Mortgage servicers tumble as Ocwen pulls guidance; government holds off on relief - report
03/04/2020 16:13
** Ocwen Financial OCN.N drops >20% and plumbs new lows
Fri after residential mortgage servicer firm pulls guidance as
COVID-19 impacts business
** OCN says can no longer reaffirm previous guidance for
pre-tax profitability, excluding income statement notables and
amortization of New Residential Investment Corp NRZ.N lump-sum
payments, in Q3 nor that its adj pretax earnings will be
positive for full year 2020 urn:newsml:reuters.com:*:nGNXmF4Rc
** Under agreements with NRZ, NRZ reimburses OCN daily for
private-label securities and weekly for Freddie Mac and Fannie
Mae servicing advances on ~$114 bln in unpaid principal balances
** NRZ's stock falls 30% on Fri
** Also, Bloomberg reported https://www.bloomberg.com/news/articles/2020-04-02/u-s-holds-off-on-extending-virus-aid-to-mortgage-servicers?sref=C6LRZopg
late Thurs that U.S. regulators are holding off extending aid
to mortgage servicers seeking aid to deal with missed payments
from borrowers hurt by COVID-19
** Mortgage servicers, who collect home-loan payments and
distribute them to investors, want the Fed and Treasury
department to use funds from just-passed $2 trillion stimulus
bill to help them weather a liquidity crisis
** Other mortgage service cos Mr. Cooper Group COOP.O down
26%, Cherry Hill Mortgage CHMI.N down 19%, PennyMac Financial
PFSI.N off 13% and Walker & Dunlop Inc WD.N down 12%
** Mortgage REITs also falling Fri. The Dow Jones U.S.
Mortgage REITs index and iShares Mortgage Real Estate ETF
REM.N both down ~11%
** Ladder Capital LADR.N down ~35% as mREIT says continues
to exercise appropriate caution to navigate uncertain
environment, and has engaged Moelis & Co MC.N to evaluate
financing alternatives urn:newsml:reuters.com:*:nBwc8sVgQa
** About 8 mortgage REITs have suspended dividend payouts in
past few weeks in effort to conserve cash, and others have sold
assets to meet margin calls and reduce leverage given bond
market turbulence created by the COVID-19 pandemic
(Reporting by Lance Tupper)
((lance.tupper.tr.com@reuters.net
lance.tupper@tr.com 646-223-5017))