Ocwen Financial (OCN - Analyst Report) had an awful session in Tuesday trading, and it seems as though there could be more pain ahead for the company too following the recent news. The mortgage lending institution had its shares temporarily halted after news broke that the State of California is attempting to suspend their mortgage license.  Since then, the stock has taken a nose dive, dropping over 36% for the day. 

This is a major hit, with no sign of an end to the bleeding in sight, especially since it has an unpaid principal of roughly $95 billion in the state alone, according to 

Underperforming Industry

Mortgage lending related stocks in particular have not performed very well for the last few months, while several lost more today following the OCN news such as Nationstar Mortgage (NSM - Snapshot Report), which lost 7.1% on the session. 

Currently NSM has a Zacks Rank #3 (hold) while OCN is in ‘Strong Sell’ territory putting it in rare company. However, it is worth noting that the whole industry is in trouble, as none of Ocwen’s peers currently have a buy rating. 

These negative revisions and sentiment which influence much of the Zacks Rank for this industry could be attributed to the fact that the 10 year Treasury bond yield has pretty much gone as low as it can go and there is little hope for more refinancing activity. 

This isn’t particularly good news for companies in the Mortgage lenders industry, creating a grim growth prospect for the future for the industry as a whole.  This may be attributed to why the industry has fallen in the Zacks Industry Rank, putting the space at the bottom 16% of the market, with a rank of 222/265.

More Bad news

At this point, we would normally like to recommend alternative stocks within a failing industry which don’t conform to the weak norms typically associated across the board for that failing industry. 

However, as interest rates are at record lows, mortgage lenders are pretty much linked in their poor outlook suggesting that investors should look elsewhere for opportunities in the financial sector now, such as in the investment broker category.