FROM NATIONAL MORTGAGE NEWS:
Few companies attacked the financial-crisis fueled boom in distressed servicing as aggressively as Ocwen Financial Corp., and not many have survived as abrupt a reversal of fortune as the company has faced.
Now, with new leadership at the helm, Ocwen once again will serve as the poster child for the niche it occupies. That leadership team's next test: Retool an operation built for scale at a time when need for its core services are in decline. To accomplish that goal, Ocwen will need to reinvent itself from the inside out because the primary path to growth it pursued in the past — acquisition of servicing portfolios — remains closed to it for the time being.
Assuming Ocwen's leadership succeeds in the exercise they are undertaking, the company will emerge in a very different form, one that has a more diversified revenue stream and one that employs a much more diverse workforce. Evidence of the latter is already visible in the form of non-executive chair Phyllis Caldwell, who ascended from a seat on the company's board to head it a year ago, is actually the second Ocwen board member to take on the post of non-executive chair in the wake of founder Bill Erbey's forced resignation in early 2015.
Erbey's departure came amid a host of enforcement actions related to improper foreclosures and modifications, allegations of conflicts of interest involving his ownership of a group of closely related companies (of which Ocwen was one), and civil litigation alleging employment discrimination.
In addition to replacing Erbey as chairman, Ocwen added a community advisory council in 2014, and has stressed diversity in staffing. Caldwell points to the diversity push as one of her top priorities. "It's important to have a board and a workforce that reflect the diversity of the customers you serve," she said.
Caldwell, a former chief of the Treasury's Homeownership Preservation Office, is also well-versed in government and consumer relations.
Barry Zigas, director of housing policy at the Consumer Federation of America, said that during Caldwell's tenure there, she was effective at identifying and rectifying problems for consumers seeking relief through the Home Affordable Modification Program.
"In some cases servicers had to be told again what to do, or had to be disciplined in order to do it right. She did that, from my perspective, in a way that was even handed and reasonable," he said. "She also was quite insistent in making sure that consumers were treated well and tried to continuously improve what started out as a very flawed program."
Of course, Caldwell and the board will also have to execute on a strategy that opens new opportunities to the special servicer.
For Ocwen, the strategic pivot starts with a set of initiatives and investments in technology aimed at becoming more efficient, and gaining scale in other lines of business such as mortgage origination.
"On the origination front, we continue to focus on enhancing our asset-generation capability, which includes completing our build-out of our mortgage lending technology," Caldwell said.
The goal of the project is to expand Ocwen's reach until it is "a top originator."
Ocwen is also looking to alternative lending lines, such as automotive floor plan lending, she noted.
While the extension of Ocwen's reach will help, the company is still, at its core, built to serve a particular purpose. And there are some glimmers of opportunity. One comes from the pickup in securitization activity.
A number of post-crisis private-mortgage securitizers have started to experiment with new roles for special servicers, and the prospects for private mortgage securitization expansion are better than they have been in years.
Another business opportunity that exists for special servicers lies in the more active market for legacy distressed product.
"For a long time no deals were closing because very few banks could not afford to sell them [distressed loans] for what they were worth at that time, but now they can," said Steven Horne, a former special servicing executive.
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