Prior to the release of its annual financial results, Ocwen Financial Corporation (NYSE: OCN) this week reported a preliminary loss of $546 million, or $4.18 per share, for the year ended December 31, 2014.
The loss in 2014 compares to a net income of $310.4 million, or $2.13 per share, Ocwen reported for the year ended December 31, 2013.
While the Atlanta-based mortgage servicer — and parent company of Liberty Home Equity Solutions — expects to be profitable in 2015, the company’s operating results in the past year were impacted by a number of increased expenses, including $186.1 million of legal expenses related to its settlement with the New York Department of Financial Services (NYDFS).
In 2014 alone, Ocwen incurred a total of $728.1 million in preliminary normalized expenses, including the costs associated with the NYDFS, as well as $420.2 million of goodwill impairment; $72.3 million for mortgage servicing rights-related fair value changes; and $49.5 million of transition and other items, the company stated in its preliminary earnings release for the full-year 2014.
Despite the more than $500 million net loss in 2014, the company is optimistic that certain strategies it has begun to carry out will help it turn things around this year.
“I am encouraged by the progress Ocwen has made so far in 2015,” said Ocwen President and CEO Ron Faris is a written statement. “We currently expect to be profitable in 2015 and meet all of our ongoing financial and servicing obligations.”
The company has already made significant strides in its strategy to sell agency MSRs. This year, Ocwen has announced its intent to sell up to $44.4 billion worth of MSRs to a number of its biggest competitors including Nationstar Mortgage Holdings (NYSE: NSM) and a subsidiary of Walter Investment Management Corp. (NYSE: WAC).
It was also reported in March that Ocwen would sell a $45 billion MSR portfolio to JPMorgan Chase & Co. (NYSE: JPM).
“We are optimistic that the investments we have made and are making in these areas reduce significantly the substantial risks associated with non-compliance with laws and regulations and improves our service to homeowners which will ultimately result in better overall returns to our shareholders,” Faris said.
Ocwen currently does not have an estimate of when its 2014 financial statements will be finalized.
The preliminary report, however, arrives weeks following the threat of potential delisting from the New York Stock Exchange due to the company’s failure to timely file its annual report for the fiscal year ended December 31, 2014.
In a statement on its noncompliance with NYSE listing standards, Ocwen said that it will need additional time to file its Form 10-K annual report because the company continues to analyze the ability of Home Loan Servicing Solution, Ltd. (HLSS), an Ocwen affiliate, to meet its obligations to fund new servicing advances.
“A failure by HLSS to fund new servicing advances could have a material negative impact on the Company’s financial condition, and the Company requires additional time to prepare information related to its ability to operate as a going concern and to provide such information to the auditors for the purposes of their audit of the Company’s financial statements for the year ended December 31, 2014,” Ocwen previously said in a statement.
Written by Jason Oliva