Fitch Ratings has downgraded its servicer rating on Ocwen Financial Corp. of 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 mortgage servicing rights will total upward of $140 billion. The downgrade was announced Dec. 20.

Fitch also said that Ocwen is negotiating "the acquisition of a significant subprime portfolio from a major bank."

Fitch downgraded Ocwen's subprime servicer rating to RPS3 from RPS2, adding that it maintains a rating watch of "negative" on the company. At the end of September, Ocwen reported $76 billion of subprime subservicing contracts, ranking second nationwide behind JPMorgan Chase & Co., according to the Quarterly Data Report. (The figure excludes the Saxon deal which has yet to close.)

Fitch said Ocwen's servicing strategy places a "heavy emphasis on its offshore operations," noting that recent acquisitions replaced "seasoned servicing staff at the acquired platforms with newly hired staff in its global offices." Fitch estimates that 80% of Ocwen's servicing staff is offshore with 90% of "customer-facing functions" in other countries.

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