OCN - Ocwen Financial

[ItsAValueTrap]

When it rains, it really pours...

 

http://www.housingwire.com/articles/32753-fitch-warns-ocwen-related-rmbs-deals-on-verge-of-major-downgrade?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire

 

It seems like certain things trigger if the Fitch rating drops too low.

from the HLSS 8-K filed  10.29.13 4:45PM

 

(e) Seller fails to maintain residential primary servicer ratings for subprime loans of at least “Average” by Standard & Poor’s Rating Services, a division of Standards & Poor’s Financial Services LLC (or its successor in interest), “SQ3” by Moody’s Investors Service, Inc. (or its successor in interest) and “RPS4+” and “RSS4+” by Fitch Ratings (or its successor in interest);

[Guest roark33]

Yes, my understanding is that if the downgrade is established beyond the "temporary" status that Fitch just published today, there could be grounds for automatic MSR transfer.  Still think that is a difficult hurdle for the RMBS investors, but only fuels the flames for a large settlement from Ocwen to continue servicing, increased compliance costs or both. 

[ItsAValueTrap]

Yes, my understanding is that if the downgrade is established beyond the "temporary" status that Fitch just published today, there could be grounds for automatic MSR transfer.  Still think that is a difficult hurdle for the RMBS investors, but only fuels the flames for a large settlement from Ocwen to continue servicing, increased compliance costs or both.

 

The 8-K I mentioned was for HLSS.  It is likely that HLSS and Ocwen will renegotiate their deal if Ocwen's ratings fall too low.  I don't think it would be an automatic MSR transfer.

 

There are certain RMBS that can fire their servicer if the servicer's ratings fall too low.  So far that hasn't happened yet (or something).  Ocwen triggered it but the RMBS investors didn't fire Ocwen.

[davidoosnk]

To quote from the article:

 

"To date, Fitch's rating constraints have focused primarily on subprime RMBS, where Ocwen's market share is largest,” Fitch said in the note. “The size of the portfolio and the increased cost and heightened regulatory requirements of servicing subprime loans in particular limits the number of companies willing and able to quickly assume the servicing rights in the event a servicing transfer is required. Today's rating actions anticipate expanding the constraints to all mortgage sectors, reflecting Ocwen's growth in the Prime and Alt-A sectors.”

 

So it appears that this is an expansion of poorer ratings rather than a completely new threat to Ocwen. How much of this is already baked into the stock price?

[davidoosnk]

There is another tidbit in the article that brings forward an interesting idea

 

"The size of the portfolio and the increased cost and heightened regulatory requirements of servicing subprime loans in particular limits the number of companies willing and able to quickly assume the servicing rights in the event a servicing transfer is required."

 

To what extent does all this regulatory scrutiny inhibit competitors from establishing services that might compete in the arenas where Ocwen is the most active?

 

Could one compare Ocwen to cigarette stocks where a moat is established because of intense regulatory scrutiny and there is little competition? Over time those companies' stocks seem to do well, probably because the regulations create a monopoly atmosphere where the company includes the cost of regulation in its business costs but still has pricing power due to its monopoly status. I guess the counter argument could be that with cigarettes, the health risks are well known and the regulations are established, but with Ocwen the regulations are in a discovery process where the costs to the company, and its ability to adjust to it, is harder to quantify.

 

Could also be the case though that this difficult to quantify leads to an opportunity in the share price...

 

This one promises to be interesting. Also, does anyone know how much Robert Chapman bought?

 

 

 

 

 

 

 

 

[Guest roark33]

I think a different way to look at it is the rise of non-bank servicers may be a flash in the pan.  This was seen as inevitable and everyone quotes Dimon saying he doesn't want to service a defaulted loan.  I think this was an effective marketing pitch by Erbey, but I think the banks are keeping a lot of these loans on their books now.  It has become difficult to sell them, the percentage of defaulted loans have dropped significantly, which means there isn't this big motivation to get them off their books, etc. 

 

For example M&T Bank is now sub servicing MSRs for other banks.  Also, Wells' MSR book has continued to grow.  I don't think the regulatory action is going to prevent new competitors, instead it is going to make the ones already in the business  (money-center banks) more inclined to keep the MSRs and service them.  Instead of the 3-4T in UPB that Erbey used to cite as potential for non-bank servicing, we might look back and see that around $500B with 5 very competitive players,  OCN, Nationstar, Select Portfolio Servicing (private), Green Tree Servicing (WAC), and PHH Mortgage Corp.

[ItsAValueTrap]

I think a different way to look at it is the rise of non-bank servicers may be a flash in the pan.  This was seen as inevitable and everyone quotes Dimon saying he doesn't want to service a defaulted loan.  I think this was an effective marketing pitch by Erbey, but I think the banks are keeping a lot of these loans on their books now.  It has become difficult to sell them, the percentage of defaulted loans have dropped significantly, which means there isn't this big motivation to get them off their books, etc. 

 

For example M&T Bank is now sub servicing MSRs for other banks.  Also, Wells' MSR book has continued to grow.  I don't think the regulatory action is going to prevent new competitors, instead it is going to make the ones already in the business  (money-center banks) more inclined to keep the MSRs and service them.  Instead of the 3-4T in UPB that Erbey used to cite as potential for non-bank servicing, we might look back and see that around $500B with 5 very competitive players,  OCN, Nationstar, Select Portfolio Servicing (private), Green Tree Servicing (WAC), and PHH Mortgage Corp.

 

I think the banks would sell them if they could.  Right now the buyers can't buy.

 

Wells Fargo tried to sell its subprime MSRs to Ocwen and is growing its prime MSRs.

[ItsAValueTrap]

Here's the HLSS letter to BlueMountain regarding them trying to increase the interest on HLSS debt:

http://www.sec.gov/Archives/edgar/data/1513161/000151316115000003/ex991hlsslettertotrustee.htm

 

Not surprisingly:  "We have no reason to believe that any such Events of Default have occurred."

[ItsAValueTrap]

I don't understand the current trading price so I've been buying more OCN shares.

 

Their revenues are pretty much guaranteed.  Parts of their revenue like HAMP fees are uncertain but the majority of revenue is contractually guaranteed.  They probably won't lose their servicing rights.

 

On the expenses side, regulatory problems will increase their expenses yes.  But I think people are overreacting???

 

It seems to me that Ocwen is trading well below runoff value and you get the franchise thrown in for free.

[Wilson-TPC]

The "franchise" could be of negative value especially with a brand like Ocwen.

[Guest roark33]

I think people have been overestimating the book value, potential growth and run-off value and underestimating the regulatory concerns of this company for over a year now.  I think it might be time to consider whether these estimates are incorrect.  I can point to a run-off calculation on this company at each price point over past year, 40, 30, 20, heck even a few weeks ago, late Dec, people were wondering who was on the other side of the $12.5 puts priced at $3.  Those are securely in the money now, and whoever was long that trade is down 100%.

 

We spend a lot of time discussing how the market is wrong, but sometimes it is we who are wrong...

[constructive]

I think people have been overestimating the book value, potential growth and run-off value and underestimating the regulatory concerns of this company for over a year now.  I think it might be time to consider whether these estimates are incorrect.  I can point to a run-off calculation on this company at each price point over past year, 40, 30, 20, heck even a few weeks ago, late Dec, people were wondering who was on the other side of the $12.5 puts priced at $3.  Those are securely in the money now, and whoever was long that trade is down 100%.

 

We spend a lot of time discussing how the market is wrong, but sometimes it is we who are wrong...

 

Are you still short? What do you think the runoff value is?

[valueinvestor82]

I don't know if you were being facetious Constructive, but I think the same thing every time I see Roark post. The price is never low enough, any good news demands 10 posts from him explaining how the rabbit hole is deeper and deeper as he suggests more doubt and uncertainty, and ignoring any potential positives. The irony is that it gives less credibility, because it comes across as biased emotional assessment instead of careful balancing of pros and cons. That said, I'm biased as a long investor, but I just appreciate it when people are straight up in their motives. Roark, if you already honestly stated your position, my apologies. I just know that you waste too much precious time to not have a vested interest in a negative outcome. Anyway, here's a paraphrased recent exchange with an analyst at my company, which will remain unnamed, just know it's a "big'n."

Me: "how did you guys come up with a X price target (far higher than current price)":

Analyst: "we took the assets net of liabilities, then discounted that number 60% to account for any unknown discounts resulting from lower probability events like forced sales of MSRs or substantial fines."

Me: "is it fair to say that by the time any of these outcomes (not listed here but discussed, ranging from nothing happening to a big fine, to a sale of MSRs, or the unlikely assignment without compensation) do occur, that a company trading at less than 2X cash flow could either pay off its debt or buy back so many shares that even a shadow of the former company could generate decent FCF per share?"

Analyst: "yeah, we think that's reasonable, it's just that the market doesn't know how to deal with the regulatory risk in terms of valuation."

Me: "in a worst-case scenario, who would end up with servicing rights?"

Analyst: "that's what we can't figure out. NationStar has financial issues that would make it tough for them to handle such a large transfer. Subprime especially doesn't fit into most firms capabilities. Then the government would also have to approve the transfer, and we don't see how that would help either the home owners or regulators having to oversee the "problem." We see that Fitch has the ratings under review, and some RMBS trusts can transfer rights if ratings fall below a certain number, but the problem still exists of who would end up with the rights having the ability to handle the task."

 

So that's where we are. At the end, I basically summarized and received his nod that none of these outcomes impair value to the point of $5.70 a share. Doesn't the market realize that the agency business resulting in $1.7 billion could pay off debt and still leave $100 million, plus whatever cash accumulates in the interim? So the other half is only worth $600 million? I will go on record (perhaps foolishly?) and say impossible.

[jay21]

Im glad someone else sees this the way I do*. Thanks valueinvestor82

 

*Not that I am right or that my original estimate of value was correct.

[morningstar]

I don't know if you were being facetious Constructive, but I think the same thing every time I see Roark post. The price is never low enough, any good news demands 10 posts from him explaining how the rabbit hole is deeper and deeper as he suggests more doubt and uncertainty, and ignoring any potential positives. The irony is that it gives less credibility, because it comes across as biased emotional assessment instead of careful balancing of pros and cons. That said, I'm biased as a long investor, but I just appreciate it when people are straight up in their motives. Roark, if you already honestly stated your position, my apologies. I just know that you waste too much precious time to not have a vested interest in a negative outcome. Anyway, here's a paraphrased recent exchange with an analyst at my company, which will remain unnamed, just know it's a "big'n."

Me: "how did you guys come up with a X price target (far higher than current price)":

Analyst: "we took the assets net of liabilities, then discounted that number 60% to account for any unknown discounts resulting from lower probability events like forced sales of MSRs or substantial fines."

Me: "is it fair to say that by the time any of these outcomes (not listed here but discussed, ranging from nothing happening to a big fine, to a sale of MSRs, or the unlikely assignment without compensation) do occur, that a company trading at less than 2X cash flow could either pay off its debt or buy back so many shares that even a shadow of the former company could generate decent FCF per share?"

Analyst: "yeah, we think that's reasonable, it's just that the market doesn't know how to deal with the regulatory risk in terms of valuation."

Me: "in a worst-case scenario, who would end up with servicing rights?"

Analyst: "that's what we can't figure out. NationStar has financial issues that would make it tough for them to handle such a large transfer. Subprime especially doesn't fit into most firms capabilities. Then the government would also have to approve the transfer, and we don't see how that would help either the home owners or regulators having to oversee the "problem." We see that Fitch has the ratings under review, and some RMBS trusts can transfer rights if ratings fall below a certain number, but the problem still exists of who would end up with the rights having the ability to handle the task."

 

So that's where we are. At the end, I basically summarized and received his nod that none of these outcomes impair value to the point of $5.70 a share. Doesn't the market realize that the agency business resulting in $1.7 billion could pay off debt and still leave $100 million, plus whatever cash accumulates in the interim? So the other half is only worth $600 million? I will go on record (perhaps foolishly?) and say impossible.

 

Personally, I'd estimate runoff value of the portfolio the same way I did in my last post on the issue - roughly tangible book value plus the appreciation of MSRs to fair value where they are marked at amortized cost. To get a higher figure I think you need to assume either (1) that Ocwen can service more efficiently than the marginal market buyer (not sure this is really supported by facts, though the company's believers certainly think there's a material cost advantage) or (2) assume a lower discount rate, which could be fair though it's easy to overvalue assets in this fashion. You certainly get to a multiple of the current market cap this way, but if you then assume that the cash portions of the NY settlement end up being applied proportionally nationwide - and why would any state not hop on this free money bandwagon - you aren't far from where it trades today.

 

I do feel like today's price action possibly reached a nice bottom for the stock.

[innerscorecard]

I don't understand the current trading price so I've been buying more OCN shares.

 

Wouldn't it be prudent to understand exactly why the market is mispricing OCN, if it is in fact mispriced, rather than simply buying more even if you don't exactly understand the inefficient rationale?

[Guest roark33]

Valueinvestor82 and others: I am sorry if I come across as curt or any other manner of rudeness.  Not my intention.  I have spoken with the other main poster on this topic personally, and I thought I had indicated my position.  I have mainly been short ASPS.  I was briefly short OCN, but I have always felt that ASPS was more susceptible to becoming a 0 with its debt and no real tangible assets.  I question its "technology" and its ability to win any new business. 

 

I am not currently short, because the set-up in ASPS is brutal on a short squeeze, however, I would get short again if ASPS went over 30 without a convincing reason (i.e. Cooperman talking about testicles on a conference call is not a good reason). 

 

I originally investigated the whole complex as a long.  I appreciate Glenn's thoroughness in describing the industry, etc.  I feel like there is always an element of slight uncertainty when looking at a business from the outside.  I felt like it could go either way with Ocwen.  Either it had just made the typical clerical errors and had growing pain oversight, in which case the regulatory issues would pass and Ocwen would be allowed to grow again. 

 

I have two main issues with the bull case. 

 

1. I think there is enough evidence that Ocwen hasn't just made clerical errors.  Cross Country is a great example (I would recommend you reading the actual complaint).  Forced placed lender insurance, BPO up-charging, etc.  These are instances where one needs to think about if the regulatory issues are going to be put behind them or those actions are just part of the culture.  I post a lot about that because I think a lot of investors just brush off regulatory risk as something where a fine can be paid, and back to business as usual.  If you are Erbey, you don't agree to resign because your company committed clerical errors.  My biggest beef is that, for some reason, people are unable to take new facts are change their mind.  Just look at the numbers. 

 

2. I think people are anchoring themselves to a back of the envelope type valuation method to Ocwen's book value, even at some substantial discount.  I don't think this takes into account the fines to be paid to additional state regulators, fines to be paid to CPFB, etc.  Additionally, the increased regulation and inability to do certain things, like forced-placed insurance, have changed the value of these MSRs.  What Ocwen paid for them two years ago is basically meaningless.  If you want to know about MSR pricing, I would suggest talking to a shop like MountainView in Denver.  Pricing is very difficult right now.  Ocwen is shopping two bulk agency portfolios now and they are not getting any takers.

 

Additionally, what is Ocwen going to do with the cash even if it can run them off or sell them.  Maybe it can buy MSRs in a year or two, but its profitability profile will be a lot different.  I pound the table a lot on this point, but Ocwen lost its ability to buy bulk loans as a bank in the early 2000s and then tried to find another business avenue for its capital. It floundered for 2-3 years until the recession gave it a great opportunity to take these MSRs off the bank's books. 

 

I am not short Ocwen at these prices, but I don't really understand the bull case.  Either the company cannot negotiate with all the state regulators and RMBS bondholders and files for bankruptcy, or it flounders in run-off mode for a few years hoping to find another way to put its capital to work that it derived from either sales of MSRs or cash flow.  Lots of downside, not much upside. 

 

I also think this situation is a great example of not following "big" funds.  Luxor, Cooperman, White Elm, Goodhaven, Baupost. I could name a lot of big funds that have been burned on the Erbey complex.  That's my favorite part of the markets....I will try to keep it more civil and post less.  Best...

 

 

 

 

[ItsAValueTrap]

I don't understand the current trading price so I've been buying more OCN shares.

 

Wouldn't it be prudent to understand exactly why the market is mispricing OCN, if it is in fact mispriced, rather than simply buying more even if you don't exactly understand the inefficient rationale?

 

You could come up with any number of explanations.  Here are some:

1- People are overly fearful.

2- People don't understand the company because of _____________.

 

You could likely explain almost every beaten down stock with either explanation.  I don't find that particularly useful.  I think the sensible thing to do is to price the company (granted, there's a large amount of uncertainty about what a company is worth).

 

And a lot of the time, the trading in a stock doesn't make much sense.  After the California DBO settlement, the stock traded down in the aftermarket.  Then it traded up a lot.  And then over the past few days, the stock has traded down.

[valueinvestor82]

No apology necessary, Roark. You certainly haven't come across as rude to me, I just didn't know definitively where you stood. Thanks for the explanation as well, I understand your points entirely and I've appreciated some of the challenges to my more optimistic outlook, even if not directly, I still take them into consideration. I guess to me, the $150 million in NY and the additional oversight seems to be the "gold medal" of a regulator extracting value, not the most likely for each state. The percentage that each state contributes to UPB is smaller than CA and NY as well, and everyone else signed the national settlement (I know there has already been good discussion on the settlement and if other states can/cannot go as far as NY).

 

I feel (totally subjectively and speculatively) that even a diminished profile of profitability is better than what is bein assigned as credit to OCNs stock.

 

You brought up one of my arguments for outcomes closer to the status quo (though certainly at lower levels of profitability): you say that they may be having trouble selling the MSRs that they've discussed previously. Doesn't that challenge the view that suddenly and easily they'll have to transfer MSRs to some other lucky recipient? Who has the capability to handle $200 billion?

 

Even Fitch says that such a transfer could take considerable time. How much more cash comes in the door, allowing substantial change to the balance sheet?

 

I think the consensus now seems to be 1) highly uncertain future business model 2) potential further reg action 3) fines and greater oversight (lower margins). This seems to be overdone in the stock price currently. I don't think OCN has a coca cola brand, they just have a moat in terms of doing something that would be difficult for anyone else to do. Moody's and Fitch both note OCNs superior servicing abilities on a number of metrics, even visible in the notes this evening on potential ratings downgrades.

 

HLSS feels like it's in the crosshairs too, and I think that the closeness of the relationship between the two and a joint goal of getting lawsuits off of their backs will lend toward the two working closely together if one is somehow indebted to the other.

 

Basically I agree with your assessments of the uncertainties, I just happen to believe that those factors have caused the stock to be overly discounted from any range of stressed outcomes.

[ItsAValueTrap]

The "franchise" could be of negative value especially with a brand like Ocwen.

 

I don't think any mortgage servicer will ever have a good brand.

a- The customers can't leave.  Companies like that tend to generate a lot of complaints.  Cable companies regularly get slaughtered in customer satisfaction polls and on consumeraffairs.com.

b- They're like debt collectors.  Nobody is happy that they are about to lose their home.  (On the flip side, Ocwen has a very low number of fans from people who are happy with their loan mods.)

*Strangely enough, people like the companies which give out debt more than the companies that collect on it.  People tend to like Visa and Mastercard.  They HATE the companies that collect on Visa and Mastercard debt (PRAA, ASFI, etc. etc.).

c- They are incentivized to cut corners and to deliver sh**ty service.  At least cable companies have an incentive to deliver good customer service.  But in mortgage servicing you have to be a miser.  Companies that spent a lot on good customer service and have high employee morale typically ran into a lot of trouble.  Then they were sold to Ocwen (Litton, Homeward, Rescap, etc.).

 

If you are a mortgage originator, I think you would want to sell your high-delinquency MSRs.  The negative PR hurts your originations business.  If you're Wells Fargo and people don't trust you because of robo-signing, then they may not want to get a mortgage with you.

[Wilson-TPC]

I would love to hear feedbacks.

[yadayada]

Honestly roark, a lot of vague stuff. force placed insurance and overcharging for BPO;s? Where is evidence of that? Just because they were accused (and accusations were obviously very biased and directed at altisource) doesnt mean it is true. ASPS charged about 100$ on average for BPO's. It seems in line to me. Googling around gets you costs of between 50-175$ for inside and outside BPO's. Something so obvious would have been caught by Lawsky as well.

 

Also with run off mode, there would be lots of upside. Probably worth double with conservative assumptions.

 

Finally this cost advantage has not been proven? Have you compared costs and margins between different servicers? OCN is clearly the best in this area.

 

I see the bears make lot's of vague statements, and the bulls go into detail. What is this evidence of more regulatory issues?

 

Iv seen Erbey being called promotional, while OCN is the only one carrying MSR's at cost..

 

Im still not investing though. There are better doubles laying around :) .

 

 

[philly value]

@Wilson-TPC: The share count and cash figures are off a bit. Ocwen had ~127M shares outstanding as of the end of the last quarter, and as of the 10-Q filing, had repurchased an additional 2M shares for $47M. Obviously those repurchases sting a lot now. So the latest numbers as of the Q are 125.814M shares outstanding and $47M less cash than reported. For valuation and liquidity purposes it matters quite a bit if OCN made more repurchases since the Q was published, do we have any indication on that? We know ASPS shut down repurchases, hopefully OCN did the same.

[Guest roark33]

BPO up-charging works as follows:

 

Ocwen is allowed to charge up to $80 for outside and $105 for inside BPOs.  This is in the Fannie/Freddie agreements. 

 

Here's how it should work:

 

Ocwen goes to the Texas market and works with a few realtors to arrange for these BPOs.  Sometimes they are able to get a $70 price for an outside BPOs, sometimes they have to pay $80.  Either way, they pay the realtor that $70 or $80 and pass that cost along to the homeowners or bondholders.  But Ocwen isn't allowed to add in a cost of handling this because that's an embedded revenue they get in the MSR, it isn't a cost plus deal. 

 

Here's how it actually works with Ocwen.

 

Ocwen contracts with ASPS to manage all of their BPOs  (and other services, but BPOs is just the easiest example).  Altisource using a pretty neat "dutch tender offer" system to manage its BPO work and most of their general work.  The contractors bid how much they will do the work for and ASPS chooses the least expensive.  ASPS contracts with the realtor to do the BPO.  Altisource pays $40 per BPO, minus a $1 billing fee (I am not making this up)--and then turns around and bills Ocwen the full $80 or $105 if it is an inside BPO.  In other words, Ocwen is never going to find a a rate below the fee schedule, but at the same time, it has essentially no overhead on that transaction itself.  This is why they can operate at such a higher profitability than the others servicers.  These are internal costs that Ocwen has outsourced to ASPS.  At the same time, ASPS has marked-up those costs so high when sending them back to Ocwen that ASPS is also able to show such large margins. 

 

ASPS, on the other hand, has a 100% mark-up on the BPO, minus the cost of arranging it.  The regulators hate this set-up because Ocwen is effectively passing along that mark-up to the homeowners (or the bondholders depending on the status for the property).  The regulators ask, if ASPS can find a BPO for $40 (minus $1), why can't you?  They further hate the setup because if you think about it statistically, ASPS should not always be the best or lowest cost provider in all markets, in all cases, yet ASPS handles all of Ocwen's work and that's why I think they wanted Erbey out, to cleanse the system of those inter-party dealings.

 

I spent a lot of time with a former Litton/Ocwen employee working through these issues, but I discounted a lot of what he said because he advised a lot of plaintiff firms in suing Ocwen.  I also always assumed he was just a jaded employee whose job got outsourced to India.  BUT--he has been spot on in multiple cases, he even mentioned backdating to me before it came out, but I had no idea what he was talking about until it happened.  He is also the one who mentioned to me that the RMBS note holders were going to try to and claim default, and he was right on the money on that one. 

 

The evidence is clearly out there, you just have to dig a little.  This is the link to the Cross Country suit...

 

http://leagle.com/decision/In%20FDCO%2020140930839/DELGADO%20v.%20OCWEN%20LOAN%20SERVICING,%20LLC

 

I am obviously bias, but I don't have a direct interest in it right now.  In fact, I hope ASPS runs up significantly after their earnings in Feb, somewhere around 40...so I guess I should technically be out here beating the drum....Whoops.

 

 

 

 

 

 

 

[ItsAValueTrap]

I pound the table a lot on this point, but Ocwen lost its ability to buy bulk loans as a bank in the early 2000s and then tried to find another business avenue for its capital.

 

From what I understand, it temporarily lost the ability to buy NPLs until it could draft a plan for its regulator at the time (the office of thrift supervision?).  Then, they decided to get rid of the regulator by selling off its bank/thrift.  So, that's how they dealt with regulation.

 

NPLs became less attractive as other players entered the space.

 

Back then, it lost a lot of money on commercial and on affordable housing.

 

*I only skimmed the 10-Ks.

 

---

In 2000 Ocwen stopped buying nonperforming loans.

 

The volume of discount loan acquisitions has declined in recent years,

primarily because of two factors: a decline in the volume of nonperforming loans

available for purchase; and, more recently, our change in strategic direction

from capital intensive lines of business to fee-based businesses. We have not

acquired any discount loans since 2000.

http://www.sec.gov/Archives/edgar/data/873860/000101905602000193/ocn_10k.txt

 

In 2004 Ocwen got smacked by the Office of Thrift Supervision over mortgage servicing.

http://shareholders.ocwen.com/secfiling.cfm?filingID=1019056-04-549&CIK=873860

 

It debanked on Feb 4, 2005.  Bye bye OTS.

http://shareholders.ocwen.com/secfiling.cfm?filingID=1019056-05-192&CIK=873860