Ocwen Delays Financial Report

Ocwen Financial Corp. again delayed the expected filing of its annual report and said it is continuing to review the ability of affiliate Home Loan Servicing Solutions Ltd. to fund new servicing advances.

The embattled mortgage-servicing company warned in a regulatory filing that a failure by Home Loan to fund new serving advances could have a material negative impact on its financial condition.

Ocwen said it now expects to file its annual report by Monday. It had previously received an extension through Tuesday.

Shares dropped 7% to $8.36 in early trading and are down 45% so far this year.

Additionally, Ocwen said it is clarifying for its auditor the appropriateness of adding back a charge of $150 million as an extraordinary item for certain covenant calculations in one of its advance financing facilities. That charge is tied to a settlement with New York's top financial regulators over alleged homeowner abuses. The firm's executive chairman also resigned in connection with that deal, and Ocwen agreed to the appointment of an outside monitor.

Ocwen, which previously warned it would post a loss for the quarter and 2014, has also entered into an amendment to its term loan to remove certain restrictions on asset sales and permanently increase a financial covenant. It has also said its fourth-quarter results would include a goodwill write-down of about $370 million to $420 million.

The Wall Street Journal reported Tuesday that Ocwen agreed to sell $45 billion of mortgage-servicing rights to J.P. Morgan Chase & Co., following through on previous statements that it planned to shrink the business.

For Ocwen, the deal continues its dramatic evolution into a much smallerfirm.

The company said it was also going to sell off the rights to service mortgages owned by the government-supported entities, Freddie Mac and Fannie Mae.

In recent months some large institutional investors have sought to have Ocwen removed as the servicer of some large portfolios in mortgage-backed securities, saying that it had performed poorly and had defaulted due to recent downgrades of its rating by credit-rating firms.

For its part, Home Loan Servicing said last month it had agreed to be acquired by New Residential Investment Corp., an affiliate of Nationstar.

Write to Angela Chen at [e-mail]

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