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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Wilbur Ross Discusses Ocwen Chairman Bill Erbey

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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
SYM TRADE IT LAST %CHG
OCN $9.25 8.31%
AAPL $129.36 0.21%
FB $79.60 -0.19%
GOOG $573.64 0.40%
TSLA $199.56 1.13%

Markets

DOW 18,203.37 -85.26 -0.47%
S&P 500 2,107.78 -9.61 -0.45%
NASDAQ 4,979.9010 -28.1950 -0.56%

Partners Compare Online Brokers

Free Reports

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