OCWEN FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
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Florida
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1-13219
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65-0039856
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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1661 Worthington Road
Suite 100
West Palm Beach, Florida
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33409
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(Address of principal executive office)
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(Zip Code)
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Registrant’s telephone number, including area code: (561) 682-8000
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N/A
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(Former name or former address, if changed since last report)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02
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Results of Operations and Financial Condition
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The news release of the Registrant dated November 4, 2010, announcing its results for the third quarter of 2010 is attached hereto as Exhibit 99.1. The information in Exhibit 99.1 attached hereto shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
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Item 9.01
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Financial Statements and Exhibits
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(a) – (c)
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Not applicable.
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(d)
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Exhibits:
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99.1 Text
of a press release by the Registrant dated November 4, 2010.
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OCWEN FINANCIAL CORPORATION
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(Registrant)
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Date:
November 4, 2010
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By:
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/s/ John
Van Vlack
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John
Van Vlack
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Executive Vice President, Chief Financial Officer
and Chief Accounting Officer (On behalf of the Registrant and as its principal financial officer) |
Exhibit No.
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Description
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99.1
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News
release of Ocwen Financial Corporation, dated November 4, 2010, announcing its results for the third quarter of 2010
and certain other information.
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Ocwen Financial Corporation® | ||
FOR IMMEDIATE RELEASE
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FOR FURTHER INFORMATION CONTACT:
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John P. Van Vlack
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Executive Vice President, Chief Financial Officer &
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Chief Accounting Officer
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T: (561) 682-7721
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E: John.VanVlack@Ocwen.com
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·
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One-time transaction related expenses associated with the HomEq servicing acquisition of $33.9 million including severance and WARN Act compensation of $30.3 million, technology contract exit costs of $2.3 million and other expenses of $1.3 million.
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·
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$20.1 million in litigation related charges, primarily related to a judgment against Ocwen in the Cartel case of $12.7 million including punitive damages.
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·
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A non-cash reduction in the fair market value of Auction Rate Securities of $3.0 million.
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·
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Interest and amortization of loan expense for the $350 million term loan which closed in the second quarter of 2010 of $6.3 million.
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·
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Completed the acquisition of the $22.4 billion HomEq servicing portfolio and platform on September 1, 2010.
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·
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Hired and trained 777 people for HomEq prior to closing and successfully transferred 134,000 loans to the Ocwen platform upon closing.
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·
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Increased revenue on the Saxon servicing portfolio from an average annualized rate of 39 basis points per dollar of average Unpaid Principal Balance to 79 basis points.
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·
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Reduced the advance ratio to Unpaid Principal Balance on the Saxon portfolio from 8.0% at boarding to 6.7%
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·
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Completed 15,928 modifications, of which 4,241 were HAMP modifications, which was at the upper end of our guidance of 14,000 to 16,000.
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·
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Litigation charge of $20.1 million primarily related to the Cartel judgment of $12.7 million.
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·
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Reduction in the estimated fair market value of Auction Rate Securities of $3.0 million, versus a $7.3 million increase in the third quarter of 2009.
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At or for the three months ended
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September 30,
2010
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June 30,
2010
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March 31,
2010
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December 31,
2009
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September 30,
2009
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Total unpaid principal balance of loans and REO serviced
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$ | 76,140,022 | $ | 55,244,576 | $ | 49,677,999 | $ | 49,980,077 | $ | 40,293,698 | ||||||||||
Non-performing loans and REO serviced as a % of total UPB (1)
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27.2 | % | 26.2 | % | 25.3 | % | 25.6 | % | 26.9 | % | ||||||||||
Prepayment speed (average CPR)
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13 | % | 13 | % | 12 | % | 15 | % | 20 | % |
(1)
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Loans for which borrowers are less than 90 days delinquent or are making scheduled payments under modification, forbearance or bankruptcy plans are considered performing loans. This measure excludes loans serviced under special servicing agreements where we have no obligation to advance.
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Segment Results (Dollars in thousands) (UNAUDITED)
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Three months
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Nine months
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|||||||||||||||
For the periods ended September 30,
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2010
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2009
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2010
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2009
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Ocwen Asset Management
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Servicing
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Revenue
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$ | 95,369 | $ | 62,977 | $ | 246,581 | $ | 200,398 | ||||||||
Operating expenses
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69,012 | 31,608 | 141,039 | 98,781 | ||||||||||||
Income from operations
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26,357 | 31,369 | 105,542 | 101,617 | ||||||||||||
Other expense, net
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(20,929 | ) | (13,688 | ) | (46,181 | ) | (43,236 | ) | ||||||||
Income from continuing operations before taxes
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5,428 | 17,681 | 59,361 | 58,381 | ||||||||||||
Loans and Residuals
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Revenue
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— | — | — | — | ||||||||||||
Operating expenses
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819 | 891 | 3,381 | 2,202 | ||||||||||||
Loss from operations
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(819 | ) | (891 | ) | (3,381 | ) | (2,202 | ) | ||||||||
Other income (expense), net
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2,004 | 809 | 3,519 | (4,861 | ) | |||||||||||
Income (loss) from continuing operations before taxes
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1,185 | (82 | ) | 138 | (7,063 | ) | ||||||||||
Asset Management
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Revenue
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166 | 432 | 530 | 1,429 | ||||||||||||
Operating expenses
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593 | 753 | 1,505 | 2,530 | ||||||||||||
Loss from operations
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(427 | ) | (321 | ) | (975 | ) | (1,101 | ) | ||||||||
Other income (expense), net
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147 | (1,317 | ) | 818 | (2,466 | ) | ||||||||||
Loss from continuing operations before taxes
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(280 | ) | (1,638 | ) | (157 | ) | (3,567 | ) | ||||||||
Income from continuing operations before taxes
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6,333 | 15,961 | 59,342 | 47,751 | ||||||||||||
Ocwen Solutions
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Mortgage Services
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Revenue
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— | 11,869 | — | 54,052 | ||||||||||||
Operating expenses
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— | 8,131 | — | 37,039 | ||||||||||||
Income from operations
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— | 3,738 | — | 17,013 | ||||||||||||
Other income, net
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— | 81 | — | 802 | ||||||||||||
Income from continuing operations before taxes
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— | 3,819 | — | 17,815 | ||||||||||||
Financial Services
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Revenue
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— | 6,506 | — | 40,293 | ||||||||||||
Operating expenses
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— | 9,295 | — | 45,001 | ||||||||||||
Loss from operations
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— | (2,789 | ) | — | (4,708 | ) | ||||||||||
Other expense, net
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— | (146 | ) | — | (1,261 | ) | ||||||||||
Loss from continuing operations before taxes
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— | (2,935 | ) | — | (5,969 | ) | ||||||||||
Technology Products
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Revenue
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— | 5,648 | — | 28,331 | ||||||||||||
Operating expenses
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— | 3,343 | — | 18,638 | ||||||||||||
Income from operations
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— | 2,305 | — | 9,693 | ||||||||||||
Other income (expense), net
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— | 26 | — | (103 | ) | |||||||||||
Income from continuing operations before taxes
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— | 2,331 | — | 9,590 | ||||||||||||
Income from continuing operations before taxes
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— | 3,215 | — | 21,436 | ||||||||||||
Corporate Items and Other
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Revenue
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369 | 319 | 1,143 | 681 | ||||||||||||
Operating expenses
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23,166 | 3,555 | 27,904 | 11,367 | ||||||||||||
Loss from operations
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(22,797 | ) | (3,236 | ) | (26,761 | ) | (10,686 | ) | ||||||||
Other income (expense), net
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(4,248 | ) | 7,518 | (8,586 | ) | 14,566 | ||||||||||
Income (loss) from continuing operations before taxes
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(27,045 | ) | 4,282 | (35,347 | ) | 3,880 | ||||||||||
Corporate Eliminations
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Revenue
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(335 | ) | (3,540 | ) | (1,146 | ) | (17,204 | ) | ||||||||
Operating expenses
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(216 | ) | (3,344 | ) | (620 | ) | (16,410 | ) | ||||||||
Loss from operations
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(119 | ) | (196 | ) | (526 | ) | (794 | ) | ||||||||
Other income, net
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119 | 196 | 526 | 794 | ||||||||||||
Income from continuing operations before taxes
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— | — | — | — | ||||||||||||
Consolidated income (loss) from continuing operations before taxes
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$ | (20,712 | ) | $ | 23,458 | $ | 23,995 | $ | 73,067 |
Three months
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Nine months
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For the periods ended September 30,
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2010
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2009
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2010
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2009
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Revenue
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Servicing and subservicing fees
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$ | 86,424 | $ | 57,534 | $ | 218,840 | $ | 201,832 | ||||||||
Process management fees
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7,911 | 24,594 | 24,132 | 98,372 | ||||||||||||
Other revenues
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1,234 | 2,083 | 4,136 | 7,776 | ||||||||||||
Total revenue
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95,569 | 84,211 | 247,108 | 307,980 | ||||||||||||
Operating expenses
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Compensation and benefits
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43,886 | 18,959 | 69,752 | 74,758 | ||||||||||||
Amortization of mortgage servicing rights
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7,874 | 7,159 | 22,103 | 25,743 | ||||||||||||
Servicing and origination
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1,707 | 7,804 | 4,756 | 36,277 | ||||||||||||
Technology and communications
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6,727 | 5,065 | 18,582 | 14,354 | ||||||||||||
Professional services
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25,132 | 6,378 | 37,521 | 21,772 | ||||||||||||
Occupancy and equipment
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5,201 | 4,192 | 13,517 | 15,056 | ||||||||||||
Other operating expenses
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2,847 | 4,675 | 6,978 | 11,188 | ||||||||||||
Total operating expenses
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93,374 | 54,232 | 173,209 | 199,148 | ||||||||||||
Income from operations
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2,195 | 29,979 | 73,899 | 108,832 | ||||||||||||
Other income (expense)
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Interest income
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2,962 | 1,992 | 8,507 | 6,411 | ||||||||||||
Interest expense
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(24,187 | ) | (16,145 | ) | (50,017 | ) | (50,108 | ) | ||||||||
Gain (loss) on trading securities
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(3,013 | ) | 8,291 | (3,958 | ) | 13,346 | ||||||||||
Loss on loans held for resale, net
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(539 | ) | (1,242 | ) | (2,626 | ) | (8,783 | ) | ||||||||
Equity in earnings (losses) of unconsolidated entities
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266 | (1,059 | ) | 1,344 | (1,608 | ) | ||||||||||
Other, net
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1,604 | 1,642 | (3,154 | ) | 4,977 | |||||||||||
Other expense, net
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(22,907 | ) | (6,521 | ) | (49,904 | ) | (35,765 | ) | ||||||||
Income (loss) from continuing operations before taxes
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(20,712 | ) | 23,458 | 23,995 | 73,067 | |||||||||||
Income tax expense (benefit)
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(7,487 | ) | 65,294 | 310 | 82,803 | |||||||||||
Income (loss) from continuing operations
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(13,225 | ) | (41,836 | ) | 23,685 | (9,736 | ) | |||||||||
Income (loss) from discontinued operations, net of taxes
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4,383 | (231 | ) | 4,383 | 633 | |||||||||||
Net income (loss)
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(8,842 | ) | (42,067 | ) | 28,068 | (9,103 | ) | |||||||||
Net loss (income) attributable to non-controlling interests
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7 | 36 | (5 | ) | 11 | |||||||||||
Net income (loss) attributable to Ocwen Financial Corporation (OCN)
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$ | (8,835 | ) | $ | (42,031 | ) | $ | 28,063 | $ | (9,092 | ) | |||||
Basic earnings per share
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Income from continuing operations attributable to OCN
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$ | (0.13 | ) | $ | (0.51 | ) | $ | 0.24 | $ | (0.14 | ) | |||||
Income from discontinued operations attributable to OCN
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0.04 | — | 0.04 | 0.01 | ||||||||||||
Net income (loss) attributable to OCN
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$ | (0.09 | ) | $ | (0.51 | ) | $ | 0.28 | $ | (0.13 | ) | |||||
Diluted earnings per share
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Income from continuing operations attributable to OCN
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$ | (0.13 | ) | $ | (0.51 | ) | $ | 0.23 | $ | (0.14 | ) | |||||
Income from discontinued operations attributable to OCN
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0.04 | — | 0.04 | 0.01 | ||||||||||||
Net income (loss) attributable to OCN
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$ | (0.09 | ) | $ | (0.51 | ) | $ | 0.27 | $ | (0.13 | ) | |||||
Weighted average common shares outstanding
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Basic
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100,329,915 | 82,614,456 | 100,159,547 | 70,966,393 | ||||||||||||
Diluted
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100,329,915 | 82,614,456 | 107,379,725 | 70,966,393 |
September 30, 2010
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December 31, 2009
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Assets
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Cash
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$ | 163,911 | $ | 90,919 | ||||
Restricted cash – for securitization investors
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942 | — | ||||||
Trading securities, at fair value:
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Auction rate
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74,712 | 247,464 | ||||||
Subordinates and residuals
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— | 3,692 | ||||||
Loans held for resale, at lower of cost or fair value
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29,352 | 33,197 | ||||||
Advances
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218,936 | 145,914 | ||||||
Match funded advances
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2,126,991 | 822,615 | ||||||
Loans, net – restricted for securitization investors
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69,736 | — | ||||||
Mortgage servicing rights
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203,930 | 117,802 | ||||||
Receivables, net
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42,747 | 67,095 | ||||||
Deferred tax assets, net
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133,782 | 132,683 | ||||||
Goodwill
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19,457 | — | ||||||
Premises and equipment, net
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11,892 | 3,325 | ||||||
Investments in unconsolidated entities
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12,284 | 15,008 | ||||||
Other assets
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147,101 | 89,636 | ||||||
Total assets
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$ | 3,255,774 | $ | 1,769,350 | ||||
Liabilities and Equity
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Liabilities
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Match funded liabilities
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$ | 1,606,346 | $ | 465,691 | ||||
Secured borrowings – owed to securitization investors
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64,564 | — | ||||||
Lines of credit and other secured borrowings
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444,499 | 55,810 | ||||||
Investment line
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— | 156,968 | ||||||
Servicer liabilities
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2,368 | 38,672 | ||||||
Debt securities
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82,554 | 95,564 | ||||||
Other liabilities
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166,751 | 90,782 | ||||||
Total liabilities
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2,367,082 | 903,487 | ||||||
Equity
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Ocwen Financial Corporation stockholders’ equity
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Common stock, $.01 par value; 200,000,000 shares authorized; 100,476,378 and 99,956,833 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively
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1,005 | 1,000 | ||||||
Additional paid-in capital
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465,005 | 459,542 | ||||||
Retained earnings
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435,535 | 405,198 | ||||||
Accumulated other comprehensive loss, net of income taxes
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(13,104 | ) | (129 | ) | ||||
Total Ocwen Financial Corporation stockholders’ equity
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888,441 | 865,611 | ||||||
Non-controlling interest in subsidiaries
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251 | 252 | ||||||
Total equity
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888,692 | 865,863 | ||||||
Total liabilities and equity
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$ | 3,255,774 | $ | 1,769,350 |