesses.

“Genworth’s reverse mortgage business is a top-notch operation with a very strong management team and culture that emphasizes customer-service and superior quality,” said John Britti, chief financial officer & EVP of Ocwen in an email to RMD. “As a result, we believe this acquisition positions Ocwen well in the reverse mortgage business, which has enormous long-term growth potential.”

Advertisement

As part of the transaction, GFHEA will change its name to Liberty Home Equity Solutions and the deal is expected to close in the first quarter of 2013.

Genworth originally entered the reverse mortgage business when it acquired Liberty Reverse Mortgage in 2007 for $50 million in cash.

GFHEA has retail, wholesale and correspondent operations and is the 3rd largest originator of reverse mortgages in the country according to data from Reverse Market Insight.

Ocwen is one of the largest mortgage servicers, with a $128 billion portfolio of loans as of the second quarter of 2012. The company is also approved as a Ginnie Mae HMBS issuer, which should help to provide additional liquidity to the industry.

It’s the second acquisition in the reverse mortgage space in the last two months. In September, Walter Investment Management Corporation (NYSE AMEX:WAC) announced it was acquiring Reverse Mortgage Solutions for $122 million.

Join the Conversation (15)

see all

This is a professional community. Please use discretion when posting a comment.

  • Back in November 2007, Genworth paid $50 million for a company (Liberty Reverse) which was doing about 174 to 250 HECM endorsements per month but had seen a 47% drop in its retail production from the prior year.  It was not a GNMA HMBS issuer but its wholesale operations were growing.  See 

    http://rmdaily.wpengine.com/2008/11/13/liberty-reverse-will-become-genworth-financial-home-equity-access/.

    At that point HECMs were sold to FNMA at much lower prices and fixed rate HECMs were just barely being originated.

    To see Genworth being sold for only $22 million today when revenue per HECM is much higher and with its GNMA issuer operations in full swing shows that the value of HECM origination operations are not nearly as valuable today as in 2007.  This and the utter abandonment of the MetLife reverse mortgage origination and GNMA issuance operations show how detrimental recent legislation has been in the stake of insurance companies in our industry.  The pull back of large insurance companies and banks as owners of reverse mortgage operations does not bode well for the sales values of reverse mortgage companies now or in the near future.

    Some believe that the impact of the McCaskill provisions in HERA [now codified as 12 USC 1715z-20 (n)(1) and (o)] as well as the recent changes in California law in both California Civil Code Section 1923.2(i) and California Insurance Code Section 785.1 hastened the departures of both MetLife and Genworth from the industry and has discouraged other large insurance companies from entering our industry.  Not long ago there was a lot of speculation that AARP and also NY Life would be coming into our industry.  Such speculation now appears to be dead.

  • Very true Mr. Veale. These are exactly the types of players this industry needs.
    Strong and reputable competition ultimately helps every indusrty and the consumer.
    Welcome OCWEN!

    •  OCWEN…..Reputable???? Mike, have you ever worked with them on any of your deals? I have on more than one occasion and they are the worst, most uncooperative company I and the vast majority of processors I have spoken with have ever run across.

  • I also believe this is good for the industry and overall a change that fits with Liberty’s (their new, “old” name 🙂 plans. Bravo to the team that essentially made tactfully and subtancially shrewd and savvy deciions to position itself for OCWEN with the best people in the indsutry. Bravo.

  • Really Mr. Britti – ‘ a very strong management team that emphasizes customer service and superior quality’ Really? I think you will find many people who would disagree with this assessment; however, the industry as a whole welcomes a big player such as Ocwen aboard and all should be pleased for the liquidity that your company will add to the industry.
     

  • Ocwen appears to be well capitalized and growing origination operations.  Historically it was primarily a subprime lender and servicer.  So it has experience in the mortgage business, something that Genworth lacked as an insurance company.  There are pluses and minuses regarding their entrance into the RM industry, but on balance it’s positive.

  • Ocwen’s customer service on the forward side is an absolute nightmare.  I cringe at the thought of reverse mortgage borrowers being subjected to such treatment.

    • Tom,

      What stats are you referring to?  

      I think you will find they are readily available either in the Endorsement, Outlook, or the HECM Characteristics reports HUD publishes monthly.  

      But since the change took place in a month on 10/4/2010, you might have to do some math to estimate “the stats the day 1.25 MIP CHANGED FROM .50%till today” (sic).

  • Alias Bob and RM Counselor are correct.  However, terms such as Cringing and Uncooperative are too mild.  With 20 years in the mortgage industry, my experience and my client’s experience in dealing with Ocwen servicing is revolting.  They are as much a sub-prime (there goes that unfortunate comparison again…) collection agency as anything else, who would actively thwart even the simplest customer service requests such as providing a payoff statement. 

    They tout being low-cost and “efficient” for a reason….. Woefully understaffed with rude and uncooperative employees with automated call directors and overseas outsourcing of the initial levels of customer initiated contact. 

    Putting a HECM Senior into their existing servicing system is going to take some serious consideration and soul searching.  But, perhaps they will have a dedicated, truly professional US based team to handle the specifc, varied and specialized needs of the senior customer that they are serving?  If so, then maybe there is hope.  However, management will need to understand that the measure of quality will not be how many calls that a CS Rep can dispense with in an hour, but by customer satisfaction and the lack of complaints to someone other than Ocwen themselves (read CFPB, etc).  Therein lies an unwelcome opportunity for another black eye in the public domain.

    As a former WFB originator, dealing with their Servicing Department was a delight, both for me and my borrowers and potential borrowers.  Phones answered within the first 3 rings by someone specially trained and knowledgable to handle any and all questions and issures right then and there.  Requests for explainations of the monthly statement or illustrative recalculations of a modified Tenure payment plan done cheerfully and accurately verbally and in writing.  C-Link did a pretty good job for ML as well.  Hopefully Ocwen will either establish an internal dedicated RM servicing department totally unlike their forward servicing department, or look to a high quality US based sub-servicer, and not expect to measure its quality and success by their usual piece-work driven model.

    • AZCactus,

      Ask those of us who were never part of WF about our experience with getting payoffs, current principal limits for HECM refinance purposes, and other information.  It sounds like your experience with Ocwen.

string(109) "https://reversemortgagedaily.com/2012/10/31/ocwen-acquires-genworth-reverse-mortgage-division-for-22-million/"

Share your opinion