This Day On The Street
Continue to site
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

Ocwen Shares Rise on Optimism Wells Fargo Deal Will Proceed

NEW YORK ( TheStreet) -- Ocwen Financial  (OCN - Get Report) saw its shares rise Wednesday, apparently due to optimism among investors the nation's largest non-bank collector of mortgage debt can win regulatory approvals to proceed on a deal with Wells Fargo  (WFC - Get Report) involving $39 billion worth of mortgage debt.

Shares of Ocwen, which have lost more than a third of their value this year on regulatory concerns after a massive run-up in 2012 and 2013 gained 3.20% on the day to close at $36.15.

Ocwen on Tuesday said it will stop using "gag orders" as part of settlements with home owners, the result of an agreement with New York Financial Services Superintendent Ben Lawsky, who is investigating Ocwen and an affiliated company, Altisource Portfolio Solutions (ASPS) over several different issues. In conjunction with the investigations, Lawsky halted the deal with Wells Fargo, and Bill Erbey, Chairman of both Ocwen and Altisource, said in April "the whole market" for sales of mortgage servicing rights had halted pending resolution of the issues raised by Lawsky.

Mortgage servicing rights (MSRs) are the right to collect mortgage debt on behalf of lenders in return for a fee. Ocwen and other mortgage servicers like Nationstar Mortgage Holdings (NSM) and Walter Investment Management (WAC) have grown dramatically in recent years by buying smaller servicers and acquiring MSRs from banks like Bank of America (BAC) and Citigroup (C).

Speaking at a conference Tuesday hosted by KBW, Ocwen CEO Ron Faris estimated banks have $120 billion to $140 billion worth of MSRs left to sell, including the $39 billion Wells Fargo deal.

Compass Point analyst Kevin Barker said investors may draw some modest encouragement from Faris' comments.

"In the first quarter they specifically did not talk about a pipeline at all and to include the Wells Fargo deal in that may signal that they believe the deal's going to go through, or it may happen eventually," Barker said.

Ed Groshans, analyst with Height Analytics wrote in a note published Wednesday that the deal with Lawsky confirmed Tuesday shows Ocwen "is willing and capable of addressing the concerns" raised by the regulator.

"This supports our view that the two parties can reach an accord, which will permit the Wells Fargo transaction to proceed," Groshans added.

>>

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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
Only $9.95
14-Days Free
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
SYM TRADE IT LAST %CHG
OCN $8.43 0.00%
WFC $57.87 0.00%
AAPL $121.30 0.00%
FB $94.01 0.00%
GOOG $625.61 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs