Fitch Ratings on June 8 upgraded the long-term issuer default rating of Freedom Mortgage Corp. to BB- from B+ with a stable outlook.
According to the rating agency, Freedom Mortgage's strong governance framework has propelled the company to earnings stability and funding flexibility, which is reflected in the upgrade.
Additionally, Fitch believes that Freedom Mortgage will be able to sustain sufficient liquidity and reserves for possible margin calls and indemnification activity, as well as generate a stable operating cash flow.
In a separate release, Fitch also affirmed the long-term and short-term issuer default ratings of Ocwen Financial Corp. at B- and B, respectively. The long-term issuer default rating of Ocwen Loan Servicing LLC, a unit of Ocwen Financial, was affirmed at B-.
The affirmations are due to the scale and market position of Ocwen Financial in the subprime mortgage servicing sphere, as well as the company's strong liquidity position and sufficient capitalization and leverage, Fitch said.
Additionally, Fitch believes that the company's acquisition of PHH Corp. will provide the company an opportunity to utilize economies of scale to improve margins, cut down excessive corporate overhead and public company-related costs to reduce fixed costs, and offset the portfolio runoff to benefit from possible growth opportunities.
The outlook on the ratings remains negative.
