Ocwen, Dubbed “Next Generation Subprime Lender” By Moodys

As The FT reports,


Non-bank mortgage servicers are poised to become the “next generation” of subprime lenders as the companies seek to diversify their rapidly expanding businesses in the face of mounting regulatory scrutiny, Moody’s says.


The warning from the credit rating agency comes as specialised mortgage servicers, particularly Ocwen Financial, face increasing criticism from regulators, who argue that the companies have grown too quickly in recent years.



Mortgage servicers such as Ocwen, Nationstar and Walter Investment have been buying hundreds of billions of dollars worth of “mortgage servicing rights” from big banksincluding JPMorgan Chase and Bank of America.


Under these MSRs, the companies collect payments on US mortgages in exchange for a small portion of the income. Banks have sold the rights in the face of a wave of troublesome post-financial crisis foreclosures as well as regulatory pressure to offload the assets. The amount of outstanding mortgages serviced by Ocwen, the biggest non-bank mortgage servicer in the US, has risen from $43bn in 2005 to more than $500bn now.


Ocwen estimates that banks still have $1tn worth of MSRs to sell, but servicing mortgages has a finite shelf life and originations of the subprime loans in which the company has historically specialised are unlikely to recover to pre-crisis levels.


That could spur Ocwen to expand its nascent prime lending business to include making subprime loans, which have historically been the domain of banks.

2 responses to “Ocwen, Dubbed “Next Generation Subprime Lender” By Moodys

  1. Purchasing stolen voided non collectable notes does not seem smart. Perhaps these companies will wind up like Countrywide and WAMU, BK and gone. The truth is out and the laws are standing for homeowners in case after case. Are these smug companies believing they are above the law or stupid companies.

  2. Are the banksta’s selling to new servicers, to get what little they can out of stolen property, knowing they have no servicing rights to Void contracts, and using these sharksta’s to harass and devour what they can, stealing what homes they can from vulnerable consumers without a paddle to row up stream, and lose the rest to the homeowners fighting back. Knowing the goverment wont protect the innocent so most people will be forced to walk knowing their homes are being stolen. Therefore they servicer sharksta’s debt collectors of non collectable debt, will make a profit knowing they will only lose on a small portion of the mortgages. Due to lack of knowledge and lack of funds by the majority to fight back! So wrong of our leaders not to protect the victims. Sure hope the few politicians whom are trying are successful. and soon.

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