Ocwen refunds $0.7 million to Maryland mortgage borrowers
Ocwen Loan Servicing, a subsidiary of Ocwen Financial Corp. (OCN) voluntarily refunded $674,137 to more than 180 Maryland borrowers after a state examination found violations of Maryland law restricting the imposition of prepayment penalties.
Prepayment penalties are clauses in mortgages that require borrowers to pay a financial penalty to the lender if they pay off their mortgage before the due date.
Ocwen cooperated with the state agency’s examination and voluntarily conducted its own review of its entire Maryland loan portfolio. On completion, it made refund payments around the end of June, 2009.
In November 2008, Ocwen Financial and the government of Maryland had signed an agreement under which Ocwen agreed to help reduce the number of foreclosures in the state. Ocwen services about 7,072 mortgages in Maryland and about 341,000 mortgages nationwide.
Ocwen Financial Corporation is a financial services company engaged in the servicing of residential and commercial mortgage loans. Ocwen acquired mortgage-servicing rights (MSRs) for performing, sub-performing and non-performing residential mortgage loans, for which it earns fees such as annual servicing fee and late fees. Ocwen is approved as a loan servicer by the Department of Housing and Urban Development, Freddie Mac (FRE) and Fannie Mae (FNM).
Ocwen is scheduled to release its 2Q09 earnings results on August 6, 2009. We think the company may be a major beneficiary of President Obama’s loan modification plan. Ocwen was also recently appointed by FRE as a special servicer for the new pilot initiative launched to identify borrowers who are at risk of foreclosure.
Further, the Government is considering the inclusion of securities backed by servicer advances in the expanded TALF program. We expect these initiatives to be significantly accretive to both Ocwen’s revenue and earnings in 2009 and beyond, as they also improve liquidity.
Ahead of the 2Q09 results, we are maintaining our Buy recommendation on the shares.
Read the full analyst report on “OCN”
Read the full analyst report on “FRE”
Read the full analyst report on “FNM”
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