Ocwen Financial announced a preliminary loss of $546 million, or $4.18 per share, for fiscal year 2014 Tuesday, on a higher-than-expected goodwill impairment and charges stemming from the company's settlement with the New York Department of Financial Services.
The preliminary loss represented a drop of 276% from its net income of $310 million in 2013, and is just shy of the company's combined net income of $569.7 million from 2011 through 2013. In contrast with the staggering preliminary loss, however, the mortgage servicer and originator grew its revenue by 4% year-over-year to $2.11 billion in 2014.
Higher expenses were to blame for the major reversal in the company's results from year to year. Ocwen's preliminary operating expenses rose 56% from 2013, to $2.04 billion. Contributing to this rise in operating expenses was a $420.2 million goodwill chargeoff. Preliminary servicing and operating expenses also nearly doubled to $202.7 million in 2014 over the previous year.
Furthermore, Ocwen recorded $186.1 million in legal and settlement expenses stemming from its settlement with the New York Department of Financial Services regarding alleged doctoring of foreclosure documents.
Despite the preliminary setback, the company remained positive on its 2015 outlook, referencing the substantial cash flow generated from previously announced asset sales.
"We currently expect to be profitable in 2015 and meet all of our ongoing financial and servicing obligations," said Ron Faris, president and chief executive of Ocwen, in the release. "We have already significantly advanced our agency MSR sale strategy at attractive prices, entered into an amendment with Home Loan Servicing Solutions that provides more stability for the company and reduced our 2015 refinancing risk. We have also continued to make progress and improvements in our risk and compliance management systems, a critical focus of our management team and employees."
The Atlanta-based company delayed its earnings release in March without citing a specific reason for the postponement. The company said in Tuesday's release that it does not know when the 2014 results will be finalized.
Last August, the company announced that it had to restate its results from fiscal year 2013 and the first quarter of 2014 due to a "material weakness" in the company's accounting controls.