Ocwen Financial is one of at least three investors that were invited in by Goldman Sachs to make a final round of bids on Litton Loan Servicing, the Wall Street firm’s specialty servicing division, according to investment bankers and others close to the situation.
However, it’s unclear whether the West Palm Beach-based Ocwen is considered the leading bidder. Both Goldman and Ocwen declined to comment to National Mortgage News.
Sources noted that Ocwen also has expressed interest in buying Saxon Mortgage, Morgan Stanley’s servicing division. “Ocwen is looking to do a ‘roll-up’ of servicing companies,” said one investment banking official.
At last check, Litton ranked fifth nationwide among all subprime servicers with about $46 billion in contracts on hand. Goldman made the decision earlier this year to sell the unit. (The Wall Street firm bought Litton in late 2007 from the struggling Credit-Based Asset Servicing and Securitization or C-BASS.)
Ocwen services about $58 billion in nonconforming product. If it winds up with Litton it would become the nation’s largest servicer/subservicer of nonconforming mortgages with $104 billion in receivables, according to figures compiled by National Mortgage News and the Quarterly Data Report.
The subprime servicing business has been shrinking steadily since the financial crisis of 2008. Today, about $600 billion in subprime mortgages are outstanding compared to $1 trillion during the peak of the market.
With servicers of all stripes struggling with an array of delinquent loans (including prime) Ocwen is trying to become the subservicer of choice for both the megabanks and mid-sized servicers.