This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Wilbur Ross Discusses Ocwen Chairman Bill Erbey

Stocks in this article: OCN

I guess the one thing you might worry about would be over regulation. As you know the consumer protection people are becoming very aggressive in regulating everything that has to do with consumer's finance. And as you know, there have been plenty of state attorneys general who brought all kinds of litigations, and have gotten all kinds of settlements. So over regulation is one potential problem.

The second potential problem, although they're dealing with it, is part of the reason they bought our business. Historically their big growth has been acquiring MSRs on a wholesale basis, quite large blocks at a time. Well even with higher rates there's a certain amount of runoff that will occur in the portfolio. So there are really two ways to try to keep the growth going. One is by continuing to buy more and more MSRs, and I believe that will go on for a while because of the capital treatment that they now get in the banks. So I think that you're going to continue seeing banks selling MSRs. But there is the problem, as your portfolio of MSRs gets big, you have to run harder and harder to make up for the runoff and then get enough more to grow.

So part of what he's done, and he did it with us and he's doing it elsewhere, is Homeward was originating quite a lot of mortgages, something like a billion dollars a month. And so he was aware that it would be a good idea to supplement the wholesale acquisition of MSRs. So he's creating his own MSRs by originating mortgages. Very few of the other players in this space have the foresight to do that in any kind of meaningful scale. So there's a potential vulnerability, but it's one that's he been doing.

Plus because he's so large, and has such a low cost of capital, he can be very, very competitive in terms of the bidding on the MSRs. And on occasion a seller who, for whatever reason, doesn't want to have a big quasi-public auction, because they don't want to press coverage, on a number of times, since everybody knows they can make a quick decision and he has no problem funding it, on a couple of times they've been able to buy stuff on a one off basis, and whenever you can avoid an auction you usually get things a little bit cheaper than you might in an auction. So while that's a theoretical vulnerability, the runoff, I think he's positioned himself pretty well to cope with it. And that's the kind of strategic thinking that he does.

5 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs