Liberty Parent Ocwen Records Strong Reverse Business in First Quarter

Ocwen Financial Corporation (NYSE: OCN), parent company of Liberty Home Equity Solutions, recorded strong numbers in its reverse mortgage business in spite of the company’s generally reduced financial performance in Q1 2019, according to financial documents released this week.

“[Our] reverse lending business recorded pre-tax income of $24 million, which included $17 million of favorable net fair value changes,” said Ocwen Chief Financial Officer June Campbell in Tuesday’s Q1 earnings call. “We also recorded $3 million of revenue in the quarter from a fair value election for future draw commitments on reverse loans purchased or originated after December 31, 2018.”

The Q1 2019 pre-tax income figure of $24 million stands in noticeable contrast to the same recorded figure in Q4 2018, which stood at only $8.3 million.

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Liberty also stood as the top performing company in the reverse mortgage industry for April 2019 according to recently-released data from Reverse Market Insight (RMI), which recorded a 53.1 percent rise in Liberty’s originations to 222 loans. This marked “their highest volume in over a year on this report,” according to RMI President John Lunde.

The outlook was not as positive for the the larger company, which recorded a $44.5 million loss in Q1, a steep dive compared to their $2.3 million loss recorded in Q4 2018.

“Our first quarter was impacted by $22 million of severance, retention and other reengineering costs and $14 million of unfavorable net fair value changes driven by changes in interest rates and valuation assumptions,” Campbell explained. “This was offset by a $31 million recovery of announced previously expense from the service provider.”

Some of the company’s losses continue to be mitigated due to its October 2018 acquisition of mortgage company PHH Corporation, and Ocwen is still incorporating the acquired assets into its larger corporate structure.

“We remain focused on executing our key business initiatives and positioning the company for profitability in the shortest timeframe possible, while executing the integration of PHH in a prudent and disciplined manner,” said Ocwen CEO Glen Messina on the earnings call.

The incorporation of PHH into Ocwen’s operations is part of a wider reorganization and cost reduction strategy designed to return Ocwen to overall profitability.

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