Servicing portfolio growth and cost cutting has resulted in Ocwen Financial Corp.'s first-quarter profit tripling from a year earlier, to $15.1 million.
The West Palm Beach, Fla., company made $0.24 per share, $0.07 more than the average estimate from analysts. Its shares jumped almost 9% in midday trading on May 7.
From the third quarter of 2007 until this past quarter, Ocwen's portfolio of loans serviced had been shrinking, due to prepayments.
But in February, Freddie Mac hired Ocwen to service 5,000 low-documentation loans that were at least 60 days delinquent. That contract, combined with a purchase of servicing rights during the first quarter, caused Ocwen's portfolio to grow 1.5% from the end of last year, to $40.8 billion on March 31.
Operating expenses dropped 18% from a year earlier, to $72 million. Despite the cost cuts, "we kept more people in their homes and returned more loans to performing status than in any prior quarter in our history," William Erbey, Ocwen's chairman and chief executive, said in a press release.
The company said it has been automating processes. The company said it modified 20,651 loans during the period, "despite a slowdown in late March as additional details and specific guidance related to the [Obama administration's] Home Affordable Modification Plan emerged." Ocwen's planned spinoff of its technology unit is expected to be completed in the third quarter.