Mortgage Loan Servicer Ocwen Soars on Net Income; Plans Reverse Split
Mortgage loan servicer Ocwen Financial Corp. (NYSE: OCN) announced Thursday that the company will report net income of $2 million in the second quarter of 2020. While that may not seem like a grand sum, consider that the company posted an annualized loss of $322 million in the same period two years ago. Based on the second-quarter results, Ocwen expects to post annualized pretax income of $31 million this year.
Ocwen services 1.3 million residential and commercial loans and is the country’s largest servicer of subprime loans. It was the subprime loan business that first got the firm crosswise with the Consumer Financial Protection Bureau (CFPB).
In April of 2017, the CFPB filed a lawsuit alleging that Ocwen had failed in its obligations to serve its customers. The company had swept up piles of bad loans to service following the housing crisis of 2008. The CFPB reached a $2.1 billion settlement with Ocwen in 2013 on similar charges.
A federal judge last year dismissed the CFPB’s second lawsuit against Ocwen calling it a “shotgun pleading,” a legal term that implies an excessive number of facts with little organizational coherence. The company is still litigating a similar case brought by the state of Florida.
While Ocwen’s financial future has mostly cleared up, the company also said Thursday that it expects to conduct a 1-for-25 reverse stock split effective in early August. A shareholders’ advisory vote in May approved the transaction.
Ocwen’s shares traded at around $0.86, up more than 32%, in the early afternoon Friday. The stock’s 52-week range is $0.28 to $2.07. At the current share price, the stock would be valued at around $21.50 a share following the reverse split.