Mortgage Servicers

Ocwen Financial Corporation, Walter Investment Management Corp

Credit, Finance/Real Estate, Event Driven/Special Sit


Publicly traded companies mentioned herein: Ocwen Financial Corporation (OCN), New Residential Investment Corp (NRZ), Walter Investment Management Corp (WAC)

Highlights

When the Consumer Financial Protection Bureau (CFPB) filed suit against Ocwen at the end of April (2017) it sent the stock down over 60%. Over the past four years, the presenter said the company has been consistently targeted by regulators and fined ~$1bn for what he views as “debatable” offenses. Regardless of the legitimacy of the claim(s), Ocwen is now in a situation where it cannot originate new business and may not be able to service mortgages due to 20+ states issuing cease and desist orders against its subsidiaries. Thus, there is “a high likelihood” that the business is in run-off. Despite the challenges facing Ocwen and other mortgage servicers such as Walter, the presenter sees a few instruments that are “worth a look” on the long side, depending on investors’ appetite for risk:

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Idea Discussion

Commentor 1 - 2 weeks ago

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