Ocwen Financial Corporation (NYSE: OCN), parent company of PHH Mortgage Corporation and top reverse mortgage lender Liberty Reverse Mortgage, announced strong financial results this week and once again touted the strength of its reverse mortgage business as a driver of growth for the company at-large. This also comes as a legal dispute between Ocwen and the Consumer Financial Protection Bureau (CFPB) has been decided in the company’s favor.
In terms of company performance, Ocwen posted preliminary first quarter 2021 adjusted pre-tax income of $6.6 million, a swing from an adjusted pre-tax loss of $23.4 million seen at the same point in 2020.
Adding to the company’s more positive outlook is its reverse mortgage division, according to Ocwen CEO Glen Messina.
“[W]e continue to see great strength in the reverse mortgage market,” Messina said in an earnings call. “We think it’s a great long-term opportunity for the company. Our platform performed really well in the first quarter as industry volume levels and margins there remain relatively high.”
The court issue stems from a complaint filed by the CFPB against Ocwen in April 2017, which alleged a host of violations on the part of Ocwen, including illegally foreclosing on 1,000 borrowers, mishandling escrow accounts, enrolling consumers in add-on programs without their consent, and knowingly populating its mortgage-tracking software with incorrect or incomplete information.
Early this year, Ocwen announced it had failed to reach a mediation agreement with the CFPB in the dispute, but last week the Bureau ultimately decided to drop the suit entirely.
“We are pleased the Court has entered final judgment in our favor against the CFPB, and has ordered this case closed,” an Ocwen spokesperson said on April 21. “We believe the Court’s March 4 decision granting summary judgment in Ocwen’s favor, along with the CFPB’s subsequent decision to drop its remaining claims, is consistent with our belief that the Bureau’s allegations regarding Ocwen’s past servicing practices were without merit. Should the CFPB decide to file an appeal, Ocwen will continue to vigorously defend itself, as we have done throughout the course of this litigation.”
In Q4 2020, Ocwen also praised the performance of its reverse mortgage business as a key driver of profitability for the organization.
“Our reverse origination platform is positioned to support the financial needs of our growing senior population by tapping into an estimated $7.8 trillion of untapped home equity,” said Messina in a February earnings call. “Our special servicing expertise and track record of creating non-foreclosure outcomes for consumers positions us to support the roughly 1.8 million homeowners who are still on forbearance who may need loss mitigation assistance.”