Ocwen Financial Corp. reports that delinquencies on the subprime mortgages it handles flattened or declined this summer, in large measure due to its technology-enhanced loan modification program and borrower outreach initiatives.
According to the servicer, delinquency rates in every bucket – 60, 90 and 90-plus days – have either declined or remained flat over the last three months. This is the first sign of stability in Ocwen-serviced loans since the inception of the subprime crisis in 2007, the company notes. Ocwen's portfolio covers a significant portion of the subprime market – through its subsidiary, Ocwen Loan Servicing LLC, the company services approximately 350,000 mortgages, about 85% of which are subprime.
"While it's still too early to signal an end to the subprime mortgage crisis," says Ocwen's president Ronald M. Faris, "this represents a welcome reversal of spiking delinquencies."
Through proprietary technology incorporating artificial intelligence, rules-based systems, scripting engines and net present value cashflow models, Ocwen is able to determine whether a loan modification would result in cashflow to the investor that exceeds the likely liquidation proceeds from a foreclosure and the homeowner's willingness and ability to stay current on the new modified payment.
Additionally, the firm has increased its home retention consultant staff by 65% over the past year.
"Since August 2007, we have achieved loan workouts, avoiding foreclosure for over 58,000 homes," said Margery Rotundo, Ocwen's senior vice president in charge of loss mitigation operations.
In designing the optimal loan modification that achieves the highest net present value, Ocwen utilizes interest rate reductions, principal forgiveness, extensions to the amortization period or a combination thereof.
SOURCE: Ocwen Financial Corp.