The Company does not believe that the recent issues in the residential mortgage business regarding foreclosure processes and loan put backs had a measurable effect on Ocwen's results in the third quarter.
In comparison to the third quarter of 2009, revenue was 51% higher, and the total unpaid principal balance serviced increased from $40.3 billion at September 30, 2009 to $76.1 billion at September 30, 2010. Operating expenses increased by 118% primarily due to $33.9 million in transaction expenses related to the HomEq acquisition. Pre-tax income for Servicing of $5.4 million was 69% lower than the same quarter last year but after adjusting for one-time charges income was 121%, or $21.6 million, higher due to growth and unit cost reductions.
Loans and ResidualsLoans and Residuals incurred a loss from continuing operations before taxes of $0.8 million as compared to a loss of $3.4 million in the third quarter of 2009. The balance of assets in this segment was $109.9 million at September 30, 2010, which includes $69.7 million of non-recourse assets associated with the four securitization trusts that we first included in our financial statements in 2010. The improvement in operating results reflects fewer loans becoming non-performing and a flattening of the decline in real estate valuations. Asset Management Vehicles The loss from continuing operations before taxes for Asset Management Vehicles was $0.3 million as compared to $1.1 million in the third quarter of 2009. The carrying value of our investment in asset management vehicles was $12.3 million at September 30, 2010. Corporate In the third quarter of 2010, Corporate losses from continuing operations before taxes were $27.0 million compared to pre-tax profit of $3.9 million in the third quarter of 2009. The following items affected results in the quarter:
- Litigation charge of $20.1 million primarily related to the Cartel judgment of $12.7 million.
- Reduction in the estimated fair market value of Auction Rate Securities of $3.0 million, versus a $7.3 million increase in the third quarter of 2009.