How Low Will Ocwen Stock Go? Ocwen Executives Tell Shareholders To Expect Record Losses

Ocwen Executives blamed lower revenue expectations coupled with higher expected operating, interest and tax expenses are informing shareholders that Ocwen expects to post a  record loss in 2015. Ocwen Executives disclosed the information in a September investor presentation that was filed with the Securities and Exchange Commission.

If Ocwen does post a loss in 2015, it would make the second straight year of losses for Ocwen. In 2014, Ocwen recorded a net loss of $546 million, a stark reversal from 2013, when Ocwen executives reported net income of $310.4 million.

Ocwen losses are also due to banks like Wells Fargo who terminated their relationship with Ocwen after the majority of their investors had directed it to terminate Ocwen.

According to Bloomberg, “Downgrades of Ocwen’s servicing ratings last year triggered technical defaults in the bonds, prompting Wells Fargo to solicit instructions from investors on what to do next. They were also among deals where some bondholders had accused Ocwen of “imprudent and improper servicing practices.”

According to Housing Wire, “In April, Ocwen Executives said that the 2014 loss was due to “preliminary normalized expenses,” namely a $420.2 million charge-off of goodwill. In March, Ocwen estimated the charge-off to be between $370-$420 million, and the actual result came in slightly higher than that estimate.”

Ocwen also posted a loss of $186.1 million in legal and settlement expenses due to the $150 million settlement with the New York Department of Financial Services.

Ocwen, the largest servicer of loans within mortgage bonds without government backing, has seen its stock tumble 73 percent over the past year. Last year, Ocwen was forced to pay $150 million to the state of New York and remove William Erbey as CEO. In addition, Ocwen was forced to pay an additional $2.5 million to the state of California.

Ocwen actually did post small profits in the first and second quarters of this year. In the first quarter, Ocwen reported net income of $34.4 million, while in the second quarter, Ocwen reported net income of $10 million.

At the end of the second quarter, Ocwen Executive Officer Ron Faris told investors that the second half of 2015 will be challenging.