Fitch Ratings this week downgraded its servicer rating on Ocwen Financial Corp., Atlanta, questioning its rapid expansion in servicing contracts and voicing doubts about its heavy use of offshore workers.

Come February, when Ocwen completes its purchase of Saxon Mortgage contracts, its MSRs will total upwards of $140 billion.

Fitch also notes that Ocwen is negotiating “the acquisition of a significant subprime portfolio from a major bank.”

The ratings firm downgraded Ocwen's subprime servicer rating to RPS3 from RPS2, adding that it maintains a rating watch of “negative” on the firm.

But the call hardly dented its share price. This week Ocwen's shares continued to trade at $14.74, nearing its 52-week high.

At the end of September, Ocwen reported $76 billion of subprime subservicing contracts, ranking second nationwide behind JPMorgan Chase, according to the Quarterly Data Report. (The figure excludes the Saxon deal which has yet to close.)

Fitch says Ocwen's servicing strategy places a “heavy emphasis on its off-shore operations,” noting that recent acquisitions replaced “seasoned servicing staff at the acquired platforms with newly hired staff in its global offices.”

Early in the fall Ocwen bought Litton Loan Servicing from Goldman Sachs. Rumors abounded that Ocwen would close Litton's large Houston operation, but a company official told National Mortgage News that such talk was totally untrue and that the firm might actually add more workers in Houston.

But Fitch estimates that 80% of Ocwen's servicing staff is based off-shore with 90% of “customer facing functions” located in other countries.

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