Ocwen Financial Corp.
) corporate family and senior secured ratings have been
reaffirmed by Moody's Investors Service - the rating division of
) - at 'B1'. All these ratings have a 'Stable' outlook.
Moody's stated that Ocwen's strong growth strategy is supported
by its robust capital position. Further, the company has been
successful in pursuing and completing acquisitions to date. At
present, the company is the fourth largest mortgage servicer in
the country with a market share of roughly 5%.
Moreover, the 'Stable' outlook on the ratings is based on Moody's
expectation that Ocwen will be able to integrate all its
announced as well as future acquisitions without compromising on
servicing and financial performance. Last week, Ocwen announced a
deal to acquire residential mortgage servicing rights (MSRs) on
the portfolio comprising nearly 184,000 loans with a total
principal balance of $39 billion from
Wells Fargo & Co.
). Further, earlier this week, Ocwen announced its plan to issue
a new $2.2 billion 7-year senior secured term loan to finance the
Of late, Ocwen has been growing inorganically. The company has
acquired MSRs from several large banks including
), The Goldman Sachs Group, Inc. and JPMorgan Chase & Co.
Once the company closes all its announced deals, the total
servicing portfolio will likely be approximately worth $500
Nevertheless, Moody's remains concerned about Ocwen's
opportunistic acquisition spree, which is leading to an increase
in servicing volume. Additionally, the company's concentration on
mono-line residential mortgage servicing market is one of the
reasons for its rating not being revised upward. Further,
management's history of looking for other growth opportunities
diffuses the focus on its core servicing business.
Hence, any ratings upgrade by Moody's in the near term is
unlikely for Ocwen. However, in case the company's servicing or
financial performance weakens, a downgrade in ratings could
Currently, Ocwen carries a Zacks Rank #2 (Buy).
MOODYS CORP (MCO): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis
OCWEN FINL CORP (OCN): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
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