Ocwen Financial Corporation (NYSE: OCN) has announced plans to exit the wholesale forward-mortgage industry, but a company spokesman confirms that its Liberty Home Equity Solutions arm remains unaffected.
The West Palm Beach, Fla.-based company announced last week that it has reached an agreement to sell the assets related to its wholesale forward lending business, with the unnamed buyer assuming a facility lease and potentially offering existing Ocwen employees jobs.
Ocwen also noted in an 8-K filing that its reverse mortgage business would not be affected by the moves, and that the company would continue to originate forward retail loans; an Ocwen spokesperson confirmed to Reverse Mortgage Daily that Liberty, its Home Equity Conversion Mortgage lending arm, was untouched.
The deal to exit wholesale forward lending will end up costing Ocwen about $7 million, primarily in the form of a write-off associated with an internally developed wholesale software program; the company also plans to shell out an additional $1 million to $2 million in severance expenses. Ocwen expects the transaction to close during the fourth quarter of 2017, with the write-off affecting the books for the third quarter.
Ocwen also indicated that it had reached agreements with four more states to remove servicing and lending restrictions: Starting April 30, 2018, Ocwen can begin acquiring mortgage servicing rights again in Minnesota, Arkansas, Alabama, and the District of Columbia. The jurisdictions join a growing list of state governments that have closed similar deals with the lender and servicer, which found itself slapped with a wave of cease-and-desist orders back in the spring.
As part of the deals to lift the restrictions, Ocwen has generally agreed to transition away from its troubled servicing platform, REALServicing, and open its escrow accounts to an independent third-party audit.
Written by Alex Spanko