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Ocwen Financial (OCN 2.03%)
Q3 2021 Earnings Call
Nov 08, 2021, 8:30 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Greetings, and welcome to the Ocwen Financial Corporation third quarter earnings and business update conference call. [Operator instructions] As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Dico Akseraylian, senior vice president, corporate communications.

Thank you, sir. You may begin.

Dico Akseraylian -- Senior Vice President, Corporate Communications

Good morning, and thank you for joining us for Ocwen's third quarter 2021 earnings call. Please note that our third quarter earnings release and slide presentation are available on our website. Speaking on the call will be Ocwen's chief executive officer, Glen Messina; and Chief Financial Officer June Campbell. As a reminder, the presentation and our comments today may contain forward-looking statements made pursuant to the safe harbor provisions of the federal securities laws.

These forward-looking statements may be identified by reference to a future period or by use of forward-looking terminology and address matters that are to different degrees uncertain. You should bear this uncertainty in mind when considering such statements and should not place undue reliance on such statements. Forward-looking statements involve assumptions, risks, and uncertainties, including the risks and uncertainties described in our SEC filings, including our Form 10-K for the year ended December 31, 2020, and our current and quarterly reports since such date. In the past, actual results have differed materially from those suggested by forward-looking statements, and this may happen again.

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Our forward-looking statements speak only as of the date they are made, and we disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, the presentation and our comments contain references to non-GAAP financial measures, such as adjusted pre-tax income and adjusted expenses, among others. We believe these non-GAAP financial measures provide a useful supplement to discussions and analysis of our financial condition and an alternate way to view certain aspects of our business that is instructed. Non-GAAP financial measures should be viewed in addition to and not as an alternative for the company's reported results under accounting principles generally accepted in the United States.

A reconciliation of the non-GAAP measures used in this presentation to their most directly comparable GAAP measures may be found in the press release and the appendix in the investor presentation. Now I will turn the call over to Glen Messina. 

Glen Messina -- Chief Executive Officer

Thanks, Dico. Good morning, everyone, and thanks for joining us. We're looking forward to sharing our progress with you this morning. So we'll get started with some highlights for the third quarter.

If you could please turn to Slide 4. I'm really proud of what our team has accomplished and really appreciate all their hard work. We delivered strong GAAP net income and adjusted pre-tax income, and our ROE exceeded guidance largely due to strong top-line performance. I believe this demonstrates the strong operating leverage we have in our business.

This was our eighth consecutive quarter of positive adjusted pre-tax income. Our team continues to execute well against our operating objectives, strong originations growth and servicing additions, solid operational execution, and performance. Cost reduction is tracking ahead of targets. We also closed our planned call rights transaction for the third quarter and have deployed more than 50% of MAM's investment commitment.

October as well, we had some milestones. So in October, we closed our acquisition of the RMS reverse mortgage servicing platform. And also in October, I'm pleased to announce that we exceeded our recapture rate objective. We continue to make solid progress on our actions to expand our addressable market.

We're growing in higher-margin channels, services, and products giving us strong momentum, and the RMS platform acquisition gives us access to a potential $86 billion reverse mortgage subservicing market, which is an exciting new growth opportunity for us. And finally, we continue to navigate a volatile and unpredictable environment, and I'll talk a bit more about that later. Let's turn to Slide 5 for some highlights on originations. Originations again delivered really solid performance against our operating objectives.

We closed $20 billion in total servicing additions in the third quarter with very strong performance in subservicing additions. With the closing of the TCB acquisition, correspondent volume doubled versus last quarter. The TCB team is off to a really strong start, and I'm so glad to have them with us and appreciate the contributions they're making to the business. We're seeing great results from our actions to grow subservicing.

We secured $20 billion in new awards and expect this volume to commence boarding in the fourth quarter. Our subservicing pipeline has never been more robust. Our top 10 prospects represent roughly $63 billion in opportunity, and our total prospect pipeline has grown to slightly over $200 billion. We're excited about this activity level and believe we have a very compelling value proposition.

I'll spend a little bit more time on our subservicing value prop a little bit later. Our enterprise sales approach and the TCP acquisition have allowed us to grow our base of sellers to 700 at the end of Q3. That's roughly 2.5 times over third quarter last year, and we're continuing to grow. Nondelegated and Best Efforts delivery services were rolled out as expected, and we're seeing steady adoption as well.

Our Ginnie Mae product mix is improving. It's up to about 10% of total originations, excluding co-issue, we're still well below industry mix in Ginnie Mae. So I believe we have room for improvement here. We recently attended the MBA, Mortgage Bankers Association Annual Convention and client attendance at our meeting room exceeded our expectations, and the response to the quality of our team and operating execution was very positive.

So many thanks to all our correspondent co-issue and subservicing clients for choosing us as one of their key business partners. We look forward to serving them and supporting new clients as we expand our addressable market. Our Consumer Direct team continues to improve recapture performance. We did see a little bit of slippage in the third quarter versus the second quarter due to accelerated runoff in select client portfolios versus Q2.

That said, we saw a very strong recovery in October with refinance recapture rate achievement of 36%, which is a milestone for us and a huge congratulations to our recapture team. We believe we're on track to meet our 30% refinance recapture rate objectives in the fourth quarter. Overall, our originations team is making terrific progress against their objectives for this year, and they're energized for the fourth quarter and for 2022. Let's turn to Slide 6 for a progress update on our margin and market expansion actions.

The team continues to make strong progress growing higher-margin products, channels, and services. These actions do help us expand our addressable market, as well as deflect margin pressure, as industry buying mobiles contract. Year over year, consumer direct volume in both forward and reverse is up 61%, both forward and reverse delivered record retail funding and lock volumes in October. The marketing eligible population for our forward recapture business increased about 43% from the second quarter to the third quarter.

And we now have roughly 174,000 loans where borrowers could save $100 or more per month by refinancing, and our team will be focused on trying to help these borrowers. Total reverse originations were up 86% year over year. Team is executing very well. Our reverse market share is up from 6.5% in third quarter 2020 to 7% in third quarter 2021, and this compares to about 4.2% in the third quarter of 2019.

So great progress by the team, growing our share and our business. In forward correspondent, we have meaningful opportunity to grow our best efforts and non-delegated delivery services. Our team is focused there, and we've launched those recently. Today, these services are just a fraction of the levels we see across the industry generally.

Our long-term goal is to get best efforts in non-delegated to roughly 25% to 30% of volume and about 40% to 50% of our gain on sale revenues. Let's turn to Slide 7 to cover some highlights on our servicing business. In servicing, continuing to improve cost and customer experience are the key objectives for us, and the team is performing really well. To achieve these objectives, we're focused on moving the needle in four key areas: technology, process simplification, scale, and portfolio composition.

The results have been good so far. Overall, servicing operating costs are down roughly 25% from third quarter 2020 levels, and we've already achieved our full year target for 2021. Technology is a big driver for us, and our technology agenda has a three-part focus. That's reduce cost, improve execution and improve the customer experience.

We believe our actions to improve client borrower and investor experience are critical elements to support our growth and recapture rate objectives over the long run. And with technology as the enabler, we can reduce cost and improve execution at the same time. In terms of scale, we've increased our total servicing UPB about 33% versus the third quarter of 2020. And our percentage of prime servicing is now 70% of our total servicing UPB.

In terms of portfolio composition, increasing the percentage of agency loans is helping to increase average loan balance and decrease delinquencies, both of these trends will improve our ratio of operating expenses as a percent of UPB. We believe we have tremendous operating leverage in our servicing platform, and we're focused on increasing scale by growing our own servicing and subservicing. Now let's turn to Slide 8 and look at some of our operating execution in servicing. Again, here, the team continues to perform very well in several areas.

Average beat of answer and call abandonment rate continued to outperform the industry average as reported by the MBA. Our average speed of answer is just a fraction of the MBA average, and abandonment rates are roughly half the industry average. We continue to be laser-focused on supporting borrowers who are exiting forbearance and helping them understand their options. We believe the best path for the homeowner and the investor is to find what works within investor guidelines to keep the consumer in their home.

In this regard, we outperformed the industry as reported by the MBA, relating to the percentage of borrowers with an agency loan who exit forbearance with the reinstatement or loss mitigation solution in place. Between September 2020 and June 2021, roughly 93% of our borrowers who exited forbearance had a reinstatement or loss mitigation plan in place, and that compares to the industry average of 83%. And what that means is about 7% of our borrowers on forbearance have exited without a reinstatement plan or a loss mitigation solution versus over 17% for the industry. Based on the MBA data, we're delivering 20% more loss mitigation solutions for homeowners versus the industry average.

And again, I believe this demonstrates how our servicing capabilities deliver superior performance for homeowners and investors. NPS is up 6 points over third quarter 2020, and that's even with the impact of boarding over 280,000 loans in the third quarter onto our servicing platform and helping over 4,700 borrowers exit forbearance. Also worth noting, Moody's and S&P upgraded our servicer quality assessment as Master servicer, along with Fitch -- and along with Fitch, all three affirmed our servicer ratings. Some of the key strengths noted by the agencies were our reporting and remitting processes, proactive servicer oversight in master servicing, management and organization, industry experience, multiple levels of internal controls, and our diligent response to the pandemic, as well as our enterprisewide risk and compliance management framework.

Now let's turn to Slide 9 and cover some highlights on our servicing revenue diversification opportunities. We've put significant effort into diversifying our servicing revenue streams over the last two years. Our focus has been on growing own servicing, growing our subservicing, and taking advantage of ancillary or intrinsic revenue streams in our business, Ginnie Mae EBO gains at call right opportunities. These efforts have paid off as the percentage of our servicing revenue derived from the NRZ subservicing agreement has been reduced by more than 50%.

It's now just 17% of our revenues. From a loan count perspective, the NRZ loans are down to 33% of the total as, compared to 54% in third quarter of last year, and the NRZ loans also comprise about two-thirds, 67% of our total nonperforming loans as of the third quarter of 2021. EBOs and call rights continue to be an opportunity for us. We settled our planned call rights transaction in the third quarter, involving seven deals, and we're pleased with the results.

As of the third quarter of 2021, our call rights, our owned call rights were approximately 121 deals. And we estimate the near-term opportunity for call rights that could potentially be actionable is about 30 to 40 deals. Market appetite for seasoned non-agency loans remain strong, and there is sustained activity from other legacy non-agency servicers. With respect to our previously announced fourth quarter transaction, we received a request from the trustee Deutsche Bank asking us to pause the cleanup calls.

They wanted to confirm the call price, met the requirements of underlying PSAs. We believe the call price we've calculated is consistent with the applicable PSAs in our course of conduct with Deutsche Bank and relevant third parties and with established industry practice. We intend to work with Deutsche Bank in their analysis, including if Deutsche Bank chooses to seek input from a court of competent jurisdiction. Meanwhile, we have agreed to pause our calls to allow that analysis to take place.

Regarding EBOs, we realized $12.3 million in EBO gains year-to-date third quarter with loans now emerging from forbearance, we expect to see an increase in EBO activity as loans are modified throughout 2022. Now let's turn to Slide 10 to discuss our approach in subservicing. We believe we've built a best-in-class servicing platform for performing and special servicing with capacity for growth that can offer a compelling value proposition to existing and prospective clients. During 2020 and 2021, we performed an end-to-end review of our platform and capabilities against what we believe are client expectations.

Based on this review, we believe our platform delivers best-practice performance levels for clients across six C's of performance. These include competency, putting the client first, customer centricity, technology-enabled capabilities, a well-staffed bank-grade risk, and compliance model and a strong value-based culture that underpins everything we do. We've made several investments in bar and client-facing technology to address the needs of clients and consumers and to streamline our business and improve the ability for consumer and client self-service. We can offer swift onboarding, responsive service to our clients and consumers.

And as we covered on Pages 7 and 8, industry-leading operating performance. We believe our operations can deliver superior total cost and service-level performance versus our peers. And we've been rewarded for the investments we've made in our platform. We've secured $28 billion of subservicing additions in the last 12 months.

We secured $20 billion in new awards in the third quarter, and we have a $63 billion opportunity with our top 10 prospects and a potential prospect pipeline of $200 billion and growing. With the closing of RMS as well, we are positioned to enter the $86 billion reverse mortgage servicing market once the integration is complete. So while these opportunities do have a longer sales cycle, I'm nonetheless very excited about the opportunity we have here. Now let's turn to Slide 11 to discuss our thoughts on the operating environment for 2022.

Generally, this year, industry volume levels continue to be very robust, certainly as compared to historic levels of both forward and reverse. We continue to deal with incredible interest rate volatility in August. The 10-year treasury rate was trading at 117 basis points. By quarter end, it was 153.

It's now in the high 140s. So it's been volatile. We are seeing non parallel interest rate movements, as well as mortgage to treasury spread compression, and discount margin volatility in reverse as well. These risks are not covered by our hedging program, and we did feel the effects of this in the third quarter.

June will talk a little bit more about that later. Consensus industry forecast is for rising rates and about a 28% average reduction in industry origination volumes. This is based upon the consensus of Fannie Mae, Freddie Mac, and MBA forecast. That said, 2022 projected volume levels are still relatively high compared to historic levels, especially in the 2018, 2019 time frame.

Reverse mortgage endorsement volume remained strong and is expected to remain strong compared to last year. In a contracting market, we would expect some continued pressure on originations margins until capacity -- excess capacity in industry could be eliminated. That said, margins were roughly stable in the third quarter. With rising rates, we would expect increased servicing profitability and MSR values as payoffs and runoff -- portfolio runoff decreases.

And we also expect perhaps some M&A and bulk purchase opportunities may emerge as market participants consider exiting as the origination market contracts. And we also expect to see the agencies buy box expand a bit with higher loan limits and support for first-time and low- to moderate-income buyers. To address the dynamic environment, we're focused on a few straightforward strategies, prudent growth by expanding our client base, product, services, and addressable markets. continuing to drive best-in-class operating performance to deliver superior value proposition to clients, investors, and consumers, providing a service experience that delivers on our commitments, enhancing our competitiveness through scale and low cost aggressively pursuing our subservicing opportunity pipeline, and expanding into reverse subservicing.

And lastly, continuing to be prudent in bulk purchases through MAV and M&A opportunities to increase scale and capabilities. Now let's turn to Slide 12 to discuss our operating objectives for the balance of 2021 and our initial thoughts on 2022. By now, you're familiar with our key operating objectives for 2021, and we're well on our way to achieving our targets. In each of the five categories, we believe we've got strong momentum.

And our key operating objective framework will remain the same for 2022. We are targeting over $100 billion in total owned servicing and subservicing additions. We're targeting to maintain recapture rates over 30% with the long-term objective of industry best practice levels by investor type. Continuous cost and process improvement is part of our DNA, and we're driving base cost and variable cost productivity improvement to support our competitiveness.

We're targeting roughly another 1-basis-point reduction in servicing and overhead opex as a percent of UPB from third quarter 2021 levels. Industry-leading operation execution and delivering on our commitments to clients, borrowers, and investors is a critical component of our value proposition. So this will continue to be a focus and emphasis for us in 2022 and beyond. And for 2022, we're targeting about 50% growth in subservicing additions and harvesting embedded EBO and call rights income to diversify and grow our revenue.

Consistent with our operating objectives this year, we continue to target low double-digit to mid-teen after-tax operating ROEs in 2022. And with that, I'll turn it over to June, who will discuss our financial performance in more detail. 

June Campbell -- Chief Financial Officer

Thank you, Glen. Please turn to Slide 13. We reported $37 million in adjusted pre-tax income and 32% in adjusted pre-tax ROE. This is the eighth consecutive quarter of positive adjusted pre-tax income.

Net income in the quarter was $22 million, including $27 million in unfavorable notables, largely driven by MSR fair value changes from higher actual prepayments than modeled, Negative effects of basis risk, partially offset by higher market interest rates net of hedging. We achieved 19% after-tax GAAP ROE exceeding our low double-digit to mid-teen guidance. Our earnings per share was $2.35, beating analyst consensus by over two times. On the top right bar chart, you can see that we're delivering on our growth objectives and cost leadership.

Revenue increased 38% year over year, largely due to higher servicing fees on an additional $66 billion in UPB and executing the call right transactions. Operating expense as a percentage of average UPB was favorable year over year after absorbing cost to maintain capacity for both the new bulk volume reported in August and September, incurring temporary interim subservicing expense on MSR bulk acquisitions and as I mentioned previous quarters, carrying excess costs during foreclosure moratorium and expectation of borrower need. Equity increased to $470 million, and book value per share increased $2 to $51 per share. Please turn to Slide 14.

This slide demonstrates that our balanced business model is operating well with originations growth replenishing our servicing portfolio more than offsetting runoff. The replenishment rate in the quarter was 170%. On the left side of the slide, you can see that volume is up across all channels, approximately 77% versus the same quarter last year. Adjusted pre-tax income was impacted by lower revaluation gains on MSR cash window and flow purchases and expected margin normalization.

You can see on the margins graph, Consumer Direct margins increased slightly versus last quarter but lower than this time last year. Mix-adjusted correspondent lending margins were relatively flat versus last quarter. The adjustment in the second quarter correspondent margins is attributed to gains recognized in the second quarter on certain loans that were acquired under favorable circumstances, resulting in higher than market average margins for these loans. Adjusting for these loans, second quarter margins were consistent with the first quarter at approximately 12 basis points.

As Glen mentioned, we're growing higher-margin products, channels and services, which we believe will help deflect margin pressure as industry volume levels contract. On the right side of the slide, you can see the results in our Servicing segment from building scale. Third quarter total servicing UPB is $248 billion, a $62 billion increase over the third quarter of 2020. The Subservicing plus NAV UPB, and as you know, we began subservicing NAV this quarter, doubled year over year, largely replacing the NRZ UPB decline.

NRZ UPB concentration dropped from 46% to 24% year over year. We expect this trend to accelerate as we grow subservicing for other clients in NAV. Servicing adjusted pre-tax income of $41 million was largely driven by higher servicing fees from higher UPB, expanding servicing revenue with approximately $23 million in call right gains, as well as cost leadership. You saw earlier that servicing operating costs are down 3 basis points year over year, and we expect continued improvement, which I'll show you on the next slide.

Please turn to Slide 15. This is our road map page. We told you last quarter that we were positioned for a step function change in profitability in the second half of the year, and we delivered on this in the third quarter with GAAP earnings and 19% ROE. This is our operating framework for 2022 assuming a stable interest rate environment and no adverse changes in market conditions or legal and regulatory environment.

The page is broken down by our operating objectives in the origination, servicing, and corporate segments. I'll provide a few highlights, but please let me know if any of you want to review in more detail separately, and I'd be happy to. We reflect the full quarterly impact from the bulk transactions closed in June we talked about last quarter. flow MSR volume was redirected to MAV in the third quarter, and we continue to grow performing subservicing, which results in a mix shift to higher-margin consumer direct and reverse channels.

We expect EBO, call rights, and other revenue diversification in the range of $20 million to $25 million, and the segments continue to achieve productivity targets. Now I'll turn it back over to Glen. 

Glen Messina -- Chief Executive Officer

Thanks, June. And if you could all please turn to Slide 16. A couple of comments just to wrap up before questions. We had a great quarter, delivered really strong financial performance.

I'm proud of how the team is executing and we're excited about the opportunities ahead. We're demonstrating a solid track record of delivering on our operational and financial commitments and continued development of our balanced and diversified business model. We're focused on a few straightforward strategies to navigate this dynamic market environment, prudent growth by expanding client base product services to expand addressable markets. superior value proposition to clients, investors, and consumers through best-in-class operating performance, providing a service experience that delivers on our commitments and enhancing our competitiveness through scale and low cost.

I have to thank and recognize our board of directors and global business team for the hard work and enduring commitment to our success. I'm proud of what our team accomplished in the third quarter and very appreciative of all their efforts. And with that, Laura, let's open up the call for questions. 

Questions & Answers:


[Operator instructions] Our first question comes from the line of Bose George with KBW. You may proceed with your question.

Bose George -- Keefe, Bruyette and Woods -- Analyst

Hey, everyone. Good morning. I just wanted to ask first just about gain on sale trends, what you guys are seeing in October by channel? And then what you're sort of expecting going into next year?

Glen Messina -- Chief Executive Officer

Sure, Bose. In forward retail, our consumer direct platform, channels were roughly flat, maybe up slightly. In correspondent on the surface, it did look like margins came down. You'll see in our Q.

And on June's presentation, there was -- looks like margins reflected down. Although in the second quarter, we did have an opportunistic purchase of a pool of loans that had an extraordinarily out large margin embedded in them. So if you normalize out for that, basically, 2Q forward correspondent margins were about 12 basis points. 3Q was again about that 12-basis-points range.

Third quarter was about 10 basis points. So maybe a little bit of pressure. But I think within the range of reasonableness, don't get me wrong, it's competitive, we fight for every deal with every customer. So we've got to keep our pencils sharp, but it's been pretty consistent like that for the past six months or so.

In reverse, we're seeing a little bit of volatility. When you look at our KC, we had discount margin affects the tail gains -- And that tends to move around a little bit, it moved around a little bit during the third quarter with the interest rate volatility I spoke about. So those margins came down a little bit. So generally, again, nothing out of line that we would expect to see in this environment and, frankly, relatively stable on the forward side.

Bose George -- Keefe, Bruyette and Woods -- Analyst

OK, great. Thanks. And then just on the correspondent you noted the mix shift, more best efforts versus mandatory. And can you just talk about what that implies? Like, what are the margin differences there, how that could impact your margin outlook and corresponding?

Glen Messina -- Chief Executive Officer

Yes. June, do you want to address that?

June Campbell -- Chief Financial Officer

Sure. So we are expecting the best efforts in non-delegated margins to improve period-over-period. What we reported last quarter in our deck is that the non-delegated is about two times the mandatory correspondent margins, and we expect to continue at that level.

Bose George -- Keefe, Bruyette and Woods -- Analyst

OK, great. Thanks. And then just one last one. The comment you guys made on the -- on Deutsche Bank and the call rights, just in terms of how that's playing into your expectation for call rights in the fourth quarter and next year, are you -- is that sort of pushing out some of the call rights into next year? Just -- yes, just how is that going to impact you sort of operationally in terms of when those are called?

Glen Messina -- Chief Executive Officer

Sure. So Bose, yes, look, we agreed to cooperate with Deutsche Bank. We believe we've calculated the call price correctly. We've done it consistent with our past practice.

We've done it consistent with our prior dealings with Deutsche Bank and frankly, very consistent with how under other industry participants who own these legacy private calls performed their calculations. It will, I think, push out our fourth quarter transaction. So we did agree to put that on hold. So we do expect to push that -- it's going to be pushed into next year.

June, do you have --

June Campbell -- Chief Financial Officer

Just one, in Q2, we provided some guidance that EBO and call rights would achieve about $35 million to $40 million and actual to date, we're at about $40 million. So we don't expect the call right to lay to have an impact on our Q4 results.

Bose George -- Keefe, Bruyette and Woods -- Analyst

OK, great. Thanks a lot.


Our next question comes from the line of Marco Rodriguez with Stonegate Capital. You may proceed with your question.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Good morning, everybody. Thank you for taking my questions. I was wondering, are you guys seeing any increased competition in the reverse mortgage market, just sort of given the favorable demographic outlook?

Glen Messina -- Chief Executive Officer

So, Marco, the answer is yes. While market competition has increased, we've been successful in increasing our market share over the past two years. And we've delivered about 86% growth year over year in the third quarter in total endorsement volume. Yes, the RMS transaction will position Ocwen as the only reverse originator issuer and direct servicer in the industry.

We think this unique ability will allow us to capitalize on demographic outlook and positions us very well as compared to competitors.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Got it. And in that same kind of line of thinking here, just if maybe you can kind of broadly outline what differentiates you from your competitors? And why do you actually think that you're going to be the winners in this industry?

Glen Messina -- Chief Executive Officer

Yes. Look, Marco, I believe we're entering 2022 from a position of strength. We are a new -- we've built a very high-performing correspondent consumer direct and reverse mortgage business. With that said, we are a new entrant in originations, and we believe we can generate growth by expanding our addressable market.

And we're doing that with expansion into higher-margin products and services and growing our client base. Our sales team has been very effective with the enterprise sales model, helping to grow subservicing, and we have demonstrated terrific performance vis-a-vis the MBA and Moody's reported statistics across multiple dimensions of our servicing operating performance. We believe we've got a technology-enabled controlled scalable servicing platform that delivers leading operating and cost performance. And as I just mentioned, with the acquisition of the RMS reverse servicing platform, we are the only end-to-end reverse mortgage provider giving us access to an estimated $86 billion in potential reverse of servicing opportunities.

And then lastly, look, we've got a relationship, a strategic alliance with financial and capital partners to help support our business as we go forward. So I'm excited about how we're positioned and looking forward to competing effectively in 2022.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Fantastic. Great information there. Any plans to improve your brand awareness going forward?

Glen Messina -- Chief Executive Officer

Yes, Marco look, that I'll say a little more about this later, but we are such a different company today than when we were just a few short years ago. So we are rethinking the company brand. It's something we're considering. We've transformed our business.

It's now a balanced business model. We do both performing in special. It's not quite Ocwen. It's not quite PHH.

We really are something completely different. So we do want to ensure our brand reflects who we are today and our vision. So we're evaluating our potential opportunities here.

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Got it. Thank you very much. I appreciate your time.

Glen Messina -- Chief Executive Officer

Yes sir. Thank you.


Our next question comes from the line of Matt Howlett with B. Riley. You may proceed with your question.

Matt Howlett -- B. Riley Financial -- Analyst

Thanks for taking my question, and congrats to you, Glen, and the team, for really turning around the story here. The question is on capital. type for capital, its guidance with the the owned and I realize subservicing doesn't require much capital. But what are your options, Glen, to pursue new capital? Can you talk a little bit about what might be available and if you'd look to that at some point in '22?

Glen Messina -- Chief Executive Officer

Sure. So look, we are -- first and foremost, Matt, thank you for your kind words and your comments. The team really appreciates it. Look, we are focused on driving prudent sensible growth in the business.

June has laid out the framework we have for the business, we believe we have the capital base to support that operating framework for 2022. We've been very successful in capital deployment through MAV. So we've deployed about 50% of the targeted investment commitment for MAV. I have really enjoyed the working relationship with Oaktree.

They're great partners. To the extent MAV performs well, we certainly wouldn't be shy about going to exploring with Oaktree expanding that and its capability or capacity there. So look, if the opportunity presents itself for something that is special for our business and can really drive extraordinary growth and extraordinary performance, assuming it's in the best interest of our shareholders. we would evaluate options to take advantage of the growth for the business and explore different mechanisms on raising capital if the situation permits.

And again, if it makes sense for shareholders.

Matt Howlett -- B. Riley Financial -- Analyst

No, that was my question on MAV. If you'd look to expand and it sounds like it's off to a great start. We look forward to hearing more about that. But on -- I mean have you talked to rating agencies in terms of capabilities, I mean, could preferred work, [indiscernible] market for no secured debt now? I mean all that is that open for discussion? Or is this something that needs a lot of work with the rating agencies and so forth?

Glen Messina -- Chief Executive Officer

Look, we've been in touch with -- we always stay in touch with the rating agencies and with our banking partners, so to speak, investment banking partners. -- a preferred is something we would consider. Again, it's a way to be -- to not dilute common shareholders, right? So that makes a lot of sense. -- pricing is attractive.

I know a number of our competitors have issued preferred at attractive prices. So it definitely is something we would consider. We are talking to the rating agencies every quarter with our financial performance and reminding them of how strong the business performance is. They gave us great remarks, great comments on the servicer performance ratings.

But for the total corporate ratings, again, we are continuing to pound the message home that we are a different company. We are driving superior performance in our business. And yes, I -- we certainly would consider all options and preferred being one of them to take advantage of growth opportunities if they present themselves.

Matt Howlett -- B. Riley Financial -- Analyst

I really look forward. We really appreciate that and look forward to hearing more about it. And then on that topic, on the bulk market, just we read the industry reports that the bulk markets opening back up. You guys are rating the mix, talk a little bit about just the dynamics that are going on pricing, whether or not that's going to accelerate as we get potentially consolidation in the mortgage industry.

Glen Messina -- Chief Executive Officer

So look, I think it will. It's one of the things I mentioned in my overview of the industry as rates back up. A lot of originators have kept MSRs on their balance sheet. And as cash margins in the origination space continues to compress at this part of the market cycle, people who have held MSRs tend to sell MSRs.

So we are seeing a bit of a pickup in the bulk market. Look, I think pricing is tight is competitive. I think people are leaning into prepayment speed assumptions. Interest rates are at record lows.

The expectation is for rates to continue to go up. Personally, I believe we're going to see speeds. If rates go up, the way the industry is predicting speeds will be the slowest probably that the industry has ever seen. And I don't think I'm unique in sharing that perspective.

I think a lot of others share that perspective. So I expect to see some increase in bulk. I expect it's going to be competitive. I think people will be leaning into speeds.

And we're going to be prudent in our approach and work with our partners, Oaktree to prudently acquire a business that delivers the appropriate returns from MAV and for Oaktree and our shareholders.

Matt Howlett -- B. Riley Financial -- Analyst

Glen, I appreciate it. It's good to see Ocwen back in the mix.

Glen Messina -- Chief Executive Officer

Thanks, Matt. Appreciate it.


[Operator instructions] Our next question comes from the line of Drew Mackintosh with Mackintosh Investor Relations. You may proceed with your question.

Drew Mackintosh -- Mackintosh Investor Relations -- Analyst

Hi, guys. My questions have actually already been answered but a great job on the quarter.

Glen Messina -- Chief Executive Officer

Thanks, Drew. Appreciate it.


[Operator instructions]

Glen Messina -- Chief Executive Officer

Thanks, Laura. To wrap up, I just completed three years with Ocwen in October. And looking back from where we came from, the transformation is incredible. We faced 2019 when I joined the company with amount of challenges in front of us, we were digging out of a 2Q 2018 pro forma annualized adjusted pre-tax loss of over $300 million for Ocwen and PHH combined.

We faced a large-scale integration that affected every function in the business. We had to convert 1 million loans onto a new servicing system, enterprisewide technology, and telephony modernization, cutting our cost structure almost in half, massive single-client concentration risk, building sustainable origination capabilities from scratch, inadequate recapture performance, refinancing our capital structure, addressing legacy regulatory matters. It was just a mountain of things that this team had to overcome, and here we are today. I believe we're entering 2022 from a position of strength.

We've delivered eight consecutive quarters of positive adjusted pre-tax income. We're winning in our target markets. We're delivering on our growth and return objectives and our origination and servicing platforms have capacity for growth and strong operating leverage. Our multichannel origination platform is focused on expanding our addressable markets through new products and services and expanding our client base.

Our servicing platform delivers industry-leading performance in multiple loan types -- has a highly competitive cost structure, and we are relentless in our pursuit of delivering our commitments. We've modernized our technology platform with proprietary centers of excellence, driving automation and lead process reengineering. And I just couldn't be more excited about our potential for 2022 and really couldn't be prouder, more proud of the Ocwen team and just so thankful for what they've accomplished and helps us do in the business. So thank you for your continued interest in Ocwen, and I look forward to speaking with you on the exporter business update.


[Operator signoff]

Duration: 45 minutes

Call participants:

Dico Akseraylian -- Senior Vice President, Corporate Communications

Glen Messina -- Chief Executive Officer

June Campbell -- Chief Financial Officer

Bose George -- Keefe, Bruyette and Woods -- Analyst

Marco Rodriguez -- Stonegate Capital Markets -- Analyst

Matt Howlett -- B. Riley Financial -- Analyst

Drew Mackintosh -- Mackintosh Investor Relations -- Analyst

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