Ocwen Financial juggles many different roles in many different parts of the mortgage arena. It's hard to say if it is a high-tech mortgage company or a mortgage technology company; it's even difficult to say if it is mostly residential or mostly commercial. But putting labels aside, sophisticated technology and unique servicing skills make it an interesting company to watch.
Ocwen Financial Corp.'s Technology Center was built on the third floor of the corporate headquarters for good reason. In case of hurricane and flooding, the floor would be high enough above any potential rising waters.
There are also no windows on the third floor, and it is water-sealed. The only running water is in the bathroom.
Ocwen's headquarters can be found in a nondescript office complex in West Palm Beach, Florida, and hurricanes are definitely a concern. In fact, the entire third floor where the company's huge computers and servers sit, is entirely bricked out, and electrically it is backed up by a large generator that will keep Ocwen's entire facility and high-tech servicing systems running without interruption.
"We have the battery power to supply backup in the event we lose main power. Subject to refueling, we have four days' supply of fuel," observes John Hegner, senior manager of remote operations and one of the company's many high tech gurus.
For a financial company, Ocwen has taken great pains to make sure its technology is well protected, but as Hegner notes, "that's because all of the company's businesses rely on maximizing the effective use of technology."
Indeed, the company has spared little expense in protecting the technology center housing the proprietary loss-mitigation and asset-evaluation systems that it has spent millions of dollars developing.
Ocwen Financial Corp., which went public in 1996, has grown into a $3.5 billion financial institution specializing in the acquisition and management of distressed real estate assets. It has built its reputation on servicing nonperforming, subperforming and subprime loans, and over the course of the past few years has become the number one purchaser of discount loans and servicer of distressed mortgage loans in the United States.
In 1997, Ocwen acquired $1.78 billion of discount loans (loans in which the borrower is not currently paying or not contractually current), up from $1.5 billion in 1996. Additionally, last year, Ocwen purchased and originated $584 million of subprime residential loans. To further expand its subprime lending business established in 1995, the company acquired Admiral Home Loan in May 1997 through a new subsidiary, Ocwen Financial Services Inc.
The company has become such a strong servicer of distressed mortgage loans it is now one of only seven special servicers rated "Strong" by Standard & Poor's for commercial loans and was the first firm to receive the "Special Servicer" designation by S&P for residential loans.
Over the past couple of years, Ocwen climbed "out of the box" to venture into new, but related, businesses. The company manages Ocwen Asset Investment Corp. (OAC), an $822 million publicly traded real estate investment trust (REIT) it created to acquire high-yielding real estate assets, including distressed property, subordinated securities and mezzanine debt. Last year, Ocwen Federal Bank FSB, a wholly owned subsidiary, and OAC acquired and provided commitments to $1.2 billion in commercial real estate transactions.
In April, Ocwen formed another wholly owned subsidiary called Ocwen Technology Exchange Inc. (OTX) to combine Ocwen's proprietary loss-mitigation systems with complementary and advanced real estate systems developed by other companies Ocwen acquired over the past 12 months.
In November, Ocwen bought for $9.7 million Amos Inc., a developer of mortgage loan servicing software, and then followed that up with the $13 million purchase in January of DTS Communications, a company that developed technology tools to automate real estate transactions over the Internet. OTX now plans to combine these systems and license its technologies to third parties.
"OTX will operate as a separate technology company that will complement and support our core lending and servicing businesses," says Christine Reich, president of Ocwen Financial. "Ocwen continues to look for boutique, niche products we can integrate with our larger suite of mortgage servicing and origination tools."
Amos, for example, boasted Microsoft Windows-based client/server architecture, real-time processing, Year 2000 compliance and strong workflow capabilities, and DTS' "Data Track" enables any lender to order, manage and track every product and service required for a real estate transaction. Putting all the acquisitions together with its proprietary software, Ocwen Technology developed seven modules that can be licensed to third parties.
The key to Ocwen's success to date and fast growth has been technology. The company entered into the discount loan business in 1991 and over the years spent millions of dollars creating the software necessary to manage loans that are delinquent or not being paid regularly.