Ocwen reports more than half a billion loss

by MPA14 Apr 2015
After delaying filing its annual report mulitple times and being threatened with a possible delisting by the New York Stock Exchange, Ocwen Financial Corp. has finally released its fourth quarter and year-end financial results. And the news isn't good.

The embattled mortgage-servicing company reported a preliminary net loss of $546 million, or $4.18 per share, for 2014, compared to net income of $310.4 million, or $2.13 per share, in 2013. Despite the big loss, Ocwen said it expects to to profitability in 2015,

The loss wasn't due to lack of revenue. In fact, Ocwen generated preliminary revenue of $2.1 billion in 2014, up 4% compared to $2 billion in the prior year. It's preliminary income from operations was $76.1 million.

Preliminary pre-tax loss for 2014 was $443.2 million, compared to $352.5 million pre-tax income in 2013. Preliminary pre-tax income on a normalized basis for 2014 was $284.9 million, compared to the $550.4 million normalized pre-tax income in 2013.

During 2014, Ocwen incurred a total of $728.1 million in preliminary normalized expenses. Normalization items in 2014 include $420.2 million of goodwill impairment, $186.1 million of legal and settlement expenses primarily related to the settlement with the New York Department of Financial Services (NYDFS), $72.3 million for MSR-related fair value changes and $49.5 million of transition and other items.

The preliminary normalized results for 2014 were impacted by and include $127.3 million of servicer expenses and uncollectible advances along with $39.4 million in regulatory monitoring costs. In addition, our preliminary net loss results include a charge to record an approximately $77 million valuation allowance against our remaining deferred tax asset.

Last year, Ocwen settled with the NYDFS over its servicing practices and the California’s Department of Business Oversight for $2.5 million over claims it failed to turn over the right paper work showing it complies with the state’s laws protecting homeowners.

"I am encouraged by the progress Ocwen has made so far in 2015. We currently expect to be profitable in 2015 and meet all of our ongoing financial and servicing obligations. In addition to generating substantial cash flow from pending asset sales that have already been announced so far this year, we expect our historical track record of generating substantial cash flow from operations to continue in 2015 and beyond,” Ocwen CEO Ron Faris said.

“To accomplish our objectives we must, among other things, extend our $1.8 billion advance receivable facility that begins amortizing in October 2015, continue meeting our regulatory requirements, execute on our plan to reduce our GSE servicing exposure, continue to comply with our debt covenants and maintain our current servicer ratings," he added.


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