yadayada Posted August 4, 2014 Share Posted August 4, 2014 Yeah but banks will lose a lot of money, they hate being in this business, and they now have higher capital requirements in a business they don't want to be in. I can imagine they will put pressure on the politicians they bough.. I mean lobbied here. :D And looking at Lawsky's bitcoin regulation, it makes no sense. Clearly did not understand that whole thing. His accusations here are on pretty weak ground. Really looks like this guy is just trying to score points here. So that is why I think he won't let this drag on for years. I read latest Q call, and it looks like they are investing now to drive complaint ratio close to zero because of new rules. So if that happens, within a year there will be barely any complaints. And Lawsky will not score much political points to keep going after them. Or any other regulator trying to get a political carreer going. And his thesis is also very weak as there aren't really any problems with Ocwen. Link to comment Share on other sites More sharing options...
yadayada Posted September 10, 2014 Share Posted September 10, 2014 Wellington throws in the towel and sells almost its entire stake. Im starting to think i should have just stuck with ASPS :) , as my confidence in this thing is not exactly rock solid now. Link to comment Share on other sites More sharing options...
jay21 Posted September 10, 2014 Share Posted September 10, 2014 Wellington throws in the towel and sells almost its entire stake. Im starting to think i should have just stuck with ASPS :) , as my confidence in this thing is not exactly rock solid now. I pulled open their 13-HR. I have no confidence in them. Are they reputable? I haven't heard much about them. Link to comment Share on other sites More sharing options...
jgyetzer Posted September 10, 2014 Share Posted September 10, 2014 Wellington has some $900B under management. It's hard to imagine that a stake in a company as small as Ocwen was a highly scrutinized or well understood investment for them in the first place. I think their selling would best be regarded as a non-event. Link to comment Share on other sites More sharing options...
mvalue Posted September 11, 2014 Share Posted September 11, 2014 Wellington throws in the towel and sells almost its entire stake. Im starting to think i should have just stuck with ASPS :) , as my confidence in this thing is not exactly rock solid now. What were they doing with it when it was at $45? Link to comment Share on other sites More sharing options...
yadayada Posted September 11, 2014 Share Posted September 11, 2014 yeah good points. Still think holding a larger position in ASPS is the better play. Not selling my small one in OCN though. Link to comment Share on other sites More sharing options...
morningstar Posted October 21, 2014 Share Posted October 21, 2014 http://www.dfs.ny.gov/about/press2014/pr141021-ltr.pdf New Lawsky letter alleging backdating of letters to borrowers, or at least some form of record-keeping problems. ASPS and OCN both down hard (back near the recent lows), other Erbey companies down to a lesser extent. Link to comment Share on other sites More sharing options...
yadayada Posted October 25, 2014 Share Posted October 25, 2014 http://seekingalpha.com/pr/11436475-ocwen-writes-open-letter-to-homeowners-concerning-letter-dating-issues Honestly even with elevated costs the run off value will be more then the current market cap. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted October 25, 2014 Share Posted October 25, 2014 http://seekingalpha.com/pr/11436475-ocwen-writes-open-letter-to-homeowners-concerning-letter-dating-issues Honestly even with elevated costs the run off value will be more then the current market cap. Fail... there's no contact for borrowers/homeowners listed at the bottom of the press release. http://shareholders.ocwen.com/releasedetail.cfm?ReleaseID=878151 Link to comment Share on other sites More sharing options...
yadayada Posted October 25, 2014 Share Posted October 25, 2014 This thing is an interesting study in the whole efficient market thing. It is suposed to reflect all information out there. Yet if you read complaints on Ocwen, the most complaints were about this exact backdating issue. Read on various message boards and you have at least a dozen people describing this issue exactly. And this issue seems still pretty minor to me. Yet the stock went from 35$ to 20$, almost half! And run off is suposed ot be around 40$, if no new MSR''s would be added. It is basicly pricing in full disaster extremely likely to happen. Link to comment Share on other sites More sharing options...
scorpioncapital Posted October 25, 2014 Share Posted October 25, 2014 I think the market is quite efficient with respect to the Ocwen empire. That efficiency is the realization that profits in the industry have been too fat in an area that touches a nerve due to the financial crisis. The regulatory issues are an indirect proxy to diminish these returns, a sort of bubble popping of something growing too fast. So I think the market is not pricing in the surface regulatory issues but rather the future profit potential. Link to comment Share on other sites More sharing options...
yadayada Posted October 25, 2014 Share Posted October 25, 2014 they have been too fat? Why? Do you have any idea why they have been growing so fast? Why is it bad that servicers are growing too fast? Why would OCN having a cost advantage be bad (without sacrificing quality vs banks and other servicers)? Why shouldn't profits be made when risk is taken in this area? Why is it bad when it is shown already that servicers do a better job (especialy OCN) then banks of extracting money from these loans while keeping more people in their homes? If no returns are to be had in servicing, that means quality of servicing will go down, that means more robosigning and other things that are bad for homeowners. The market is pricing the future as if there will be no new MSR 's going to servicers, and costs will drastically go up, while facts show that more MSR's to servicers is clearly better for banks, servicers and homeowners. So if either costs will not drasticaly go up, or there will be new MSR's to homeowners, the stock is very mispriced. The only reason there is downside is if OCN woul d have to somehow forfeit their MSR's. If you make a run off calculation with very pessimistic cost increases and no new MSR's, there is still some upside from current price. So a stock that has all the bad things (except for one super unlikely horror scenario that would actually be the worst for homeowners) fully priced in, you got a good investment probably? edit: another bad scenario for ocwen woul dbe very high interest due to higher inflation that we have had in the past 10-20 years. If you get like 7% inflation for at least severla years, that would be pretty bad for OCN. But that seems unlikely too. Link to comment Share on other sites More sharing options...
morningstar Posted October 26, 2014 Share Posted October 26, 2014 If no returns are to be had in servicing, that means quality of servicing will go down, that means more robosigning and other things that are bad for homeowners. I don't see why this would be the case. Ocwen has committed to service these loans; if the quality required/costs required go up to the point that Ocwen earns a very poor return, this doesn't mean the quality goes down. This is a risk Ocwen shareholders assumed by taking on a fixed revenue stream to support an unlimited liability. Link to comment Share on other sites More sharing options...
scorpioncapital Posted October 26, 2014 Share Posted October 26, 2014 I wonder what is the relationship between Ocwen and mortgage insurers if they originate and hold mortgage loans? Link to comment Share on other sites More sharing options...
rayfinkle Posted October 26, 2014 Share Posted October 26, 2014 Yada can you share your runoff model? Link to comment Share on other sites More sharing options...
yadayada Posted October 26, 2014 Share Posted October 26, 2014 take UPB take 0.23% of that (goes to OCN not counting possible additional charges that all go to OCN and not to HLSS). That is about 1 billion$. When it comes to costs it gets tricky. This is all in VIC write up btw, and after reading annual reports and conference calls it seems to check out. So on 2.2 million loans, assuming some of them are non performing, I get costs of around 150-300 million$. Assuming 75$ per loan that is performing, and 300$ per loan that is non performing. Im not sure what other corporate costs they have, but it is probably safe to say they will generate at least 500 million$ next year. And costs also come down as the portfolio runs off. I think about 350k loans out of 2.2 million loans were non performing in 2013. So costs will drastically come down after a few years when vast majority of loans is performing. Plus they had one time costs of improving infrastructure to handle current capacity. They also have some origination costs that will go away (we are assuming no new UPB). You can also deduce this from past years . And then assume UPB goes down like 15% each year (this number is on high side if you think itnerest rates go up a bit every year). And then you get roughly 5 billion$. Basicly they get pretty much no complaints on performing loans. And if you subtract the number of complaints from this backdating issue (which generated most of the complaints) then OCN's complaint ratio is very low compared to everyone else... And it seemed increased regulatory costs so far are like 25 million$ a year, not in the hundreds of millions of $. And this will come down with the number of non performing loans on their books. I think what a lot of people fail to consider here is that Erbey uses the mispricing to buy back stock. That is something that puts the return on steroids if they do end up getting new UPB. Because then OCN is probably worth between 5-20 billion$. Just imagine if they buy back like 25% of stock in the meantime... That would stock price in 160$ range on a 15 billion market cap and 95m shares. So to lose here you have to assume that with the lowest complaint ratio's and keeping most people in their home, they would have to have increased costs of in the billions, no new originations and no new UPB. But who the hell will service those loans then?? That would be very irrational from the regulator's point of view, and would hurt home owners and banks. It seems that if Ocwen gets their complaint ratio to a very low number, they can basicly go on a crusade against Lawsky here, and that would make Lawsky look overzealous. And he already gets flack from stepping out of line. There would be a lot of forces working against Lawsky if he did that. So I like the odds. And elections are in 2 years, so I don't expect this to last longer then that. It is pretty clear Lawsky doesn't really care about homeowners, he just wants to move his career ahead. Link to comment Share on other sites More sharing options...
yadayada Posted October 26, 2014 Share Posted October 26, 2014 If they would double UPB, that would put OCN's income at least at around 1 billion$ probably. On a 2.5 billion market cap lol.. This assumes much higher costs then the 75$ and 300$ for performing and non performing loans. I think the market just looks at 2013 net income, looks at their business, and looks at regulator issues, and just assumes that number will come down over the years. in that case it is not crazy to say it could very well be worth less then 2.5 billion$. As for the upside scenario. They are already loosening up lending standards for mortgages in the US. Allowing loans with very low downpayments in certain states etc. If subprime lending would go to historical average, and OCN would get a small portion of that, the portfolio would not run off, even if they get no new MSR's from the banks. Just wish I did not buy above 30$ lol, and waited a bit. These look quite attractive btw: http://finance.yahoo.com/q/op?s=OCN&data-ipsquote-timestamp=1484870400 Not sure what the person who writes them is thinking though. You have more then 2 years.. By then this will be almost certainly be resolved. ANd with not much more risk then with the common, you can have between a 10-20 bagger. Link to comment Share on other sites More sharing options...
portfolio14 Posted October 27, 2014 Share Posted October 27, 2014 What assumption did you use to get 10-20 bagger? Or, did you mean annualised return? These look quite attractive btw: http://finance.yahoo.com/q/op?s=OCN&data-ipsquote-timestamp=1484870400 Not sure what the person who writes them is thinking though. You have more then 2 years.. By then this will be almost certainly be resolved. ANd with not much more risk then with the common, you can have between a 10-20 bagger. Link to comment Share on other sites More sharing options...
physdude Posted October 30, 2014 Share Posted October 30, 2014 OCN releases 3q earnings http://boardvote.com/symbol/OCN/communique/798695 - net loss of (0.58) including $100 million reserve for possible settlement with the New York regulator. They repurchased nearly 5% of the float so management clearly thinks that the stock price is undervalued. This might be an okay long term entry point but I am not adding any at this point. Link to comment Share on other sites More sharing options...
rayfinkle Posted October 30, 2014 Share Posted October 30, 2014 Anxious to read the Q and see how they come to $100M for the reserve. There has to be some sort of signalling going on here based on conversations with regulators--doubtful they pull this number out of the air. Link to comment Share on other sites More sharing options...
rayfinkle Posted October 30, 2014 Share Posted October 30, 2014 Of the 6,098 borrowers referenced in the NYDFS letter that received misdated letters in 2012: -Almost 70% were subsequently approved for another modification. -At the end of September, 2014, about 2/3 were now making regular payments with a high percentage, almost 80%, being contractually current, and many others making payments on an agreed-upon payment plan. -Less than 5% have gone through foreclosure. Of these: –About one-third were offered other pre-foreclosure alternatives. –Of the loans that did go through to foreclosure without being offered an alternative (about 3% of the 6,098), unless prohibited, Ocwen either contacted or attempted to contact each borrower at least 50 times. Link to comment Share on other sites More sharing options...
yadayada Posted October 30, 2014 Share Posted October 30, 2014 Yea it seems easy from now on to make lawsky look bad for ocwen. Almost 0% complaints, more people kept in their homes etc. so prob will be resolved soon. Link to comment Share on other sites More sharing options...
rayfinkle Posted October 30, 2014 Share Posted October 30, 2014 Yea it seems easy from now on to make lawsky look bad for ocwen. Almost 0% complaints, more people kept in their homes etc. so prob will be resolved soon. Erbey said that they are "unlikely to reach settlement for less than $100M." Even a big settlement seems like a fine outcome. What worries me are the potential "non financial" elements of a settlement that Erbey mentioned. A hit to earnings power or ability to buy MSR's would be a big deal. Forced divestiture would be huge, but seems like overkill. Link to comment Share on other sites More sharing options...
phil_Buffett Posted October 30, 2014 Share Posted October 30, 2014 what i dont get, with this low Ratio of complaints, why they have probably to pay over 100mio to settle? could somebody explain this to me? Link to comment Share on other sites More sharing options...
merkhet Posted October 30, 2014 Share Posted October 30, 2014 what i dont get, with this low Ratio of complaints, why they have probably to pay over 100mio to settle? could somebody explain this to me? Extortion and Politics Link to comment Share on other sites More sharing options...
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