Ocwen Financial is "optimistic" that it will eventually be able to resume purchasing mortgage servicing rights (MSRs,) based on discussions it has had with the New York Department of Financial Services and the California Department of Business Oversight.

The servicer’s ability to acquire new MSRs is currently restricted as part of last year’s settlements with the two regulators over its practices.

Once purchases resume, Ocwen plans to partner with New Residential Investment Corp., a real estate investment trust, to either help finance the purchases or finance any funds that must be advanced to mortgage bondholders as part of the servicing. This is similar to the arrangement that Ocwen had with its Home Loan Servicing Solutions (HLSS) affiliate before it sold that business to New Residential.

HLSS often turned to the securitization market to finance these advances.

“They would be definitely one of the first financiers that we would go to,” said Michael Bourque, Ocwen’s chief financial officer said during the company’s second quarter earnings call on Thursday.

On April 6, New Residential entered into a purchase agreement to buy HLSS’s assets for about $1.2 billion.  HLSS was created by Ocwen to help finance investments in mortgage investments in mortgage servicing contracts and was take public in 2012.

On Thursday's call, Ocwen CEO Ronald Faris said that the servicer is working with the New York regulator to develop criteria that would allow it to purchase MSRs. However it is too early to say when that process will be completed.

Ocwen is also working with the California DBO to receive approval to resume MSRs purchases, but that timeline is also uncertain. Faris said that “there are certain things that we still have to work through.”

As part of the settlement with the New York regulator, Ocwen acknowledged that it didn’t properly deal with distressed homeowners, may have saddled them with excessive charges from affiliated companies and failed to maintain adequate systems for servicing hundreds of billions of dollars in mortgages. Its former chariman, William Erbey also stepped down.

Ocwen is still paying the price for this regulatory scrutiny. On Thursday the company reported lower income year-over-year as revenue from its now smaller servicing portfolio fell steeply, despite the gains from the sale of nonperforming loans.

The Atlanta-based company's net income dropped to $9.7 million from nearly $67 million a year ago. Earnings per share of 8 cents came in below the average estimate of 17 cents from analysts polled by Bloomberg.

Much of the year-over-year decline in income stemmed from the 19% dip in servicing revenue to $423 million, which was partially offset by a decrease in expenses for this segment.

Ocwen also saw an overall increase in its losses from corporate items to a $46.5 million loss versus a $21 million loss the year prior, due to a 104% jump in expenses.

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