Ocwen Financial Corporation is a leading asset manager and business process solutions provider specializing in loan servicing, special servicing, mortgage loan due diligence and receivables management services.
In fact they were the first company chosen by Freddie Mac to begin a pilot program [Feb 3, 2009: Freddie Mac to Outsource Delinquent Collections - Ocwen Financial Chosen to Start]
Freddie Mac (NYSE: FRE - News) said today it is piloting a new Workout Strategy For High Risk Loans designed to keep more at-risk borrowers in their homes by employing third party servicers that specialize in servicing Alt A and other types of higher risk mortgages.
Now that was for people who are late on their payments - whereas the Obama Mortgage modification is to modify loans for people who are not yet late. That has also begun as of April 13th press release
- Ocwen Financial Corporation (NYSE:OCN - News), a leading servicer of subprime mortgages, is among the first servicers (if not the first) in the country to begin executing loan modifications under the U.S. Treasury Department's new Home Affordable Modification Program. The expansive initiative, the contractual details of which are still being developed, is designed to help three to four million distressed homeowners avoid foreclosure by reducing their monthly mortgage payments.
- Even though the form servicing contracts have not yet been provided, Treasury invited servicers ready to adopt the Program to do so, given the exigencies of the foreclosure crisis. Ocwen was able to very quickly adapt its already robust modification initiatives to be compliant with the government's Program because the company's Home Retention Consultant staff is enabled with a highly automated, scalable loan servicing platform.
- Participating servicers must reduce monthly payments on those loans to no more than 31% of the homeowner's monthly gross income so long as the modified loan provides more cash flow to the loan owner than what would be realized in a foreclosure. The reduced payments are to be achieved through interest rate reductions, extended amortization terms and/or principal forbearance or forgiveness. Servicers will receive an up-front incentive fee of $1,000 for every modification under the Program, plus a $1,000 success fee for each year that modified loan stays current, for up to three years. Borrowers receive a principal reduction of $1,000 per year for staying current for up to five years.
I am increasing Ocwen Financial (OCN) up to a 3%ish stake in the fund now that after a huge run the stock has pulled back to its 20 day moving average of $11.25 - a nice consolidation and now we can enjoy the taxpayers largess for the next leg. Ocwen was slated to make $1.00 or so in earnings for 2009 even before the gift from China / you / your grandchildren, so as we keep each household in their underwater home for 90 days extra, this is all just extra "free" money as the cherry on top.
Long Ocwen Financial in fund and personal account