Ocwen Financial Corp. reported a net loss of $70.8 million, or $0.53 per share, for the full year 2018 compared to a net loss of $128 million, or $1.01 per share, for the full year of 2017, a $57.2 million improvement.
For the three months ended Dec. 31, 2018, Ocwen reported a net loss of $2.3 million, or $0.02 per share.
“We made solid progress in the quarter as we work to realize the scale and cost savings benefits of combining Ocwen and PHH and position the Company for future profitability,” said Glen A. Messina, president and CEO of Ocwen. “We are focused on executing our key business initiatives in order to address our most critical near-term business challenges, improve our financial performance, and establish a stronger foundation for the future. We continue with our disciplined and prudent approach to our integration efforts and are encouraged by the overall progress we are making.”
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Pre-tax loss from continuing operations for the fourth quarter of 2018 was $7.8 million and included a PHH post- acquisition pre-tax loss of $31.5 million. Pre-tax results for the quarter were impacted by a number of significant items, including but not limited to: $64.0 million in bargain purchase gain, $16.4 million in PHH transaction, integration and restructuring costs and $10.1 million in expense related to significant litigation and regulatory settlements.
The Servicing segment recorded $40.6 million of pre-tax loss for the fourth quarter of 2018 and included a PHH post-acquisition pre-tax loss of $21.2 million. The business was negatively impacted by lower revenue from a smaller servicing portfolio due to portfolio runoff and de-boarding of previously announced subservicing clients as a result of terminations and transfers. For the full year 2018, the Servicing business recorded $31.9 million of pre-tax loss.
The lending segment recorded $3.0 million of pre-tax income for the fourth quarter of 2018. Our forward lending business incurred a $5.3 million pre-tax loss that included a PHH post-acquisition pre-tax loss of $2.4 million. Our reverse mortgage lending business recorded pre-tax income of $8.3 million.
The lending businesses were $5.1 million favorable to prior quarter largely driven by favorable valuation changes on our reverse mortgage lending portfolio as a result of falling interest rates. For the full year 2018, the lending business recorded pre-tax income of $11.2 million, an increase of $15.6 million versus 2017. The forward lending business had a pre-tax loss of $9.2 million, which was more than offset by $20.3 million of pre-tax income in our reverse mortgage lending business.
Additional Business Highlights
- In 2018, Ocwen completed 39,545 loan modifications to help struggling families stay in their homes, 17% of which included debt forgiveness totaling over $200 million.
- Delinquencies decreased from 7.8% at September 30, 2018 to 4.9% at December 31, 2018, primarily driven by acquisition of lower delinquency PHH portfolio and ongoing consumer assistance efforts.
- The constant pre-payment rate (“CPR”) decreased from 13.7% in the third quarter of 2018 to 12.9% in the fourth quarter of 2018. In the fourth quarter of 2018, the prime CPR was 14.8%, and the non-prime CPR was 11.8%.
- For the full year 2018, Ocwen originated forward and reverse mortgage loans with UPB of $0.9 billion and $0.6 billion, respectively. The Company intends to re-enter the correspondent forward lending channel and successfully launched a proprietary jumbo reverse mortgage pilot program.
- Our reverse mortgage portfolio ended the year with an estimated $68.1 million in discounted future gains from future draws on existing loans. Neither the anticipated future gains nor future funding liability are included in the company’s financial statements.
