West Palm Beach, Florida-based Ocwen Financial Corporation, a provider of residential and commercial mortgage loan servicing, has engaged in restructuring actives that will involve a massive reduction in force that will affect approximately 2,300 employees.
The company claims that it already has laid off 700 employees and plans to lay off another 1,600 by the end of 2019. The company will close offices in Waterloo, Iowa; Fort Washington, Pennsylvania; Addison, Texas; Atlanta, Georgia; Glendale, California; and Orlando, Florida as it continues to offshore its operations primarily to the Philippines (500 employees) and India (4,100 employees).
Part of the decision was based on the need to cut costs following a net loss of $70.8 million in 2018 and the $360 million acquisition of Mount Laurel, New Jersey-based mortgage servicer PHH. There is no doubt that many of the layoffs are the direct result of the need to consolidate and eliminate PHH duplicative functions and activities.
Ocwen CEO Glen Messina noted, “While the decision to reduce our workforce and close certain sites is difficult due to the impact on employees, they are necessary if we are to return to profitability. We thank all our employees for their commitment to Ocwen success and we are committed to treating our employees with dignity and respect as we execute our re-engineering plans.”
However, in the annual 10-K filed with the Securities and Exchange Commission …
“Key to achieving our cost synergies are the elimination of redundant corporate overhead and completion of the loan transfers to Black Knight MSP. We have successfully completed two transfers, totaling approximately 240,000 loans as of February 27, 2019. The remaining portfolio will be transferred in multiple waves with the final transfer targeted to be completed in the second quarter of 2019. Our integration plans call for extensive pre- and post-transfer testing, quality checks and customer communications and support. To the extent any unexpected challenges are encountered, our transfer timeline may be extended. In addition to eliminating the dual servicing system environment, once we have completed the loan transfers to Black Knight MSP, we plan to drive further expense reductions through greater utilization of the cost advantages of our off-shore infrastructure and reductions in on-shore costs.”
“The human capital and site closure components of our cost re-engineering efforts could disrupt operations, impair morale and productivity, and generate negative publicity, which could have a material adverse effect on our operations, business and financial performance.”
“As part of our cost re-engineering plans, we expect to reduce total staffing levels significantly and to close a number of our U.S. facilities. While we believe these steps are necessary in order to drive stronger financial performance and, in the longer term, simplify our operations, the process of closing these facilities will add complexity to our operations in the short term and divert management and employee attention from our other initiatives. In addition, the reduction in our workforce may negatively impact employee morale. It is possible that critical employees may seek other employment, or that employees needed to assist with the transition will depart prior to their scheduled departure dates. Further, it is possible that we have misjudged the number or allocation of positions needed to run our operations efficiently and critical functions could be understaffed. Finally, the potential negative publicity accompanying the site closures and workforce reductions may invite increased regulatory inquiries. Any of the above risks, or a combination of these risks, could impair our ability to realize anticipated integration synergies and result in a material adverse effect on our business and operating results.”
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life, or promises for a bright future. Just because something bad hasn't happened yet, doesn't mean it won't. It can happen to anyone, anytime, anywhere ... are you now wondering, Am I Next?
