Ocwen Stock Drops Below NYSE Standard

Ocwen Financial Corporation, the parent company of reverse mortgage lender Liberty Reverse Mortgage, has been notified by the New York Stock Exchange (NYSE) that the average per share trading price of its common stock was below the NYSE’s minimum average share price rule, which could potentially lead to the stock’s delisting from the exchange without corrective action.

The NYSE requires that the stock price of a listed company be at least $1.00 per share over a consecutive 30 trading-day period, and the exchange sent written notification to the company on April 8 that its stock failed to meet that threshold. Over the past 30 days, the highest per-share value that the stock reached was $0.80 on March 17, while the lowest per-share price in that same period of time was $0.31 on April 3.

“In accordance with the NYSE’s rules, Ocwen has six months from receipt of the notice to regain compliance with the NYSE’s price condition,” said Ocwen in a press release announcing its notification by the stock exchange. “The Company can regain compliance at any time during the six-month cure period if on the last trading day of any calendar month during the cure period or on the last day of the cure period, Ocwen has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the 30 trading-day period ending on such date.”

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In an effort to increase its share price, the company is currently contemplating the implementation of a reverse stock split, which could increase the per-share price and bring it back into compliance with the NYSE listing standard. The company also plans to, “reduce the number of its authorized shares of common stock by the same proportion as the ratio chosen for the reverse stock split,” according to its press release.

The company’s board of directors plans to request shareholder approval of the reverse stock split proposal on an advisory basis at the company’s upcoming annual shareholder meeting on May 27.

“The Board intends to take into account the results of the advisory vote as well as changing market conditions and other developments which may impact the company’s stock price in order to make a determination with respect to the best course of action to pursue in order to regain compliance with the NYSE’s minimum share price requirement,” Ocwen said in its press release.

Even if the shareholders do not approve of the plan, the board of directors reserves the right to implement it anyways if the proposed split is deemed to be in the best interest of the company and the shareholders, Ocwen said.
Liberty Reverse Mortgage recently rebranded and began operating as a division of the Ocwen-owned PHH Mortgage Corporation in March.

Liberty Reverse Mortgage is currently ranked as the fifth largest reverse mortgage lender by Home Equity Conversion Mortgage (HECM) volume, according to data from March 2020 tabulated by Reverse Market Insight (RMI).

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  • Late 2012 many in the industry opposed the entry of Ocwen into the originating side of the industry through its announced $22 million acquisition of Genworth’s reverse mortgage division that Genworth acquired as Liberty Reverse Mortgage back in 2007 for $50 million. Many were pleasantly surprised at the price Genworth paid back in 2007.

    If one looks strictly at the percentage loss in HECM endorsements between September 2007 and September 2012 of 49%, compared to the 56% loss in value in the purchase price of the Liberty reverse mortgage unit, one begins to realize that HECM endorsement volume has impact on company values. Add to the HECM endorsement percentage loss, the all but total loss in proprietary reverse mortgage activity in fiscal 2012 and it is clear why the value of Liberty went down by more than the overall drop in HECM endorsement activity. Of course, this overlooks other possible and potential causes such as lower earnings, a worsening balance sheet, poor cash flow, high debt ratio, or some other business downturn or loss.

    Sadly , this setback at Ocwen looks like the demise of Ditech, also known as Walter Investment Management Corporation (WIMC). Is Ocwen’s servicing operations management so superior that it will survive its current downturn while WIMC could not? Like WIMC, Liberty’s profits are not so sufficient so as to be able to carry all of Ocwen by itself.

    Where major servicers once looked like the new wave of major new players in the industry, Ocwen may be the next major player to leave the industry. While Liberty may be a major player in our fishbowl of an industry, Ocwen is no longer even a significant player on the NYSE.

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