Ocwen Financial Corp
The Employment Cost Index Was Flat in 2Q16
Employment costs rose 0.6% in the quarter ending June 30, 2016. Over the past 12 months, compensation costs for civilian workers have risen 2.3%.
Mortgage Servicing Rights’ Valuations Are Getting Hit
New capital requirements for MSRs (mortgage servicing rights) are also depressing valuations. Banks are reluctant to hold too much servicing.
Employment Costs Rise with Healthcare Inflation
Employment costs rose 0.6% in the quarter ending March 31, 2016. Over the past 12 months, compensation costs for civilian workers have risen 1.9%.
Company & Industry Overviews
BB&T’s Residential Mortgage Banking Segment Faces Headwinds
BB&T’s (BBT) Residential Mortgage Banking segment retains and services mortgage loans originated by the Community Banking segment.
Baupost Group Lowered Its Stake in Ocwen Financial
The Baupost Group lowered its position in Ocwen Financial (OCN) during 4Q14. The position accounted for 1.77% of the total portfolio in 4Q14.
Leon Cooperman questions Altisource’s capital allocation plan
Omega’s Leon Cooperman criticized Altisource’s poor capital allocation plan for its $200-million share buyback when the stock was trading at $104.
Omega Advisors ups position in Altisource Portfolio Solutions
Omega Advisors added to its position in Altisource Portfolio Solutions this month. It holds 2,257,451 shares, an 11.14% stake, via an amended 13G filing.
Mortgage delinquencies tick up 6.08%
Better economic times are helping lower mortgage delinquencies, but we still have some work to do clearing the foreclosure pipeline.
Bank of America’s residential loan portfolio: The decline continues
The residential mortgage market is expected to show recovery in the coming years, primarily fueled by more relaxed lending standards.
Omega Advisors lowers position in Chimera Investment
Chimera Investment invests in residential mortgage loans, residential mortgage-backed securities, real estate-related securities and various other asset classes. Chimera declared a fourth-quarter 2014 cash dividend of $0.09 per common share.
Omega Advisors ups position in QEP Resources
QEP Resources is an independent natural gas and crude oil exploration and production company. The company’s latest 3Q results beat estimates.
Omega Advisors eliminates position in Boston Scientific
Boston Scientific Corporation is a worldwide developer, manufacturer, and marketer of medical devices that are used in a broad range of interventional medical specialties
Omega Advisors eliminates position in Freeport-McMoRan
Freeport-McMoRan posted revenue of $5.7 billion, down 7.6%. It said its results “reflect lower oil volumes and price realizations for copper, gold and oil.”
Omega Advisors exits position in Qualcomm
Last month, Qualcomm announced 4Q14 and fiscal 2014 earnings that missed estimates. Its revenue for 4Q14 was $6.69 billion, missing analysts’ expectations by $330 million.
Omega initiates position in Melco Crown Entertainment
Melco Crown Entertainment is a venture between Australian billionaire James Packer and Lawrence Ho. Melco owns and develops casino gaming and entertainment resort facilities in Macau.
Omega Advisors adds to position in Nordic American Offshore
Nordic American Offshore (NAO) is an international offshore supply vessel company that was incorporated in Bermuda. NAO was spun off from Nordic American Tanker (NAT) in November last year.
Omega Advisors opens new position in AerCap Holdings
AerCap said its 3Q14 net income grew to $340.9 million from $83.6 million in the same period of 2013. The increase in profit and earnings was “driven primarily by the ILFC transaction.”
Omega Advisors: Highlights of holdings in 3Q14
Omega Advisors is a New York-based investment advisory firm founded in 1991 by Leon G. Cooperman. In this series, we’ll discuss the main positions traded by the firm in the third quarter of 2014.
Bond Market Rally Lifts Originator Business
Since the bubble burst, mortgage origination has been almost exclusively government-driven. The US government bears 50% of the credit risk of the entire US mortgage market.
The Baupost Group buys stake in Ocwen Financial in 3Q14
Baupost adds position in Ocwen Financial Seth Klarman’s The Baupost Group, LLC, added a significant stake in Ocwen Financial Corp. (OCN) that accounted for 3.19% of the fund’s total third-quarter portfolio. Ocwen Financial Corporation overview Ocwen Financial is a financial services holding company that, through its subsidiaries, is one of the largest mortgage companies in the […]
Overview: Seth Klarman’s Baupost Group position trades in 3Q14
Seth Klarman, of Baupost Group, LLC, is one of the best-performing hedge fund managers of all time. The fund has generated $21.5 billion in returns over its history.
Luxor Capital ups position in Altisource Asset Management
Altisource Asset Management’s primary business is to provide asset management and certain corporate governance services to institutional investors.
Luxor Capital raises stake in Altisource Portfolio Solutions
Altisource Portfolio Solutions and its subsidiaries are a premier marketplace and transaction solutions provider for the real estate, mortgage, and consumer debt industries.
Why mortgage applications hit 14-year lows as refinances dry up
The MBA Applications Index fell 7.2% after rising 0.2% the week before. This is the lowest reading for the MBA Mortgage Applications Index since early 2001.
Must-know: Omega Advisors increases its position in Ocwen Financial
Omega’s 13F filing revealed that it increased its stake in Ocwen Financial. The position currently accounts for 1.27%, up from 0.12% of the fund’s first quarter of 2014 (or 1Q14) portfolio. Ocwen Financial is a financial services holding company that, through its subsidiaries, is one of the largest mortgage companies in the U.S.
A key guide to the left-versus-right divide on housing policy
For the political right, the goal is to encourage private capital to return to the market and lower the government’s footprint in housing. For them, the goal is to “crowd in” private capital.
An investor’s guide to non-bank mortgage servicers like Ocwen
It’s important to keep in mind that the quality of MSRs that have been originated over the past six years are head and shoulders above the MSRs that were created during the bubble.
Wells Fargo and Ocwen’s mortgage servicing right sale is blocked
New York State Attorney General Eric Schneiderman decided in October to block the planned sale of mortgage servicing rights from Wells Fargo (WFC) to Ocwen Financial.
A key guide to mortgage servicing rights: The non-bank servicer
The non-bank servicer is what the name implies: a company that services loans as a primary business but isn’t a bank. Typically a bank will service its own loans that it has put on its balance sheet.
The must-know basics of mortgage servicing rights and servicers
Mortgage servicing rights (or MSRs) are interesting assets that can hedge interest rate risk. They’re usually held on banks’ balance sheets.
Earnings deluge on tap: Must-know releases to follow this week
Economically, we don’t have anything really market-moving, although the GDP number could move markets. This is the second revision to fourth quarter GDP.
Why mortgage applications fell in the holiday-shortened week
The MBA Applications Index fell 12.8% after holding steady the week before. Mortgage applications have dropped off a cliff ever since rates began increasing last spring.
Why mortgage applications are falling as rates rise
Last year, refinance activity drove business for mortgage bankers. Now, they’ll have to rely on purchase activity, which tends to be very seasonal.
Must-know: Two Harbors reports a small decline in book value
Two Harbors’ sophisticated investment strategy of buying mortgage servicing rights and being short TBAs helped it weather the bond market sell-off.
Consumer Financial Protection Bureau rose cost of loan servicing
Regulatory risks One of the other big risks for holders of mortgage servicing rights (MSRs) is the Consumer Financial Protection Bureau (CFPB). While the servicer’s job is to look out for the bondholders, the regulators are tasked with looking after the borrower. First, one of a servicer’s jobs is dealing with the borrower once a […]
Why mortgage servicing rights imply risks for servicers
Risks of being a servicer Generally, servicing seems like an easy job. Collect the payment, give the government its take, pass the (smaller) payment to the bondholders, and keep the rest. What could go wrong? There’s just one catch. What happens if you miss your mortgage payment? The U.S. government guarantees Ginnie Mae securities. When […]
Why mortgage servicing rights can hedge interest rate risk
Mortgage servicing rights are residual assets from mortgage origination Mortgage servicing rights (MSRs) are residual assets that mortgage originators usually retain after selling a mortgage into a mortgage-backed security. While a few companies specialize in servicing—particularly Ocwen (OCN) and Nationstar (NSM)—MSRs are usually held on the balance sheets of banks. MSRs are interesting assets that […]
Mortgage servicing rights increase in value as interest rates rise
Mortgage servicing rights are one of the few financial assets that increase in value as rates rise Most mortgage REITs are exposed to changes in interest rates, and are usually long-duration, which means that the value of their portfolio decreases in value as interest rates rise. Good examples of these types of REITs would be […]
Bonds and REITs collapse on FOMC statement
The Federal Open Market Committee determines interest rate policy The June Federal Open Market Committee (FOMC) meeting was recently completed and the results of that meeting were released at 2:00 pm EST. The FOMC statement gives color on how the Fed views the economy, how they are thinking about moving forward, and some guidance regarding […]
Radar Logic futures curve predicts flat real estate prices until September 2014
Radar Logic futures can be used to forecast real estate prices Most people are unaware that there is a futures market for U.S. real estate prices. The Radar Logic futures contract launched about a year ago on the CBOE Futures Exchange. While they are not especially liquid, they do provide an insight into what the market […]
Strong economic data is causing the yield curve to steepen
The shape of the yield curve matters almost as much as the absolute level of interest rates to financial companies As a general rule, financial companies (banks, REITs) borrow short and lend long. What this means is that they lever their balance sheet by borrowing at short-term interest rates and generally invest in longer-maturity assets, […]