Now that the dust is beginning to settle on the $150 million settlement between Ocwen Financial (OCN) and the New York Department of Financial Services, the company has unveiled its plans for the future.
First and foremost, the company will be without departing chairman William Erbey, who was forced to resign as part of the NYDFS settlement. But in a conference call with investors, Ocwen Chief Executive Officer Ron Faris revealed Ocwen’s four-part plan for the future and said that Erbey’s departure isn’t the only big change for the nonbank.
Faris told investors that Ocwen is planning to exit agency servicing. “We are going to focus our servicing business primarily on non-agency servicing,” Faris said.
Faris said that Ocwen plans to sell off its entire portfolio of agency servicing. “We estimate the difference between our $1.1 billion book value and fair value of our agency MSRs is between $400 and $500 million dollars,” Faris said.
“In addition to potentially realizing these gains, we have the potential to free up $200 to $300 million currently allocated to fund agency advances,” Faris added. “This strategy has the potential to free up over $1.7 billion of capital to invest in new businesses, to reduce leverage, or to return to shareholders over time.”
But Faris said that the sales of its agency mortgage servicing rights portfolio will not be done in bulk. “Given the current environment, we believe it is unlikely that you will see large bulk transactions like we have seen in recent years,” Faris said. “We expect to be in a position to execute this strategy with smaller transactions.”