Ocwen Financial Corp.
) fell nearly 2.3% to close at $26.33 following the restatement of
its historical results. The company was compelled to restate its
full-year 2013 and first-quarter 2014 results owing to certain
Consequently, Ocwen's net income (GAAP basis) for first-quarter
2014 decreased $15.3 million or 11 cents per share to come at $59.5
million or 43 cents per share. Ocwen restated its prior-year
quarter results as well. The company's first-quarter 2013 net
income (GAAP basis) after restatement stands at $46.3 million or 33
cents per share.
Further, the accounting adjustment led to revisions in Ocwen's 2013
results too. The company's net income (GAAP basis) for 2013
increased $16.3 million or 11 cents per share to stand at $298.4
million or $2.13 per share. Notably, Ocwen does not expect any
change in its second-quarter 2014 results.
The accounting changes stemmed from a certain transaction between
Ocwen and Home Loan Servicing Solutions, Ltd. (
). There were changes pertaining to how Ocwen recorded the value of
$634 million worth of mortgage-servicing rights (MSRs) sold to Home
We believe that heightened regulatory scrutiny regarding Ocwen's
business dealings with several affiliate firms including Home Loan
Servicing, Altisource Portfolio Solutions S.A. (
) and Altisource Residential Corporation, will continue to
harm its creditability.
Further, Benjamin Lawsky, the superintendent of New York's
Department of Financial Services, restricted Ocwen's deal
(announced in February) to acquire mortgage servicing rights from
Wells Fargo & Co. (
). This was prompted by doubts over the mortgage servicer's ability
to handle the rise in servicing volumes.
Hence, the analysts have been bearish about Ocwen's future
prospects. Over the last 30 days, the Zacks Consensus Estimate for
2014 has declined 18.7% to $2.78 per share. As a result, Ocwen
currently carries a Zacks Rank #5 (Strong Sell).
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WELLS FARGO-NEW (WFC): Free Stock Analysis
OCWEN FINL CORP (OCN): Free Stock Analysis
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