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5 年前
TEXT-Fitch cuts Ocwen IDR to 'B'; maintains watch negative
2012年11月8日 / 下午5点48分 / 5 年前

TEXT-Fitch cuts Ocwen IDR to 'B'; maintains watch negative

Nov 8 - Fitch Ratings has downgraded Ocwen Financial Corporation's 
(Ocwen) long-term Issuer Default Rating (IDR) to 'B' and maintained it on Rating
Watch Negative. In addition, Fitch has placed Ocwen's short-term IDR on Rating
Watch Negative. The rating actions reflect Ocwen's continued aggressive mortgage
servicing acquisition strategy, and the impact of this strategy on the company's
financial metrics, operational/integration flexibility and potential legal
liability associated with acquired entities/portfolios. 

On Oct. 24, 2012, the company successfully won a $3 billion joint bid with 
Walter Investment Management Corp. (Walter) for the mortgage servicing and 
origination platform assets of Residential Capital LLC (ResCap), subject to 
bankruptcy court approval. Ocwen's portion of the bid comprises of approximately
$830 million of mortgage servicing rights, master servicing and subservicing 
contracts, as well as $1.63 billion of advances. This follows Ocwen's Oct. 3, 
2012 announced acquisition of Homeward Residential Holdings, Inc. for $750 
million, subject to regulatory approval. 

The ResCap transaction, if approved, is expected to be funded by sales of a 
portion of Ocwen's servicing assets to Home Loan Servicing Solutions Ltd. 
(HLSS), combined with senior secured debt issuance. Fitch remains concerned 
regarding the potential leverage implications and integration risks associated 
with the company's ongoing growth through large, opportunistic portfolio 
acquisitions.  In Fitch's view, any positive impact from deleveraging could be 
constrained due to the shifting of balance sheet leverage from Ocwen to HLSS, on
which a significant portion of the company's future subservicing revenue will be
dependent. In addition, if all or a portion of the legal liabilities associated 
with loans originated by ResCap are extended to Ocwen, this would further weigh 
on Ocwen's overall risk profile.

Regardless of whether either or both of the transactions are ultimately 
consummated, Fitch believes that Ocwen's broader acquisition strategy and 
increased willingness to assume direct or indirect (through HLSS) leverage 
indicate an increased level of credit risk. 

Rating Drivers and Sensitivities

Resolution of the Rating Watch will be evaluated in the context of the success 
of the integration of the ResCap and Homeward platforms, the extent to which 
Ocwen is able to stabilize leverage, and any other acquisitions that Ocwen 
pursues in the near to intermediate term. The ratings could be downgraded 
further due to a material deterioration in revenue and cash flow generation 
resulting from potential integration risks and service disruptions, as well as 
the extent to which Ocwen is unable to mitigate potential litigation risks 
associated with the legal liabilities associated with acquired 
entities/portfolios. Should Ocwen pursue future acquisitions that result in a 
material increase in balance sheet leverage beyond Fitch's expectations for the 
current rating level, this could also yield negative rating actions. 

Conversely, the rating could be affirmed in the event that Ocwen is able to 
maintain sufficient liquidity and funding flexibility over an extended period of
time, including a reduction of balance sheet leverage to pre-acquisition levels.
Positive improvement in operating performance, including incremental EBITDA and 
cash flow generation through measured growth, also may lead to a ratings 
affirmation. 

Fitch has taken the following rating actions:

Ocwen Financial Corporation

--Long-term IDR downgraded to 'B' from 'B+'; maintained on Rating Watch 
Negative;

--Short-term IDR placed on Rating Watch Negative.

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