Morgan Stanley recently announced the sale of its Saxon Mortgage Services to Ocwen Financial Corporation for $59.3 million, plus $1.4 billion for servicing advance receivables outstanding.
National Mortgage Professional reported that Ocwen plans to pay for the sale with cash on-hand, cash from operations, credit and $1.1 billion in servicing advance facilities. Ocwen reported $122.5 million in revenue for the third quarter of 2011, a 28 percent increase compared to the third quarter of 2010. In the third quarter, Ocwen reported completing 15,743 loan modifications, with the Home Affordable Modification Program making up 16 percent of the modifications.
Michael Grondahl, an analyst for Piper Jaffrey, said many large banks are unable to service high-risk loans in a cost-effective way, opening the doors for mortgage lenders who handle subprime mortgages such as Ocwen.
"We believe there is approximately $1.4 trillion in distressed mortgage assets in the U.S., all of which need servicing, and potentially up for grabs," said Grondahl. "As such, OCN is in a unique position to benefit as a proven servicer of subprime mortgages."
- AIG cut municipal debt holdings and added mortgage bonds
- Mortgage insurers struggle with high delinquency rates
- Goldman Sachs to stop controversial practices
- FHFA: Performance of modified loans improves in third quarter
- Bank of America anticipating higher costs on repurchases