SECFilings Analysis: Ocwen Financial Corporation (OCN)
SECfilings are statistical data that represents the financial statementsand reports filed with U.S. Securities and Exchange Commission by theindividual company. However, this paper is analysis of the SECfilings by Ocwen Financial Corporation (OCN). In the year 2014, theOCN has been filing its financial reports in every month. Most of thefilings include quarterly reports and other financial documents. Forexample, the company has file twelve Forms 8-K, which are the mostdocuments filed so far in the year 2014. The nature of the Form 8-Kbeing filed in the year 2014 entails the results of financialcondition and operations, financial statements, entrance into amaterial definitive agreement, change of directors or principleofficers, regulation FD disclosures, and non-reliance of previousfinancials.
Theannual SEC report, Form 10-K filed in 2013 by the Ocwen FinancialCorporation provides the detailed summary of the company as well asits primary business. According to the report, the company’smission is to execute their growth and sustainable strategies oftheir loan servicing business. The business achieves its mandatethrough loan origination and acquisition business where it retainsall the MSRs associated with the owed loans. It is regarded as one ofthe largest mortgage companies in the U.S.
Thecompany’s ticker symbol is OCN while the number of sharesoutstanding is 135,637,932shares.The prices per share was $0.01. The report date was February22, 2013 and auditdate December31, 2012. On the other hand fillingdate 3/1/2013
Themajor risk factors affecting the business are the continued economicslowdown and deterioration of housing market. As such, the increaseof foreclosures and delinquencies rates could also cause an increaseof interest expenses, thereby reducing income generation metrics.
Thequarterly report for OCWENwas filed on 5/2/2014 andis unaudited.It was reported on March 31 2014. The method Ocwen Financial uses toaccount for its Mortgage Servicing Rights (MSRs) is AmortizedCost MSRs.However, the critical assumptions are the speed at which themortgages prepay and delinquency experience (EDGAROnline, 2014).Other includes cost of servicing, discount rate, and compensationinterest expenses.
NationstarMortgage Holdings Inc.
Thesecond quarterly report for NSMwas filed on 5/9/2014 and is unaudited. It was reported onMarch 31 2014. The method Ocwen Financial uses to account for itsMortgage Servicing Rights (MSRs)isMSRsat fair value.The critical assumptions includesdetermining the fair value of the MSRs that incorporates discountrate, prepayment speeds, delinquencies, and ancillary fees
Compareof accounting for MSRs
OCWEN’saccounting for MSRs use Amortized cost MSRs to estimate their fairvalues, which use combined internal models with data provided by thethird-party valuation professionals. On its part, Nationstar`sconsent contractual agreements with the investors in mortgage loansand securities where they perform loan-servicing functions as anexchange for applicable fees and remuneration.
Oneof Mortgage Servicing Rights (MSRs) method that I could choose is theFinancialAccounting Standards Board (FASB).The FASB have a purpose of improving standards of financial reportingand accounting as well as establishing the general acceptedaccounting principles (GAAP) in the U.S. (FASB,2014).The FASB standards govern the preparation of all financial reports ofcorporate, which are legally recognized by Securities and ExchangeCommission. One of the reasons of choosing this method to account forMortgage Servicing Rights is their accounting standards, which arebeneficial in improving the efficient market. It is because theinformation processed through FASB standards is credible,transparent, and understandable. As such, it is set to improve MSRspractices through enhancement of preparing the accounting reports,identifying issues and their solutions in timely manner. The methodalso provides a uniform accounting standards across the industry’sfinancial market.
EDGAROnline. “OcwenFinancial Corp.”Web. 2014. Accessed October 21, 2014.<http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9961681-13917-286083&type=sect&TabIndex=2&dcn=0001445305-14-001791&nav=1&src=Yahoo>
FASB.ConceptualStatement # 2". Web. 2014. Accessed October 21, 2014.<http://www.fasb.org/cs/BlobServer?blobkey=id&blobwhere=1175820900526&blobheader=application%2Fpdf&blobcol=urldata&blobtable=MungoBlobs>