Ocwen Financial Corp. is one of at least three investors that were invited in by Goldman Sachs to make a final round of bids on Litton Loan Servicing, the Wall Street firm's specialty servicing division, according to investment bankers and others close to the situation.
However, it's unclear whether Ocwen is considered the leading bidder. Goldman and Ocwen declined to comment to National Mortgage News.
Sources said that Ocwen, of Atlanta, has also expressed interest in buying Saxon Mortgage, Morgan Stanley's servicing division. "Ocwen is looking to do a roll-up of servicing companies," an investment banking official said.
Litton ranks fifth nationwide among subprime servicers, with about $46 billion in contracts on hand. Goldman decided earlier this year to sell the unit. (The Wall Street firm bought Litton in late 2007 from the struggling Credit-Based Asset Servicing and Securitization LLC, known as C-Bass.)
Ocwen services about $58 billion in nonconforming product. If it winds up with Litton it would become the nation's largest servicer/subservicer of nonconforming mortgages with $104 billion in receivables, according to figures compiled by National Mortgage News and the Quarterly Data Report.
The subprime servicing business has been shrinking since the financial crisis of 2008. Today about $600 billion in subprime mortgages are outstanding, compared with $1 trillion when the market was it its peak.
With servicers of all stripes struggling with an array of delinquent loans, including prime, Ocwen is trying to become the subservicer of choice for megabanks as well as for midsize servicers.
