NEW YORK ( TheStreet) -- Ocwen Financial ( OCN) 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) 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.