Mortgage servicer Ocwen Financial Corp. (NYSE: OCN) announced Thursday that the company will eliminate about 300 jobs at its Waterloo, Iowa, residential loan service center. The total represents about 10% of the company’s approximately 2,900 U.S. employees.
Ocwen has been struggling with regulators for more than a year now, and it has been selling off significant bits of its agency-backed mortgage-servicing portfolio while retaining its portfolio of subprime and nonperforming loans. The company sold mortgage servicing rights to $45 billion in Fannie Mae-backed loans to JPMorgan Chase & Co. (NYSE: JPM) in May and in March announced the sale of nearly $35 billion in agency-backed loans to Nationstar Mortgage Holdings Inc. (NYSE: NSM).
As the company shrinks its portfolio, though, its profits come under pressure, and in late July Ocwen missed profit forecasts and the stock was hammered. About all it can do to bolster earnings is cut costs, and that’s where the layoffs begin. Ocwen chopped about 140 jobs in Houston earlier this summer.
The struggling company paid a $150 million fine in New York state in late December related to is performance in loan servicing and conflicts of interest with certain related parties. Another blow came earlier this spring when 119 holders of some $82 billion in residential mortgage-backed securities tried to have Ocwen removed as the services of the securities. Whether Ocwen can overcome its problems and find its niche in servicing non-agency loans remains the major issue facing the company.
Shares traded up about 2% at $7.00 shortly midday Thursday, in a 52-week range of $5.66 to $27.07.