Mortgage servicer Ocwen Financial (OCN) in Atlanta missed Wall Street's earnings estimates because of delays in integrating servicing rights portfolios it acquired.
Ocwen said Thursday that its third-quarter profit grew 30% from a year earlier, to $67 million. Earnings per share of 44 cents were well below the $1.09 average forecast of analysts polled by Bloomberg.
Servicing revenue grew more than doubled that of a year earlier, at $96.3 million, as its portfolio grew by 242%, to $434.8 billion in unpaid principal balances. Operating costs rose 244% from a year earlier, to $305.7 million.
Ocwens earnings were hampered by delays in integrating servicing rights it purchased from Ally Financial in February, along with services rights it bought from OneWest.
"Notwithstanding our record revenues, revenues were suppressed due to delays, that have now been resolved, in boarding the OneWest transaction," Bill Erbey, Ocwen's chairman, said in a press release. "As expected, margins were below historical levels due to the timing involved in transitioning ResCap and OneWest."
Ocwen began transitioning the ResCap loans to its platform in the third quarter, and has so far transitioned 22% of the loans it bought. It plans to add the rest through next May.
Ocwen has transferred about $30 billion of agency loans from OneWest and plans to transfer most of the $42 billion non-agency portfolio by Nov. 1, it said.