A day after falling more than 50% due to a number of state regulators issuing cease-and-desist orders against the company from doing new business, Ocwen Financial Corp (NYSE:OCN) has responded saying: ‘As with the recent CFPB enforcement action, Ocwen strongly disputes the key allegations made in the State Regulators’ cease and desist orders that Ocwen’s mortgage loan servicing practices have caused substantial consumer harm. Ocwen will not sign unfair and unjust consent orders that make impractical demands that no other market participant could rationally accept, and which would harm consumers. Under these circumstances, Ocwen has a responsibility to its customers, shareholders, and employees to vigorously defend the Company against unfounded claims while continuing to work with State Regulators to resolve any valid concerns’.
In response to the state of North Carolina noting that if Ocwen were to redress its operational deficiencies and pay its known and potential penalties, that ‘it would indicate that Ocwen continuing as a going concern would be in doubt’, the company responded with: ‘Ocwen disagrees with any allegation it is not financially sound. Despite significant operating losses from 2014 to 2016 driven by a shrinking portfolio and $171 million of state and national regulatory monitoring expenses, Ocwen generated over $1.4 billion of positive operating cash flow. The Company ended 2016 with $257 million of cash on the balance sheet. Additionally, in December 2016, Ocwen refinanced its corporate debt, significantly extending the maturity dates and demonstrating significant lender confidence in Ocwen. Over this time period, Ocwen reduced its corporate debt by over $942 million, or 58%, dropping its corporate debt-to-equity ratio from an already conservative 1.6x in 2014 to 1.0x in 2016. Ocwen remains one of the least levered non-bank servicers today’.
Although it is unclear whether Ocwen’s response will be enough to improve sentiment or turn around the company, shares of the stock are up 6% on light volume in the pre-market.
What Does The Smart Money Sentiment Say?
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Of the 742 elite funds we track, 19 funds owned $82.74 million of Ocwen Financial Corp (NYSE:OCN) and accounted for 12.40% of the float on December 31.That’s up from 17 and $62.99 million on September 30.
The Bottom Line
Ocwen Financial Corp (NYSE:OCN) is trending after the company responded to state regulators, disputing their allegations and vowing to cooperatively achieve an acceptable solution. For more reading, check out ‘6 Hardest Fields of Law to Practice‘.