Still saddled with a $150 million total regulatory settlement announced late last year, Ocwen Financial Corp. has announced a preliminary loss of $598.4 million for the fourth quarter of 2014.

That’s a loss of $4.77 per share, compared with net income of $134.3 million, or 95 cents per share, in the same period of 2013.

The nation’s largest nonbank mortgage servicer has been struggling under the weight of a hefty settlement it reached in December with the New York Department of Financial Services over the way it handled foreclosures and failed to appropriately respond to borrower requests for loan information, and for performing core servicing functions on inadequate systems. Under the terms of the settlement, Ocwen agreed to pay a $100 million civil money penalty and $50 million in restitution to current and former New York borrowers who had foreclosure actions filed against them between 2009 and 2014. CEO William C. Erbey stepped down in January, ending a 30-year career.

For the entire fiscal year of 2014, Ocwen incurred $728.1 million in preliminary normalized expenses, including $420.2 million of “goodwill impairment,” $186.1 million of legal and settlement expenses primarily related to the New York settlement, $72.3 million for mortgage servicing rights (MSR)-related fair-value changes, and $49.5 million of transition and other items. The preliminary normalized results for 2014 were impacted by and include $127.3 million of servicer expenses and uncollectible advances, along with $39.4 million in regulatory monitoring costs.

Ocwen President and CEO Ron Faris said he expects the company to be profitable in 2015 and beyond, but acknowledged that the company’s auditor may have doubts about its ability to continue after viewing its 2014 annual report. After twice delaying the filing of the report with the U.S. Securities and Exchange Commission, Ocwen has fallen out of compliance with NASDAQ’s rules for continued listing on the stock exchange and has until May 18 to submit a plan to regain compliance.

After recently announced plans to sell $9.6 billion in mortgage servicing rights to Green Tree Servicing, a subsidiary of Walter Investment Management, and a $45 billion portfolio of agency servicing to JPMorgan Chase, Ocwen expects “our historical track record of generating substantial cash flow from operations to continue in 2015 and beyond,” Faris said. “To accomplish our objectives we must, among other things, extend our $1.8 billion advance receivable facility that begins amortizing in October 2015, continue meeting our regulatory requirements, execute on our plan to reduce our GSE servicing exposure, continue to comply with our debt covenants and maintain our current servicer ratings. We have already significantly advanced our agency MSR sale strategy at attractive prices, entered into an amendment with Home Loan Servicing Solutions that provides more stability for the company and reduced our 2015 refinancing risk.”

Having also focused on risk and compliance management systems, Ocwen is “optimistic that the investments we have made and are making in these areas reduce significantly the substantial risks associated with noncompliance with laws and regulations and improves our service to homeowners, which will ultimately result in better overall returns to our shareholders,” Faris added.

According to Fitch Ratings, Ocwen has lost its status as the country’s largest subprime mortgage servicer and is now in third place behind Bank of America and Nationstar Mortgage, which are first and second, respectively.

Email Amy Swinderman.

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