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Morningstar Revises Forecast for Ocwen’s Ranking to Positive

Morningstar Credit Ratings has come around on Ocwen Financial Corporation. The ratings agency has affirmed Ocwen’s MOR RS3 Residential Mortgage Special-Servicer, Prime Servicer, and Non-Prime Servicer rankings as well as the MOR RV3 residential vendor ranking (Offshore) for Ocwen Financial Pty, and revised the forecast for the ranking from negative to positive.

Morningstar cited Ocwen’s management team, enhanced corporate governance and improved control, and its internal audit and quality control methodologies as reasons for the shift. It also cited Ocwen’s stronger internal technology platform, improved loss-mitigation performance, transparency, and improved regulatory outlook.

According to Morningstar, Ocwen has enhanced its corporate governance and risk management oversight “through its robust three lines of defense audit methodology, and by completing an enterprise-wide review and update of all operating policies and procedures via a software application that effectively manages the drafting, review, and versioning of all policy and procedure documents.”

In addition, a new workflow technology tool introduced in late 2015 “provides an early-warning system by mapping and aligning compliance guidelines with business unit metrics for independent compliance testing,” Morningstar stated.

The last time Morningstar rated Ocwen was February of 2015. Ocwen remains subject to continuous compliance review by a third-party auditor as a result of settlements with the New York Department of Financial Services and the California Department of Business Oversight that occurred in 2014.

“The cost of ongoing regulatory compliance has been a drain on OFC’s profitability,” the Morningstar announcement stated. “However, compliance costs have significantly declined in recent months as the company nears the expiration date of the NYDFS and DBO consent orders and National Mortgage Settlement monitoring in the second and third quarters of 2017.”

Morningstar also stated that Ocwen is a top performer in the Treasury’s Making Home Affordable Program “and is currently a leader in that program’s streamlined modification program.”

As of June 30, Ocwen serviced a portfolio of approximately 1.5 million residential first- and second-lien mortgage loans with an aggregate unpaid principal balance of approximately $224 billion. The portfolio includes 1.2 million non-agency residential mortgage loans, with a UPB of $169 billion; and 351,407 agency residential mortgage loans, with a UPB of $53 billion.

About Author: ScottMorgan1

Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.
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