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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark one)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

            For the fiscal year ended December 31, 2005

OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

            For the transition period from: ___________to ___________

                           Commission File No. 1-13219

                           OCWEN FINANCIAL CORPORATION
             ------------------------------------------------------
             (Exact name of Registrant as specified in our charter)

                Florida                                 65-0039856
    -------------------------------                 -------------------
    (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization)                  Identification No.)

   1661 Worthington Road, Suite 100
       West Palm Beach, Florida                            33409
---------------------------------------                 ----------
(Address of principal executive office)                 (Zip Code)

                                 (561) 682-8000
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:

     Common Stock, $.01 par value           New York Stock Exchange (NYSE)
         (Title of each class)       (Name of each exchange on which registered)

  Securities registered pursuant to Section 12 (g) of the Act: Not applicable.

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act:

Large Accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act) Yes [ ] No [X]

Aggregate market value of the Common Stock, $0.01 par value, held by
nonaffiliates of the registrant, computed by reference to the closing price as
reported on the NYSE as of the close of business on June 30, 2005: $271,692,000
(for purposes of this calculation affiliates include only directors and
executive officers of the registrant).

Number of shares of Common Stock, $0.01 par value, outstanding as of March 10,
2006: 63,358,466 shares

DOCUMENTS INCORPORATED BY REFERENCE: Portions of our definitive Proxy Statement
with respect to our Annual Meeting of Shareholders to be held on May 4, 2006,
are incorporated by reference into Part III, Items 10 - 12 and 14.

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<PAGE>

                           OCWEN FINANCIAL CORPORATION
                          2005 FORM 10-K ANNUAL REPORT
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                ----

                                                          PART I
<S>        <C>                                                                                                    <C>

Item 1.    Business.........................................................................................       3


Item 1A.   Risk Factors.....................................................................................       8


Item 1B.   Unresolved Staff Comments........................................................................      12


Item 2.    Properties.......................................................................................      13


Item 3.    Legal Proceedings................................................................................      13


Item 4.    Submission of Matters to a Vote of Security Holders..............................................      14


                                                          PART II


Item 5.    Market for the Registrant's Common Equity, Related Stockholder Matters and
           Issuer Purchases of Equity Securities............................................................      14


Item 6.    Selected Financial Data..........................................................................      15


Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations............      17


Item 7A.   Quantitative and Qualitative Disclosures about Market Risk.......................................      37


Item 8.    Financial Statements and Supplementary Data......................................................      39


Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............      39


Item 9A.   Controls and Procedures..........................................................................      39


Item 9B.   Other Information................................................................................      40


                                                         PART III


Item 10.   Directors and Executive Officers of Registrant...................................................      40


Item 11.   Executive Compensation...........................................................................      40


Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...      40


Item 13.   Certain Relationships and Related Transactions...................................................      40


Item 14.   Principal Accounting Fees and Services...........................................................      40


                                                          PART IV


Item 15.   Exhibits and Financial Statement Schedules ......................................................      40

Signatures .................................................................................................      43
</TABLE>


                                        1

<PAGE>

FORWARD-LOOKING STATEMENTS

     This Annual Report contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including, but not limited to the
following:

o    projections for growth of the residential loan servicing business and
     business opportunities in other core businesses;
o    assumptions related to the sources of liquidity and the adequacy of
     financial resources;
o    estimates regarding interest rates and foreign currency transactions; and
o    expectations related to pending litigation.

     Forward-looking statements are not guarantees of future performance and
involve a number of assumptions, risks and uncertainties that could cause actual
results to differ materially. Important factors that could cause actual results
to differ materially from those suggested by the forward-looking statements
include, but are not limited to, the following:

o    general economic and market conditions,
o    prevailing interest or currency exchange rates,
o    availability of servicing rights for purchase,
o    governmental regulations and policies,
o    international political and economic uncertainty,
o    availability of adequate and timely sources of liquidity,
o    uncertainty related to dispute resolution and litigation, and
o    real estate market conditions and trends.

     Further information on the risks specific to our business are detailed
within this report and our other reports and filings with the Securities and
Exchange Commission, including our periodic reports on Form 10-K and Form 10-Q
and current reports on Form 8-K. The forward-looking statements speak only as of
the date they are made and should not be relied upon. OCN undertakes no
obligation to update or revise the forward-looking statements.

                                        2

<PAGE>


                                     PART I


ITEM 1 BUSINESS (Dollars in thousands)

GENERAL

     Ocwen Financial Corporation ("OCN") is a provider of servicing and
origination processing solutions to the loan industry with headquarters in West
Palm Beach, Florida, offices in Orlando, Florida and Chicago, Illinois and
global operations in Canada, Germany, India, China and Taiwan. OCN is a Florida
corporation that was organized in February 1988 in connection with the
acquisition of Ocwen Federal Bank FSB (the "Bank").

     Effective June 30, 2005, the Bank terminated its status as a federal
savings bank. This process, which we have referred to as "debanking," began on
November 24, 2004, when the Bank filed an Application for Voluntary Dissolution
with the Office of Thrift Supervision ("OTS").

     In connection with our debanking process, on February 4, 2005, OCN and the
Bank entered into a Branch Purchase and Deposit Assumption Agreement (the
"Branch Purchase Agreement") with Marathon National Bank of New York
("Marathon"). Pursuant to the Branch Purchase Agreement, Marathon agreed to
assume the deposit liabilities of the accounts associated with the Bank's branch
facility in Fort Lee, New Jersey. In addition, Marathon agreed to take over the
lease and other contracts and acquire the assets related to the branch. We
agreed to make a cash payment to Marathon of $164,212, which was calculated
based upon, among other things, the amount of those deposit account liabilities
as of the closing. On June 13, 2005, the OTS approved our plan of voluntary
dissolution for the Bank subject to certain conditions, including, among other
things, our entering into an agreement to guaranty the obligations of the Bank
(other than the deposit and other liabilities that were assumed by Marathon in
connection with the Branch Purchase Agreement), a cash collateral agreement and
a collateral trust agreement, all on terms acceptable to the OTS.

     On June 30, 2005, we completed our divestiture to Marathon of the deposit
liabilities of the accounts associated with the branch and our assignment of the
remaining assets, liabilities and business of the Bank to Ocwen Loan Servicing,
LLC ("OLS"). We recognized a gain of $1,750 from the sale of our branch deposit
liabilities to Marathon. In addition, we recorded a one-time provision of
$1,124, which is net of a related adjustment to the deferred tax asset valuation
allowance, arising from the recapture of bad debt reserves in connection with
our termination of the Bank's status as a federal savings bank. We are
continuing the Bank's non-depository businesses, including its residential
mortgage servicing business, under OLS, which is a licensed servicer in all
fifty states, the District of Columbia and Puerto Rico. As a result of
debanking, we are no longer able to accept deposits in the United States
("U.S.") or benefit from federal preemption with regard to post-debanking
activities.

AVAILABLE INFORMATION

     Our annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and all amendments to those reports are made available free
of charge through our website (http://www.ocwen.com) as soon as practicable
after such material is electronically filed with or furnished to the Securities
and Exchange Commission (the "SEC"). Also posted on our website, and available
in print upon request, are the charters for our Audit Committee, Compensation
Committee and Governance Committee, our Governance Guidelines, and Code of
Ethics and Code of Ethics for Senior Financial Officers. Within the time period
required by the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange, we will post on our website any amendment to or waiver of the
Code of Ethics for Senior Financial Officers, as well as any amendment to the
Code of Ethics or waiver thereto applicable to any executive officer or
director. The information provided on our website is not part of this report,
and is therefore not incorporated herein by reference.

     On June 13, 2005, pursuant to Section 303A.12 of the New York Stock
Exchange's listing standards, our Chief Executive Officer certified to the New
York Stock Exchange that he was not aware of any violation by Ocwen Financial
Corporation of the New York Stock Exchange corporate governance listing
standards as of that date. Additionally, we filed with the SEC the CEO/CFO
certifications required under Section 302 of the Sarbanes-Oxley Act as Exhibits
to our Form 10-K.

                                        3

<PAGE>

SEGMENTS

     As of December 31, 2005, our business segments, aligned within our two
areas of focus, are as follows:

          SERVICING
               Residential Servicing
               Commercial Servicing
               Ocwen Recovery Group

          LOAN PROCESSING AND ORIGINATION SERVICES
               Residential Origination Services
               Business Process Outsourcing

     In addition to these business segments, we report other items of revenue
and expense in our Corporate Items and Other segment as discussed later in this
section.

     Key elements of our strategy are summarized as follows:

o    continue to grow our residential servicing business, including the
     opportunistic acquisition of servicing and subservicing rights;
o    grow our residential loan origination services, including mortgage due
     diligence, mortgage loan processing, property valuation and loan
     refinancing; and
o    expand our unsecured debt collection and business process outsourcing
     businesses.

     A more detailed description of each of our business segments follows.

RESIDENTIAL SERVICING

     We service performing, sub-performing and non-performing residential
mortgage loans. Subprime mortgages comprised the vast majority of the
$42,779,048 in total unpaid principal balance of loans we serviced for others at
December 31, 2005. We serviced loans under 466 servicing agreements for 22
clients as of December 31, 2005. These clients include well-capitalized mortgage
originators, such as New Century and Delta Funding, Wall Street firms with
mortgage securitization platforms, such as Lehman Brothers, Credit Suisse First
Boston and Morgan Stanley, and governmental agencies, such as the United States
Department of Veterans Affairs. Revenue from this segment comprised 74%, 78% and
85% of consolidated revenues in 2005, 2004 and 2003, respectively.

     We are entitled to service mortgages because we purchased the servicing
rights from the owners of the mortgages or have entered into a subservicing
agreement with an entity that owns the servicing rights. The rights and
obligations of servicing rights are typically specified in an agreement between
the various parties to a mortgage securitization transaction. Our largest source
of revenue with respect to servicing rights is the servicing fees we earn
pursuant to servicing and subservicing agreements. Servicing fees are usually
earned as a percentage of the unpaid principal amount of the mortgages that are
being serviced. A typical servicing fee is approximately 0.50% per year and a
typical subservicing fee ranges from approximately 0.17% to 0.19% per year. The
servicing and subservicing fees are supplemented by related income, including
late fees from borrowers who are delinquent in remitting their monthly mortgage
payments and interest earned on payments made to us but not yet remitted to the
owner of the mortgage.

     As a servicer or subservicer, we also have a variety of obligations that
are also specified in the servicing or subservicing agreement including the
obligation to service the mortgages according to certain contractual standards
and to advance funds to securitization trusts in the event that borrowers are
delinquent on their monthly mortgage payments. The costs incurred in connection
with meeting these obligations includes, but is not limited to, the cost of
servicing the loans and the interest expense incurred to finance the servicing
rights and servicing advances incurred in connection with conducting the
business.

     The contracts for servicing may provide for a single bulk transfer of a
servicing portfolio or the ongoing transfer of loans as they are originated or
purchased by counterparties to the servicing contract. While the loan data are
transferred to us for servicing, the client retains ownership of the loans.

     The acquisition of servicing rights is generally structured as a two-part
bid process. A preliminary bid is provided to each potential client following a
preliminary due diligence review of the loan portfolio, the seller's financial
status, the strategic fit of the portfolio with our servicing capabilities and
the portfolio's historical performance characteristics.

     Once the preliminary bid is accepted, we initiate a further evaluation of
the portfolio through a formal due diligence process, which includes a more
detailed analysis of historical prepayment and delinquency experience. This
formal process determines the present value of a projected

                                        4

<PAGE>

stream of cash inflows and outflows from the portfolio. Based upon the findings,
a final bid is prepared for approval by our Credit Committee and submitted for
consideration. Upon acceptance, we enter into a servicing rights purchase
agreement.

     The U.S. Department of Housing and Urban Development, Freddie Mac and
Fannie Mae have approved OLS as a loan servicer. Standard & Poor's Rating
Services ("Standard & Poor's") has rated OLS "Strong" as a Residential Subprime
Servicer and Residential Special Servicer. "Strong" represents Standard & Poor's
highest ratings category. Moody's Investors Services, Inc. ("Moody's") has rated
OLS "SQ2-" as a Residential Subprime Servicer and "SQ2" as a Residential Special
Servicer. "SQ2" represents Moody's second highest rating category. Fitch Ratings
("Fitch") has rated OLS "RPS2" for Residential Subprime Servicing and "RSS2" for
Residential Special Servicing. These represent Fitch's second highest
categories, respectively.

     This segment also includes our residential loan servicing system product
(REALServicing(TM)). Our REALServicing product is a comprehensive
enterprise-level residential mortgage loan servicing platform which we have used
since January 2001.

COMMERCIAL SERVICING

     This segment includes the results of operations of both domestic and
international servicing as well as our commercial loan servicing system product
(REALSynergy(TM)). International servicing is conducted through Global Servicing
Solutions LLC ("GSS"), a joint servicing venture we formed with Merrill Lynch in
March 2002 for the servicing of assets in various countries. We own 70% of GSS
with the remaining 30% owned by Merrill Lynch. GSS servicing offices in Tokyo,
Japan and Taipei, Taiwan became fully operational during 2003. In 2005, we sold
our servicing operations in Japan. We established a servicing office in Toronto,
Canada in late 2004. We have established consulting operations in the United
Kingdom ("UK"), Germany and China. We commenced servicing loans in Germany in
the fourth quarter of 2005. Revenue from this segment comprised 5%, 4% and 2% of
consolidated revenues in 2005, 2004 and 2003, respectively.

     Our REALSynergy product is a comprehensive enterprise-level commercial
mortgage loan servicing platform.

OCWEN RECOVERY GROUP

     This segment conducts collection activities for third party owners of
unsecured receivables and for a portfolio of unsecured credit card receivables
that we acquired in 1999 and 2000. On collections for third party owners, we
generally earn a fee based upon a percentage of the dollars collected. The
percentage fee generally ranges from 17% to 50%. We intend to continue to grow
our third party collections activity. Revenue from this segment comprised 3%, 4%
and 4% of consolidated revenues in 2005, 2004 and 2003, respectively.

RESIDENTIAL ORIGINATION SERVICES

     This business segment provides various loan origination services including
residential property valuation services, mortgage due diligence, title services
and loan refinancing for Residential Servicing customers. This segment also
includes our internet-based vendor management system (REALTransSM) and the
results of our subprime residual trading securities. Revenue from this segment
comprised 15%, 11% and 7% of consolidated revenues in 2005, 2004 and 2003,
respectively.

     We provide valuation services to external customers in the wholesale
lending community as well as for our own residential real estate transactions.
An important part of the process of acquiring and managing mortgage loan
portfolios is the accurate review and analysis of the collateral offered as
security for the loans. This business not only provides traditional valuation
products such as appraisals and broker price opinions, it also employs valuation
models and other alternative valuation products that can meet the specific risk
management needs of our customers.

     Beginning with the acquisition of our due diligence operation in December
of 2004, we have begun to develop a new line of business which is focused on
adding fee-based services in areas related to the origination and securitization
process. We believe that this will provide an economic hedge to our core
residential servicing business which experiences challenges in a low interest
rate environment. Low interest rates cause mortgage prepayments to increase,
thereby resulting in the loss of future servicing fees and the acceleration of
amortization on our mortgage servicing rights as the underlying loans are
prepaid. Further, low interest rates diminish the amount we can earn on the
borrower payments that we hold in custodial accounts from receipt through
remittance to the investors.

     Conversely, origination and securitization activity flourishes in a low
interest rate environment. Our strategy has three basic components:

o    Sell due diligence services on closed whole loans to Wall Street firms who
     actively purchase loans for their securitization programs.
o    Participate in a program to offer securitization capability to small
     originators, lacking sufficient production volume to securitize on their
     own. The first securitization under this program is expected to close
     during the first quarter of 2006.
o    Provide back office services to small originators who either lack those
     capabilities or wish to eliminate those operations.

                                        5

<PAGE>

     Our REALTrans product is a web-based vendor management platform that
facilitates the electronic fulfillment of real estate products and services
necessary to process, approve and close residential mortgage loans, as well as
to service them.

BUSINESS PROCESS OUTSOURCING

     This business segment began operations in December 2002. The results
reflect the initiation of several new outsourcing contracts in late 2003 and
2004. Business Process Outsourcing provides outsourcing services to third
parties, including mortgage underwriting, data entry, call center services and
mortgage research. Revenue from this segment comprised 3%, 3% and 2% of
consolidated revenues in 2005, 2004 and 2003, respectively.

CORPORATE ITEMS AND OTHER

     We account for certain items of revenue and expense that are not directly
related to a business unit in our Corporate Items and Other segment. Included in
our Corporate Items and Other segment is interest income on short-term
investments of cash and the related costs of financing these investments,
results of business activities that are not significant, gains and losses on the
early retirement of debt and certain other corporate income and expense items.
Based on the relative insignificance of the assets remaining in the Commercial
Assets and Affordable Housing segments, the remaining assets of these businesses
and any related income or loss arising from their resolution have been included
in the Corporate Items and Other segment beginning in 2005. Segment results for
prior periods have been restated to conform to this presentation.

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Segments" for additional financial information and
related discussion regarding each of our segments.

SOURCES OF FUNDS

     We closely monitor our liquidity position and ongoing funding requirements.
The principal sources of funds that support our business activities are:

     o    Lines of credit and other secured borrowings
     o    Match funded liabilities
     o    Debt securities
     o    Servicing fees
     o    Payments received on trading securities

     In the last several years, our Residential Servicing business has grown
primarily through the purchase of servicing rights. Servicing rights entitle us
as the owner to earn servicing fees and other types of ancillary income, but
they also impose on us various obligations as the servicer. Among these are the
obligation to advance our own funds to meet contractual principal and interest
payments for certain investors and to pay taxes, insurance and various other
items that are required to preserve the assets being serviced.

     Our ability to continue to expand our Residential Servicing business
depends in part on our ability to obtain additional financing to purchase new
servicing rights and to fund servicing advances. We currently use a variety of
sources of debt to finance these assets, including match funded agreements and
credit facilities. Our credit facilities provide financing to us at amounts that
are less than the full value of the related servicing assets that serve as
collateral for the credit facilities. If we cannot replace or renew these
sources as they mature or obtain additional sources of financing, we may unable
to acquire new servicing rights and make the associated advances.

     As a result of debanking, customer deposits no longer represent a source of
funds for us in the U.S. Although we believe our existing sources of liquidity
will be adequate to fund our planned activities for the foreseeable future, we
continue to evaluate other sources of funds.

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity, Commitments and Off-Balance Sheet Risks" for
additional financial information regarding our sources of funds.

COMPETITION

     A discussion of competition as it relates to our primary core businesses
appears in Item 1A, "Risk Factors."

SUBSIDIARIES

     A list of our significant subsidiaries is set forth in Exhibit 21.0.

                                        6

<PAGE>

EMPLOYEES

     As of December 31, 2005, we had a total of 3,396 employees, of which 872
were in our U.S. facilities and 2,467 were in our India operations centers. We
have developed our India operations centers over the past four years in order to
benefit from the cost savings opportunities and quality workforce available in
that country. We also had 57 employees in other countries at December 31, 2005.

     In the U.S., our operations are concentrated in our headquarters in West
Palm Beach, Florida which had 265 employees as of December 31, 2005, and our
operations center in Orlando, Florida, which had 389 staff members as of the
same date. In addition, we had 218 employees at various other locations in the
U.S.
     In India, our operations are located in the cities of Bangalore and Mumbai.
Of the 2,467 members of the staff in India as of December 31, 2005, 1,682 were
in Bangalore and 785 were in Mumbai. Our India workforce can be summarized by
business as follows:

o    35% are engaged in activities for our Residential Servicing business,
o    18% support Business Process Outsourcing,
o    17% support our Residential Origination Services business,
o    6% work in various other business units,
o    19% provide technology support to the business groups and
o    5% represent various other support functions, including Human Resources and
     Corporate Services, Accounting and Risk Management.

REGULATION

     Effective June 30, 2005, we completed the debanking process. We no longer
control a federal savings bank and are no longer subject to federal banking
regulations, but we remain subject to certain federal, state and local consumer
protection provisions. As a result of the debanking, we also became subject to
regulation as a mortgage service provider and/or as a debt collector in a number
of states in which we previously had enjoyed exemptions. We have not previously
operated our mortgage servicing and debt collection businesses under such
regulatory regimes, and there can be no assurance that this transition will not
result in additional costs or uncertainties that would have a material adverse
effect on the profitability of our mortgage servicing and debt collection
businesses.

     On April 19, 2004, the Bank entered into a Supervisory Agreement with the
OTS. The Supervisory Agreement terminated upon the completion of debanking as a
result of the Bank no longer being an FDIC-insured institution. However, for a
period of six years following the completion of debanking, the OTS retains the
right to bring enforcement actions in respect of any breach or noncompliance by
the Bank with the Supervisory Agreement during the period prior to the
completion of our debanking during which the Supervisory Agreement was in
effect.

     In addition, in connection with the debanking process, we entered into
various agreements to meet the conditions to the OTS' approval. We entered into
an Assignment and Assumption Agreement, dated June 28, 2005, with our
subsidiaries Investors Mortgage Insurance Holding Company, Rocaille Acquisition
Subsidiary, Inc., the Bank and OLS whereby the Bank assigned to OLS, directly or
indirectly, all of its assets, liabilities and business remaining after the
consummation of the debanking transactions (the "Assignment"). Also on June 28,
2005, we entered into an agreement (the "Guaranty") in favor of the OTS and any
holders of claims with respect to liabilities assumed by OLS from the Bank in
connection with the Assignment. The Guaranty contains affirmative covenants
relating to the maintenance of a cash collateral account, reporting
requirements, transactions with affiliates, preservation of the existence of our
subsidiaries and maintenance of not less than $35,000 of unencumbered assets.
The Guaranty also contains negative covenants that restrict our ability to (i)
incur indebtedness if certain financial ratios are not achieved or if we fail to
maintain a specified minimum net worth, (ii) enter into merger transactions or a
sale of substantially all of our assets, (iii) sell, lease transfer or otherwise
dispose of our assets or (iv) pay dividends or acquire our capital stock. While
we do not expect that compliance with the Guaranty will have a material adverse
impact on our financial condition, results of operations or cash flows, if an
event of default were to occur we would be obligated to increase the cash
collateral amount. Furthermore, the OTS and other beneficiaries of the Guaranty
are entitled to initiate enforcement proceedings against us, which, in the case
of the OTS, could result in civil money penalties.

     Our business is subject to extensive regulation and supervision by federal,
state and local governmental authorities and is subject to various laws and
judicial and administrative decisions imposing requirements and restrictions on
a substantial portion of our operations. Our servicing activities are subject to
supervision by numerous federal and state agencies, including the Federal Trade
Commission and state agencies that license our mortgage servicing entities. We
also are required to comply with a variety of federal, state and local consumer
protection laws, including the Gramm-Leach-Bliley Act, the USA Patriot Act, the
Fair Debt Collections Practice Act, Real Estate Settlement Procedures Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair and
Accurate Credit Transactions Act and the Homeowners Protection Act, among
others. We are also subject to the rules and regulations of state regulatory
authorities with respect to our operations. These requirements can and do change
as statutes and regulations are enacted, promulgated or amended.

                                        7

<PAGE>

     These statutes and regulations, among other things, regulate debt
collection, foreclosure and claims handling, investment and interest payments on
escrow balances and payment features, mandate certain disclosures and notices to
borrowers and prohibit discrimination. Since debanking, we receive from time to
time requests from state agencies for records, documents and information
regarding our policies, procedures and practices regarding our loan servicing,
loan origination and processing, and debt collection business activities. We
incur significant costs on an on-going basis to comply with governmental
regulations.

     Bankhaus Oswald Kruber GmbH & Co. KG ("BOK"), our German banking
subsidiary, is licensed as a credit institution (Kreditinstitut) under the laws
of the Federal Republic of Germany and is supervised and regulated in Germany by
the German Federal Financial Supervisory Authority (Bundesanstalt fur
Finanzdienstleistungsaufsicht - BaFin), the German Central Bank (Deutsche
Bundesbank) and, in respect of minimum reserves on deposits, the European
Central Bank. BOK, which we acquired on September 30, 2004, is not material to
our current operations.


I
TEM 1A. RISK FACTORS

     An investment in OCN's common stock involves significant risks inherent to
OCN's business. The principal risks and uncertainties that management believes
affect or could affect OCN are described below. The risks and uncertainties
described below are not the only ones facing OCN. Additional risks and
uncertainties that management is not aware of or focused on or that management
currently deems immaterial may also impair OCN's business operations. This
report is qualified in its entirety by these risk factors. You should carefully
read and consider these risks and uncertainties described below together with
all of the other information included or incorporated by reference in this
report before you decide to invest in our common stock. If any of the following
risks actually occur, OCN's financial condition and results of operations could
be materially and adversely affected. If this were to happen, the value of OCN's
common stock could decline significantly, and you could lose all or part of your
investment.

Our success is dependent upon our ability to acquire and accurately price
mortgage servicing right, as well as general economic conditions in the
geographic areas in which we service loans.

     The primary risk associated with mortgage servicing rights is that they
will lose a portion of their value as a result of higher than anticipated
prepayments occasioned by declining interest rates or because of higher than
anticipated delinquency rates occasioned by deteriorating credit conditions.
Interest rates, prepayment speeds and the payment performance of the underlying
loans significantly affect both our initial and ongoing valuations and the rate
of amortization of mortgage servicing rights. In general, the value of mortgage
servicing assets is affected by increased mortgage refinance activity that is
influenced by changes in borrowers' credit ratings, shifts in value in the
housing market and interest rates. While mortgage servicing rights tend to
decrease in value as interest rates decrease, they tend to increase in value as
interest rates increase. During 2003 and 2004 and most of 2005, high prepayment
speeds resulted in significant rates of amortization expense of our mortgage
servicing rights.

     We acquire servicing rights principally from mortgage origination companies
and investment banks. Servicing rights are typically acquired based upon a
competitive bidding process. A number of our competitors have access to greater
capital resources which may provide them with a competitive advantage if they
seek to increase their market share. Although the market for the acquisition of
servicing rights to subprime mortgage loans has grown in recent years, we may be
unable to acquire the desired amount and type of servicing rights in future
periods. In addition, the volume of servicing rights acquired by us may vary
over time resulting in significant inter-period variations in our results of
operations.

     In determining the purchase price for servicing rights, management makes
assumptions regarding the following, among other things:

o    the rates of prepayment and repayment within the pools;
o    projected rates of delinquencies and defaults;
o    our cost to service the loans;
o    amounts of future servicing advances;
o    ancillary fee income;
o    our ability to service and resolve loans successfully and
o    future interest rates.

     If these assumptions are inaccurate or the bases for the assumptions
change, the price we pay for servicing rights may be too high. This could result
in reduced revenue or a loss to us. Therefore, our success is highly dependent
upon accurate pricing of servicing rights as well as general economic conditions
in the geographic areas in which we service loans.

                                        8

<PAGE>

Our strategy to grow our business is subject to uncertainty.

     Our strategy focuses on providing asset servicing and origination
processing solutions to the loan industry. Many factors could adversely affect
our ability to realize this strategy including general economic factors, the
general interest rate environment, our ability to maintain the servicing ratings
assigned to us by rating agencies, government regulation, competition, our
ability to obtain mortgage servicing rights, the effectiveness of our marketing
initiatives, our ability to recruit or replace experienced management and
operations personnel and the availability of funding. In addition, there can be
no assurance that we will be able to accomplish our strategic objectives as a
result of changes in the nature of our operations over time or that such changes
will not have a material adverse effect from time to time or generally on our
business, financial condition or results of operations.

A downgrade in our servicer ratings could have an adverse effect on our
business, financial condition or results of operations.

     Standard & Poor's, Moody's and Fitch rate us as a mortgage servicer. Our
favorable servicer ratings from these entities are important to the conduct of
our loan servicing business. We can provide no assurance that these ratings will
not be downgraded in the future. Any such downgrade could have an adverse effect
on our business, financing activities, financial condition or results of
operations.

Our earnings may be inconsistent.

     Our exit from certain businesses and entry into others has resulted in
variations in our results of operations and earnings. Our past financial
performance should not be considered a reliable indicator of future performance,
and historical trends may not be reliable indicators of anticipated results or
trends in future periods.

     In addition to inconsistency in results caused by our entry into or exit
from businesses, the consistency of our operating results may be significantly
affected by inter-period variations in our current operations, including the
amount of servicing rights acquired and the changes in realizable value of those
assets due to, among other factors, increases or decreases in prepayment speeds.

     In addition, certain non-recurring items have significantly affected our
operating results. Items reported by us in prior periods may not be repeated in
future periods, and we may experience substantial inter-period variations in our
operating results.

Governmental and legal proceedings and related costs could adversely affect our
financial results.

     We face the risk of governmental proceedings and litigation, including
class action lawsuits, challenging our residential loan servicing and other
business practices.

     On April 19, 2004, the Bank entered into a Supervisory Agreement with the
OTS. Although the Supervisory Agreement terminated upon the completion of
debanking, for a period of six years following the completion of debanking, the
OTS retains the right to bring enforcement actions in respect of any breach or
noncompliance by the Bank with the Supervisory Agreement during the period prior
to the completion of our debanking. Accordingly, there can be no assurance that
any such eventualities were they to occur, would not have a material adverse
effect on our financial condition, results of operations or cash flows.

     In addition, in connection with debanking, we entered into various
agreements to meet the conditions to the OTS' approval including a Guaranty in
favor of the OTS and any holders of claims with respect to liabilities assumed
by OLS from the Bank. While we do not expect that compliance with the Guaranty
will have a material adverse impact on our financial condition, results of
operations or cash flows, if an event of default were to occur we would be
obligated to increase the $5,000 cash collateral amount established under the
terms of the Guaranty. Furthermore, the OTS and other beneficiaries of the
Guaranty are entitled to initiate enforcement proceedings against us, which, in
the case of the OTS, could result in civil money penalties. Accordingly, there
can be no assurance that any such eventualities, were they to occur, would not
have a material adverse effect on our financial condition, results of operations
or cash flows.

     In addition, we and certain of our affiliates, including the Bank, have
been named as defendants in a number of purported class action lawsuits
challenging the Bank's residential loan servicing practices. At least one of our
competitors has paid significant sums to settle lawsuits brought against it that
raised claims similar to those raised in the lawsuits brought against our
affiliates and us. Although we believe that we have meritorious legal and
factual defenses to the lawsuits, we can provide no assurance that we will
ultimately prevail. Litigation and other proceedings may result in the adoption
of business practices different from those of our competitors, as well as
settlement costs, damages, penalties or other charges, which would adversely
affect our financial results.

We incur significant costs related to governmental regulation.

     As noted in "Regulation", our business is subject to extensive regulation
and supervision by federal, state and local governmental authorities and is
subject to various laws and judicial and administrative decisions imposing
requirements and restrictions on a substantial portion of our

                                        9

<PAGE>

operations. We incur significant costs on an on-going basis to comply with
governmental regulations which adversely affects our net income. If our
regulators impose new or more restrictive requirements, we may incur additional
significant costs to comply with such requirements which could adversely affect
our net income.

     Effective June 30, 2005, we completed the debanking process. We no longer
control a federal savings bank and are no longer subject to federal banking
regulations, but we remain subject to certain federal, state and local consumer
protection provisions. As a result of the debanking, we also became subject to
regulation as a mortgage service provider, mortgage loan originator and/or a
debt collector in a number of states in which we previously had enjoyed
exemptions. We have not previously operated our mortgage servicing and debt
collection businesses under such regulatory regimes, and there can be no
assurance that this transition will not result in additional costs or
uncertainties that would have a material adverse effect on the profitability of
our mortgage servicing and debt collection businesses.

We may be unable to obtain the necessary additional capital to finance the
growth of our business.

     Our financing strategy includes the use of leverage. Accordingly, our
ability to finance our operations rests in part on our ability to borrow money.
Our ability to borrow money depends on a variety of factors including:

o    our ability to meet our current debt service obligations on our existing
     debt;
o    our corporate credit rating as evaluated from time to time by rating
     agencies and the occasion of any changes to their published ratings;
o    our financial performance and the perception that existing and potential
     lenders have of our financial strength;
o    limitations imposed on us by regulatory agencies and/or existing lending
     agreements that limit our ability to raise additional debt; and
o    general economic conditions and the impact they have on the availability of
     credit.

     An event of default, a negative ratings action by a rating agency, the
perception of financial weakness, an action by a regulatory authority or a
restriction imposed on us as a function of a debt covenant that serves to limit
our ability to borrow money, or a general deterioration in the economy that
constricts the availability of credit may increase our cost of funds and make it
difficult for us to renew existing credit facilities and obtain new lines of
credit.

     As a result of the completion of our previously disclosed debanking
process, we are no longer able to obtain deposits in the U.S. Although we
believe we will be able to replace those deposits with other financing
arrangements, we can provide no assurance that such alternative funding sources
will be adequate to meet our needs or will not increase our cost of funds.

Our international operations are subject to political and economic uncertainties
and other risks beyond our control.

     In addition to our U.S. operations, we have established operations in
Canada, China, Germany, India and Taiwan. Although currently not significant to
our operations, we also operate a bank in Germany that we acquired in 2004. Our
foreign operations are subject to risks beyond those associated with our U.S.
operations, including:

o    unexpected changes in local regulatory requirements;
o    unfavorable changes in trade protection laws;
o    difficulties in managing and staffing international operations;
o    potentially adverse tax consequences;
o    adaptability problems;
o    increased accounting and control expenses;
o    the burden of complying with foreign laws;
o    adverse social, political, labor or economic conditions; and
o    changes in foreign currency exchange rates.

     Although we evaluate hedging strategies to limit the effects of currency
exchange rate fluctuations on our results of operations, there can be no
assurance that our strategies will achieve their intended purpose. Further, we
may be unable to effectively manage the risks listed above in order to realize
the benefits of international operations.

We face strong competition in our primary business segment.

     We face strong competition from a variety of competitors in our residential
loan servicing business. These competitors include several smaller companies
focused on servicing as well as a number of large financial institutions. These
financial institutions generally have significantly greater resources and access
to capital than we do, resulting in a lower cost of funds and a greater ability
to purchase mortgage servicing rights. Because a part of our strategy depends on
our ability to obtain mortgage servicing rights, we can provide no assurance
that such competition will not have an adverse impact on our ability to
implement our strategy.

                                       10

<PAGE>

     In general, our competition has intensified in recent years as the
low-interest rate environment has created favorable conditions for other
companies and banks to enter the residential subprime loan business or expand
their existing activities within the industry. While some of these entities only
originate and do not currently service loans, there is no assurance that they
will not develop internal servicing capability or outsource the servicing
function to one of our competitors. Some originators from whom we have purchased
servicing rights in the past have developed their own servicing capabilities.

We may not be able to adequately protect our proprietary rights or information.

     Our success is in part dependent upon our proprietary information and
technology. We rely on a combination of copyright, trade secret and contract
protection to establish and protect our proprietary rights in our products and
technology. In general, we enter into intellectual property agreements with all
employees (including our management and technical staff) and consultants as well
as limit access to and distribution of our proprietary information. We cannot be
sure that we have taken adequate steps to deter misappropriation of our
proprietary rights or information. Independent third parties may develop
products and technology substantially similar to ours. Although we believe that
our products and technology do not infringe any proprietary rights of others, we
could be subject to claims of infringement in the future.

The loss of the services of our senior managers could have an adverse effect on
us.

     The experience of our senior managers is a valuable asset to us. Our
chairman and chief executive officer, William C. Erbey, has been with us since
our founding in 1987, and our president, Ronald M. Faris, joined us in 1991.
Other senior managers of ours have been with us for 10 years or more. We do not
have employment agreements with, or maintain key man life insurance relating to,
Mr. Erbey, Mr. Faris or any of our other executive officers. The loss of the
services of our senior managers could have an adverse effect on us.

Other industry risks could affect our financial performance.

     We face many industry risks that could negatively affect our financial
performance. For example, we face the risk that increased criticism from
consumer advocates or the media could hurt consumer acceptance of our services
and could lead to the adoption of different business practices. In addition, the
financial services industry as a whole is characterized by rapidly changing
technologies, and system disruptions and failures may interrupt or delay our
ability to provide services to our customers. The secure transmission of
confidential information over the Internet is essential to maintain consumer
confidence in certain of our services. Security breaches, acts of vandalism and
developments in computer capabilities could result in a compromise or breach of
the technology that we use to protect our customers' personal information and
transaction data. Consumers generally are concerned with security breaches and
privacy on the Internet, and Congress or individual states could enact new laws
regulating the electronic commerce market that could adversely affect us. In
addition, we rely on our foreign employees for a number of our business
processes in our call processing and data centers overseas. The issue of
outsourcing to lower-cost foreign workers and the impact on the U.S. labor
market continues to attract significant negative media and Congressional
attention, and Congress or individual states could enact new laws regulating
outsourcing that could adversely affect us.

We may be required to repurchase loans or indemnify investors if we breach
representations and warranties that we made in connection with the sale of those
loans.

     We have purchased and originated loans that were subsequently pooled and
securitized or sold outright. On substantially all loans sold, we made
representations or warranties at the time the loans were sold. We may be
required to repurchase loans at a price equal to the then outstanding principal
balance of the loan and any accrued and unpaid interest thereon if there were a
breach of those representations or warranties. Additionally, we may be required
to advance funds to the securitization trusts or to indemnify the trustee or the
underwriters of a securitization under specific circumstances.

     The representations made in connection with our loan sale agreements
typically include, among others, representations regarding the nature and
condition of the related properties, including environmental issues, the absence
of liens, the lack of undocumented mortgage modifications, and validity and
enforceability of the mortgages, and the existence of appropriate insurance
coverage. The expense we have recognized to date in fulfilling of guarantees is
not significant, and our exposure to future obligations in this regard is not
estimated to be significant.

We are subject to investment risks.

     We have, in some cases retained subordinate and residual interests in
connection with the securitization of our loans and have acquired other residual
interests outright or in connection with our acquisition of subsidiaries. The
performance of these securities has at times been negatively impacted by higher
than expected prepayment speeds and credit losses experienced on the mortgage
loans collateralizing the securities. We remain subject to the risk of loss on
our remaining securities primarily to the extent that future credit losses
exceed expected credit losses.

                                       11

<PAGE>

     In the securitization process the first tier of loss protection afforded to
the holders of more senior classes of mortgage-related securities (debt
securities) is over collateralization. Within the context of residual interests
in these debt securities, over collateralization is the amount by which the
collateral balance exceeds the sum of the debt securities principal amounts and
is achieved by applying monthly a portion of the interest payments of the
underlying mortgages toward the reduction of the senior class certificate
principal amounts, causing them to amortize more rapidly than the aggregate loan
balance. To the extent not consumed by losses, the excess over collateralization
is remitted to the residual holders. Principal from the underlying mortgage
loans generally is allocated first to the senior classes with the most senior
class having a priority right to the cash flow from the mortgage loans until its
payment requirements are satisfied. To the extent that there are defaults and
unrecoverable losses on the underlying mortgage loans, resulting in reduced cash
flows, the most subordinate security will be the first to bear this loss.
Because subordinate and residual interests generally have no credit support, to
the extent there are realized losses on the mortgage loans comprising the
mortgage collateral for such debt securities, we may not recover the full amount
or, indeed, any of our remaining investment in such subordinate and residual
interests.

     Subordinate and residual interests are affected by the rate and timing of
payments of principal (including prepayments, repurchase, defaults and
liquidations) on the mortgage loans underlying a series of mortgage-related
securities. The rate of principal payments may vary significantly over time
depending on a variety of factors such as the level of prevailing mortgage loan
interest rates and economic, demographic, tax, legal and other factors, although
in the absence of defaults or interest shortfalls all subordinates receive
interest. In periods of declining interest rates, rates of prepayments on
mortgage loans generally increase, and if the rate of prepayments is faster than
anticipated, then the yield on subordinates will generally be positively
affected and the yield on residuals will be negatively affected.

     We periodically assess the carrying value of our subordinate securities and
residual securities retained. There can be no assurance that our estimates used
to determine the value of subordinate securities and residual securities
retained will be accurate for the life of each securitization. If actual loan
prepayments or defaults exceed our estimates, the carrying value of our
subordinate securities and residual securities retained may be decreased during
the period in which we recognized the disparity.

     We also have invested in loans that we hold for resale related to our
Residential Origination Services business. We believe that we have established
adequate reserves for declines in fair values below cost in accordance with
generally accepted accounting principles. Future increases to these reserves may
be necessary, however, due to changes in economic conditions and the performance
of these loans prior to their sale or securitization. Increases in our reserves
for declines in fair value below cost would adversely affect our results of
operations. The carrying value of our loans held for resale at December 31, 2005
was $624,671, net of market valuation reserves of $7,659.

Our directors and executive officers collectively own a large percentage of our
common shares and could influence or control matters requiring shareholder
approval.

     Our directors and executive officers and their affiliates collectively own
or control approximately 45% of our outstanding common shares. This includes
approximately 31% owned or controlled by our chairman and chief executive
officer, William C. Erbey, and approximately 13% owned or controlled by our
director and former chairman, Barry N. Wish. As a result, these shareholders
could influence or control virtually all matters requiring shareholder approval,
including amendment of our articles of incorporation, the approval of mergers or
similar transactions and the election of all directors.


ITEM 1B. UNRESOLVED STAFF COMMENTS

     None.

                                       12

<PAGE>


ITEM 2. PROPERTIES

     The following table sets forth information relating to our primary
facilities at December 31, 2005:


<TABLE>
<CAPTION>
                          Location                             Owned/Leased   Square Footage
------------------------------------------------------------   ------------   --------------
<S>                                                               <C>                <C>
EXECUTIVE OFFICE AND HEADQUARTERS:
    West Palm Beach, Florida ...............................      Leased              41,860

SERVICING OPERATIONS CENTER:
    Orlando, Florida .......................................      Owned              120,000

MORTGAGE FULFILLMENT CENTER:
    Downers Grove, Illinois ................................      Leased              20,452

BUSINESS OPERATIONS AND TECHNOLOGY SUPPORT OFFICES:
    Bangalore, India .......................................      Leased              92,650

    Bangalore, India .......................................      Leased              56,960

    Mumbai, India ..........................................      Leased              46,280
</TABLE>


     In addition to the facilities listed above, GSS leases a total of four
offices for commercial servicing and consulting operations, one each in Taiwan,
China, Canada and Germany. Also, BOK has two offices in Germany, one in Berlin
and one in Frankfurt.


ITEM 3. LEGAL PROCEEDINGS (Dollars in thousands)

     A description of material pending or recently settled legal proceedings to
which OCN or its subsidiaries are a party follows:

     As discussed in Item 1, Business, under the terms of the Assignment and
Assumption agreement, OLS has become the successor to the Bank with respect to
all legal actions. Therefore, any references to the Bank in connection with the
following legal matters pertain to OLS as successor.

     On April 13, 2004, the United States Judicial Panel on Multi-District
Litigation granted our petition to transfer and consolidate a number of lawsuits
against the Bank, OCN and various third parties arising out of the servicing of
plaintiffs' mortgage loans into a single case to proceed in the United States
District Court for the Northern District of Illinois under caption styled: In re
Ocwen Federal Bank FSB Mortgage Servicing Litigation, MDL Docket No. 1604 (the
"MDL Proceeding"). The consolidated lawsuits in which the Bank and/or OCN are
defendants involve 60 mortgage loans currently or previously serviced by the
Bank. Additional similar lawsuits have been brought in other courts, some of
which may be transferred to and consolidated in the MDL Proceeding. The
borrowers in these lawsuits seek class action certification. No class has been
certified in the MDL Proceeding or any related lawsuits. On August 23, 2004,
plaintiffs in the MDL Proceeding filed a Consolidated Complaint containing
various claims under federal statutes, including the Real Estate Settlement
Procedures Act and Fair Debt Collection Practices Act, state deceptive trade
practices statutes and common law. The claims are generally based on allegations
of improper loan servicing practices, including (i) charging borrowers allegedly
improper or unnecessary fees such as breach letter fees, hazard insurance
premiums, foreclosure-related fees, late fees and property inspection fees; (ii)
untimely posting and misapplication of borrower payments; and (iii) improperly
treating borrowers as in default on their loans. While the Consolidated
Complaint does not set forth any specific amounts of claimed damages, plaintiffs
are not precluded from requesting leave from the court to amend the Consolidated
Complaint or otherwise seeking damages should the matter proceed to trial. On
April 25, 2005, the court entered an Opinion and Order granting us partial
summary judgment finding that, as a matter of law, the mortgage loan contracts
signed by plaintiffs authorize the imposition of breach letter fees and other
legitimate default or foreclosure related expenses. The court explained that its
ruling was in favor of defendants to the specific and limited extent that
plaintiffs' claims challenge the propriety of the above-mentioned fees. On March
22, 2006, the court denied defendants' motions to dismiss various portions of
the Consolidated Complaint on federal preemption and procedural grounds, as well
as our motion to dismiss OCN from the case for lack of personal jurisdiction.
The court has not ruled on class certification. We cannot currently determine
the ultimate outcome of the MDL Proceeding or the other matters described above
and have not established a reserve in respect thereof. We believe the
allegations in the MDL Proceeding and the other matters described above are
without merit and will continue to vigorously defend against them.

     On November 3, 2004, the trial judge in litigation brought by Cartel Asset
Management, Inc. ("Cartel") against OCN, the Bank and OTX in federal court in
Denver, Colorado entered final judgment in the amount of $520 against OTX and
nominal damages of two dollars against the

                                       13

<PAGE>

Bank. No damages were entered against OCN. In the November 3, 2004 order, the
judge reduced a prior jury verdict in the amount of $9,320 after trial on this
matter involving allegations of misappropriation of trade secrets and
contract-related claims brought by a former vendor. The litigation does not
relate to our core Residential Servicing business. Notwithstanding the nominal
damage award against the Bank, it was assessed a statutory award to Cartel of
attorneys' fees in an additional amount of $170, and the Bank and OTX were
further assessed costs in the amount of $9. Cartel and defendants are pursuing
cross-appeals in the United States Court of Appeals for the Tenth Circuit. We
intend to continue to vigorously defend this matter.

     On February 8, 2005, a jury in Circuit Court for Palm Beach County, Florida
returned verdicts of $1,000 and $1,056 in compensatory damages in favor of two
former employees of the Bank in a lawsuit against OCN and the Bank. The jury
rejected plaintiffs' request for punitive damages. The plaintiffs brought claims
under the Florida Civil Rights Act, the Florida Whistleblower Act and state tort
law, arising out of an alleged invasion of privacy and related incidents
allegedly committed by other former employees of the Bank in 1998 for which
plaintiffs sought to hold the Ocwen defendants vicariously liable. We believe
the verdicts, which were reduced to final judgments on May 20, 2005, as well as
an additional award of $900 in plaintiffs' attorneys' fees, are against the
weight of evidence and contrary to law. Our appeals therefrom have been taken to
the Florida Court of Appeals for the Fourth District. We intend to continue to
vigorously defend this matter.

     On November 29, 2005, a jury in County Court for Galveston County, Texas,
returned a verdict of $11,500 in compensatory and punitive damages and
attorneys' fees against OCN in favor of a plaintiff borrower who defaulted on a
mortgage loan we serviced. The plaintiff claimed that OCN's foreclosure on the
loan violated the Texas Deceptive Trade Practices Act and other state statutes
and common law. On February 9, 2006, the trial court reduced the jury verdict
and entered judgment in the amount of $1,830 which was comprised of $5 in actual
damages, approximately $675 in emotional distress, statutory and other damages
and interest, and $1,150 for attorneys' fees. We believe the judgment was
against the weight of evidence and contrary to law and have asked the trial
court to set it aside. We intend to continue to vigorously defend this matter
and, if necessary, will take an appeal to the Texas Court of Appeals.

     OCN is also subject to various other pending legal proceedings. In our
opinion, the resolution of these proceedings will not have a material effect on
our financial condition, results of operations or cash flows. We continuously
monitor the status of our litigation, including advice from external legal
counsel, and perform periodic assessments of our litigation for potential loss
accrual and disclosure. We accrue a litigation reserve when it is probable that
a liability has been incurred and the amount of loss can be reasonably
estimated.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of stockholders during the
quarter ended December 31, 2005.


                                     PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
        AND ISSUER PURCHASES OF EQUITY SECURITIES

PRICE RANGE OF THE COMPANY'S COMMON STOCK

     The common stock of Ocwen Financial Corporation is traded under the symbol
"OCN" on the New York Stock Exchange ("NYSE"). The following table sets forth
the high and low closing sales prices for our common stock, as traded on the
NYSE:

                                                         High            Low
                                                     ------------   ------------
2005
First quarter ....................................   $       9.54   $       7.77
Second quarter ...................................           8.26           6.50
Third quarter ....................................           7.92           6.68
Fourth quarter ...................................           8.76           6.88

2004
First quarter ....................................   $      11.50   $       8.48
Second quarter ...................................          12.57           9.56
Third quarter ....................................          11.99           7.75
Fourth quarter ...................................           9.56           7.50

                                       14

<PAGE>

     At the close of business on March 10, 2006, our common stock price was
$9.84

     The payment of any dividends by us will be significantly dependent on
dividends and other payments received from our subsidiaries, which may be
affected by either restrictive covenants or regulatory compliance. We do not
currently pay cash dividends on common stock and have no current plans to do so
in the future. The timing and amount of future dividends, if any, will be
determined by our Board of Directors and will depend, among other factors, upon
our earnings, financial condition, cash requirements, the capital requirements
of subsidiaries and investment opportunities at the time any such payment is
considered. In addition, the indentures relating to the Junior Subordinated
Debentures as well as the covenants relating to our lines of credit and other
secured borrowings and the Guaranty agreement with the OTS contain limitations
on our payment of dividends.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATES

     Information regarding purchases of our own common stock during 2005 is as
follows:


<TABLE>
<CAPTION>
                                                                    Total Number of Shares      Maximum Number of
                                                                     Purchased as Part of    Shares That May Yet Be
                                        Number of   Average Share     Publicly Announced       Purchased under the
            Perioda                      Shares      Price Paid            Plans (1)                  Plans
--------------------------------------  ---------   -------------   ----------------------   ----------------------
<S>                                            <C>             <C>                      <C>               <C>
Three months ended March 31 ..........         --              --                       --                5,568,900
Three months ended June 30 ...........         --              --                       --                5,568,900
Three months ended September 30 ......         --              --                       --                5,568,900
Three months ended December 31 .......         --              --                       --                5,568,900
                                        ---------
    Total for the year ...............         --
                                        =========
</TABLE>


(1)  A plan was announced May 9, 2000 to repurchase up to 6,000,000 shares of
     outstanding common stock.

NUMBER OF HOLDERS OF COMMON STOCK

     At March 10, 2006, 63,358,466 shares of our common stock were outstanding
and held by approximately 1,287 holders of record. Such number of stockholders
does not reflect the number of individuals or institutional investors holding
our stock in nominee name through banks, brokerage firms and others.


ITEM 6. SELECTED FINANCIAL DATA (Dollars in thousands, except share data)

     The following tables present selected consolidated financial information of
Ocwen Financial Corporation and its subsidiaries at the dates and for the years
indicated. Our historical balance sheet and operations data at and for the five
years ended December 31, 2005 have been derived from our audited financial
statements. Prior to debanking we followed the presentation requirements of
Securities and Exchange Commission Regulation S-X, Article 9, Bank Holding
Companies. After debanking and effective December 31, 2005, we revised the
presentation of our consolidated financial statements. These revisions consisted
principally of reclassifying expenses formerly netted against related revenues
to new expense categories and reclassifying certain liabilities for funds
collected from borrowers that had been netted against cash to a new liability
category. See Note 1 to the Consolidated Financial Statements for additional
information regarding these reclassifications. We have reclassified certain
amounts included in the prior years to conform to the 2005 presentation. The
selected consolidated financial information should be read in conjunction with
the information we have provided in Management's Discussion and Analysis of
Financial Condition and Results of Operations, the Consolidated Financial
Statements and the Notes to the Consolidated Financial Statements.

     Beginning in late 1999 and early 2000, we shifted our business activities
away from businesses involving the acquisition of commercial loans, real estate
and affordable housing properties. Since then, our results reflect the ongoing
management and resolution of these assets, nearly all of which were sold or
otherwise resolved by the end of 2005. At the same time, we shifted our focus
toward growing fee-based businesses, primarily residential loan servicing.
Effective June 30, 2005, we terminated our banking subsidiary's status as a
federal savings bank and as a result we are no longer able to accept customer
deposits in the U.S. On that same date, an unaffiliated bank assumed the
customer deposits associated with our bank branch facility in New Jersey. Since
2000, we had been reducing our reliance on deposits as a source of funding.

                                       15

<PAGE>


<TABLE>
<CAPTION>
                                                                                        December 31,
                                                          ------------------------------------------------------------------------
                                                              2005           2004           2003           2002           2001
                                                          ------------   ------------   ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>            <C>            <C>
BALANCE SHEET DATA
Total assets ..........................................   $  1,854,133   $  1,582,532   $  1,326,356   $  1,291,762   $  1,783,663
  Loans held for resale ...............................        624,671          8,437             --             --             --
  Match funded assets, net ............................        377,105        280,760        130,087        167,744        174,351
  Advances ............................................        219,716        240,430        374,769        266,356        283,183
  Mortgage servicing rights ...........................        148,663        131,409        166,495        171,611        101,107
Total liabilities .....................................      1,504,873      1,250,894      1,007,813        923,017      1,343,398
  Match funded liabilities ............................        339,292        244,327        115,394        147,071        156,908
  Debt securities, lines of credit and other secured
    borrowings (1) ....................................        780,777        281,861        206,633        159,721        324,013
  Deposits and escrows ................................             --        376,591        546,145        503,201        722,074
Capital Securities (1) ................................             --             --             --         56,249         61,159
Stockholders' equity ..................................        347,407        330,108        317,258        310,718        379,106
</TABLE>



<TABLE>
<CAPTION>
                                                                            For the Years Ended December 31,
                                                          ------------------------------------------------------------------------
                                                              2005           2004           2003           2002           2001
                                                          ------------   ------------   ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>            <C>            <C>
OPERATIONS DATA
Net income (loss) .....................................   $     15,065   $     57,724   $      4,772   $    (68,775)  $   (124,782)
Total revenue .........................................        375,376        359,886        315,133        240,355        188,777
Operating expenses ....................................        353,486        335,439        295,560        254,141        226,351
Other income (expense) ................................         (1,010)           953        (14,053)       (68,173)        (4,208)
Income tax expense (benefit) ..........................          5,815        (32,324)           748          2,983         83,000
Net income (loss) before effect of change in
  accounting principle ................................         15,065         57,724          4,772        (84,941)      (124,782)
Effect of change in accounting principle, net of
  tax (2) .............................................             --             --             --         16,166             --

EARNINGS (LOSS) PER SHARE
Basic:
  Net income (loss) before effect of accounting
    change ............................................   $       0.24   $       0.88   $       0.07   $      (1.26)  $      (1.86)
  Effect of change in accounting principle, net of
    tax ...............................................             --             --             --           0.24             --
                                                          ------------   ------------   ------------   ------------   ------------
    Net income (loss) .................................   $       0.24   $       0.88   $       0.07   $      (1.02)  $      (1.86)
                                                          ============   ============   ============   ============   ============
Diluted: (3)
  Net income (loss) before effect of accounting
    change ............................................   $       0.24   $       0.82   $       0.07   $      (1.26)  $      (1.86)
  Effect of change in accounting principle, net of
    tax ...............................................             --             --             --           0.24             --
                                                          ------------   ------------   ------------   ------------   ------------
    Net income (loss) .................................   $       0.24   $       0.82   $       0.07   $      (1.02)  $      (1.86)
                                                          ============   ============   ============   ============   ============

Weighted average common shares outstanding:
  Basic ...............................................     62,912,768     65,811,697     67,166,888     67,321,299     67,227,058
  Diluted (3) .........................................     63,885,439     73,197,255     68,063,873     67,321,299     67,227,058
</TABLE>


(1)  Effective with our adoption of Statement of Financial Accounting Standard
     ("SFAS") No. 150, "Accounting for Certain Financial Instruments with
     Characteristics of both Liabilities and Equity", on July 1, 2003, we
     reclassified the $56,249 outstanding balance of our Capital Securities to
     liabilities (Debt Securities). Beginning with the third quarter of 2003,
     distributions are reported as interest expense.

(2)  Upon adoption of SFAS No. 142, "Goodwill and Other Intangible Assets",
     effective January 1, 2002 we reversed the unamortized balance of the excess
     of net assets acquired over purchase price (negative goodwill) of $18,333
     we had originally recorded in connection with our acquisition of Ocwen
     Asset Investment Corp. in 1999 and recorded $3,333 of impairment charges on
     goodwill and intangible assets. These amounts have been reported as the
     effect of a change in accounting principle, net of an income tax benefit of
     $1,166.

(3)  The assumed conversion of the 3.25% Convertible Notes we issued in July
     2004 has been reflected in the calculation of weighted average common
     shares outstanding in computing diluted earnings per share for 2004, in
     accordance with Emerging Issues Task Force ("EITF") Issue 04-8, "The Effect
     of Contingently Convertible Debt on Diluted Earnings per Share". Conversion
     of the Convertible Notes to common

                                       16

<PAGE>

     shares was not assumed for 2005 because the effect would be antidilutive.
     Interest expense, net of income tax, has been added back to net income for
     purposes of computing diluted earnings per share for 2004.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION
     (Dollars in thousands, except share data)

     The following discussion of our results of operations, consolidated
financial condition and capital resources and liquidity should be read in
conjunction with our Selected Consolidated Financial Information, Consolidated
Financial Statements and the related notes, all included elsewhere herein.

CRITICAL ACCOUNTING POLICIES

     Our ability to measure and report our operating results and financial
position is heavily influenced by the need to estimate the impact or outcome of
risks in the marketplace or other future events. Our critical accounting
policies are those that relate to the estimation and measurement of these risks.
Because they inherently involve significant judgments and uncertainties, an
understanding of these policies is fundamental to understanding Management's
Discussion and Analysis of Results of Operations and Financial Condition. Our
significant accounting policies are discussed in detail in Note 1 of our
Consolidated Financial Statements (which are incorporated herein by reference).
The following is a summary of our more subjective and complex accounting
policies, as they relate to our overall business strategy.

VALUATION OF MORTGAGE SERVICING RIGHTS

     Our most significant business is our Residential Servicing business.
Inherent in our growth of this business has been the acquisition of mortgage
servicing rights, an intangible asset representing the present value of the
right to service loans in a portfolio. As of December 31, 2005, we held $148,663
of mortgage servicing rights with a fair value of $183,755. The most critical
accounting policy for this business is the methodology we use to determine the
value of mortgage servicing rights. Application of this methodology requires the
development of a number of estimates, including anticipated amortization and
periodic revaluation. We estimate the fair value of our mortgage servicing
rights based on the results of our internal valuation and an external valuation
obtained from an independent third-party valuation specialist. Our internal
valuation calculates the present value of estimated future cash flows utilizing
market-based assumptions. The more significant assumptions used in our internal
valuation include:

o    Prepayment speeds
o    Compensating interest expense
o    Delinquency experience
o    Discount rate
o    Interest rate used for computing the cost of servicing advances
o    Interest rate used for computing float earnings
o    Cost of servicing

     Prepayment speeds and delinquency experience are derived from our
historical experience by strata. Our strata are based upon loan type, which
represents the predominant risk characteristics of the underlying loans,
including:

o    Subprime
o    ALT A
o    High-loan-to-value
o    Re-performing
o    Special servicing
o    Non-residential mortgage
o    Other

     For the Subprime and Alt A loan types, the loans are further stratified by
product type between adjustable and fixed rate.

                                       17

<PAGE>

     The table presented below provides overall prepayment speed and delinquency
assumptions (expressed as a percentage) by strata projected over a five-year
period as of December 31, 2005:

                                             Prepayment Speed   Delinquency
                                             ----------------   -----------
   Subprime .............................       34% -- 48%       0% -- 19%
   ALT A ................................       38% -- 51%       0% -- 10%
   High LTV .............................       49% -- 51%           9%
   Re-performing ........................       30% -- 34%          10%
   Special servicing ....................       34% -- 36%          24%
   Non-residential mortgage .............       32% -- 51%           4%
   Other ................................       28% -- 30%           4%

     The discount rate, interest rate for the cost of financing advances,
interest rate for float earnings and the cost of servicing are based on the
market assumptions provided by our third-party valuation specialist. As of
December 31, 2005, these assumptions were as follows:

o    Discount rate of 18%
o    Interest rate of one-month LIBOR plus 200 basis points for the cost of
     financing advances
o    Interest rate equal to the Federal Funds Rate for float earnings
o    Assumptions regarding the cost of servicing vary by strata, and range from
     a low of $65 per year for a performing Alt A loan to a high of $710 per
     year for a loan that is in foreclosure.

     Changes in these assumptions are generally expected to impact our results
of operations as summarized below:

o    Increases in prepayment speeds generally reduce the value of our mortgage
     servicing rights as the underlying loans prepay faster, causing higher
     mortgage servicing rights amortization, higher compensating interest
     payments and lower overall servicing fees, partially offset by lower
     overall cost of servicing and increased float balances and income.
o    Increases in delinquencies generally reduce the value of our mortgage
     servicing rights as the cost of servicing increases during the delinquency
     period and the amount of servicing advances and related interest expense
     increases.
o    Increases in the discount rate reduce the value of our mortgage servicing
     rights due to the lower overall net present value of the combined cash
     flows.
o    Increases in interest rate assumptions for the cost of servicing advances
     will increase interest expense while rate increases will also increase the
     amount of float earnings we recognize as fee income.
o    Increases in interest rate assumptions also generally increase the value of
     our mortgage servicing rights as the projected prepayment rate for the
     underlying loans slows, while decreases in interest rate assumptions
     generally reduce the value of our mortgage servicing rights as the
     projected prepayment rate for the underlying loans increases.

     We perform an interest rate sensitivity analysis of our mortgage servicing
rights portfolio every quarter. We currently estimate that the fair value of the
portfolio increases by 3.21% for every 50 basis point (bps) increase in interest
rates and reduces by 3.37% for every 50 bps decline in interest rates.

     An impairment analysis is performed after grouping our loans into the seven
strata based on loan type which represents the predominant risk characteristics
of the underlying loans. The risk factors used to assign loans to strata include
the credit score (FICO) of the borrower, the loan to value ratio, the type of
asset (mortgage or non-mortgage) and the default risk.

     We amortize mortgage servicing rights over the period of estimated net
servicing income based on our projections of the amount and timing of future
cash flows. The amount and timing of servicing asset amortization is adjusted
periodically based on actual results and updated projections. During 2003 and
2004, and most of 2005, mortgage prepayment speeds in our servicing portfolio
remained high, resulting in a substantial rate of amortization of the balance of
servicing rights.

VALUATION OF DEFERRED TAX ASSETS

     Another accounting policy that requires the use of estimates and the
application of judgment is the determination of our overall tax provision and
the evaluation of the realizability of our gross deferred tax assets. As of
December 31, 2005 we had gross deferred tax assets of $184,072, and a
corresponding valuation allowance of $163,802 resulting in a net deferred tax
asset of $20,270. Our valuation allowance was primarily established in 2001,
when we recorded an $83,000 provision to increase the valuation allowance on our
prior years' deferred tax assets. During 2003 and 2002, we provided an
additional valuation allowance equal to the amount of any deferred tax assets
recorded during the year. During

                                       18

<PAGE>

2004, we recorded a $35,518 partial reversal of the valuation allowance we had
established on the deferred tax asset in prior years. This reduction in the
allowance in 2004 was the result of refund claims we filed with the IRS that
reduced our deferred tax asset and increased our income tax receivable balance
by the same amount. The evaluation of the need to maintain our valuation
allowance takes into consideration our recent earnings history, current tax
position and estimates of future taxable income. The tax character (ordinary
versus capital) and the carry-forward and carry-back periods of certain tax
attributes (e.g., capital losses and tax credits) are also considered.
Significant judgment is required in considering the relative impact of negative
and positive evidence related to realizability of the deferred tax assets. The
determination of the amount of the aggregate valuation allowance is based on
scenario analyses of the projected results of operations by line of business
resulting in a range of potential valuation allowances, within which a final
amount is determined. We assess the amount of the valuation allowance each
quarter and a change in the valuation allowance may be warranted in the future.

OVERVIEW

CHANGES IN FINANCIAL CONDITION

     Total assets rose to $1,854,133 during 2005, as compared to $1,582,532 as
of December 31, 2004. This increase is primarily due to a $616,234 increase in
our loans held for resale, which is largely comprised of residential loans that
we purchased during the fourth quarter, and a $96,345 increase in match funded
residential servicing advances. Offsetting these increases was a $357,810
decline in cash and investment grade securities which largely resulted from the
cash payment we made to Marathon upon its assumption of the customer deposit
liabilities in connection with debanking. Also, during 2005 we collected the
$63,398 of federal income tax refund claims and related interest that existed at
December 31, 2004.

     Total liabilities increased to $1,504,873 at December 31, 2005 as compared
to $1,250,894 at December 31, 2004. This increase is largely the result of a
repurchase agreement with a balance of $459,400 entered into to finance the
purchase of loans held for resale and a $94,965 increase in match funded
liabilities as we utilized increased borrowing capacity. Offsetting these
increases was the removal of customer deposits and escrow deposits from our
balance sheet at the completion of debanking. These deposits totaled $376,591 at
December 31, 2004. Also, during 2005, we repurchased $76,920 of our debt
securities.

     At December 31, 2005, we had $269,611 of cash, $398,321 of unused borrowing
capacity on our existing lines, including $178,831 that is available to a
consolidated VIE, and $347,407 of equity.

RESULTS OF OPERATIONS

     We recorded net income of $15,065 for 2005 as compared to net income of
$57,724 and $4,772 for 2004 and 2003, respectively. Our basic earnings per share
were $0.24 for 2005, as compared to $0.88 and $0.07 for 2004 and 2003,
respectively. Net income for 2004 includes an income tax benefit of $32,324 that
largely resulted from a $35,518 partial reversal of the valuation allowance that
we had established on our deferred tax asset in prior years. Pre-tax income was
$20,880, $25,400 and $5,520 for 2005, 2004 and 2003, respectively.

     Our 2005 results reflect a strong performance in our Residential Servicing
segment whose pre-tax income rose by $5,056, or 30% in 2005 as compared to 2004.
This increase primarily reflects the positive impact of rising short-term
interest rates on our revenue from custodial accounts ("float earnings") and a
reduction in total operating expenses, offset in part by continued high mortgage
prepayment speeds for most of 2005 and a reduction in the properties being
marketed under our contract with the United States Department of Veterans
Affairs ("VA"). Residential Servicing is our most profitable segment with
pre-tax income of $21,695, $16,639 and $25,683 for 2005, 2004 and 2003,
respectively. After incurring pre-tax losses in 2003 and 2004 due to significant
start-up costs related to our international operations, Commercial Servicing
earned a profit of $2,940 in 2005 on higher fees earned from both domestic and
international operations. Offsetting these improvements were declines in both
our Residential Origination Services and Ocwen Recovery Group segments. Pre-tax
income for Residential Origination Services declined by $17,953 or 133% in 2005,
primarily reflecting losses from our new mortgage due diligence and loan
processing business, reduced earnings from our UK residual security portfolio, a
charge to recognize the full impairment of a working capital investment in a
consolidated variable interest entity ("VIE") and a charge to reduce the
carrying value of our loans held for resale to market value. After being
profitable in 2003 and 2004, Ocwen Recovery Group incurred a pre-tax loss of
$(684) in 2005 primarily reflecting a shift in revenue from maturing proprietary
assets to lower yielding third-party contracts.

     Results of our Corporate Items and Other segment have continued to improve
with pretax income of $154 in 2005 as compared to losses of ($10,639) and
($27,153) in 2004 and 2003. This improvement is largely due to reduced interest
expense, the recognition of interest income on federal income tax refund claims
in 2005 and 2004, gains from the repurchase of debt securities in 2005 and
reduced losses from the Commercial Assets business.

     We provide additional financial information and discuss our segment results
in the following section.

                                       19

<PAGE>

SEGMENTS

     The following section provides a discussion of the changes in financial
condition of our business segments during the year ended December 31, 2005 and a
discussion of pre-tax results of operations of our business segments for the
three-year period ended December 31, 2005.

     The following table presents the assets and liabilities of each of our
business segments at December 31, 2005:


<TABLE>
<CAPTION>
                                                                  Ocwen      Residential    Business      Corporate      Business
                                   Residential   Commercial     Recovery     Origination     Process      Items and      Segments
                                    Servicing     Servicing       Group       Services     Outsourcing      Other      Consolidated
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------
<S>                                <C>           <C>           <C>           <C>           <C>           <C>           <C>
ASSETS
   Cash ........................   $        --   $     3,057   $        --   $     2,181   $        --   $   264,373   $    269,611
   Trading securities:
     Investment grade ..........            --            --            --            --            --         1,685          1,685
     Subordinates and
       residuals ...............            --            --            --        27,023            --         3,254         30,277
   Loans held for resale .......            --            --            --       624,671            --            --        624,671
   Match funded assets .........       377,105            --            --            --            --            --        377,105
   Advances ....................       215,207           389            --         3,022            --         1,098        219,716
   Mortgage servicing rights ...       148,663            --            --            --            --            --        148,663
   Receivables .................        23,323         2,508           864        18,497         1,183        21,891         68,266
   Premises and equipment ......         1,730           302           120           719            10        37,227         40,108
   Other assets ................        17,532           177            18         3,319            --        52,985         74,031
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------
     Total assets ..............   $   783,560   $     6,433   $     1,002   $   679,432   $     1,193   $   382,513   $  1,854,133
                                   ===========   ===========   ===========   ===========   ===========   ===========   ============

LIABILITIES
   Match funded liabilities ....   $   339,292   $        --   $        --   $        --   $        --   $        --   $    339,292
   Servicer liabilities ........       298,892            --            --            --            --            --        298,892
   Lines of credit and other
      secured borrowings .......        81,218            --            --       530,569            --        14,661        626,448
   Debt securities .............            --            --            --            --            --       154,329        154,329
   Other liabilities ...........        26,358         3,220         2,773         7,657            --        45,904         85,912
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------
     Total liabilities .........   $   745,760   $     3,220   $     2,773   $   538,226   $        --   $   214,894   $  1,504,873
                                   ===========   ===========   ===========   ===========   ===========   ===========   ============
</TABLE>


                                       20

<PAGE>

     The following table presents the pre-tax statement of operations for each
of our business segments for the year ended December 31, 2005:


<TABLE>
<CAPTION>
                                                                  Ocwen      Residential    Business      Corporate      Business
                                   Residential   Commercial     Recovery     Origination     Process      Items and      Segments
                                    Servicing     Servicing       Group       Services     Outsourcing      Other      Consolidated
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------
<S>                                <C>           <C>           <C>           <C>           <C>           <C>           <C>
REVENUE
  Servicing and subservicing
    fees .......................   $   268,122   $    14,030   $    11,683   $        --   $        --   $      (266)  $    293,569
  Process management fees ......         7,423            --            --        54,511        11,265        (1,238)        71,961
  Other revenues ...............         4,115         5,481            --           221            --            29          9,846
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------
     Total revenue .............       279,660        19,511        11,683        54,732        11,265        (1,475)       375,376
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------

OPERATING EXPENSES
  Compensation and benefits             35,022         8,943         5,437        12,581         3,776        28,866         94,625
  Amortization of servicing
    rights .....................        96,692            --            --            --            --            --         96,692
  Occupancy and equipment ......         9,605           981         1,110         1,643           583         3,754         17,676
  Technology and
    communications .............        22,700         3,119         1,871         7,538         2,386        (7,239)        30,375
  Professional services ........        13,862         1,036           683         3,680             3         6,711         25,975
  Servicing and origination ....        36,446            70           520        24,049            --            (2)        61,083
  Other operating expenses .....        22,190         2,270         3,094        21,730         3,197       (25,421)        27,060
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------
     Total operating expenses ..       236,517        16,419        12,715        71,221         9,945         6,669        353,486
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------

OTHER INCOME (expense)
   Interest income .............           323           386            --        16,745            --         7,784         25,238
   Interest expense ............       (21,752)         (582)           --        (6,672)          (97)       (8,158)       (37,261)
   Gain (loss) on trading
     securities ................            --            --            --            (7)           --            20             13
   Gain (loss) on debt
     repurchases ...............            --            --            --            --            --         4,258          4,258
   Other, net ..................           (19)           44           348         1,973             2         4,394          6,742
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------
     Other income (expense),
       net .....................       (21,448)         (152)          348        12,039           (95)        8,298         (1,010)
                                   -----------   -----------   -----------   -----------   -----------   -----------   ------------
Pre tax income (loss) ..........   $    21,695   $     2,940   $      (684)  $    (4,450)  $     1,225   $       154   $     20,880
                                   ===========   ===========   ===========   ===========   ===========   ===========   ============
</TABLE>


RESIDENTIAL SERVICING

     Total assets increased by $96,327 or 14% during 2005, primarily due to a
$100,479 increase in match funded advances. Additionally, mortgage servicing
rights increased by $17,254 as a result of an increase in acquisitions, and
advances declined by $26,762. The $83,923 or 13% increase in total liabilities
of this segment during 2005 is primarily due to a $99,099 increase in match
funded liabilities. Also, escrow deposits declined by $85,861 as a result of
debanking, and net borrowings under secured credit lines increased by $45,541.
The increase in match funded assets and liabilities primarily reflects a
$100,000 increase in borrowing capacity during 2005.

                                                            December 31,
                                                     ---------------------------
Selected balance sheet data                              2005           2004
--------------------------------------------------   ------------   ------------
Total assets .....................................   $    783,560   $    687,233
    Match funded advances ........................        377,105        276,626
    Advances .....................................        215,207        241,969
    Mortgage servicing rights ....................        148,663        131,409
    Receivables ..................................         23,323         24,012
Total liabilities ................................   $    745,760   $    661,837
    Match funded liabilities .....................        339,292        240,193
    Servicer liabilities .........................        298,892        291,265
    Lines of credit and other secured borrowings .         81,218         35,677
    Escrow deposits ..............................             --         85,861

                                       21

<PAGE>

     Match Funded Advances. Match funded advances consist of the following:

                                                            December 31,
                                                     ---------------------------
                                                         2005           2004
                                                     ------------   ------------
Principal and interest ...........................   $    174,252   $    107,102
Taxes and insurance ..............................        129,700        107,710
Other ............................................         73,153         61,814
                                                     ------------   ------------
                                                     $    377,105   $    276,626
                                                     ============   ============

     Match funded advances on loans serviced for others resulted from our
transfer of residential loan servicing related advances to a third party in
exchange for cash. The original and subsequent transfers did not qualify as
sales for accounting purposes since we retained effective control of the
advances. Accordingly, we report the amount of proceeds received from the sale
as a secured borrowing with pledge of collateral (match funded liabilities). The
increase in match funded advances is primarily the result of a $100,000 increase
during 2005 in the amount of debt available at favorable rates under the match
funded securitization facility that we first executed in November 2004.

     Advances. Advances consist of the following:

                                                            December 31,
                                                     ---------------------------
                                                         2005           2004
                                                     ------------   ------------
Principal and interest ...........................   $     40,201   $     51,366
Taxes and insurance ..............................         98,331         94,642
Other ............................................         76,675         95,961
                                                     ------------   ------------
                                                     $    215,207   $    241,969
                                                     ============   ============

     During any period in which the borrower is not making payments, we are
required under certain servicing agreements to advance our own funds to meet
contractual principal and interest remittance requirements for investors, pay
property taxes and insurance premiums and process foreclosures. We generally
recover these advances from borrowers for reinstated and performing loans and
from investors for foreclosed loans. We record a charge to the extent that we
estimate that advances are uncollectible, taking into consideration the age and
nature of the advance and our historical loss experience, among other factors.
Advances on loans serviced for others are net of reserves of $570 and $2,437 as
of December 31, 2005 and 2004, respectively.

     Mortgage Servicing Rights. The unamortized balance of mortgage servicing
rights is primarily related to subprime residential loans. Our investment
increased by $17,254 during 2005 as purchases exceeded amortization. Mortgage
servicing rights declined during 2004 as amortization exceeded purchases,
reflecting the more cautious acquisition strategy that we had adopted given the
uncertainty of prepayment speeds. Of the $113,946 of purchases in 2005, $57,238
or 50% closed during the fourth quarter, reflecting an improvement in market
conditions.

                                                           December 31,
                                                    ---------------------------
                                                        2005           2004
                                                    ------------   ------------
Balance at beginning of period ...................  $    131,409   $    166,495
Purchases ........................................       113,946         60,950
Amortization .....................................       (96,692)       (96,036)
                                                    ------------   ------------
Balance at end of period .........................  $    148,663   $    131,409
                                                    ============   ============

     At December 31, 2005, we serviced loans under 466 servicing agreements for
22 investors. This compares to 345 servicing agreements for 22 investors at
December 31, 2004.

     Receivables. Receivables related to the Residential Servicing business
include $15,674 and $12,801 at December 31, 2005 and December 31, 2004,
respectively, representing fees earned from the servicing of loans and real
estate. The remaining balance consists principally of reimbursable expenses due
from loan servicing investors. The total balance of receivables for this segment
is net of reserves of $6,509 and $3,395 at December 31, 2005 and December 31,
2004, respectively.

                                       22

<PAGE>

     Match Funded Liabilities. Match funded liabilities represent proceeds
received from transfers of loans and advances on loans serviced for others.
Because we retained effective control over the assets transferred, these
transfers did not qualify as sales for accounting purposes, and we, therefore,
report them as secured borrowings with pledges of collateral.


<TABLE>
<CAPTION>
                                                                          Balance Outstanding at
                                                           Unused              December 31,
                                                          Borrowing    ---------------------------
  Collateral                 Interest Rate                Capacity         2005           2004
---------------   -----------------------------------   ------------   ------------   ------------
<S>               <C>                                   <C>            <C>            <C>
Advances (1)      See (1) below                         $     36,057   $    238,943   $    149,341
Advances (2)      1-Month LIBOR + 175 basis points            24,651        100,349         90,852
                                                        ------------   ------------   ------------
                                                        $     60,708   $    339,292   $    240,193
                                                        ============   ============   ============
</TABLE>


(1)  In November 2004, we executed a servicing advance securitization. This
     transaction involved the issuance of a term note for $100,000 and a
     one-year variable funding note for a maximum of $75,000. On March 31, 2005,
     we executed an indenture supplement to the November 2004 securitization
     with a closing date of April 6, 2005.This supplement included the issuance
     of a second term note for $75,000. In addition, the maximum amount of the
     variable funding note was increased to $100,000.The original term note
     bears interest at LIBOR plus 50 basis points, and the second term note
     bears interest at LIBOR plus 40 basis points. The variable funding note
     bears interest at a commercial paper rate plus a margin that approximates
     LIBOR plus 50 basis points. The original term note under this facility has
     a stated maturity of October 2013, and the second term note has a stated
     maturity of March 2014.The variable funding note has a stated maturity of
     November 2011.The variable funding note has a stated maturity of November
     2010. 1-Month LIBOR was 4.39% and 2.40% at December 31, 2005 and 2004,
     respectively.
(2)  Under the terms of the agreement, we are eligible to finance additional
     advances on loans serviced for others up to a maximum balance of $125,000.
     This facility will mature in January 2007.

     Servicer Liabilities. Servicer liabilities represent amounts we have
collected, primarily from Residential Servicing borrowers, that will be
deposited in custodial accounts and excluded from our balance sheet, paid
directly to an investment trust or refunded to borrowers. The following table
sets forth the principal components of servicer liabilities:

                                                            December 31,
                                                     ---------------------------
                                                         2005           2004
                                                     ------------   ------------
Borrower payments due to custodial accounts ......   $    225,862   $    255,040
Escrow payments due to custodial accounts ........         22,573          3,786
Partial payments and other unapplied balances ....         50,457         32,439
                                                     ------------   ------------
                                                     $    298,892   $    291,265
                                                     ============   ============

     Lines of Credit and Other Secured Borrowings. Secured line of credit
arrangements are as follows:


<TABLE>
<CAPTION>
                                                                                        Balance Outstanding at
                                                                         Unused              December 31,
                                                                        Borrowing    ---------------------------
    Borrowing Type          Interest Rate (1)          Maturity         Capacity         2005           2004
---------------------     ---------------------      -------------    ------------   ------------   ------------
<S>                       <C>                        <C>              <C>            <C>            <C>
Senior secured credit     1-Month LIBOR + 162.5
  agreement (2)            or 225 basis points         June 2006      $     58,782   $     81,218   $     24,218
Senior secured credit      1-Month LIBOR + 250
  agreement (3)               basis points           December 2005              --             --         11,458
                                                                      ------------   ------------   ------------
                                                                      $     58,782   $     81,218   $     35,676
                                                                      ============   ============   ============
</TABLE>


(1)  1-month LIBOR was 4.39% and 2.40% at December 31, 2005 and 2004,
     respectively.
(2)  Secured by mortgage servicing rights and advances on loans serviced for
     others. Borrowing secured by mortgage servicing rights is at LIBOR plus 225
     basis points. Borrowing secured by other acceptable collateral is at LIBOR
     plus 162.5 basis points. The interest rate may be reduced to 1.625% or
     2.25% to the extent that we have available balances on deposit with the
     lender.
(3)  We repaid in full the balance outstanding under this credit agreement
     during the second quarter of 2005 and terminated the agreement.

     Escrow Deposits. Escrow deposits amounted to $86,084 at December 31, 2004
and consisted of custodial deposit balances representing funds collected from
borrowers for the payment of taxes and insurance premiums on mortgage properties
underlying loans that we serviced for others. In connection with debanking,
these custodial deposits were transferred from the Bank to an unaffiliated bank
and are now excluded from our balance sheet.

     Pre-tax income for the Residential Servicing segment increased by $5,056,
or 30%, in 2005 as compared to 2004. Increases in short-term interest rates
during 2005 have had a positive impact on our float earnings on funds that we
have received from borrowers that are held in

                                       23

<PAGE>

custodial accounts until remitted to investors. However, mortgage prepayment
speeds in our servicing portfolio remained high through most of 2005. Not only
do prepayments result in the loss of future servicing fees, they also result in
increases to the rate at which we amortize the balance of our servicing rights.
Prepayments also create an obligation for us to pay compensating interest
expense to investors for the full month of interest on loans that are repaid
before the end of a calendar month. Results for 2005 also reflect a decline in
operating expenses, primarily compensation and benefits and compensating
interest, and a decline in earnings from our VA contract due to decreased
transaction volumes.


<TABLE>
<CAPTION>
Selected operations data                                                     2005            2004            2003
----------------------------------------------------------------------   ------------    ------------    ------------
<S>                                                                      <C>             <C>             <C>
Unpaid principal balance of loans serviced at December 31 ............   $ 42,779,048    $ 34,524,491    $ 37,697,318
Number of loans serviced at December 31 ..............................        368,802         320,185         359,590
Average unpaid principal balance of loans serviced for the year ......   $ 37,850,025    $ 35,295,755    $ 33,830,520

Pre-tax income .......................................................   $     21,695    $     16,639    $     25,683
Revenue:
   Servicing and subservicing fees ...................................   $    268,122    $    266,595    $    259,251
   Process management fees ...........................................          7,423           8,165           7,500
   Other .............................................................          4,115           6,049             686
                                                                         ------------    ------------    ------------
     Total revenue ...................................................   $    279,660    $    280,809    $    267,437
                                                                         ============    ============    ============

Operating expenses:
   Compensation and benefits .........................................   $     35,022    $     40,004    $     33,987
   Amortization of servicing rights ..................................         96,692          96,036          93,558
   Occupancy and equipment ...........................................          9,605           9,852           7,270
   Technology and communications .....................................         22,700          20,462          15,411
   Professional services .............................................         13,862          12,547           6,631
   Servicing and origination .........................................         36,446          49,287          48,988
   Other .............................................................         22,190          16,570          15,331
                                                                         ------------    ------------    ------------
     Total operating expenses ........................................   $    236,517    $    244,758    $    221,176
                                                                         ============    ============    ============
Other income (expense):
   Interest income ...................................................   $        323    $        107    $         70
   Interest expense ..................................................        (21,752)        (19,745)        (20,962)
   Other .............................................................            (19)            226             314
                                                                         ------------    ------------    ------------
      Total other income (expense) ...................................   $    (21,448)   $    (19,412)   $    (20,578)
                                                                         ============    ============    ============
</TABLE>


     Servicing and Subservicing Fees. The principal components of servicing and
subservicing fees are provided in the table below, for the years indicated:


<TABLE>
<CAPTION>
                                                                             2005            2004            2003
                                                                         ------------    ------------    ------------
<S>                                                                      <C>             <C>             <C>
Servicing fees (1) ...................................................   $    170,522    $    174,274    $    166,425
Late charges .........................................................         35,095          40,149          35,461
Revenue from custodial accounts (float earnings) (2) .................         31,664          16,561          10,821
Prepayment and collection related fees ...............................          8,681          14,086          21,513
Other fees ...........................................................         22,160          21,525          25,031
                                                                         ------------    ------------    ------------
                                                                         $    268,122    $    266,595    $    259,251
                                                                         ============    ============    ============
</TABLE>


(1)  Servicing fees for 2005, 2004 and 2003 include $11,880, $19,286 and $4,714,
     respectively, of real estate property management fees associated with the
     contract we entered into with the VA in September 2003.
(2)  The increase in revenue from custodial accounts in 2005 is due to an
     increase in short-term interest rates. The yield we earned on these
     balances averaged 2.83% during 2005 as compared to 1.38% and 1.01% during
     2004 and 2003, respectively. Custodial accounts are excluded from our
     balance sheet. The average balances held in these custodial accounts were
     approximately $1,119,400, $1,322,200 and $993,000 for 2005, 2004 and 2003
     respectively. The underlying servicing agreements restrict the investment
     of float balances to certain types of instruments. We are responsible for
     any losses incurred on the investment of these funds; although to date, we
     have not incurred any such losses.

                                       24

<PAGE>

     The following table sets forth information regarding residential loans and
real estate serviced for others:


<TABLE>
<CAPTION>
                                  Loans (a)(b)(c)               Real Estate (d)                    Total
                            ---------------------------   ---------------------------   ---------------------------
                               Amount          Count         Amount          Count         Amount          Count
                            ------------   ------------   ------------   ------------   ------------   ------------
<S>                         <C>                 <C>       <C>                  <C>      <C>                 <C>
December 31, 2005:
    Performing ..........   $ 36,532,664        297,649   $         --             --   $ 36,532,664        297,649
    Non-performing ......      5,125,116         57,420      1,121,268         13,733      6,246,384         71,153
                            ------------   ------------   ------------   ------------   ------------   ------------
                            $ 41,657,780        355,069   $  1,121,268         13,733   $ 42,779,048        368,802
                            ============   ============   ============   ============   ============   ============
December 31, 2004:
    Performing ..........   $ 29,227,341        253,617   $         --             --   $ 29,227,341        253,617
    Non-performing ......      3,971,439         48,711      1,325,711         17,857      5,297,150         66,568
                            ------------   ------------   ------------   ------------   ------------   ------------
                            $ 33,198,780        302,328   $  1,325,711         17,857   $ 34,524,491        320,185
                            ============   ============   ============   ============   ============   ============
</TABLE>


(a)  At December 31, 2005 we serviced 304,234 subprime loans with a total unpaid
     principal balance of $37,429,090 as compared to 238,105 subprime loans with
     an unpaid principal balance of $28,374,493 at December 31, 2004. Subprime
     loans represent residential loans we service that were made by others to
     borrowers who generally did not qualify under guidelines of Fannie Mae and
     Freddie Mac ("nonconforming loans").
(b)  Non-performing loans have been delinquent for 90 days or more. Performing
     loans are current or have been delinquent for less than 90 days.
(c)  We serviced under subservicing contracts approximately 105,873 residential
     loans with an unpaid principal balance of $10,983,237 as of December 31,
     2005. This compares to approximately 58,776 residential loans with an
     unpaid principal balance of $7,063,232 serviced under subservicing
     contracts at December 31, 2004.
(d)  Real estate includes $683,193 and $839,654 of foreclosed residential
     properties serviced for the VA at December 31, 2005 and 2004, respectively.

     Compensation and Benefits Expense. The decrease in compensation expense and
benefits in 2005 as compared to 2004 has occurred primarily due to a decline in
the average number of employees in the U.S. as a result of cost reduction
initiatives put in place earlier in the year, including a greater utilization of
the lower cost workforce in India. Although average employment in India
increased in 2005, total average employment declined and the ratio of India
employment to total employment increased significantly as compared to 2004. The
increase in compensation and benefits in 2004 as compared to 2003 reflects an
increase in average employment, both in the U.S. and India.

     Average employment in the Residential Servicing segment for the last three
years is as follows:

                                     2005           2004           2003
                                 ------------   ------------   ------------
India ........................            918            817            671
United States ................            520            682            626
                                 ------------   ------------   ------------
                                        1,438          1,499          1,297
                                 ============   ============   ============

     The increase in average employment in 2004 as compared to 2003 was
primarily due to the following:

o    The property management contract we entered into with the VA in September
     2003 resulted in the need to hire additional staff.
o    In September 2003, we terminated our agreement with an external law firm to
     manage certain aspects of our loan resolution function, which included,
     among other functions, the issuance of obligatory breach notices to
     delinquent borrowers, for which the law firm charged us a fee. At that
     time, we decided to cease to assess these fees to borrowers although it was
     legally permissible for us to do so under the mortgage documents. Upon
     termination of the agreement, we began performing these functions
     internally. This resulted in the need to hire additional staff to perform
     these functions which increased 2004 compensation and benefit expenses as
     well as the related occupancy and technology costs.

     Professional Services Expense. Professional services in 2005 includes
$3,700 to provide for current and pending litigation, including $1,830 for a
judgment in a wrongful foreclosure case. While this amount is substantially less
than the initial jury verdict, we believe the award is not justified and will
continue to defend the case. See Note 28 to our Consolidated Financial
Statements for additional information regarding this matter.

                                       25

<PAGE>

     Servicing and Origination Expenses. The principal components of servicing
and origination expenses are:

                                     2005           2004           2003
                                 ------------   ------------   ------------
Compensating interest (1) ....   $     22,210   $     33,115   $     32,315
Satisfaction expense .........          6,273          6,117          2,771
Other ........................          7,963         10,055         13,902
                                 ------------   ------------   ------------
                                 $     36,446   $     49,287   $     48,988
                                 ============   ============   ============

(1)  During 2004 and 2003, prepayments on our loans serviced for others
     increased significantly primarily due to declining mortgage interest rates.
     Accordingly, we were required to pay increased compensating interest to the
     securitization trusts for the full month of interest on loans that were
     repaid before the end of a calendar month.

     Other Operating Expenses. Other primarily consists of overhead allocation
charges and bad debt expense. The increase in other operating expenses in 2005
is in large part due to an increase in bad debt expense as a result of providing
for aged reimbursable expenses that may be uncollectible. Bad debt expense
amounted to $4,598, $1,810 and $328 in 2005, 2004 and 2003, respectively.

COMMERCIAL SERVICING

     The decline in assets and liabilities of this segment during 2005 is
primarily due to the sale of two subsidiaries in December 2005 that were engaged
in servicing operations in Japan.

                                                            December 31,
                                                     ---------------------------
Selected balance sheet data                              2005           2004
--------------------------------------------------   ------------   ------------
Total assets .....................................   $      6,433   $     13,659
   Match funded loans ............................             --          4,134
   Receivables ...................................          2,508          2,736
Total liabilities ................................   $      3,220          8,028
   Match funded liabilities ......................             --          4,134

     Commercial match funded loans were held by one of the GSS subsidiaries in
Japan that was sold in 2005. These match funded loans resulted from the
transfer, on a non-recourse basis, of an undivided 100% participation interest
in certain real estate loans to a Japanese subsidiary of Merrill Lynch on March
30, 2004 in exchange for cash. The transfer did not qualify as a sale for
accounting purposes as we did not meet all of the conditions for surrender of
control over the transferred loans. Accordingly, we reported the amount of
proceeds we received from the transfer as a secured borrowing with pledge of
collateral (match funded liabilities).

     The Commercial Servicing segment became profitable in 2005 on increased
revenues, primarily reflecting higher asset resolution fees earned in both our
domestic servicing operations and our Asia operations of GSS as well as lower
operating expenses. Results for 2003 and 2004 reflect start-up costs related to
GSS.

Selected operations data             2005           2004           2003
------------------------------   ------------   ------------   ------------
Pre-tax income (loss) ........   $      2,940   $       (224)  $     (5,736)
Revenue:
    Servicing and subservicing
       fees ..................   $     14,030   $      9,736   $      6,312
    Other ....................          5,481          6,334            949
                                 ------------   ------------   ------------
       Total revenue .........   $     19,511   $     16,070   $      7,261
                                 ============   ============   ============

Operating  expenses ..........   $     16,419   $     17,468   $     13,766

     Servicing Fees. The principal components of servicing fees are:

                                         2005           2004           2003
                                     ------------   ------------   ------------
International servicing fees (1) ..  $      8,961   $      5,281   $      3,867
Domestic servicing fees ...........         5,069          4,455          2,445
                                     ------------   ------------   ------------
                                     $     14,030   $      9,736   $      6,312
                                     ============   ============   ============

(1)  International servicing fees include $4,389, $3,507 and $1,674 earned by
     our Japan operations, which we sold in December 2005.

                                       26

<PAGE>

     The following table sets forth information regarding commercial loans and
real estate serviced for others:


<TABLE>
<CAPTION>
                                       Loans                      Real Estate                      Total
                            ---------------------------   ---------------------------   ---------------------------
                               Amount          Count         Amount          Count         Amount          Count
                            ------------   ------------   ------------   ------------   ------------   ------------
<S>                         <C>                   <C>     <C>                      <C>  <C>                   <C>
December 31, 2005:
    Performing ..........   $  1,389,787            300   $         --             --   $  1,389,787            300
    Non-performing ......        193,635            274         56,719             69        250,354            343
                            ------------   ------------   ------------   ------------   ------------   ------------
                            $  1,583,422            574   $     56,719             69   $  1,640,141            643
                            ============   ============   ============   ============   ============   ============
December 31, 2004:
    Performing ..........   $    847,811            365   $         --             --   $    847,811            365
    Non-performing ......     12,537,631          9,398        121,210             35     12,658,841          9,433
                            ------------   ------------   ------------   ------------   ------------   ------------
                            $ 13,385,442          9,763   $    121,210             35   $ 13,506,652          9,798
                            ============   ============   ============   ============   ============   ============
</TABLE>


     At December 31, 2005, our international offices serviced a total of 272
loans with an unpaid principal balance of $1,269,796. This compares to 9,267
loans with an unpaid principal balance of $12,826,411 serviced at December 31,
2004. The reduction is primarily due to the sale of our Japanese operations in
the fourth quarter of 2005 which serviced a total of 8,909 loans with an unpaid
principal balance of $12,300,754 at December 31, 2004.

OCWEN RECOVERY GROUP

     Overall results for the past three years reflect a shift in revenue from a
maturing portfolio of proprietary assets to lower yielding third-party
contracts.


<TABLE>
<CAPTION>
Selected operations data                       2005            2004           2003
----------------------------------------   ------------    ------------   ------------
<S>                                        <C>             <C>            <C>
Pre-tax income (loss) ..................   $       (684)   $      3,916   $      5,300
Revenue:
    Servicing fees:
      Third-party collections (1) ......   $     10,345    $     11,575   $      9,167
      Proprietary recoveries (2) .......          1,338           2,071          2,737
                                           ------------    ------------   ------------
        Total revenue ..................   $     11,683    $     13,646   $     11,904
                                           ============    ============   ============

Operating expenses (3) .................   $     12,715    $      9,901   $      6,856
</TABLE>


(1)  On collections of unsecured receivables for third party owners, we
     generally earn a fee based upon a percentage of the amount collected.
(2)  Recoveries of unsecured credit card receivables that we own have declined
     as these portfolios have declined in size and have not been replaced. We
     have not purchased any unsecured credit card receivables since 2000.
(3)  The increase in operating expenses in 2005 and 2004 is largely due to the
     following:
     o    Higher compensation and benefits in 2004 and the first half of 2005
          due to an increase in staffing levels;
     o    An increase in legal fees and settlements in 2005 related to the
          settlement of contract disputes; and
     o    An increased share of corporate overhead costs in 2005.

RESIDENTIAL ORIGINATION SERVICES

     Total assets of this segment increased by $630,084 during 2005 primarily
due to a $616,234 increase in loans held for resale. This increase is largely
the result of loans acquired during the fourth quarter. These loans were
acquired with the intention of securitizing them and retaining the residual
securities. The securitization was completed in February 2006. In addition to
providing various mortgage due diligence and loan origination services, our
strategy in this business includes the targeted acquisition of residual
securities, either directly or indirectly through the purchase and subsequent
securitization of loans. The $535,946 increase in liabilities in 2005 is
primarily due to a repurchase agreement to finance the purchase of the loans.

                                       27

<PAGE>

                                                            December 31,
                                                     ---------------------------
Selected balance sheet data                              2005           2004
--------------------------------------------------   ------------   ------------
Total assets .....................................   $    679,432   $     49,348
   Trading securities ............................         27,023         35,277
   Loans held for resale .........................        624,671          8,437
   Receivables ...................................         18,497          3,455
Total liabilities ................................   $    538,226   $      2,280
   Lines of credit and other secured borrowings ..        530,569             --

     Trading Securities. Consists of subordinate and residual securities. During
2005, the balance declined by $8,254 primarily due to a decrease in the fair
value of the unrated UK subprime residual securities, principal repayments and
amortization. This decline was offset in part by a residual security with a fair
value of $705 at December 31, 2005 that was retained in connection with a
securitization of loans held for resale during the fourth quarter.

     Subordinate and residual securities do not have a contractual maturity but
are paid down over time as cash distributions are received. The weighted average
remaining life of these securities was 3.5 years at December 31, 2005.The
anticipated effective yield to maturity as of December 31, 2005 based on the
purchase price, actual cash flows received to date and the current estimate of
future cash flows under the assumptions was 15.31%. The original anticipated
effective yield to maturity based on the purchase price and anticipated future
cash flows under pricing assumptions was 18.68%. Differences in the December 31,
2005 anticipated yield to maturity from that originally anticipated are due to
differences between estimated cash flows and actual cash flows. Each quarter, we
update the assumptions used to estimate future cash flows based on the actual
results to date. The primary assumptions include prepayment speeds, loss rates
and the discount rate. The mortgages that underlie our residential trading
unrated subprime subordinate and residual securities amounted to $397,088 at
December 31, 2005 and are secured by properties located in 50 states and the UK.
The largest aggregate value of mortgages in any one state or foreign country is
$34,436 in the UK.

     Loans Held for Resale. Loans held for resale represent single-family
residential loans originated or acquired by our Residential Origination Services
segment that we intend to sell or securitize. These loans are carried at the
lower of cost or market value and were comprised of the following at December
31, 2005:

o    Loans with a carrying value of $469,937, net of market valuation reserve of
     $4,380, were acquired during the fourth quarter of 2005. These loans were
     securitized in a transaction that closed in February 2006.
o    Loans with a carrying value of $11,885 (unpaid principal balance of
     $15,164), net of a market valuation reserve of $3,279, were acquired as a
     part of an acquisition of $81,853 of loans in September 2005 in connection
     with the termination of securitization trusts in which we were the servicer
     and holder of residual securities. These loans included non-performing
     loans at the time of acquisition. In October 2005, we completed a
     securitization involving $59,756 of these loans. The remaining carrying
     value at December 31, 2005 includes $10,857 of non-performing loans.
o    Loans with a carrying value of $51,406 were originated in connection with
     our new origination services business.
o    A balance of $18,587 represented loans that were originated in response to
     requests from Residential Servicing customers to refinance their mortgage.
     A balance of $8,437 of such loans was outstanding at December 31, 2004, all
     of which were sold in January 2005. Only loans with sales commitments prior
     to closing are originated under this program. Of the loans outstanding at
     December 31, 2005, nearly all were sold in January 2006.
o    Loans with a carrying value of $72,856 were held by a consolidated VIE. The
     majority of these loans were sold in February 2006.

     Receivables. The $15,042 increase in receivables during 2005 is primarily
due to uncollected principal and interest on loans held for resale.

                                       28

<PAGE>

     Lines of Credit and Other Secured Borrowings. The loans we acquired in the
fourth quarter of 2005 were funded through a transaction involving the sale of
loans under an agreement to repurchase which we account for as a collateralized
financing. The loans were securitized in February 2006 and the outstanding
balance was repaid. Lines of credit and other secured borrowings are as follows:


<TABLE>
<CAPTION>
                                                                                     Balance Outstanding at
                                                                      Unused              December 31,
                                                                     Borrowing    ---------------------------
     Borrowing Type            Interest Rate        Maturity          Capacity        2005           2004
-------------------------   -------------------  --------------    ------------   ------------   ------------
<S>                         <C>                  <C>               <C>            <C>            <C>
Repurchase agreement        1-Month LIBOR + 75   March 2006 (1)    $         --   $    459,400   $         --
Master loan and security    1-Month LIBOR + 55
  agreement (2)             or 355 basis points   October 2006          100,000             --             --
Master loan and security
  agreement -               1-Month LIBOR + 55
  consolidated VIE (3)      or 355 basis points   October 2006          178,831         71,169             --
                                                                   ------------   ------------   ------------
                                                                   $    278,831   $    530,569   $         --
                                                                   ============   ============   ============
</TABLE>


(1)  This agreement matured on March 17, 2006.
(2)  We entered into this agreement on October 11, 2005 and any future
     borrowings under this agreement will be secured by mortgage loans. We can
     borrow up to 90% of the principal balance of the mortgage loans or 88.2% of
     the market value of the loans, whichever is lower, at LIBOR plus 55 basis
     points. Borrowing above this level is at LIBOR plus 355 basis points.
(3)  A consolidated VIE entered into this agreement on October 11, 2005.
     Borrowings under this agreement are secured by mortgage loans. The
     consolidated VIE can borrow up to 90% of the principal balance of the
     mortgage loans or 88.2% of the market value of the loans, whichever is
     lower, at LIBOR plus 55 basis points. Borrowing above this level is at
     LIBOR plus 355 basis points.

     Results for 2005 include an operating loss from the mortgage fulfillment
center and due diligence operation we acquired in December 2004. This loss
primarily reflects our need to increase processing staff in advance of increased
transaction volume. Our 2005 results were also impacted by declining earnings on
our maturing portfolio of UK-based residual securities, a provision to fully
reserve a working capital investment in a consolidated VIE and charges recorded
to provide market valuation reserves on loans held for resale. Our loan
refinancing program for residential servicing customers began earning fees in
the second quarter of 2004.


<TABLE>
<CAPTION>
Selected operations data                                2005            2004            2003
-------------------------------------------------   ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
Pre-tax income (loss) ...........................   $     (4,450)   $     13,503    $      5,533
Revenue:
    Process management fees .....................   $     54,511    $     41,368    $     22,394
    Other .......................................            221              16             627
                                                    ------------    ------------    ------------
      Total revenue .............................   $     54,732    $     41,384    $     23,021
                                                    ============    ============    ============
Operating expenses:
    Compensation and benefits ...................   $     12,581    $      5,413    $      2,018
    Servicing and origination ...................         24,049          23,056          10,897
    Occupancy and equipment .....................          1,643             862             558
    Technology and communications ...............          7,538           3,962           2,406
    Professional services .......................          3,680           1,248          12,051
    Other .......................................         21,730           6,468           7,656
                                                    ------------    ------------    ------------
      Total operating expenses ..................   $     71,221    $     41,009    $     35,586
                                                    ============    ============    ============
Other income (expense):
    Interest income:
      Subordinate and residual trading securities   $     11,778    $     14,803    $     16,223
      Loans held for resale .....................          4,642              --              --
      Other .....................................            325               9             494
                                                    ------------    ------------    ------------
       Total interest income ....................         16,745          14,812          16,717
    Interest expense ............................         (6,672)           (877)         (1,528)
    Gain (loss) on trading securities ...........             (7)         (2,004)          2,932
    Other, net ..................................          1,973           1,197             (23)
                                                    ------------    ------------    ------------
      Total other income (expense) ..............   $     12,039    $     13,128    $     18,098
                                                    ============    ============    ============
</TABLE>


                                       29

<PAGE>

     Process Management Fees. The principal components of process management
fees are:


<TABLE>
<CAPTION>
                                                        2005            2004            2003
                                                    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
Property valuation fees (1) .....................   $     29,122    $     30,373    $     18,804
Mortgage due diligence fees .....................          9,109              --              --
Loan refinancing fees ...........................          6,078           2,362              --
Other (2) .......................................         10,202           8,633           3,590
                                                    ------------    ------------    ------------
                                                    $     54,511    $     41,368    $     22,394
                                                    ============    ============    ============
</TABLE>


(1)  The increase in property valuation fees in 2004 reflects an increase in
     volume primarily as a result of the VA contract entered into in September
     2003.
(2)  Other primarily includes title service and other fees earned from vendors
     in the REALTrans network.

     Operating Expenses. The increase in operating expenses in 2005 is in large
part due to increased staffing, technology and other operating expenses
associated with the mortgage fulfillment center and due diligence operation we
acquired in December 2004. Servicing and origination expenses for 2005, 2004 and
2003 include $19,426, $20,747 and $10,649, respectively, of fees incurred in
connection with the residential property valuation services that we provided.
Other operating expenses for 2005 include a charge of $7,238 to recognize the
full impairment of a working capital investment in a consolidated VIE and
charges of $4,380 to reduce loans held for resale to market value. Professional
services for 2003 include a $10,000 settlement resulting from a proceeding
before an arbitration panel in connection with a subsidiary which ceased
operations in 1999.

     Gain (Loss) on Trading Securities These gains and losses primarily
represent unrealized gains and losses on unrated subprime residual securities
backed by subprime residential loans originated in the UK. A decline in cash
flows from the UK securities has resulted in reduced interest income and a
decline in fair value. The $5,475 of net unrealized losses for 2005 were almost
entirely offset by realized gains of $5,468. The realized gains resulted from
the following:

o    On June 30, 2005, we purchased $11,766 of unrated residual securities
     related to loans for which we were the master servicer for the related
     securitizations. As the master servicer, we had the clean-up call rights to
     collapse the related trusts once the balance of the underlying loans
     outstanding reached the optional termination amount of 10% of the original
     amount of loans in the securitization. In September 2005, we exercised our
     call rights and purchased the approximately $81,853 of remaining loans from
     the trusts. As a result, the over collateralization was remitted to us, and
     we realized a gain of $8,495 on the residual securities that we had
     purchased. We purchased the loans with the intention of securitizing or
     selling them. A portion of the loans that we acquired were nonperforming,
     and we recorded a provision of $6,476 to reduce these nonperforming loans
     to their market value, yielding a net gain of $2,019.
o    In October 2005, we completed the securitization of $59,756 of the loans
     acquired in the transaction described above and recorded a gain of $3,449.
     We retained a residual security with a fair value of $705.

BUSINESS PROCESS OUTSOURCING

     This segment began operations in 2002. Results reflect the initiation of
new outsourcing contracts in late 2003 and 2004 and the expansion of sales and
marketing activities in 2004.


<TABLE>
<CAPTION>
Selected operations data                                2005            2004            2003
-------------------------------------------------   ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
Pre-tax income ..................................   $      1,225    $      2,205    $      1,893
Process management fees .........................         11,265           9,493           4,496
Operating expenses ..............................          9,945           7,264           2,598
</TABLE>


                                       30

<PAGE>

CORPORATE ITEMS AND OTHER

     The decline in assets during 2005 primarily reflects a decline in cash and
investment grade securities used to fund the transfer of our customer deposits
to Marathon in connection with debanking. The decline in liabilities in 2005 is
largely due to the transfer of customer deposits to Marathon and the repurchase
of debt securities.

                                                            December 31,
                                                     ---------------------------
Selected balance sheet data                              2005           2004
--------------------------------------------------   ------------   ------------
Total assets .....................................   $    382,513   $    829,249
   Trading securities ............................          4,939         90,465
   Receivables ...................................         21,891         94,643
   Premises and equipment, net ...................         37,227         35,400
   Other assets ..................................         52,985         50,567
Total liabilities ................................   $    214,894   $    578,449
   Lines of credit and other secured borrowings ..         14,661         14,936
   Debt securities ...............................        154,329        231,249
   Deposits ......................................             --        290,507
   Other liabilities .............................         45,904         41,655

     Trading Securities. The following table sets forth the fair value of our
trading securities in the Corporate Items and Other segment:

                                                            December 31,
                                                     ---------------------------
                                                         2005           2004
                                                     ------------   ------------
Investment grade securities:
    U.S. Treasury securities .....................   $         --   $      1,594
    Collateralized mortgage obligations
      (AAA-rated) (1) ............................             --         81,466
    Bonds and debentures (2) .....................          1,685          3,155
                                                     ------------   ------------
                                                            1,685         86,215
Subordinates (commercial unrated) ................          3,254          4,250
                                                     ------------   ------------
                                                     $      4,939   $     90,465
                                                     ============   ============

(1)  Prior to debanking, we invested in CMOs as needed to meet the Qualified
     Thrift Lender requirements of the Bank.
(2)  These securities were acquired in connection with our acquisition of BOK.

     Receivables. Receivables in this segment consist of the following:

                                                            December 31,
                                                     ---------------------------
                                                         2005           2004
                                                     ------------   ------------
Amounts due from sales of affordable housing
   properties (1) ................................   $     13,160   $     18,308
Income taxes (2) .................................            (95)        68,463
Other (3) ........................................          8,826          7,872
                                                     ------------   ------------
                                                     $     21,891   $     94,643
                                                     ============   ============

(1)  The balance primarily represents payments to be received in future years
     (through June 2014) from the sale of investments in affordable housing
     properties. The balances are net of an unaccreted discounts of $1,530 and
     $2,346 and a reserves for doubtful accounts of $6,150 and $5,596 at
     December 31, 2005 and 2004, respectively.
(2)  As of December 31, 2004, income taxes receivable included $63,398 of
     federal tax refund claims, including $6,872 of accrued interest on the
     claims. In September 2005, we collected the federal income tax refund
     claims, which totaled $ 65,317 including $ 8,772 of interest.
(3)  Other includes $3,701 and $3,384, at December 31, 2005 and 2004,
     respectively, of receivables related to BOK.

                                       31

<PAGE>

     Other Assets. Other assets held by this segment are comprised of the
following:

                                                            December 31,
                                                     ---------------------------
                                                         2005           2004
                                                     ------------   ------------
Deferred tax assets, net (1) .....................   $     20,270   $     17,677
Interest earning collateral deposits (2) .........         15,164          8,905
Deferred debt related costs ......................          4,349          8,260
Goodwill and intangibles .........................          5,435          5,435
Real estate ......................................          4,062         18,732
Prepaid expenses .................................          2,796          3,931
Loans (net of allowance of $40 and $4,546) .......            413          3,792
Affordable housing properties (3) ................             --          5,641
Other ............................................            496            718
                                                     ------------   ------------
                                                     $     52,985   $     73,091
                                                     ============   ============

(1)  Deferred tax assets are net of valuation allowances totaling $163,802 and
     $165,927 at December 31, 2005 and 2004, respectively.
(2)  The balance at December 31, 2005 and 2004 includes $8,912 and $8,905,
     respectively, of deposits that were required in order to obtain surety
     bonds for affordable housing properties that we sold before the end of the
     fifteen-year tax credit amortization period and on which we have previously
     claimed tax credits on our income tax returns. The surety bond is necessary
     in order to avoid the recapture of those tax credits previously claimed.
     The balance at December 31, 2005 also includes a $5,000 cash collateral
     account required under the Guaranty we entered into in connection with
     debanking. See Note 22 to the Consolidated Financial Statements for
     additional information regarding this agreement.
(3)  We sold our one remaining limited partnership interest in an affordable
     housing property during 2005 for a loss of $1,272.

     Lines of Credit and Other Secured Borrowings. Lines of credit and other
secured borrowings in this segment represent a mortgage note collateralized by
our loan servicing call center located in Orlando, Florida. This note has a
fixed interest rate of 5.62% and matures in October 2014.

     Debt Securities. Debt securities in this segment consist of the following:

                                                            December 31,
                                                     ---------------------------
                                                         2005           2004
                                                     ------------   ------------
3.25% Contingent Convertible Senior Unsecured
  Notes due August 1, 2024 (1) ...................   $    100,900   $    175,000
10.875% Capital Securities due August 1, 2027 (2)          53,429         56,249
                                                     ------------   ------------
                                                     $    154,329   $    231,249
                                                     ============   ============

(1)  On July 28, 2004, OCN issued $175,000 aggregate principal amount of 3.25%
     Contingent Convertible Senior Unsecured Notes due 2024 ("Convertible
     Notes"). The Convertible Notes are convertible at the option of the holder
     under certain circumstances into shares of our common stock at an initial
     conversion rate of 82.1693 shares per $1 principal amount of the
     Convertible Notes, subject to adjustment. During 2005, we repurchased
     $74,100 of the Convertible Notes generating total gains of $4,497, net of
     the write-off of unamortized issuance costs. See Note 14 to our
     Consolidated Financial Statements for additional details regarding the
     Convertible Notes.
(2)  During 2005 we repurchased $2,820 of the Capital Securities generating
     total losses of $239, net of the write-off of unamortized issuance costs.
     See Note 14 to our Consolidated Financial Statements for additional
     information regarding the Capital Securities.

     Deposits. In connection with debanking, on June 30, 2005, Marathon National
Bank assumed the customer deposits associated with the Bank's branch facility.
As a result of our termination of the Bank's status as a federal savings bank,
we are no longer able to accept deposits in the U.S. Total customer deposits
amounted to $290,507 at December 31, 2004.

     Other Liabilities. Other liabilities in this segment consist primarily of
accruals for incentive compensation awards, audit fees, legal fees and
settlements, interest on debt securities and other operating expenses. Other
liabilities also include funds of third parties held on deposit by BOK.

                                       32

<PAGE>

     The Corporate Items and Other segment recorded pre-tax income in 2005, as
compared to losses in 2004 and 2003, primarily as a result of gains on debt
repurchases and declines in operating expenses and interest expense.


<TABLE>
<CAPTION>
Selected operations data                                2005            2004            2003
-------------------------------------------------   ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
Pre-tax income (loss) ...........................   $        154    $    (10,639)   $    (27,153)
Revenue (1) .....................................   $     (1,475)   $     (1,516)   $      1,014
Operating expenses ..............................   $      6,669    $     15,039    $     15,578
Other income (expense), net:
    Interest income .............................   $      7,784    $      8,747    $      7,330
    Interest expense ............................         (8,158)         (9,696)        (16,164)
    Distributions on Capital Securities (2) .....             --              --          (3,059)
    Gain (loss) on trading securities ...........             20           1,467             412
    Gain (loss) on debt repurchases .............          4,258              --            (445)
    Other, net ..................................          4,394           5,398            (663)
                                                    ------------    ------------    ------------
      Total other income (expense) ..............   $      8,298    $      5,916    $    (12,589)
                                                    ============    ============    ============
</TABLE>


(1)  Revenues for 2005 and 2004 primarily represent the elimination of
     inter-company servicing and process management fees.
(2)  Effective with our adoption of SFAS No. 150 on July 1, 2003, distributions
     on Capital Securities are included in interest expense.

     Operating Expenses. Operating expenses for 2005, 2004 and 2003 include
$6,131, $6,468, and $7,170, respectively, of expenses associated with business
activities that are individually insignificant, primarily Affordable Housing,
Commercial Assets and BOK.

     In 2004, reserves of $4,000 were established to provide for the following
claims:

(a)  On February 8, 2005, a jury in Circuit Court for Palm Beach County, Florida
     returned verdicts of $1,000 and $1,056 in compensatory damages in favor of
     two former employees of the Bank in a lawsuit against OCN and the Bank as
     well as the award of $900 in plaintiff's attorney fees. We have filed
     motions for a new trial and have taken an appeal to the Florida Court of
     Appeals for the Fourth District.
(b)  On August 5, 2005, the trial judge in County Court for Nueces County,
     Texas, entered an Agreed Order of Dismissal, dismissing with prejudice all
     claims brought by two investor plaintiffs whose mortgage loan on an
     investment property was serviced by the Bank. After a trial in February
     2005, the jury returned a verdict in favor of plaintiffs for compensatory
     and statutory damages in the amount of $140. The parties subsequently
     entered into a definitive settlement agreement disposing of all claims. The
     amount of the settlement was within the reserve amount established for the
     case.
(c)  On November 3, 2004, the trial judge in litigation brought by Cartel Asset
     Management, Inc. ("Cartel") against OCN, the Bank and OTX in federal court
     in Denver, Colorado entered final judgment in the amount of $520 against
     OTX and nominal damages of two dollars against the Bank. No damages were
     entered against OCN. Notwithstanding the nominal damage award against the
     Bank, it was assessed a statutory award to Cartel of attorneys' fees in an
     additional amount of $170, and the Bank and OTX were further assessed costs
     in the amount of $9.

     See Note 28 to our Consolidated Financial Statements for additional
information regarding these matters.

     Interest Expense. Interest expense includes a portion of interest on the
$175,000 of 3.25% Convertible Notes that we issued in July 2004. For 2005, 2004
and 2003, interest expense included a total of $920, $4,250 and $11,575,
respectively, related to the Affordable Housing and Commercial Asset businesses.
The decline reflects the decline in the assets of those businesses, many of
which were not interest-earning assets.

     Other, net. Other, net is primarily comprised of the following:

o    Interest income on federal income tax refund claims of $1,900 and $ 6,874
     for 2005 and 2004, respectively. These claims, including accrued interest,
     were collected in September 2005.
o    Net gains (losses) from the operation, valuation and sale of real estate
     (primarily commercial) of $1,856, $(2,924) and $(2,140) were recorded in
     2005, 2004 and 2003 respectively. Gains on sales of real estate were $2,522
     in 2005, including a gain of $1,882 related to the sale of a commercial
     real estate investment during the third quarter.
o    A gain of $1,750 we recognized in the second quarter of 2005 in connection
     with the assumption of our customer deposit liabilities on June 30, 2005 by
     Marathon.

                                       33

<PAGE>

o    Gains (losses) from the operation, valuation and sale of affordable housing
     properties of $(1,750), $255 and $(284) were recognized in 2005, 2004 and
     2003, respectively. We recognized a loss of $1,272 in 2005 on the sale of
     our one remaining limited partnership interest in an affordable housing
     property.

MINORITY INTEREST IN SUBSIDIARIES

     Minority interest of $1,853 and $1,530 at December 31, 2005 and 2004,
respectively, represents the investment by others in Global Servicing Solutions,
LLC (GSS). ML IBK Positions, Inc. ("Merrill Lynch") owns 30% of GSS. In
addition, 10% of one of the Japanese operating subsidiaries of GSS that we sold
in 2005 was owned by an unaffiliated third party.

STOCKHOLDER'S EQUITY

     Stockholders' equity amounted to $347,407 at December 31, 2005 as compared
to $330,108 at December 31, 2004. The $17,299 increase in stockholders' equity
during 2005 was primarily due to net income of $15,065 and the issuance of
388,627 shares of common stock to employees as a result of the exercise of stock
options and the vesting of stock awards.

     We did not purchase any shares of our own common stock during the year
ended December 31, 2005. A total of 5,568,900 shares may be purchased under a
plan we announced on May 9, 2000 to repurchase up to 6,000,000 shares of our
issued and outstanding common stock. Our ability to repurchase shares of our
common stock is restricted under the terms of the Guaranty that we entered into
with the OTS in connection with debanking.

INCOME TAX EXPENSE (BENEFIT)

     The following table provides details of our income tax expense (benefit):


<TABLE>
<CAPTION>
                                                        2005            2004            2003
                                                    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
Income tax expense (benefit) on income (loss)
  before taxes ..................................   $      5,973    $      3,194    $     (1,427)
Provision for (reversal of) valuation allowance
  on deferred tax asset .........................         (2,125)        (35,518)          2,175
Provision for recapture of base year bad debt
  reserves ......................................          1,967              --              --
                                                    ------------    ------------    ------------
Total income tax expense (benefit) ..............   $      5,815    $    (32,324)   $        748
                                                    ============    ============    ============
</TABLE>


     We maintain a valuation allowance in an amount sufficient to reduce our
deferred tax asset to the amount that is more likely than not to be realized.
The valuation allowance amounted to $163,802 and $165,927 at December 31, 2005
and 2004, respectively. The amount of the valuation allowance was based on
consideration of all available evidence, both positive and negative, including
our recent earnings history, current tax position and estimates of future
taxable income. The tax character (ordinary versus capital) and the carry
forward and carry back periods of certain tax attributes (e.g., capital losses
and tax credits) were also considered. We assess the amount of our valuation
allowance each quarter and in light of our recent positive earnings history,
changes to the valuation allowance may be appropriate in 2006.

     The $35,518 reduction in the valuation allowance on the deferred tax asset
in 2004 is principally a result of refund claims of $56,526 filed with the IRS
that reduced our gross deferred tax asset and increased our income tax
receivable balance by the same amount. These refund claims, which were affirmed
in writing by the IRS agent during 2004, arose because of changes in the tax law
that allowed us to carry back net operating losses from 2001 and 2002 to taxes
paid in earlier years.

     In the second quarter of 2005, we recorded a one-time provision of $1,967
($1,124 net of a related reversal of the valuation allowance on the deferred tax
asset) to recognize a deferred tax liability arising from the recapture of bad
debt reserves in connection with our termination of the Bank's status as a
federal savings bank.

     Income tax expense (benefit) on income (loss) before income taxes differs
from amounts that would be computed by applying the Federal corporate income tax
rate of 35% primarily because of the effect of foreign taxes, non-economic tax
residual payments, changes in the valuation allowance and low-income housing tax
credits. See Note 19 to our Consolidated Financial Statements for a
reconciliation of taxes at the statutory rate to actual income tax expense
(benefit). Income tax expense reflects tax credits of $998, $4,848 and $2,393,
respectively. Although we have substantial unused tax credits available to
reduce the liability arising from income taxes on our current year income, tax
credits can be used to reduce income tax expense only to the corporate
alternative minimum tax rate of 20% of taxable income.

                                       34

<PAGE>

LIQUIDITY, COMMITMENTS AND OFF-BALANCE SHEET RISKS

LIQUIDITY

     Our primary sources of funds for liquidity are:

          o    Lines of credit and other secured borrowings
          o    Match funded liabilities
          o    Debt securities
          o    Servicing fees
          o    Payments received on trading securities

     We closely monitor our liquidity position and ongoing funding requirements.
At December 31, 2005, we had $267,896 of unrestricted cash, which represented
14% of total assets. Under certain of our credit facilities, we are required to
maintain minimum liquidity levels. Among the risks and challenges associated
with our funding activities are the following:

o    As a result of debanking, we are no longer able to raise funds through
     customer deposits in the U.S.
o    Cash requirements to fund our acquisition of additional servicing rights
     and related advances and to fund existing operations and growth in other
     core business lines.
o    The maturity of an existing line of credit with an outstanding balance of
     $81,218 in June 2006, subject to the renewal of this agreement.

     We grow our Residential Servicing business through the purchase of
servicing rights or by entering into subservicing agreements. Servicing rights
entitle us as the owner to earn servicing fees and other types of ancillary
income, but they also impose on us various obligations as the servicer. Among
these are the obligations to advance our own funds to meet contractual principal
and interest payments for certain investors and to pay taxes, insurance and
various other items that are required to preserve the assets being serviced.

     Our ability to expand our Residential Servicing business depends in part on
our ability to obtain additional financing to purchase new servicing rights and
to fund servicing advances. We currently use a variety of sources of debt to
finance these assets, including match funded agreements, credit facilities and
seller financing. Our credit facilities provide financing to us at amounts that
are less than the full value of the related servicing assets that serve as
collateral for the credit facilities. If we cannot replace or renew these
sources as they mature or obtain additional sources of financing, we may be
unable to acquire new servicing rights or make the associated advances. Credit
facilities directly related to our Residential Servicing business are summarized
as follows:

o    Under a match funding agreement that we entered into on December 20, 2001,
     we are eligible to sell advances on loans serviced for others up to a
     maximum debt balance of $125,000 at any one time. At December 31, 2005, we
     had $100,349 of match funded liabilities outstanding under this facility
     which will mature in January 2007.
o    We have a $140,000 secured credit agreement that may be used to fund
     servicing advances and acquisitions of servicing rights. At December 31,
     2005, we had a balance outstanding under this agreement of $81,218. The
     agreement matures in June 2006.
o    Under a match funding agreement we entered into on November 17, 2004, we
     are eligible to sell advances on loans serviced for others up to a maximum
     outstanding balance of $275,000. As of December 31, 2005, the balance
     outstanding under this agreement was $238,943. The two term notes of
     $100,000 and $75,000 under this facility have stated maturities of October
     2013 and March 2014, respectively. The variable funding note has a maximum
     amount of $100,000 and a stated maturity of November 2010.

     In addition, our Residential Origination Services has available a warehouse
line of credit of $100,000. We had no borrowings outstanding under this line,
which expires in October 2006.

     We believe that our existing sources of liquidity, including internally
generated funds, will be adequate to fund planned activities, although there can
be no assurances in this regard. At December 31, 2005, we had $398,321 of unused
borrowing capacity under existing credit agreements, including $178,831 that is
available to a consolidated VIE. We continue to evaluate other sources of
liquidity, such as debt securities, lines of credit from unaffiliated parties,
match funded debt and other secured borrowings.

     Our operating activities provided (used) $(328,174), $179,514 and $72,618
of cash flows during 2005, 2004 and 2003, respectively. The decline in operating
cash flow in 2005 primarily reflects the net increase in loans we held for
resale and a decline in the amount of borrower payments held by us prior to
their transfer to collection accounts, offset in part by the collection of
federal income tax refund claims and related interest totaling $65,317 and an
increase in cash provided by trading activities due primarily to the sale and
maturity of investment grade securities held at December 31, 2004.

                                       35

<PAGE>

    Our investing activities provided (used) cash flows totaling $(104,796),
$39,625,and $(18,777) during 2005, 2004 and 2003, respectively. The decline in
cash flows provided by investing activities in 2005 is largely the result of an
increase in purchases of mortgage servicing rights, coupled with a decline in
proceeds from the sale of real estate and a decline in principal payments
received on loans and partly offset by a decline in loan originations in 2005.

     Our financing activities provided cash flows of $159,690, $7,585 and $557
during 2005, 2004 and 2003, respectively. Cash flows provided by financing
activities increased in 2005 principally because of $459,400 of cash we received
under a collateralized borrowing agreement we entered into to finance a purchase
of loans held for resale, offset by a decline in deposits and the repurchase of
debt securities in 2005. The decline in deposits in 2005 resulted from maturing
certificates of deposit and the cash payment to Marathon in connection with its
assumption of our customer deposits. Also, in 2004 we received proceeds from our
issuance of $175,000 of 3.25% Convertible Notes, repurchased 5,481,100 shares of
our common stock and repaid a maturing line of credit collateralized by
servicing advances.

COMMITMENTS

     The following table sets forth certain information regarding amounts we owe
to others under contractual obligations as of December 31, 2005 based on
maturities and payment due dates:


<TABLE>
<CAPTION>
                                                                After One Year      After Three
                                                    Less Than    Through Three     Years Through      After Five
      Contractual Obligations         Note (1)      One Year         Years          Five Years           Years          Total
-----------------------------------   --------   ------------   ---------------   ---------------   ------------   ------------
<S>                                      <C>     <C>            <C>               <C>               <C>            <C>
3.25% Convertible Notes ...........      14      $         --   $            --   $            --   $    100,900   $    100,900
10.875% Capital Trust Securities ..      14                --                --                --         53,429         53,429
Operating leases ..................      28             3,626             5,019             2,324          1,665         12,634
Lines of credit and other secured
   borrowings .....................      13           540,618                --                --         14,661        555,279
                                                 ------------   ---------------   ---------------   ------------   ------------
   Subtotal .......................                   544,244             5,019             2,324        170,655        722,242
Lines of credit and other secured
   borrowings - consolidated VIE ..      13            71,169                --                --             --         71,169
                                                 ------------   ---------------   ---------------   ------------   ------------
   Total ..........................              $    615,413   $         5,019   $         2,324   $    170,655   $    793,411
                                                 ============   ===============   ===============   ============   ============
</TABLE>


(1)  See respective Notes to our Consolidated Financial Statements.

     We believe that we have adequate resources to fund all unfunded commitments
to the extent required and to meet all contractual obligations as they come due.

OFF-BALANCE SHEET RISKS

     As of December 31, 2005 we had outstanding commitments to fund mortgage
loans of $58,489 and outstanding commitments to sell $17,442 of these loans.

     In addition to commitments to extend credit, we are party to various
off-balance sheet financial instruments in the normal course of our business to
manage our interest rate risk and foreign currency exchange rate risk. We have
also committed to fund operating cash deficits of certain affordable housing
properties that we have sold and are a limited guarantor under a master loan and
security agreement that terminates in October 2006. Our guarantee is limited to
5% of the aggregate principal balance of the mortgage loans pledged to secure
any debt under this agreement. The maximum amount of potential future payments
under the guaranty is approximately $20,000, including $12,500 related to a
consolidated VIE. See Note 28 to our Consolidated Financial Statements and
"Quantitative and Qualitative Disclosures About Market Risk" below.

     We conduct business with a variety of financial institutions and other
companies in the normal course of business, including counterparties to our
off-balance sheet financial instruments. We are subject to potential financial
loss if the counterparty is unable to complete an agreed upon transaction. We
seek to limit counterparty risk through financial analysis, dollar limits and
other monitoring procedures.

RECENT ACCOUNTING DEVELOPMENTS

     During 2005, we adopted no new accounting standards that had a material
effect on our Consolidated Financial Statements. For additional information
relating to the effects of our adoption of recent accounting standards, see Note
1 to our Consolidated Financial Statements.

                                       36

<PAGE>


I
TEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Dollars in
thousands)

     Market risk includes interest rate risk, foreign currency exchange rate
risk and liquidity risk. We are exposed to interest rate risk to the degree that
our interest-bearing liabilities mature or reprice at different speeds, or
different bases, than our interest-earning assets. We are exposed to foreign
currency exchange rate risk in connection with our investment in non-U.S. dollar
functional currency operations and to the extent our foreign exchange positions
remain unhedged. Market risk also reflects the risk of declines in the valuation
of trading securities, mortgage servicing rights and in the value of the
collateral underlying loans.

     We are also exposed to liquidity risk primarily because of the highly
variable daily cash requirements to support the Residential Servicing business
including acquisitions of mortgage servicing rights, the requirement to make
advances pursuant to servicing contracts and the process of remitting borrower
payments to the custodial accounts. In general, we finance our operations
through operating cash flows and various other sources including long-term debt
and financing facilities. See "Liquidity, Commitments and Off-Balance Sheet
Risks" for additional discussion regarding liquidity.

     The primary risk associated with mortgage servicing rights is that they
will lose a portion of their value as a result of higher than anticipated
prepayments occasioned by declining interest rates or because of higher than
anticipated delinquency rates occasioned by deteriorating credit conditions.
Interest rates, prepayment speeds and the payment performance of the underlying
loans significantly affect both our initial and ongoing valuations and the rate
of amortization of mortgage servicing rights. As of December 31, 2005 and 2004,
we held $148,663 and $131,409, respectively, of mortgage servicing rights.

     Our Residential Servicing business is characterized by non-interest earning
assets financed by interest-bearing liabilities. Among the more significant
non-interest earning assets are servicing advances and mortgage servicing
rights. At December 31, 2005, we had servicing advances of $592,312 consisting
of advances on loans serviced for others of $215,207 and match funded advances
on loans serviced for others of $377,105.

     We are also exposed to interest rate risk because earnings on float
balances are affected by short-term interest rates. These float balances, which
are not included in our financial statements, amounted to $716,904 and $867,884
at December 31, 2005 and 2004, respectively. We report these earnings as a
component of servicing and subservicing fees.

     At December 31, 2005, the combined balance of our match funded liabilities,
debt securities, lines of credit and other secured borrowings totaled
$1,120,179. Of this amount $951,189 was variable rate debt, for which debt
service costs are sensitive to changes in interest rates, and $168,990 was fixed
rate debt.

IMPACT OF CHANGES IN INTEREST RATES ON THE NET VALUE OF INTEREST RATE-SENSITIVE
FINANCIAL INSTRUMENTS

     We perform an interest rate sensitivity analysis of our mortgage servicing
rights portfolio every quarter. We currently estimate that the fair value of the
portfolio increases by approximately 3.21% for every 50 basis point (bps)
increase in interest rates and reduces by approximately 3.37% for every 50 bps
decline in interest rates. Mortgage servicing rights are carried at the lower of
amortized cost or fair value by strata. To the extent that fair value was to
decline below amortized cost, we would record an impairment charge to earnings
and establish a valuation allowance. A subsequent increase in fair value could
result in the recovery of some or all of a previously established valuation
allowance. However, an increase in fair value of a particular stratum above its
amortized cost would not be reflected in current earnings.

                                       37

<PAGE>

     The following table shows our financial instruments that are sensitive to
changes in interest rates, categorized by expected maturity or repricing
characteristics, and the fair values of those instruments at December 31, 2005:

                 Expected Maturity Date at December 31, 2005 (1)


<TABLE>
<CAPTION>
                                                                                                               Total         Fair
                                     2006        2007        2008        2009        2010     Thereafter     Balance        Value
                                  ----------  ----------  ----------  ----------  ----------  ----------  ------------  -----------
<S>                               <C>         <C>         <C>         <C>         <C>         <C>         <C>           <C>
Rate-Sensitive Assets:
Interest-earning cash ..........  $   15,161  $       --  $       --  $       --  $       --  $       --  $     15,161  $     15,161
    Average interest rate ......        2.37%       0.00%       0.00%       0.00%       0.00%       0.00%
  Trading securities ...........      10,481       6,583       4,316       2,823       1,827       5,932        31,962        31,962
    Average interest rate ......       21.99%      20.31%      19.84%      22.25%      23.28%      26.26%        22.24%
  Loans held for resale (2)(3)..     624,671          --          --          --          --          --       624,671       624,671
    Average interest rate ......        7.53%       0.00%       0.00%       0.00%       0.00%       0.00%         7.53%
  Interest-earning collateral
    and debt service deposits ..      29,962          --          --          --          --          --        29,962        29,962
    Average interest rate ......        3.54%       0.00%       0.00%       0.00%       0.00%       0.00%         3.54%
                                  ----------  ----------  ----------  ----------  ----------  ----------  ------------  ------------
      Total rate-sensitive
       assets ..................  $  680,275  $    6,583  $    4,316  $    2,823  $    1,827  $    5,932  $    701,756  $    701,756
                                  ==========  ==========  ==========  ==========  ==========  ==========  ============  ============
Rate-Sensitive Liabilities:
  Match funded liabilities .....  $  339,292  $       --  $       --  $       --  $       --  $       --  $    339,292  $    339,292
    Average interest rate ......        4.96%       0.00%       0.00%       0.00%       0.00%       0.00%         4.96%
  Lines of credit and other
    secured borrowings (3) .....     611,787          --          --          --          --      14,661       626,448       626,448
    Average interest rate ......        5.29%       0.00%       0.00%       0.00%       0.00%       5.62%         5.28%
  Debt securities ..............          --          --          --     100,900          --      53,429       154,329       151,028
    Average interest rate ......        0.00%       0.00%       0.00%       3.25%       0.00%      10.88%         5.89%
                                  ----------  ----------  ----------  ----------  ----------  ----------  ------------  ------------
      Total rate-sensitive
       liabilities .............  $  951,079  $       --  $       --  $  100,900  $       --  $   68,090  $  1,120,069  $  1,116,768
                                  ==========  ==========  ==========  ==========  ==========  ==========  ============  ============
</TABLE>


(1)  Expected maturities are contractual maturities adjusted for prepayments of
     principal. We use certain assumptions to estimate fair values and expected
     maturities. For assets, expected maturities are based upon contractual
     maturity, projected repayments and prepayments of principal. We base the
     prepayment experience reflected herein on our historical experience. The
     actual maturities of these instruments could vary substantially if future
     prepayments differ from our historical experience.
(2)  The majority of loans held for resale at December 31, 2005 were either sold
     or securitized during the first quarter of 2006. The balances are net of
     market valuation reserves and include non-performing loans.
(3)  Includes loans and borrowings of a consolidated VIE.

     The expected maturity of interest rate-sensitive assets and liabilities as
of December 31, 2005 and 2004 compare as follows:


<TABLE>
<CAPTION>
                                    1st Year    2nd Year    3rd Year    4th Year    5th Year   Thereafter     Total
                                   ----------  ----------  ----------  ----------  ----------  ----------  ------------
<S>                                <C>         <C>         <C>         <C>         <C>         <C>         <C>
Total rate-sensitive assets:
2005
  Amount ........................  $  680,275  $    6,583  $    4,316  $    2,823  $    1,827  $    5,932  $    701,756
  Percent of total ..............       96.94%       0.94%       0.62%       0.40%       0.26%       0.84%       100.00%
2004
  Amount ........................  $  221,552  $   32,047  $    8,682  $    5,018  $    2,580  $    8,919  $    278,798
  Percent of total ..............       79.47%      11.49%       3.11%       1.80%       0.93%       3.20%       100.00%

Total rate-sensitive liabilities:
2005
  Amount ........................  $  951,079   $      --    $     --  $  100,900  $       --  $   68,090  $  1,120,069
  Percent of total ..............       84.91%       0.00%       0.00%       9.01%       0.00%       6.08%       100.00%
2004
  Amount ........................  $  489,579  $   47,264  $   22,042  $    5,098  $  175,449  $   72,750  $    812,182
  Percent of total ..............       60.28%       5.82%       2.71%       0.63%      21.60%       8.96%       100.00%
</TABLE>


     Our Asset/Liability Management Committee is authorized to utilize a wide
variety of off-balance sheet financial techniques to assist it in the management
of interest rate risk and foreign currency exchange rate risk. These techniques
include interest rate exchange contracts or "swap"

                                       38

<PAGE>

agreements, interest rate caps and floors, U.S. Treasury interest rate futures
contracts, foreign currency futures contracts, foreign currency forwards and
European swaptions and put options.

     We have entered into foreign currency futures to hedge our net investment
in the foreign subsidiary that owns our UK subprime residual securities. The
notional amount of these futures was (pound)13,438 ($23,148) at December 31,
2005. Our principal exposure to foreign currency exchange rates exists with the
British Pound versus the U.S. dollar. Our operations in India and the foreign
operations of GSS also expose us to foreign currency exchange rate risk.
However, this risk is insignificant. See Note 18 to our Consolidated Financial
Statements for additional information regarding our management of foreign
currency exchange rate risk.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this section is contained in the Consolidated
Financial Statements of Ocwen Financial Corporation and Report of
PricewaterhouseCoopers LLP, Independent Registered Certified Public Accounting
Firm, beginning on Page F-1.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.


ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     Our management, under the supervision of and with the participation of our
Chief Executive Officer and Principal Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures, as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as of the end of the period covered by this
report. Based on such evaluation, our Chief Executive Officer and Principal
Financial Officer have concluded that, as of the end of such period, our
disclosure controls and procedures are effective.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

     Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as that term is defined in Exchange
Act Rules 13a-15(f) and 15d-15(f).

     Under the supervision of and with the participation of our management,
including our Chief Executive Officer and Principal Financial Officer, we have
conducted an evaluation of our internal control over financial reporting as of
December 31, 2005, based on the framework set forth by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control
- Integrated Framework. Based on that evaluation, our management concluded that,
as of December 31, 2005, internal control over financial reporting is effective
based on criteria established in Internal Control - Integrated Framework issued
by the COSO.

     Management has excluded Funding America, LLC ("FA") from its assessment of
internal control over financial reporting as of December 31, 2005 because it was
acquired in a purchase business combination on December 28, 2005. FA is a VIE
consolidated under the provisions of FASB Interpretation No. 46, as revised.
FA's total assets represent approximately 4% of OCN's consolidated assets at
December 31, 2005.

     Management's assessment of the effectiveness of OCN's internal control over
financial reporting as of December 31, 2005, has been audited by
PricewaterhouseCoopers LLP, an independent registered certified public
accounting firm, as stated in their report which appears herein.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS

     A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and

                                       39

<PAGE>

directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the company's assets that could have a material effect on the financial
statements.

     Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

     There have not been any changes in our internal control over financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, during our fiscal quarter ended December 31, 2005 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.


ITEM 9B. OTHER INFORMATION

     There was no information required to be reported on Form 8-K during the
fourth quarter of the year covered by this Form 10-K that was not so reported.


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information contained in our definitive Proxy Statement with respect to
our Annual Meeting of Shareholders to be held on May 4, 2006 and as filed with
the Commission on March 23, 2006 (the "2006 Proxy Statement") under the captions
"Election of Directors - Nominees for Director," "Executive Officers Who Are Not
Directors," "Board of Directors and Corporate Governance - Committees of the
Board of Directors - Audit committee", "Security Ownership of Certain Beneficial
Owners and Related Stockholder Matters - Section 16(a) Beneficial Ownership
Reporting Compliance" and "Board of Directors and Corporate Governance - Code of
Ethics" is incorporated herein by reference.


ITEM 11. EXECUTIVE COMPENSATION

     The information contained in our 2006 Proxy Statement under the captions
"Executive Compensation," "Board of Directors Compensation" and "Comparison of
Cumulative Total Return" is incorporated herein by reference


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

     The information contained in our 2006 Proxy Statement under the captions
"Security Ownership of Certain Beneficial Owners and Related Stockholder Matters
- Beneficial Ownership of Common Stock" and "Security Ownership of Certain
Beneficial Owners and Related Stockholder Matters - Equity Compensation Plan
Information" are incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

     The information required by this item is included in our 2006 Proxy
Statement under the caption "Ratification of Appointment of Independent
Registered Certified Public Accounting Firm" and is incorporated herein by
reference.


                                     PART IV


ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(1) and (2)    Financial Statements and Schedules. The information required by
               this section is contained in the Consolidated Financial
               Statements of Ocwen Financial Corporation and Report of
               PricewaterhouseCoopers LLP, Independent Registered Certified
               Public Accounting Firm, beginning on Page F-1.

                                       40

<PAGE>

(3)            Exhibits. (Exhibits marked with a " * " denote management
               contracts or compensatory plans or agreements)

          2.1       Agreement of Merger dated as of July 25, 1999 among Ocwen
                    Financial Corporation, Ocwen Asset Investment Corp. and
                    Ocwen Acquisition Company (1)
          3.1       Amended and Restated Articles of Incorporation (2)
          3.2       Amended and Restated Bylaws (3)
          4.0       Form of Certificate of Common Stock (2)
          4.1       Certificate of Trust of Ocwen Capital Trust I (4)
          4.2       Amended and Restated Declaration of Trust of Ocwen Capital
                    Trust I (4)
          4.3       Form of Capital Security of Ocwen Capital Trust I (included
                    in Exhibit 4.4) (4)
          4.4       Form of Indenture relating to 10.875% Junior Subordinated
                    Debentures due 2027 of OCN (4)
          4.5       Form of 10.875% Junior Subordinated Debentures due 2027 of
                    OCN (included in Exhibit 4.6) (4)
          4.6       Form of Guarantee of OCN relating to the Capital Securities
                    of Ocwen Capital Trust I (4)
          4.7       Registration Rights Agreement dated as of July 28, 2004,
                    between OCN and Jeffries & Company Inc. (5)
          4.8       Indenture dated as of July 28, 2004, between OCN and the
                    Bank of New York Trust Company, N.A., as trustee (5)
         10.1*      Ocwen Financial Corporation 1996 Stock Plan for Directors,
                    as amended (6)
         10.2*      Ocwen Financial Corporation 1998 Annual Incentive Plan (7)
         10.3       Compensation and Indemnification Agreement, dated as of May
                    6, 1999, between OAC and the independent committee of the
                    Board of Directors (8)
         10.4       Indemnity agreement, dated August 24, 1999, among OCN and
                    OAC's directors (9)
         10.5*      Amended Ocwen Financial Corporation 1991 Non-Qualified Stock
                    Option Plan, dated October 26, 1999 (9)
         10.6       First Amendment to Agreement, dated March 30, 2000 between
                    HCT Investments, Inc. and OAIC Partnership I, L.P. (9)
         10.7*      Ocwen Financial Corporation Deferral Plan for Directors,
                    dated March 7, 2005 (10)
         10.8       Collateral Trust Agreement, dated June 28, 2005, between OCN
                    and the Bank of New York Trust Company, N.A. (11)
         10.9       Guaranty, dated June 28, 2005, from OCN to the Guaranteed
                    Parties (11)
         10.10      Cash Collateral Agreement, dated June 28, 2005, among OCN,
                    Bank of New York Trust Company, N.A. as collateral Trustee
                    and Bank of New York Trust Company, N.A. as Account Bank
                    (11)
         11.1       Computation of earnings per share (12)
         12.1       Ratio of earnings to fixed charges (filed herewith)
         21.0       Subsidiaries (filed herewith)
         23.0       Consent of PricewaterhouseCoopers LLP (filed herewith)
         31.1       Certification of the Chief Executive Officer pursuant to
                    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
                    herewith)
         31.2       Certification of the Chief Financial Officer pursuant to
                    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
                    herewith)
         32.1       Certification of the Chief Executive Officer pursuant to 18
                    U.S.C. Section 1350, as adopted pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002 (filed herewith)
         32.2       Certification of the Chief Financial Officer pursuant to 18
                    U.S.C. Section 1350, as adopted pursuant to Section 906 of
                    the Sarbanes-Oxley Act of 2002 (filed herewith)

(1)      Incorporated by reference from a similarly described exhibit included
         with the Registrant's Current Report on Form 8-K filed with the
         Commission on July 26, 1999.
(2)      Incorporated by reference from the similarly described exhibit filed in
         connection with the Registrant's Registration Statement on Form S-1
         (File No. 333-5153) as amended, declared effective by the commission on
         September 25, 1996.
(3)      Incorporated by reference from the similarly described exhibit included
         with the Registrant's Annual Report on Form 10-K for the year ended
         December 31, 1998.
(4)      Incorporated by reference from the similarly described exhibit filed in
         connection with our Registration Statement on Form S-1 (File No.
         333-28889), as amended, declared effective by the Commission on August
         6, 1997.
(5)      Incorporated by reference from the similarly described exhibit included
         with Registrant's Quarterly Report on Form 10-Q for the quarterly
         period ended June 30, 2004.
(6)      Incorporated by reference from the similarly described exhibit filed in
         connection with the Registrant's Registration Statement on Form S-8
         (File No. 333-44999), effective when filed with the Commission on
         January 28, 1998.
(7)      Incorporated by reference from the similarly described exhibit to our
         definitive Proxy Statement with respect to our 1998 Annual Meeting of
         Shareholders as filed with the Commission on March 31, 1998.
(8)      Incorporated by reference from OAC's Quarterly Report on Form 10-Q for
         the quarterly period ended September 30, 1999.

                                       41

<PAGE>

(9)      Incorporated by reference from the similarly described exhibit included
         with the Registrant's Quarterly Report on Form 10-Q for the quarterly
         period ended March 31, 2000.
(10)     Incorporated by reference from the similarly described exhibit included
         with the Registrant's Annual Report on Form 10-K for the year ended
         December 31, 2004.
(11)     Incorporated by reference from the similarly described exhibit included
         with the Registrant's Quarterly Report on Form 10-Q for the quarterly
         period ended June 30, 2005.
(12)     Incorporated by reference from "Note 17 Basic and Diluted Earnings per
         Share" on pages F-26 and F-27 of our Consolidated Financial Statements.

                                       42

<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on our behalf by the undersigned, thereunto duly authorized.

                                           Ocwen Financial Corporation

                                           By: /s/ William C. Erbey
                                               ---------------------------------
                                               William C. Erbey
                                               Chairman of the Board and
                                               Chief Executive Officer
                                               (duly authorized representative)

Date:  March 30, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

/s/ William C. Erbey                                       Date:  March 30, 2006
--------------------------------------------------
      William C. Erbey, Chairman of the Board
      and Chief Executive Officer
      (principal executive officer)

/s/ Ronald M. Faris                                        Date:  March 30, 2006
--------------------------------------------------
      Ronald M. Faris, President and Director

/s/ Martha C. Goss                                         Date:  March 30, 2006
--------------------------------------------------
      Martha C. Goss, Director

/s/ Ronald J. Korn                                         Date:  March 30, 2006
--------------------------------------------------
      Ronald J. Korn, Director

/s/ William H. Lacy                                        Date:  March 30, 2006
--------------------------------------------------
      William H. Lacy, Director

/s/ W. Michael Linn                                        Date:  March 30, 2006
--------------------------------------------------
      W. Michael Linn, Executive Vice President
      and Director
/s/ W. C. Martin                                           Date:  March 30, 2006
--------------------------------------------------
      W.C. Martin, Director

/s/ Barry N. Wish                                          Date:  March 30, 2006
--------------------------------------------------
      Barry N. Wish, Director

/s/ Robert J. Leist, Jr.                                   Date:  March 30, 2006
--------------------------------------------------
      Robert J. Leist, Jr., Senior Vice President
      and Principal Financial Officer
      (principal financial and accounting officer)

                                       43

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF
                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

December 31, 2005


<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

                                December 31, 2005


<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----

<S>                                                                                                           <C>
Report of Independent Registered Certified Public Accounting Firm...........................................  F-2

Financial Statements:

    Consolidated Balance Sheets at December 31, 2005 and 2004...............................................  F-4

    Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003..............  F-5

    Consolidated Statements of Comprehensive Income for the years ended December 31, 2005, 2004 and 2003....  F-6

    Consolidated Statements of Changes in Stockholders Equity for the years ended
      December 31, 2005, 2004 and 2003 .....................................................................  F-7

    Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003..............  F-8

    Notes to Consolidated Financial Statements..............................................................  F-10
</TABLE>


                                       F-1

<PAGE>


        REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Ocwen Financial Corporation:

     We have completed integrated audits of Ocwen Financial Corporation's 2005
and 2004 consolidated financial statements and of its internal control over
financial reporting as of December 31, 2005, and an audit of its 2003
consolidated financial statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Our opinions, based on our
audits, are presented below.

Consolidated financial statements

     In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Ocwen Financial Corporation and its subsidiaries (the "Company") at
December 31, 2005 and December 31, 2004, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
2005 in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit of financial statements
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     As discussed in Note 1 to the consolidated financial statements, effective
December 31, 2005 the Company has revised the presentation of their consolidated
financial statements.

Internal control over financial reporting

     Also, in our opinion, management's assessment, included in Management's
Report on Internal Control over Financial Reporting appearing under Item 9A,
that the Company maintained effective internal control over financial reporting
as of December 31, 2005 based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), is fairly stated, in all material respects, based on
those criteria. Furthermore, in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of
December 31, 2005, based on criteria established in Internal Control -
Integrated Framework issued by the COSO. The Company's management is responsible
for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting.
Our responsibility is to express opinions on management's assessment and on the
effectiveness of the Company's internal control over financial reporting based
on our audit. We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial reporting,
evaluating management's assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other
procedures as we consider necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinions.

     A company's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii)
provide

                                       F-2

<PAGE>

reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

     As described in Management's Report on Internal Control over Financial
Reporting appearing under Item 9A, management has excluded Funding America, LLC
("FA") from its assessment of internal control over financial reporting as of
December 31, 2005 because FA was acquired in a purchase business combination on
December 28, 2005. We have also excluded FA from our audit of internal control
over financial reporting. FA is a variable interest entity consolidated under
Financial Accounting Standards Board Interpretation No. 46, as revised. FA's
total assets represent approximately 4% of the Company's consolidated assets at
December 31, 2005.


/s/ PRICEWATERHOUSECOOPERS LLP
Fort Lauderdale, Florida
March 30, 2006

                                       F-3

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                    (Dollars in thousands, except share data)


<TABLE>
<CAPTION>
                                                                        December 31,   December 31,
                                                                            2005           2004
                                                                        ------------   ------------
<S>                                                                     <C>            <C>
ASSETS
    Cash .............................................................  $    269,611   $    542,891
    Trading securities, at fair value
        Investment grade .............................................         1,685         86,215
        Subordinates and residuals ...................................        30,277         39,527
    Loans held for resale ............................................       624,671          8,437
    Match funded assets (including advances of $377,105 in 2005
        and $276,626 in 2004) ........................................       377,105        280,760
    Advances .........................................................       219,716        240,430
    Mortgage servicing rights ........................................       148,663        131,409
    Receivables ......................................................        68,266        126,719
    Premises and equipment, net ......................................        40,108         37,440
    Other assets .....................................................        74,031         88,704
                                                                        ------------   ------------
        Total assets .................................................  $  1,854,133   $  1,582,532
                                                                        ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
    LIABILITIES
        Match funded liabilities .....................................  $    339,292   $    244,327
        Servicer liabilities .........................................       298,892        291,265
        Lines of credit and other secured borrowings .................       626,448         50,612
        Debt securities ..............................................       154,329        231,249
        Other liabilities ............................................        85,912         56,850
        Deposits .....................................................            --        290,507
        Escrow deposits ..............................................            --         86,084
                                                                        ------------   ------------
           Total liabilities .........................................     1,504,873      1,250,894
                                                                        ------------   ------------

    Minority interest in subsidiaries ................................         1,853          1,530

    COMMITMENTS AND CONTINGENCIES (Note 28)

    STOCKHOLDERS' EQUITY
        Common stock, $.01 par value; 200,000,000 shares
           authorized; 63,133,471 and 62,739,478 shares issued
           and outstanding at December 31, 2005 and
           December 31, 2004, respectively ...........................           631            627
        Additional paid-in capital ...................................       184,262        181,336
        Retained earnings ............................................       163,198        148,133
        Accumulated other comprehensive income (loss), net of taxes ..          (684)            12
                                                                        ------------   ------------
        Total stockholders' equity ...................................       347,407        330,108
                                                                        ------------   ------------
           Total liabilities and stockholders' equity ................  $  1,854,133   $  1,582,532
                                                                        ============   ============
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements

                                       F-4

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (Dollars in thousands, except share data)


<TABLE>
<CAPTION>
                                                                             For the Years Ended December 31,
                                                                        -----------------------------------------
                                                                            2005           2004          2003
                                                                        ------------   ------------  ------------
<S>                                                                     <C>            <C>           <C>
REVENUE
    Servicing and subservicing fees ..................................  $    293,569   $    288,101  $    277,428
    Process management fees ..........................................        71,961         59,024        34,338
    Other revenues ...................................................         9,846         12,761         3,367
                                                                        ------------   ------------  ------------
        Total revenue ................................................       375,376        359,886       315,133
                                                                        ------------   ------------  ------------

OPERATING EXPENSES
    Compensation and benefits ........................................        94,625         87,283        72,221
    Amortization of servicing rights .................................        96,692         96,036        93,558
    Occupancy and equipment ..........................................        17,676         15,933        13,159
    Technology and communications ....................................        30,375         26,049        21,121
    Professional services ............................................        25,975         28,891        26,708
    Servicing and origination ........................................        61,083         72,914        61,089
    Other operating expenses .........................................        27,060          8,333         7,704
                                                                        ------------   ------------  ------------
        Total operating expenses .....................................       353,486        335,439       295,560
                                                                        ------------   ------------  ------------

OTHER INCOME (expense)
    Interest income ..................................................        25,238         23,676        24,122
    Interest expense .................................................       (37,261)       (30,364)      (38,716)
    Distributions on Capital Securities ..............................            --             --        (3,059)
    Gain (loss) on trading securities ................................            13           (537)        3,344
    Gain (loss) on debt repurchases ..................................         4,258             --          (445)
    Other, net .......................................................         6,742          8,178           701
                                                                        ------------   ------------  ------------
        Other income (expense), net ..................................        (1,010)           953       (14,053)
                                                                        ------------   ------------  ------------

Income (loss) before income taxes ....................................        20,880         25,400         5,520
Income tax expense (benefit) .........................................         5,815        (32,324)          748
                                                                        ------------   ------------  ------------
    Net income .......................................................  $     15,065   $     57,724  $      4,772
                                                                        ============   ============  ============

EARNINGS PER SHARE
   Basic .............................................................  $       0.24   $       0.88  $       0.07
   Diluted ...........................................................  $       0.24   $       0.82  $       0.07

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
  Basic ..............................................................    62,912,768     65,811,697    67,166,888
  Diluted ............................................................    63,885,439     73,197,255    68,063,873
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements

                                       F-5

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                            For the Years Ended December 31,
                                                                        -----------------------------------------
                                                                            2005           2004          2003
                                                                        ------------   ------------  ------------
<S>                                                                     <C>            <C>           <C>
Net income ...........................................................  $     15,065   $     57,724  $      4,772
Other comprehensive income (loss), net of taxes:
    Change in unrealized foreign currency translation income (loss)
       arising during the year (net of tax benefit (expense)
       of $65, $354 and $(459) .......................................          (110)          (603)          661
    Less: Reclassification adjustment for foreign currency translation
          gains included in net income (net of tax benefit of $344) ..          (586)            --            --
                                                                        ------------   ------------  ------------
    Net change in unrealized foreign currency translation gain .......          (696)          (603)          661
                                                                        ------------   ------------  ------------
Comprehensive income .................................................  $     14,369   $     57,121  $      5,433
                                                                        ============   ============  ============
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       F-6

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 and 2003
                    (Dollars in thousands, except share data)


<TABLE>
<CAPTION>
                                                                                                       Accumulated
                                                                                                          Other
                                                   Common Stock           Additional                  Comprehensive
                                           ---------------------------      Paid-in       Retained    Income (Loss),
                                              Shares         Amount         Capital       Earnings     Net of Taxes       Total
                                           ------------   ------------   ------------   ------------  --------------   ------------
<S>                                          <C>          <C>            <C>            <C>           <C>              <C>
Balance at December 31, 2002 ............    67,339,773   $        673   $    224,454   $     85,637  $          (46)  $    310,718
Net income ..............................            --             --             --          4,772              --          4,772
Issuance of common stock awards
  to employees ..........................       236,461              2            955             --              --            957
Repurchase of common stock ..............      (500,000)            (5)        (2,257)            --              --         (2,262)
Exercise of common stock options ........       359,419              4          2,325             --              --          2,329
Directors' compensation .................        31,567              1             82             --              --             83
Other comprehensive income, net of taxes:
  Change in unrealized foreign currency
    translation gain ....................            --             --             --             --             661            661
                                           ------------   ------------   ------------   ------------  --------------   ------------
Balance at December 31, 2003 ............    67,467,220            675        225,559         90,409             615        317,258
Net income ..............................            --             --             --         57,724              --         57,724
Issuance of common stock awards
  to employees ..........................       203,088              2            624             --              --            626
Repurchase of common stock ..............    (5,481,100)           (55)       (49,394)            --              --        (49,449)
Exercise of common stock options ........       543,260              5          4,341             --              --          4,346
Directors' compensation .................         7,010             --            206             --              --            206
Other comprehensive income, net of taxes:
  Change in unrealized foreign currency
    translation gain ....................            --             --             --             --            (603)          (603)
                                           ------------   ------------   ------------   ------------  --------------   ------------
Balance at December 31, 2004 ............    62,739,478            627        181,336        148,133              12        330,108
Net income ..............................            --             --             --         15,065              --         15,065
Issuance of common stock awards
  to employees ..........................       185,217              2          1,503             --              --          1,505
Exercise of common stock options ........       203,410              2          1,356             --              --          1,358
Directors' compensation .................         5,366             --             67             --              --             67
Other comprehensive income, net of taxes:
  Change in unrealized foreign currency
    translation gain ....................            --             --             --             --            (696)          (696)
                                           ------------   ------------   ------------   ------------  --------------   ------------
Balance at December 31, 2005 ............    63,133,471   $        631   $    184,262   $    163,198  $         (684)  $    347,407
                                           ============   ============   ============   ============  ==============   ============
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       F-7

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                               For the Years Ended December 31,
                                                                           -----------------------------------------
                                                                               2005           2004          2003
                                                                           ------------   ------------  ------------
<S>                                                                        <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ..............................................................  $     15,065   $     57,724  $      4,772
Adjustments to reconcile net income (loss) to net cash provided
    (used) by operating activities
  Net cash provided (used) by trading activities ........................        99,842        (75,067)       20,807
  Purchases of loans held for resale ....................................      (489,481)       (17,744)           --
  Originations of loans held for resale .................................      (408,967)            --            --
  Proceeds from sales of loans held for resale ..........................       347,411          9,307            --
  Premium amortization (discount accretion) on securities, net ..........           411         (1,319)        2,402
  Amortization of servicing rights ......................................        96,692         96,036        93,558
  Depreciation and other amortization ...................................        12,812         13,345        13,530
  Provision for bad debts ...............................................         5,308          2,655           554
  Impairment of working capital investment in consolidated VIE ..........         7,238             --            --
  Provision for loan losses .............................................           (37)        (1,881)       (2,684)
  Valuation (gains) losses on real estate ...............................           (95)         5,110         7,430
  Loss (gain) on trading and match funded securities ....................           (13)           537        (3,344)
  Loss (gain) on sale of real estate ....................................        (2,552)        (1,556)         (466)
  Loss (gain) on sale of deposits .......................................        (1,750)            --            --
  Loss (gain) on investments in affordable housing properties ...........         1,750           (255)          284
  Loss (gain) on repurchase of debt securities ..........................        (4,258)            --           445
  Decrease (increase) in advances and match funded advances .............       (79,765)       (36,499)      (92,532)
  Decrease (increase) in receivables and other assets ...................        39,071        (80,220)        7,659
  Increase (decrease) in servicer liabilities ...........................         7,627        192,502        23,995
  Increase (decrease) in other liabilities ..............................        23,302         15,972         2,620
  Other, net ............................................................         2,215            867        (6,412)
                                                                           ------------   ------------  ------------
Net cash provided (used) by operating activities ........................      (328,174)       179,514        72,618
                                                                           ------------   ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Principal payments received on match funded loans .....................         1,819          5,757        13,736
  Acquisition of match funded loans .....................................            --         (7,119)           --
  Proceeds from sale of match funded loans ..............................            --         21,592            --
  Proceeds from sale of affordable housing properties ...................         6,325            327         5,257
  Purchase of mortgage servicing rights .................................      (113,946)       (60,950)      (88,442)
  Proceeds from sale of loans ...........................................            --             --        30,153
  Principal payments received on loans ..................................         1,923         38,750        28,337
  Purchases, originations and funded commitments on loans, net ..........           (40)       (16,478)       (6,201)
  Capital improvements to real estate ...................................            --         (2,682)       (8,837)
  Proceeds from sale of real estate .....................................         7,761         70,504        17,573
  Additions to premises and equipment ...................................       (11,283)        (7,594)      (10,353)
  Net cash paid to consolidated VIE .....................................        (6,998)            --            --
  Net cash paid to acquire subsidiaries .................................            --         (2,482)           --
  Proceeds from sale of subsidiaries ....................................         9,643             --            --
                                                                           ------------   ------------  ------------
Net cash provided (used) by investing activities ........................      (104,796)        39,625       (18,777)
                                                                           ------------   ------------  ------------
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       F-8

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                               For the Years Ended December 31,
                                                                           -----------------------------------------
                                                                               2005           2004          2003
                                                                           ------------   ------------  ------------
<S>                                                                        <C>            <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Increase (decrease) in deposits and escrow deposits ...................      (210,850)      (169,554)       42,944
  Sale of deposits ......................................................      (165,741)            --            --
  Premium received from sale of deposits ................................         1,500             --            --
  Proceeds from (repayments of) lines of credit and other secured
    borrowings, net .....................................................       507,453        (79,772)       67,638
  Proceeds from issuance (repayments) of match funded liabilities, net ..        96,846        128,933       (31,677)
  Issuance (repurchase) of debt securities, net .........................       (70,445)       175,000       (77,420)
  Exercise of common stock options ......................................           927          2,427         1,334
  Repurchase of common stock ............................................            --        (49,449)       (2,262)
                                                                           ------------   ------------  ------------
Net cash provided (used) by financing activities ........................       159,690          7,585           557
                                                                           ------------   ------------  ------------

Net increase (decrease) in cash .........................................      (273,280)       226,724        54,398
Cash at beginning of year ...............................................       542,891        316,167       261,769
                                                                           ------------   ------------  ------------
Cash at end of year .....................................................  $    269,611   $    542,891  $    316,167
                                                                           ============   ============  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for
  Interest ..............................................................  $     36,862   $     28,980  $     41,362
  Income tax refunds (payments) .........................................        64,634        (16,610)         (869)

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
  Assumption of line of credit by purchaser of real estate .............. $          --   $     20,000  $         --
  Exchange of loans for real estate .....................................            --          4,771            --
  Accounts receivable from sale of affordable housing properties ........            --          2,535         2,767
  Real estate acquired through foreclosure ..............................            --             --           161
  Equipment acquired through capital leases .............................         4,104             --            --

SUPPLEMENTAL SCHEDULE OF BUSINESS ACQUISITIONS AND CONSOLIDATION
  OF VIE
  Fair value of assets acquired .........................................  $    (73,539)  $    (21,850) $         --
  Fair value of liabilities assumed .....................................        73,539         11,170            --
  Impairment of working capital investment in consolidated VIE ..........        (7,238)            --            --
                                                                           ------------   ------------  ------------
  Cash paid .............................................................        (7,238)       (10,680)           --
  Less cash acquired ....................................................           240          8,198            --
                                                                           ------------   ------------  ------------
  Net cash paid .........................................................  $     (6,998)  $     (2,482)           --
                                                                           ============   ============  ============
</TABLE>


        The accompanying notes are an integral part of these consolidated
                              financial statements.

                                       F-9

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

     Ocwen Financial Corporation ("OCN") is a holding company, which, through
its subsidiaries, is engaged in business activities related to residential and
commercial mortgage servicing, consumer unsecured debt collections, loan
origination services and business process outsourcing. At December 31, 2005, OCN
owned all of the outstanding stock of its primary subsidiaries, Ocwen Loan
Servicing, LLC ("OLS"), Investors Mortgage Insurance Holding Company ("IMI") and
Ocwen Financial Solutions Pvt. Limited ("India"). OCN also owns 70% of Global
Servicing Solutions, LLC ("GSS") with the remaining 30% minority interest held
by ML IBK Positions, Inc. ("Merrill Lynch"). Effective June 30, 2005, Ocwen
Federal Bank FSB (the "Bank"), a wholly owned subsidiary, voluntarily terminated
its status as a federal savings bank and dissolved, a process we referred to as
"debanking".

PRINCIPLES OF CONSOLIDATION

     We evaluate special purpose entities first for classification as a
"qualifying special purpose entity" ("QSPE") as specified by Statement of
Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" ("SFAS 140"). Where we
determine that a special purpose entity is classified as a QSPE, it is excluded
from our consolidated financial statements. Where we determine that a special
purpose entity is not classified as a QSPE, it is further evaluated for
classification as a variable interest entity ("VIE") as specified by FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities", as
revised. When a special purpose entity meets the definition of a VIE where OCN
is identified as the primary beneficiary of the entity, it is included in our
consolidated financial statements.

     Our consolidated balance sheet at December 31, 2005 includes the assets and
liabilities of Funding America, LLC ("FA"), a VIE under FIN 46 and FIN 46 (R).
We have determined that we hold a variable interest in FA and have also
determined that we are the primary beneficiary effective as of December 28,
2005. FA is engaged in the origination, acquisition and subsequent
securitization or sale of subprime single family residential loans. As a result
of consolidation, the net change in our total assets and liabilities was an
increase of $72,301. Total assets include $72,856 of loans held for sale that
are pledged to secure collateralized borrowings of $71,169. OCN is a party to an
agreement whereby it has guaranteed repayment of FA's obligations up to a
maximum of 5%. Other than with respect to this guarantee, the creditors of FA
have no recourse against the credit of OCN.

     All material intercompany accounts and transactions have been eliminated.
We report minority interests in our majority-owned subsidiaries as a separate
item on our consolidated balance sheets and minority interest in our earnings is
included in other income (expense), net, on our consolidated statements of
operations.

BASIS OF PRESENTATION

     Prior to debanking, our consolidated financial statements followed the
presentation requirements of Securities and Exchange Commission ("SEC")
Regulation S-X, Article 9, Bank Holding Companies. As a result of debanking,
effective December 31, 2005, we have revised the presentation of our
consolidated financial statements to better align our presentation with the
growth and significance of loan servicing and loan origination and outsourcing
services, our principal businesses. The principal change in our consolidated
financial statements for the periods presented as compared to the presentation
in prior periods is in the format of our consolidated statement of operations.
In adopting the new format for our consolidated statement of operations, we have
made a number of reclassifications of expenses. The most significant of these
reclassifications has been to report as operating expenses amounts that were
netted against the revenues that were previously reported as "Servicing and
other fees." These expenses are directly related to the generation of revenues
and are reported in our consolidated statement of operations as "Amortization of
servicing rights" and as components of "Servicing and origination." Servicing
and origination includes expenses of approximately $34,900, $45,800 and $47,500,
for the years ended December 31, 2005, 2004 and 2003, respectively, that had
previously been netted against revenues reported in servicing and other fees.
Similarly, expenses previously included in "Loan expenses" on the consolidated
statement of operations are also principally reported as components of servicing
and origination expense.

     Revenues that are associated with our Residential Origination Services and
Business Processing Outsourcing business segments are reported in a separate
revenue category, "Process management fees." These revenues were previously
reported as a component of

                                      F-10

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

servicing and other fees. Other categories of income, including interest income
and interest expense, which were previously reported as revenues but which were
not related to the operations of our principal business segments, are reported
in "Other income (expense)."

     In addition, we created a new liability caption, "Servicer liabilities", in
our consolidated balance sheet. This caption represents amounts that we have
collected from borrowers that will be remitted to off-balance sheet custodial
accounts, paid directly to investment trusts or refunded to borrowers.
Previously, the amounts included in servicer liabilities had been reported
either as escrow deposits or as reductions of our cash balances.

     Amounts included in our 2004 and 2003 consolidated financial statements
have been reclassified to conform to these changes in presentation in our
consolidated statement of operations as well as to conform to certain other,
less significant, reclassifications that have been made in our consolidated
financial statements in 2005. In addition, effective January 1, 2005, we
reorganized our business segment reporting. All segment information presented
has been restated to conform to the new structure.

CASH AND CASH EQUIVALENTS

     Cash includes both interest-bearing and non-interest-bearing deposits with
financial institutions. Other highly liquid investments when purchased with a
maturity of three months or less are considered to be cash equivalents.

TRADING SECURITIES

     We currently account for our investment grade, residual and subordinate
securities as trading securities at fair value. We report changes in fair value
in income in the period of change. We determine fair value based on either third
party dealer quotations, where available, or internal values. Our internal
valuations are determined using internally developed models. Expected future
cash flows are estimated using assumptions such as discount rates, prepayment
speeds and expected losses. Discount rates for the subordinate and residual
securities range from 11% to 30% and are determined based upon an assessment of
general market conditions. The prepayment and loss assumptions are projected
based on a comparison to actual historical performance curves.

     Interest income on subordinate and residual securities is recognized
through an "effective yield" method with changes in expected future cash flows
reflected in the yield on a prospective basis. The prospective yield is adjusted
each time the expected future cash flows change or the actual cash flows differ
from projections. The newly calculated yield is used in the accrual of interest
income for subsequent reporting periods.

LOANS HELD FOR RESALE

     Loans that we do not intend to hold to maturity are classified as loans
held for resale and are reported at the lower of cost or market value. The
excess of cost over market value is accounted for as a market valuation reserve
with changes in the reserve included in other operating expenses of the period
in which the change occurs. Loans for which we have entered into an agreement to
sell to an investor at a set price are valued at the commitment price. For
uncommitted performing loans, we estimate fair value based on quotes for similar
loans. The fair value of uncommitted non-performing loans is based on estimated
expected future cash flows discounted using a rate commensurate with the risks
involved. Loan origination fees and direct loan origination costs are deferred
until the loans are sold. These fees and costs are considered in the carrying
value of the loans when determining a market valuation reserve.

MORTGAGE SERVICING RIGHTS

     We record purchased mortgage servicing rights at cost and amortize in
proportion to and over the period of estimated net servicing income. We
determine estimated net servicing income using the estimated future balance of
the underlying mortgage loan portfolio, which, absent new purchases, declines
over time from prepayments and scheduled loan amortization. We adjust
amortization prospectively in response to changes in estimated projections of
future cash flows. We evaluate the mortgage servicing assets for impairment
based on the fair value of the servicing assets by strata. We stratify the
servicing assets based on loan type. To the extent the carrying value of the
servicing assets exceeds their fair value by strata, we establish a valuation
allowance, which we may adjust in the future as the value of the servicing
assets increases or decreases. We estimate the fair value of our mortgage
servicing rights based on the results of our internal valuation and an external
valuation obtained from an independent third-party valuation specialist. Our
internal valuation calculates the present value of estimated future cash flows
utilizing market-based assumptions. The more significant assumptions used in our
internal valuation include:

                                      F-11

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

o    Prepayment speeds
o    Compensating interest expense
o    Delinquency experience
o    Discount rate
o    Interest rate used for computing the cost of servicing advances
o    Interest rate used for computing float income
o    Cost of servicing

     The significant cash inflows considered in estimating future cash flows
include servicing fees, late fees, prepayment penalties, float income and other
ancillary fees. Significant cash outflows include the cost of servicing,
compensating interest payments and the cost of making service advances.
Prepayment speeds and delinquency experiences are derived from historical
experience. The discount rate, interest rate for the cost of financing advances,
interest rate for float income and the cost of servicing are based on market
assumptions provided by our third-party valuation specialist. An impairment
analysis is performed after grouping our loans into seven strata based on loan
type which represents the predominant risk characteristics of the underlying
loans. The risk factors used to assign loans to strata include the credit score
(FICO) of the borrower, the loan to value ratio, the type of asset (mortgage or
non-mortgage) and the default risk. Our strata include:

o    Subprime
o    ALT A
o    High-loan-to-value
o    Re-performing
o    Special servicing
o    Non-residential mortgage
o    Other

MORTGAGE SERVICING FEES AND ADVANCES

     We earn fees for servicing mortgage loans. We collect servicing fees,
generally expressed as a percent of the unpaid principal balance, from the
borrowers' payments. We also include late fees, prepayment penalties, float
income and other ancillary fees in servicing income. During any period in which
the borrower is not making payments, certain servicing agreements require that
we advance our own funds to meet contractual principal and interest remittance
requirements for certain investors, pay property taxes and insurance premiums
and process foreclosures. We are entitled to recover advances from borrowers for
reinstated and performing loans and from investors for foreclosed loans. We
record a charge to earnings to the extent that advances are uncollectible under
provisions of the servicing contracts, taking into consideration historical loss
and delinquency experience, length of delinquency and the amount of the advance.

EXCESS OF COST OVER NET ASSETS ACQUIRED

     We report the excess of purchase price over net assets of acquired
businesses ("goodwill") at cost. We review the carrying value of goodwill at
least annually for impairment.

     In performing our impairment analyses for goodwill and other intangibles,
we use an approach based on fair value of the assets and liabilities. We perform
this analysis using projections of future income discounted at a market rate.
The determination of market discount rates is subjective and may vary by product
based on the nature of the underlying business, stage of development and sales
to date.

                                      F-12

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

PREMISES AND EQUIPMENT

     We report premises and equipment at cost and, except for land, depreciate
them over their estimated useful lives on the straight-line method as follows:

       Buildings                           39 years
       Land improvements                   39 years
       Furniture and fixtures               5 years
       Office equipment                     5 years
       Computer hardware and software       3 years
       Leasehold improvements              A maximum of 10 years but not to
                                           exceed the term of the lease.

ASSETS SOLD UNDER AGREEMENTS TO REPURCHASE

     We periodically enter into sales of assets, such as securities and loans,
under agreements to repurchase the same assets. We report repurchase agreements
as collateralized financings and report the obligations to repurchase assets
sold as a liability in our consolidated balance sheet. We report all assets
underlying repurchase agreements as assets in our consolidated balance sheet.
Custodians hold the securities in safekeeping.

DERIVATIVE FINANCIAL INSTRUMENTS

     We record all of our derivative instruments in the balance sheet at fair
value. We record changes in the fair value of derivatives each period in income
or other comprehensive income, depending on whether a derivative is designated
as part of a hedge transaction and, if it is, depending on the type of hedge
transaction and the effectiveness of the hedge. For hedge transactions of net
investments in foreign operations, we record the effective portions of the
changes in fair value as a component of accumulated other comprehensive income
in stockholders' equity. For cash-flow hedge transactions in which we hedge the
variability of cash flows related to a variable-rate asset, liability or a
forecasted transaction, we report the effective portions of the changes in the
fair value in other comprehensive income. The gains and losses reported in other
comprehensive income are reclassified to income in the periods in which earnings
are impacted by the variability of the cash flows of the hedged item.

     We account for all other derivative instruments used for risk management
purposes that do not meet the hedge accounting criteria at fair value with
changes in fair value generally recorded in other income (expense), net. We
recognize the ineffective portions of all hedges in our current period earnings
and report them as a component of other income (expense), net.

FOREIGN CURRENCY TRANSLATION

     Where the functional currency is not the U.S. dollar, we translate assets
and liabilities of foreign entities into U.S. dollars at the current rate of
exchange existing at the balance sheet date and revenues and expenses at average
monthly rates. We include the resulting translation adjustments as a component
of accumulated other comprehensive income in stockholders' equity. Where the
functional currency of a foreign entity is the U.S. dollar, re-measurement
adjustments are included in the results of operations.

INCOME TAXES

     We file consolidated Federal income tax returns with our subsidiaries.
Consolidated income tax is allocated among the subsidiaries participating in the
consolidated return as if each subsidiary that has one or more subsidiaries
filed its own consolidated return and those with no subsidiaries filed separate
returns.

     We account for income taxes using the asset and liability method which
requires the recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities. Additionally, we adjust deferred
taxes to reflect estimated tax rate changes. We conduct periodic evaluations to
determine whether it is more likely than not that some or all of our deferred
tax asset will not be realized. Among the factors considered in this evaluation
are estimates of future earnings, the future reversal of temporary differences
and the impact of tax planning strategies that we can implement if warranted. We
provide a valuation allowance for any portion of our deferred tax asset that,
more likely than not, will not be realized.

                                      F-13

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

BASIC AND DILUTED EARNINGS PER SHARE

     We calculate basic earnings per share based upon the weighted average
number of shares of common stock outstanding during the year. We calculate
diluted earnings per share based upon the weighted average number of shares of
common stock outstanding and all dilutive potential common shares outstanding
during the year. The computation of diluted earnings per share includes the
impact of the exercise of the outstanding options to purchase common stock using
the treasury stock method which assumes that the proceeds from such issuance are
used to repurchase common shares at fair value. If we incur a net loss for the
period, we exclude common stock equivalents from the diluted calculation since
the common stock equivalents would be antidilutive. Beginning in 2004, the
computation of diluted earnings per share also includes the potential shares of
converted common stock associated with the 3.25% Convertible Notes that we
issued in July 2004 using the if-converted method. Under the if-converted
method, the convertible notes are assumed to have been converted, regardless of
whether any of the contingent features have been met, and the resulting shares
are included in the denominator (if dilutive). Interest expense applicable to
the Convertible Notes, net of tax, is added back to the numerator (i.e. net
income), for purposes of computing diluted earnings per share.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires that we make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Material estimates that are
particularly significant in the near or medium term relate to our determination
of the valuation of securities, loans held for resale, advances, servicing
rights, intangibles and the deferred tax asset.

STOCK-BASED COMPENSATION

     We currently account for stock-based compensation under the intrinsic value
method set forth in Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations. As
discussed in the "Current Accounting Pronouncements" section below, the FASB
issued a revision of SFAS No. 123, "Accounting for Stock-Based Compensation", in
December 2004, which supersedes APB Opinion No. 25 and is effective January 1,
2006.

     We maintain stock-based compensation plans that provide for the granting of
stock and stock options to our employees and directors. As indicated above, we
account for our stock option plans based on the intrinsic value method set forth
in APB Opinion No. 25 and related Interpretations, under which no compensation
cost has been recognized, except with respect to stock options that are granted
with an exercise price that is less than the fair value of our stock at the date
of the grant. We generally grant stock options to employees at an exercise price
that is less than the price of our stock at the date of the grant. The following
table presents net income, basic and diluted earnings per share as reported and
pro forma net income and pro forma earnings per share. We have determined pro
forma amounts by assuming that compensation costs for our stock option plans had
been determined based on the fair value at the grant dates for awards under
those plans granted after December 31, 1994, consistent with the method
described by SFAS No. 123.

                                      F-14

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)


<TABLE>
<CAPTION>
                                                                                 Years Ended December 31,
                                                                        -----------------------------------------
                                                                            2005           2004          2003
                                                                        ------------   ------------  ------------
<S>                                                                     <C>            <C>           <C>
NET INCOME
  Net income (loss) as reported ......................................  $     15,065   $     57,724  $      4,772
    Add stock-based compensation expense included in reported net
      income, net of tax .............................................           562            823           797
    Deduct total stock-based employee compensation expense
      determined under fair value based method for all awards, net
      of tax .........................................................        (1,193)        (2,668)       (1,559)
                                                                        ------------   ------------  ------------
  Pro forma net income (loss) ........................................  $     14,434   $     55,879  $      4,010
                                                                        ============   ============  ============

BASIC EPS
  As reported ........................................................  $       0.24   $       0.88  $       0.07
  Pro forma ..........................................................  $       0.23   $       0.85  $       0.06

DILUTED EPS
  As reported ........................................................  $       0.24   $       0.82  $       0.07
  Pro forma ..........................................................  $       0.23   $       0.80  $       0.06
</TABLE>


     We estimate the fair value of our option grants using the Black-Scholes
option-pricing model with the following assumptions:


<TABLE>
<CAPTION>
                                                                            2005           2004          2003
                                                                        ------------   ------------  ------------
<S>                                                                          <C>            <C>           <C>
Expected dividend yield ..............................................          0.00%          0.00%         0.00%
Expected stock price volatility ......................................         36.00          43.00         48.00
Risk-free interest rate ..............................................          4.35%          3.61%         3.25%
Expected life of options .............................................       5 years        5 years       5 years
</TABLE>


CURRENT ACCOUNTING PRONOUNCEMENTS

     SFAS No. 123(R), "Share-Based Payment" and Staff Accounting Bulletin No.
107 (SAB 107),"Share-Based Payment". SFAS 123(R) was issued by the Financial
Accounting Standards Board ("FASB") in December 2004 and is a revision of SFAS
123. In addition, this Statement also supersedes APB Opinion No. 25 and amends
FASB Statement No. 95, "Statement of Cash Flows". SFAS 123R is effective
beginning on January 1, 2006.

     As permitted by SFAS No. 123, we currently follow the guidance of APB
Opinion No. 25, which provides for accounting for share-based compensation to
employees and directors using the intrinsic value method and recognizing
compensation costs for such stock options to the extent that the exercise price
is less than the price of the stock at the grant date. SFAS No. 123 (R) requires
a public entity to measure the cost of employee services received in exchange
for an award of equity instruments based on the grant-date fair value of the
award (with limited exceptions) measured using either the Black-Scholes or
lattice (binomial) option pricing model. That cost will be recognized over the
period during which an employee is required to provide service in exchange for
the award - the requisite service period (usually the vesting period).

     We have elected to apply the modified prospective transition method upon
adoption of SFAS 123(R). As a result, we will be required to recognize
additional compensation expense for the years 2006 through 2009 related to the
unvested portion of stock options granted for the years 2002 through 2005 net of
estimated future forfeitures. We have also determined that awards we have
granted to date will be classified as equity awards. Therefore, the fair value
of these awards will not be re-measured after our initial estimation on the
grant date. Our adoption of SFAS No. 123(R) did not have a significant impact on
our consolidated financial statements.

     Earnings Per Share - An Amendment of SFAS No. 128. The FASB has decided to
defer the issuance of a final standard on EPS until the first quarter of 2006.
When issued, the provisions of the final standard are expected to be effective
for interim and annual periods ending after June 15, 2006 and require
retrospective application for all prior periods presented. When computing
diluted EPS for year-to-date periods, it is expected that companies will be
required to use the year-to-date average stock price to compute the number of
treasury shares that could theoretically be purchased with the proceeds from
exercise of share contracts such as options or warrants. The year-to-date
computation would be performed independently from the quarterly computations.
The old method required companies to calculate an

                                      F-15

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

average of the potential incremental common shares computed for each quarter
when computing year-to-date incremental shares. This amendment is expected to
impact OCN as we use the treasury stock method to determine the number of
incremental shares from the assumed exercise of stock options to be included in
the denominator of diluted EPS computations. Under the treasury stock method,
the proceeds from the assumed exercise of options are assumed to be used to
purchase common stock at the average market price during the period. The
incremental shares (the difference between the number of shares assumed issued
and the number of shares assumed purchased) are included in the denominator of
the diluted EPS computation.

     Statement of Position 03-3, "Accounting for Certain Loans for Debt
Securities Acquired in a Transfer" ("SOP 03-3"). This statement was issued by
the Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants in December 2003 and requires that acquired
impaired loans for which it is probable that the investor will be unable to
collect all contractually required payments receivable to be recorded at the
present value of expected cash flows. Under SOP 03-3, it is not appropriate to
create or carry over a valuation allowance at the time of acquisition. SOP 03-3
was issued in December 2003 and is effective for loans acquired on or after
January 1, 2005. SOP 03-3 does not apply to mortgage loans classified as held
for sale. The application of SOP 03-3 did not have a significant impact on our
consolidated financial statements.

     SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments." In
February 2006, FASB issued SFAS No. 155 as an amendment to SFAS No. 133 and SFAS
No. 140. SFAS No. 155 allows financial instruments that have embedded
derivatives to be accounted for as a whole (eliminating the need to bifurcate
the derivative from its host) if the holder elects to account for the whole
instrument on a fair value basis. The standard also: a) Clarifies which
interest-only strips and principal-only strips are not subject to the
requirements of Statement 133; b) Establishes a requirement to evaluate
interests in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that contain
an embedded derivative requiring bifurcation; c) Clarifies that concentrations
of credit risk in the form of subordination are not embedded derivatives; and d)
Amends Statement 140 to eliminate the prohibition on a qualifying
special-purpose entity from holding a derivative financial instrument that
pertains to a beneficial interest other than another derivative financial
instrument.

     SFAS No. 155 is effective for all financial instruments acquired or issued
after the beginning of an entity's first fiscal year that begins after September
15, 2006. Earlier adoption is permitted as of the beginning of an entity's
fiscal year, provided the entity has not yet issued financial statements,
including financial statements for any interim period for that fiscal year. We
have not yet determined the financial impact of the adoption of SFAS No. 155 or
whether we will adopt SFAS No. 155 in 2006.

     SFAS No. 156, "Accounting for Servicing of Financial Assets-an amendment of
FASB Statement No. 140". FASB issued SFAS No. 156 in March 2006 as an amendment
to SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities", with respect to the accounting for separately
recognized servicing assets and liabilities. Recognition of a servicing asset or
liability would be required each time an entity commits to service a financial
asset through a servicing contract that: a) represents a transfer of the
servicer's financial assets that meets the requirements for sale accounting, b)
represents a transfer of the servicer's financial assets to a qualifying
special-purpose entity in a guaranteed mortgage securitization in which the
transferor retains all of the resulting securities and classifies them as either
available-for-sale securities or trading securities in accordance with SFAS 115.
"Accounting for Certain Investments in Debt and Equity Securities", or c)
represents an acquisition or assumption of an obligation to service a financial
asset that does not relate to financial assets of the servicer or its
consolidated affiliates.

     SFAS 156 also requires all separately recognized servicing assets and
liabilities to be initially measured at fair value, if practicable, and allows
an entity to chose from two subsequent measurement methods for each class of
separately recognized servicing assets and liabilities. The two methods are: a)
the amortization method which amortizes servicing assets or liabilities in
proportion to and over the period of estimated net servicing income or net
servicing loss and assesses servicing assets or liabilities for impairment or
increased obligation based on fair value at each reporting date, and b) the fair
value measurement method which measures servicing assets or liabilities at fair
value each reporting date and reports changes in fair value in earnings in the
period in which the changes occur.

     A prospective application of SFAS 156 is required as of the beginning of an
entity's first fiscal year that begins after September 15, 2006. Earlier
adoption is allowed as of the beginning of an entity's fiscal year, provided the
entity has not yet issued financial statements, including interim financial
statements, for any period of that fiscal year. We have not yet determined which
subsequent measurement method we will adopt or whether that adoption will occur
effective January 1, 2006 or January 1, 2007. As of December 31, 2005, the fair
value of our mortgage servicing rights was $183,755 as compared to a carrying
value of $148,663.

                                      F-16

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

NOTE 2 FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair values reflect the interest rate environments as of December 31,
2005 and 2004. In different interest rate environments, fair value results can
differ, especially for certain fixed-rate financial instruments and non-accrual
assets. The methodologies used and key assumptions made to estimate fair value,
the estimated fair values determined and recorded carrying values follow:

TRADING SECURITIES

     We adjust our securities portfolio to fair value based on third party
dealer quotations, where available, and internal values, subject to an internal
review process. For those securities that do not have an available market
quotation we request market values and underlying assumptions from various
securities dealers.

LOANS HELD FOR RESALE

     We estimate the fair value of our performing loans based upon quoted market
prices for similar whole loan pools. We base the fair value of our
non-performing loans on estimated cash flows discounted using a rate
commensurate with the risk associated with the estimated cash flows.

ADVANCES

     We value advances we make on loans we service for others at their carrying
amounts because they have no stated maturity, generally are realized within a
relatively short period of time and do not bear interest.

RECEIVABLES

     The carrying value of receivables approximates fair value because of the
relatively short period of time between their origination and realization.
Certain long-term receivables are carried at a discounted value that we believe
approximates fair value.

BORROWINGS

     We base the fair value of our debt securities on quoted market prices. The
fair value of our other borrowings, including match funded liabilities and
obligations outstanding under lines of credit, approximates carrying value
because these borrowings are either short-term or bear interest at a rate that
is adjusted regularly based on a market index.

DERIVATIVE FINANCIAL INSTRUMENTS

     We base the fair values of our derivative financial instruments on quoted
market prices.

                                      F-17

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     The carrying amounts and the estimated fair values of our financial
instruments are as follows:


<TABLE>
<CAPTION>
                                                            December 31, 2005             December 31, 2004
                                                       ---------------------------   ---------------------------
                                                         Carrying         Fair         Carrying         Fair
                                                           Value          Value          Value          Value
                                                       ------------   ------------   ------------   ------------
<S>                                                    <C>            <C>            <C>            <C>
Financial assets:
    Trading securities .............................   $     31,962   $     31,962   $    125,742   $    125,742
    Loans held for resale ..........................        624,671        624,671          8,437          8,437
    Match funded assets ............................        377,105        377,105        280,760        280,760
    Advances .......................................        219,716        219,716        240,430        240,430
    Receivables ....................................         68,266         68,266        126,719        126,719
Financial liabilities:
    Match funded liabilities .......................        339,292        339,292        244,327        244,327
    Lines of credit and other secured borrowings ...        626,448        626,448         50,612         50,612
    Debt securities ................................        154,329        151,028        231,249        228,003
    Deposits .......................................             --             --        290,507        292,896
    Escrow deposits ................................             --             --         86,084         86,084
Derivative financial instruments, net ..............          1,268          1,268            410            410
</TABLE>


NOTE 3 TRADING SECURITIES

     Trading securities are as follows at December 31:

                                                            2005        2004
                                                         ----------   ---------
Investment grade:
    U.S. Treasury note ................................  $       --   $   1,594
    Collateralized mortgage obligations (AAA-rated) ...          --      81,466
    Bonds and debentures ..............................       1,685       3,155
                                                          ---------   ---------
                                                          $   1,685   $  86,215
                                                          =========   =========
Subordinates and residuals:
    Single family residential
        BB-rated subordinates .........................   $     223   $     256
        B-rated subordinates ..........................         336         435
        Unrated subordinates ..........................         165         217
        Unrated subprime residuals ....................      27,024      35,276
                                                          ---------   ---------
                                                             27,748      36,184
    Commercial unrated subordinates ...................       2,529       3,343
                                                          ---------   ---------
                                                          $  30,277   $  39,527
                                                          =========   =========

     A profile of the maturities of our trading securities at December 31, 2005
follows. Mortgage-backed securities are included based on their weighted-average
maturities reflecting anticipated future prepayments.


<TABLE>
<CAPTION>
                                                       Investment Grade Securities   Subordinates and Residuals
                                                       ---------------------------   ---------------------------
                                                         Weighted                      Weighted
                                                          Average                       Average
                                                           Yield       Fair Value        Yield       Fair Value
                                                       ------------   ------------   ------------   ------------
<S>                                                            <C>    <C>                   <C>     <C>
Due within one year ................................           1.95%  $        653          23.21%  $      9,828
Due after 1 through 5 years ........................           5.63          1,032          22.18         14,518
Due after 5 through 10 years .......................             --             --          25.79          5,044
Due after 10 years .................................             --             --          28.96            887
                                                                      ------------                  ------------
                                                                      $      1,685                  $     30,277
                                                                      ============                  ============
</TABLE>


                                      F-18

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     Realized and unrealized gains on trading and match funded securities for
the years ended December 31 were comprised of the following:

                                         2005         2004         2003
                                      ----------   ----------   ----------
Unrealized gains (losses):
    Trading securities ............   $   (5,460)  $   (1,067)  $    3,226
    Match funded securities .......           --           --         (248)
                                      ----------   ----------   ----------
                                          (5,460)      (1,067)       2,978
                                      ----------   ----------   ----------
Realized gains:
    Trading securities ............        5,473          530          366
                                      ----------   ----------   ----------
                                      $       13   $     (537)  $    3,344
                                      ==========   ==========   ==========

     Our subordinate and residual securities at December 31, 2005, and 2004
include retained interests with a fair value of $1,429 and $907, respectively,
from securitizations of loans.

NOTE 4 LOANS HELD FOR RESALE

     Loans held for resale primarily represent subprime single family
residential loans originated or acquired through our Residential Origination
Services segment that we intend to sell or securitize. The carrying value of
these loans amounted to $624,671 and $8,437 at December 31, 2005 and 2004,
respectively. At December 31, 2005, we had entered into commitments to sell
$18,587 of these loans. The balance at December 31, 2005 is net of a market
valuation reserve of $7,659. Loans with a carrying value of $469,937 at December
31, 2005 were acquired in the fourth quarter of 2005 and securitized in February
2006. Loans held for resale at December 31, 2005 include non-performing loans
with a carrying value of $10,857.

NOTE 5 MATCH FUNDED ASSETS

     Our match funded assets are comprised of the following at December 31:

                                                            2005        2004
                                                          ---------   ---------
Advances on residential loans serviced for others:
    Principal and interest ............................   $ 174,252   $ 107,102
    Taxes and insurance ...............................     129,700     107,710
    Other .............................................      73,153      61,814
                                                          ---------   ---------
                                                            377,105     276,626
Commercial loans ......................................          --       4,134
                                                          ---------   ---------
                                                          $ 377,105   $ 280,760
                                                          =========   =========

     Match funded advances are owned by special purpose entities and are,
therefore, not available to satisfy claims of general creditors. We retain
control of the advances and therefore the transfers do not qualify as a sale for
accounting purposes. As a result, the proceeds we received from the transfer are
reported as a secured borrowing with pledge of collateral (match funded
liabilities) in our consolidated balance sheet.

NOTE 6 ADVANCES

     During any period in which the borrower is not making payments, we are
required under certain servicing agreements to advance our own funds to meet
contractual principal and interest remittance requirements for investors, pay
property taxes and insurance premiums and process foreclosures. Advances on
loans serviced for others and loans we own consisted of the following at
December 31:

                                                            2005        2004
                                                          ---------   ---------
Residential loans serviced for others:
    Principal and interest ............................   $  40,506   $  51,782
    Taxes and insurance ...............................      98,622      94,926
    Other .............................................      77,228      93,375
                                                          ---------   ---------
                                                            216,356     240,083
Loans and loans held for resale .......................       3,360         347
                                                          ---------   ---------
                                                          $ 219,716   $ 240,430
                                                          =========   =========

                                      F-19

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     Advances on loans serviced for others are net of reserves of $570 and
$5,212 at December 31, 2005 and 2004, respectively. The $5,212 of reserves at
December 31, 2004 included $4,115 related to the remaining balance of
forbearance plan fees and multiple breach fees that we were not collecting
directly from borrowers at that time.

NOTE 7 MORTGAGE SERVICING RIGHTS

     We service residential mortgage loans that we do not own under contractual
servicing agreements. We purchase servicing rights from the owners of the
mortgages or enter into subservicing agreements with entities that own the
servicing rights. The total unpaid principal balance of such loans we serviced
for others was $42,779,048 and $34,524,491 at December 31, 2005 and 2004,
respectively, and is excluded from our balance sheet. We similarly exclude from
our balance sheet funds representing collections of principal and interest we
have received from borrowers that are on deposit with an unaffiliated bank.
Those funds amounted to $716,904 and $867,884 at December 31, 2005 and 2004,
respectively. The rights and obligations of servicing rights are typically
specified in an agreement between the various parties to a mortgage
securitization transaction. In general, these servicing agreements include
guidelines and procedures for servicing the loans, including servicing,
remittance and reporting requirements, among other provisions.

     The following table summarizes the activity in our mortgage servicing
rights for the years ended December 31:

                                         2005         2004         2003
                                      ----------   ----------   ----------
Balance at beginning of year ......   $  131,409   $  166,495   $  171,611
Purchases .........................      113,946       60,950       88,829
Amortization ......................      (96,692)     (96,036)     (93,558)
Impairment ........................           --           --         (387)
                                      ----------   ----------   ----------
Balance at end of year ............   $  148,663   $  131,409   $  166,495
                                      ==========   ==========   ==========

     At December 31, 2005 and 2004, we estimated the fair value of our servicing
rights to be $183,755 and $152,148, respectively, by discounting future
underlying loan cash flows. As more fully described in Note 1, the more
significant assumptions used in the December 31, 2005 valuation include a
discount rate of 18%, prepayment speeds ranging from 28% to 51% (depending on
loan type), delinquency rates ranging from 0% to 24% (depending on loan type),
an interest rate of one-month LIBOR plus 200 basis points for computing the cost
of servicing advances and an interest rate equal to the Federal Funds Rate for
computing float income.

     At December 31, 2005, the geographic distribution based on the unpaid
principal balance of the loans we serviced was as follows:

                               Amount       No. of loans
                            -------------   -------------
California ..............   $   9,212,741          43,939
Florida .................       3,837,526          33,175
New York ................       3,512,391          20,163
Texas ...................       2,097,182          28,279
Illinois ................       1,971,775          16,794
Other (1) ...............      22,147,433         226,452
                            -------------   -------------
                            $  42,779,048         368,802
                            =============   =============

(1)  Consisted of loans in 45 other states, the District of Columbia, three U.S.
     territories and one foreign country, none of which aggregated over
     $1,459,184 in any one.

                                      F-20

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

NOTE 8 RECEIVABLES

     Receivables consisted of the following at the dates indicated:

                                                      December 31,
                                                -----------------------
                                                   2005         2004
                                                ----------   ----------
Residential Servicing (1) ...................   $   23,323   $   24,012
Commercial Servicing ........................        2,508        2,736
Ocwen Recovery Group ........................          864          341
Residential Origination Services (2) ........       18,497        3,455
Business Process Outsourcing ................        1,183        1,532
Corporate Items and Other (3)(4) ............       21,891       94,643
                                                ----------   ----------
                                                $   68,266   $  126,719
                                                ==========   ==========

(1)  The balances at December 31, 2005 and 2004 include $15,674 and $12,801,
     respectively, of fees earned from the servicing of loans and real estate.
     The remaining balance consists largely of reimbursable expenses due from
     loan servicing investors. The total balance of receivables for this segment
     is net of reserves of $6,509 and $3,395 at December 31, 2005 and 2004,
     respectively.
(2)  The balance at December 31, 2005, which is net of reserves of $2,379,
     consists principally of $4,020 of trade receivables related to our
     operations of REALTrans and the activities of Ocwen Realty Advisors and
     $10,751 of uncollected principal and interest related to loans held for
     resale. The balance at December 31, 2004 consists principally of trade
     receivables of REALTrans and Ocwen Realty Advisors.
(3)  The balances at December 31, 2005 and 2004 include receivables totaling
     $13,160 and $18,308, respectively, that primarily represent payments to be
     received in future years (through June 2014) of proceeds from the sales of
     investments in affordable housing properties. These balances are net of
     unaccreted discounts of $1,530 and $2,346 and reserves for doubtful
     accounts of $6,150 and $5,596 at December 31, 2005 and 2004, respectively.
(4)  The balance at December 31, 2004 also included $68,463 of income taxes
     receivable. Income taxes receivable at December 31, 2004 included $63,398
     of federal tax refund claims, including $6,872 of accrued interest on the
     claims. In September 2005, we collected the federal income tax claims which
     totaled $65,317 including $8,772 of interest.

NOTE 9 PREMISES AND EQUIPMENT

     Our premises and equipment are summarized as follows at the dates
indicated:
                                                      December 31,
                                                -----------------------
                                                   2005         2004
                                                ----------   ----------
Computer hardware and software ..............   $   77,675   $   67,483
Building ....................................       19,641       19,641
Leasehold improvements ......................        6,586       10,508
Land and land improvements ..................        4,049        4,049
Furniture and fixtures ......................        9,300        8,677
Office equipment and other ..................        5,150        3,887
Less accumulated depreciation and
 amortization ...............................      (82,293)     (76,805)
                                                ----------   ----------
                                                $   40,108   $   37,440
                                                ==========   ==========

     Depreciation and other amortization expense amounted to $12,770, $12,312
and $12,406 for 2005, 2004 and 2003, respectively (of which $3,660, $2,925 and
$2,455 related to computer software). Building represents our customer service
and collection facility in Orlando, Florida, which we have used as collateral
for a mortgage note.

                                      F-21

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

NOTE 10 OTHER ASSETS

     Other assets consisted of the following at the dates indicated:

                                                      December 31,
                                                -----------------------
                                                   2005         2004
                                                ----------   ----------
Deferred tax assets (net of valuation
 allowances of $163,802 and $165,927) .......   $   20,270   $   17,683
Interest earning collateral deposits (1) ....       15,164        8,905
Interest earning debt service accounts (2) ..       14,798        5,850
Deferred debt related costs, net ............        7,505       11,216
Goodwill and intangibles, net (3) ...........        7,053        7,756
Real estate .................................        4,062       18,732
Prepaid expenses ............................        2,922        4,069
Loans (net of allowance of $40 and $4,546) ..          413        3,792
Affordable housing properties ...............           --        5,641
Other .......................................        1,844        5,060
                                                ----------   ----------
                                                $   74,031   $   88,704
                                                ==========   ==========

(1)  The balances at December 31, 2005 and 2004 include $8,912 and $8,905,
     respectively, of deposits that were required in order to obtain surety
     bonds for affordable housing properties that we sold before the end of the
     fifteen-year tax credit amortization period and on which we have previously
     claimed tax credits on our income tax returns. The surety bond is required
     in order to avoid the recapture of those tax credits previously claimed.
     The balance at December 31, 2005 also includes a $5,000 cash collateral
     account required under an agreement we entered into in connection with
     debanking.
(2)  The balances at December 31, 2005 and 2004 include amounts set aside from
     the proceeds of one of our match funded advance facilities to provide for
     possible shortfalls in the funds available to pay certain expenses and
     interest. The balance at December 31, 2005 also includes collections on
     match funded advances related to our other advance facility that were
     forwarded to the trustee prior to the scheduled payment application date.
(3)  The balance at December 31, 2005 and 2004 included $5,435 of goodwill and
     intangibles related to the acquisition of our German subsidiary, Bankhaus
     Oswald Kruber GmbH & Co. KG ("BOK") on September 30, 2004.

NOTE 11 MATCH FUNDED LIABILITIES

     Match funded liabilities are obligations secured by the collateral
underlying the related match funded assets, and are repaid through the cash
proceeds arising from those assets. Our match funded liabilities are accounted
for as secured borrowings with pledges of collateral and are comprised of the
following at December 31:


<TABLE>
<CAPTION>
                                                                              Unused
                                                                             Borrowing
Collateral                                  Interest rate                     Capacity       2005           2004
-----------------------------------------   -----------------------------   -----------   -----------   -----------
<S>                                         <C>                             <C>           <C>           <C>
Advances on loans serviced for others (1)   See (1)                         $    36,057   $   238,943   $   149,341
Advances on loans serviced for others (2)   LIBOR plus 175 basis points          24,651       100,349        90,852
Commercial loans                            --                                       --            --         4,134
                                                                            -----------   -----------   -----------
                                                                            $    60,708   $   339,292   $   244,327
                                                                            ===========   ===========   ===========
</TABLE>


(1)  In November 2004, we executed a servicing advance securitization. This
     transaction involved the issuance of a term note for $100,000 and a
     one-year variable funding note for a maximum of $75,000. On March 31, 2005,
     we executed an indenture supplement to the November 2004 securitization
     with a closing date of April 6, 2005. This supplement included the issuance
     of a second term note for $75,000. In addition, the maximum amount of the
     variable funding note was increased to $100,000. The original term note
     bears interest at LIBOR plus 50 basis points, and the second term note
     bears interest at LIBOR plus 40 basis points. The variable funding note
     bears interest at a commercial paper rate plus a margin that approximates
     LIBOR plus 50 basis points. The original term note under this facility has
     a stated maturity of October 2013, and the second term note has a stated
     maturity of March 2014. The variable funding note has a stated maturity of
     November 2011.
(2)  Under the terms of the agreement, we are eligible to finance additional
     advances on loans serviced for others up to a maximum balance of $125,000.
     This facility will mature in January 2007.

     At December 31, 2005 and 2004, match funded liabilities had a weighted
average interest rate of 4.96% and 3.32%, respectively.

                                      F-22

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     Match funded liabilities contain various qualitative and quantitative
covenants that, among other things, establish requirements for the monitoring
and reporting of specified financial transactions and reporting on defined
events affecting the collateral underlying the agreements. We are currently in
compliance with these covenants.

NOTE 12 SERVICER LIABILITIES

     Servicer liabilities represent amounts we have collected, primarily from
residential servicing borrowers, that will either be deposited in collection
accounts held at an unaffiliated bank and excluded from our balance sheet, paid
directly to an investment trust, or refunded to borrowers. The following table
sets forth the principal components of servicer liabilities at December 31:

                                                      2005         2004
                                                   ----------   ----------
Borrower payments due to custodial accounts ....   $  225,862   $  255,040
Escrow payments due to custodial accounts ......       22,573        3,786
Partial payments and other unapplied balances ..       50,457       32,439
                                                   ----------   ----------
                                                   $  298,892   $  291,265
                                                   ==========   ==========

NOTE 13 LINES OF CREDIT AND OTHER SECURED BORROWINGS

     Secured lines of credit from various unaffiliated financial institutions
are as follows at December 31:


<TABLE>
<CAPTION>
                                                                           Unused            Balance Outstanding
                                                                          Borrowing     -----------------------------
Borrowings                         Interest Rate (1)       Maturity       Capacity           2005            2004
------------------------------   ---------------------   ------------   -------------   --------------   ------------
<S>                              <C>                     <C>            <C>             <C>              <C>
Senior secured credit            1-Month LIBOR +162.5
 agreement (2)                    or 225 basis points      June 2006    $      58,782   $       81,218   $     24,218
Senior secured credit             1-Month LIBOR + 250
 agreement (3)                       basis points             (3)                  --               --         11,458
Mortgage note (4)                        5.62%           October 2014              --           14,661         14,936
Loans sold under agreement        1-Month LIBOR + 75
 to repurchase (5)                   basis points         March 2006               --          459,400             --
Master loan and security          1-Month LIBOR + 55
 agreement (6)                    or 355 basis points    October 2006         100,000               --             --
                                                                        -------------   --------------   ------------
                                                                              158,782          555,279         50,612
Master loan and security          1-Month LIBOR + 55
 agreement - consolidated         or 355 basis points
 VIE (7)                                                 October 2006         178,831           71,169             --
                                                                        -------------   --------------   ------------
                                                                        $     337,613   $      626,448   $     50,612
                                                                        =============   ==============   ============
</TABLE>


(1)  1-Month LIBOR was 4.39% and 2.40% at December 31, 2005 and 2004,
     respectively.
(2)  Secured by mortgage servicing rights and advances on loans serviced by
     others. Borrowing secured by mortgage servicing rights is at LIBOR plus 225
     basis points. Borrowing secured by other acceptable collateral is at LIBOR
     plus 162.5 basis points. The interest rate may be reduced to 1.625% or
     2.25% to the extent that we have available balances on deposit with the
     lender.
(3)  We repaid in full the balance outstanding under this credit agreement
     during the second quarter of 2005 and terminated the agreement.
(4)  Collateral represents our loan servicing call center located in Orlando,
     Florida.
(5)  Represents a repurchase agreement entered into to finance the purchase of
     mortgage loans held for resale. The loans were securitized in February 2006
     and the outstanding balance was repaid. This agreement matured on March 17,
     2006.
(6)  We entered into this agreement on October 11, 2005. Any borrowings under
     this agreement will be secured by mortgage loans. We can borrow up to 90%
     of the principal balance of the mortgage loans or 88.2% of the market value
     of the loans, whichever is lower, at LIBOR plus 55 basis points. Borrowing
     above this level is at LIBOR plus 355 basis points.
(7)  A consolidated VIE entered into this agreement on October 11, 2005.
     Borrowings under this agreement are secured by mortgage loans. The
     consolidated VIE can borrow up to 90% of the principal balance of the
     mortgage loans or 88.2% of the market value of the loans, whichever is
     lower, at LIBOR plus 55 basis points. Borrowing above this level is at
     LIBOR plus 355 basis points.

                                      F-23

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     Each of our lines of credit contains qualitative and quantitative covenants
that establish, among other things, the maintenance of specified net worth and
restrictions on future indebtedness, as well as the monitoring and reporting of
various specified transactions or events. We are currently in compliance with
these covenants.

     The maximum month end amount outstanding under lines of credit and other
secured borrowings was $626,448 and $113,790 for the years ended December 31,
2005 and 2004, respectively. The average balance of obligations outstanding
under lines of credit and other secured borrowings was $116,999 and $66,271
during the years ended December 31, 2005 and 2004, respectively, and the
weighted average interest rates were 4.16% and 4.10%, respectively. The weighted
average interest rates on our obligations outstanding under lines of credit and
other secured borrowings were 5.29% and 4.84% at December 31, 2005 and 2004,
respectively.

NOTE 14 DEBT SECURITIES

     Our debt securities consist of the following at December 31:

                                                      2005         2004
                                                   ----------   ----------
3.25% Convertible Notes due August 1, 2024 .....   $  100,900   $  175,000
10.875% Capital Securities due August 1, 2027 ..       53,429       56,249
                                                   ----------   ----------
                                                   $  154,329   $  231,249
                                                   ==========   ==========

     Each of our debt securities contain qualitative and quantitative covenants
that establish, among other things, the maintenance of specified net worth and
restrictions on future indebtedness, as well as the monitoring and reporting of
various specified transactions or events. We are currently in compliance with
these covenants.

     Convertible Notes. In July 2004, OCN issued $175,000 aggregate principal
amount of 3.25% Contingent Convertible Senior Unsecured Notes due 2024
("Convertible Notes"). The Convertible Notes are senior unsecured obligations
and bear interest at the rate of 3.25% per year. Interest is payable on February
1 and August 1 of each year beginning on February 1, 2005. The Convertible Notes
will mature on August 1, 2024. During 2005, we repurchased $74,100 of our
Convertible Notes in the open market resulting in a gain of $4,497, net of the
write-off of unamortized issuance costs.

     In connection with our issuance of the Convertible Notes, we incurred
certain costs that we capitalized and are amortizing over the period from the
date of issuance to August 1, 2009, the first date at which holders may require
us to repurchase their notes. The unamortized balance of these issuance costs
amounted to $2,814 and $6,107 at December 31, 2005 and 2004, respectively, and
is included in other assets. We filed with the SEC a registration statement,
which was declared effective March 15, 2005, covering resales by holders of the
Convertible Notes and the common stock issuable upon conversion.

     Holders may convert all or a portion of their notes into shares of our
common stock under the following circumstances: (1) at any time during any
calendar quarter commencing after December 31, 2004, if the closing sale price
of our common stock for at least 20 trading days in a period of 30 consecutive
trading days ending on the last trading day of the calendar quarter prior to
such quarter is greater than 125% of the conversion price per share of common
stock on such last day; (2) subject to certain exceptions, during the five
business day period after any five-consecutive-trading-day period in which the
trading price per $1 principal amount of the notes for each day of the
five-consecutive-trading-day period was less than 98% of the product of the
closing sale price of our common stock and the number of shares issuable upon
conversion of $1 principal amount of the notes; (3) if the notes have been
called for redemption; or (4) upon the occurrence of specified corporate
transactions.

     The conversion rate is 82.1693 shares of our common stock per $1 principal
amount of the notes, subject to adjustment. Events that may cause the conversion
rate to be adjusted, as more fully described in the related indenture agreement,
primarily relate to cash dividends or other distributions to holders of our
common stock. Upon conversion, we may at our option choose to deliver, in lieu
of our common stock, cash or a combination of cash and common stock as described
herein.

     Beginning August 1, 2009, we may redeem all or a portion of the notes for
cash for a price equal to 100% of the principal amount of the notes to be
redeemed plus accrued and unpaid interest, if any.

     Holders may require us to repurchase all or a portion of their notes for
cash on August 1, 2009, August 1, 2014, and August 1, 2019 or upon the
occurrence of a "fundamental change" at a repurchase price equal to 100% of the
principal amount of the notes to be

                                      F-24

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

repurchased plus accrued and unpaid interest, if any. A "fundamental change" is
a change of control or a termination of trading in our common stock.

     In privately negotiated transactions concurrent with the private placement
of the Convertible Notes, we used 25% of the gross proceeds from the sale of the
Convertible Notes to repurchase 4,850,000 shares of our common stock at a price
of $9.02 per share. We used the remaining proceeds, net of underwriting discount
and other expenses, primarily to repay maturing deposits and other liabilities,
to increase our cash and to invest in short-term investment grade securities.

     Capital Securities. In August 1997, Ocwen Capital Trust ("OCT") issued
$125,000 of 10.875% Capital Securities (the "Capital Securities"). OCT invested
the proceeds from issuance of the Capital Securities in 10.875% Junior
Subordinated Debentures issued by OCN. The Junior Subordinated Debentures, which
represent the sole assets of OCT, will mature on August 1, 2027. Prior to our
adoption of SFAS No. 150 on July 1, 2003, we presented the Capital Securities in
a separate caption between liabilities and stockholders' equity in our balance
sheet as "Company-obligated, mandatorily redeemable securities of subsidiary
trust holding solely Junior Subordinated Debentures of the Company", and
distributions were reported on the Capital Securities in a separate caption
immediately following non-interest expense in our consolidated statement of
operations. Effective with our adoption of SFAS No. 150 on July 1, 2003, the
Capital Securities are presented as a liability in the balance sheet as a
component of Debt Securities. At the same time, we began reporting distributions
on the Capital Securities as a component of interest expense in the consolidated
statement of operations. During 2005, we repurchased $2,820 of our Capital
Securities in the open market resulting in a loss of $239, net of the write-off
of unamortized issuance costs.

     Holders of the Capital Securities are entitled to receive cumulative cash
distributions accruing from the date of original issuance and payable
semiannually in arrears on February 1 and August 1 of each year, commencing on
February 1, 1998, at an annual rate of 10.875% of the liquidation amount of
$1,000 per Capital Security. OCN guarantees payment of distributions out of
moneys held by OCT, and payments on liquidation of OCT or the redemption of
Capital Securities, to the extent OCT has funds available. If Ocwen Financial
Corporation does not make principal or interest payments on the Junior
Subordinated Debentures, OCT will not have sufficient funds to make
distributions on the Capital Securities, in which event the guarantee shall not
apply to such distributions until OCT has sufficient funds available therefore.
Accumulated distributions payable on the Capital Securities amounted to $2,425
and $2,549 at December 31, 2005 and 2004, respectively, and are included in
other liabilities.

     We have the right to defer payment of interest on the Junior Subordinated
Debentures at any time or from time to time for a period not exceeding 10
consecutive semiannual periods with respect to each deferral period provided
that no extension period may extend beyond the stated maturity of the Junior
Subordinated Debentures. Upon the termination of any such extension period and
the payment of all amounts then due on any interest payment date, we may elect
to begin a new extension period. Accordingly, there could be multiple extension
periods of varying lengths throughout the term of the Junior Subordinated
Debentures. If we defer interest payments on the Junior Subordinated Debentures,
distributions on the Capital Securities will also be deferred, and we may not,
nor may any of our subsidiaries, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, their capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities that rank pari passu with or junior to the Junior Subordinated
Debentures. During an extension period, interest on the Junior Subordinated
Debentures will continue to accrue at the rate of 10.875% per annum, compounded
semiannually.

     We may redeem the Junior Subordinated Debentures before maturity at our
option subject to the receipt of any necessary prior regulatory approval, (i) in
whole or in part on or after August 1, 2007, at a redemption price equal to
105.438% of the principal amount thereof on August 1, 2007, declining ratably on
each August 1 thereafter to 100% on or after August 1, 2017, plus accrued
interest thereon, or (ii) at any time, in whole (but not in part), upon the
occurrence and continuation of a special event (defined as a tax event,
regulatory capital event or an investment company event) at a redemption price
equal to the greater of (a) 100% of the principal amount thereof or (b) the sum
of the present values of the principal amount and premium payable with respect
to an optional redemption of such Junior Subordinated Debentures on August 1,
2007, together with scheduled payments of interest from the prepayment date to
August 1, 2007, discounted to the prepayment date on a semiannual basis at the
adjusted Treasury rate plus accrued interest thereon to the date of prepayment.
The Capital Securities are subject to mandatory redemption, in whole or in part,
upon repayment of the Junior Subordinated Debentures at maturity or their
earlier redemption, in an amount equal to the amount of the related Junior
Subordinated Debentures maturing or being redeemed and at a redemption price
equal to the redemption price of the Junior Subordinated Debentures, plus
accumulated and unpaid distributions thereon to the date of redemption.

                                      F-25

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     For financial reporting purposes, we treat OCT as a subsidiary and,
accordingly, the accounts of OCT are included in our consolidated financial
statements. We consolidated OCT because we own all of the Common Securities that
were issued by OCT and 57% of the Capital Securities. We eliminate intercompany
balances and transactions with OCT, including the balance of Junior Subordinated
Debentures outstanding, in our consolidated financial statements.

     In connection with our issuance of the Capital Securities, we incurred
certain costs that we capitalized and are amortizing over the term of the
Capital Securities. The unamortized balance of these issuance costs amounted to
$1,535 and $1,691 at December 31, 2005 and 2004, respectively, and is included
in other assets.

NOTE 15 DEPOSITS

     In connection with debanking, on June 30, 2005, Marathon National Bank
assumed the customer deposits associated with the Bank's branch facility. As a
result of our termination of the Bank's status as a federal savings bank, we are
no longer able to accept deposits in the U.S. Our deposits consisted of the
following at December 31, 2004:

Non-interest-bearing deposits ............   $    4,513
NOW and money market checking accounts ...       12,541
Savings accounts (1) .....................        1,804
                                             ----------
                                                 18,858
Certificates of deposit (1) ..............      271,649
                                             ----------
                                             $  290,507
                                             ==========

(1)  BOK deposits amounted to $12,550 and $10,792 at December 31, 2005 and 2004,
     respectively, and are included in other liabilities.

     Interest expense we incurred by type of deposit account was as follows for
the years ended December 31:

                                         2005         2004         2003
                                      ----------   ----------   ----------
NOW, money market and savings .....   $      690   $      586   $      528
Certificates of deposit ...........        3,020       13,048       17,018
                                      ----------   ----------   ----------
                                      $    3,710   $   13,634   $   17,546
                                      ==========   ==========   ==========

NOTE 16 ESCROW DEPOSITS

     Escrow deposits amounted to $86,084 at December 31, 2004 and consist of
custodial deposit balances representing funds collected from borrowers for the
payment of taxes and insurance premiums on mortgage properties underlying loans
that we serviced for others. In connection with debanking, these custodial
deposits were transferred from the Bank to an unaffiliated bank and are now
excluded from our balance sheet.

NOTE 17 BASIC AND DILUTED EARNINGS PER SHARE

     We are required to present both basic and diluted EPS on the face of our
statement of operations. Basic EPS excludes common stock equivalents and is
calculated by dividing net income by the weighted average number of common
shares outstanding during the year. We calculate diluted EPS by dividing net
income, as adjusted to add back interest expense on the Convertible Notes, by
the weighted average number of common shares outstanding including the potential
dilutive common shares related to outstanding stock options, restricted stock
awards and the Convertible Notes.

                                      F-26

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     The following is a reconciliation of the calculation of basic EPS to
diluted EPS for the years ended December 31:


<TABLE>
<CAPTION>
                                                    2005           2004           2003
                                                ------------   ------------   ------------
<S>                                             <C>            <C>            <C>
Basic EPS:
Net income ..................................   $     15,065   $     57,724   $      4,772
                                                ============   ============   ============
Weighted average shares of common stock .....     62,912,768     65,811,697     67,166,888
                                                ============   ============   ============
Basic EPS ...................................   $       0.24   $       0.88   $       0.07
                                                ============   ============   ============
Diluted EPS:
Net income ..................................   $     15,065   $     57,724   $      4,772
Interest expense on Convertible Notes, net
 of income tax (1) ..........................             --          2,378             --
                                                ------------   ------------   ------------
Adjusted net income .........................   $     15,065   $     60,102   $      4,772
                                                ============   ============   ============
Weighted average shares of common stock .....     62,912,768     65,811,697     67,166,888
Effect of dilutive elements:
  Convertible Notes (1) .....................             --      6,129,022             --
  Stock options (2) .........................        807,649        992,337        493,889
  Common stock awards .......................        165,022        264,199        403,096
                                                ------------   ------------   ------------
Dilutive weighted average of common stock ...     63,885,439     73,197,255     68,063,873
                                                ============   ============   ============
Diluted EPS .................................   $       0.24   $       0.82   $       0.07
                                                ============   ============   ============
</TABLE>


(1)  The effect of our Convertible Notes on diluted EPS is computed using the
     if-converted method in accordance with the provisions of EITF 04-8, as
     described in Note 1. The Convertible Notes are assumed to have been
     converted to common shares at the time the Convertible Notes were issued on
     July 28, 2004. Interest expense and related amortization costs applicable
     to the Convertible Notes, net of income tax, is added back to net income.
     Conversion of the Convertible Notes into shares of common stock has not
     been assumed for purposes of computing diluted EPS for 2005 because the
     effect would be anti-dilutive. The effect is anti-dilutive whenever
     interest expense on the Convertible Notes, net of income tax, per common
     share obtainable on conversion exceeds basic EPS.

(2)  Excludes an average of 1,582,640, 1,274,364 and 2,818,332 options that were
     anti-dilutive for 2005, 2004 and 2003, respectively, because their exercise
     price was greater than the average market price of our stock.

NOTE 18 DERIVATIVE FINANCIAL INSTRUMENTS

FOREIGN CURRENCY EXCHANGE RATE RISK MANAGEMENT

     We entered into foreign currency derivatives to hedge our net investments
in foreign subsidiaries that own residual securities backed by subprime
residential loans originated in the UK and that owned a shopping center located
in Halifax, Nova Scotia. During the first quarter of 2005, we sold our foreign
subsidiary that owned the shopping center. However, in connection with the sale,
OCN extended a short-term Canadian Dollar loan in the amount of C$6,000 to the
buyer. During the third quarter of 2005, the Canadian Dollar loan was repaid in
full and the related currency futures contract was terminated. We have managed
our exposure to foreign currency exchange rate risk related to this foreign
currency-denominated transaction through the use of currency futures. Our
remaining principal exposure to foreign currency exchange rates exists primarily
with the British Pound versus the U.S. Dollar. Our policy is to periodically
adjust the amount of foreign currency derivative contracts we have entered into
in response to changes in our recorded investment as well as to changes in our
assets denominated in a foreign currency. Our net exposures are subject to gain
or loss if foreign currency exchange rates fluctuate. Currency futures are
commitments to either purchase or sell foreign currency at a future date for a
specified price. We have determined that the local currency of our investment in
UK residuals is the functional currency. The foreign currency derivative
financial instrument related to our foreign subsidiary that owns the residual
securities was designated as a hedge. Accordingly, for this instrument we
include the gains or losses in the net unrealized foreign currency translation
in accumulated other comprehensive income in stockholders' equity. The foreign
currency derivative financial instrument related to our Canadian
Dollar-denominated loan was not designated as a hedge. Gains and losses from
this instrument are included in earnings as an offset to the related foreign
currency transaction gain or loss arising from remeasurement of the loan prior
to its repayment in the third quarter.

                                      F-27

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     The following table sets forth the terms and values of these foreign
currency financial instruments at the dates indicated:


<TABLE>
<CAPTION>
                                             Position     Maturity     Notional Amount   Strike Rate     Fair Value
                                             --------   ------------   ---------------   ------------   ------------
<S>                                          <C>        <C>            <C>               <C>            <C>
December 31, 2005:
British Pound currency futures (1) .......   Short      March 2006     (pound)  13,438         1.7692   $        726
                                                                                                        ============
December 31, 2004:
Canadian Dollar currency futures (1) .....   Short      March 2005     C$       11,500         0.8416   $        109

British Pound currency futures (1) .......   Short      March 2005     (pound)  17,000         1.9248            301
                                                                                                        ------------
                                                                                                        $        410
                                                                                                        ============
</TABLE>


(1)  The U.S. Dollar equivalent notional amount of the British Pound currency
     futures at December 31, 2005 was $23,148. At December 31, 2004, the U.S.
     Dollar equivalent notional amounts of the Canadian Dollar and British Pound
     currency futures were $9,570 and $32,609, respectively.

     Because foreign currency futures contracts are exchange traded, holders of
these instruments look to the exchange for performance under these contracts and
not the entity holding the offsetting futures contract, thereby minimizing the
risk of nonperformance under these contracts. The notional principal amount does
not represent our exposure to credit loss.

     Beginning in the second quarter of 2005, BOK entered into Euro foreign
exchange forward contracts ("FX Forward") in order to hedge its investment in
U.S. dollar-denominated servicing advances that it acquired from OLS. The
following table sets forth the terms and value of the foreign exchange forward
contracts as of December 31, 2005:


<TABLE>
<CAPTION>
                                        Notional Amount
                                 -----------------------------       Contract
Maturity                             Sell            Buy               Rate         Fair Value
------------------------------   ------------   --------------   ----------------   ----------
<S>                              <C>            <C>              <C>                <C>
April to August 2006             $      7,464   (euro)   6,111   1.1854 to 1.2590   $     (189)
</TABLE>


INTEREST RATE RISK MANAGEMENT

     From time to time, we enter into interest rate swaps. Under interest rate
swaps, we agree with other parties to exchange, at specified intervals, the
difference between fixed-rate and floating-rate interest amounts calculated by
reference to an agreed upon notional amount. We are exposed to loss when we
enter into interest rate swaps if: (i) the counterparty to the interest rate
swap does not perform and (ii) the interest rate that we receive exceeds the
interest rate that we pay.

     We had no interest rate swaps outstanding at December 31, 2005 or 2004.
During 2003, we realized gains of $1,076 on swaps that we terminated. While
these two swaps were entered into for purposes of mitigating the impact of
declining interest rates on float earnings, they did not meet the criteria to be
accounted for under hedge accounting. Accordingly, they were accounted for at
fair value with changes in fair value included in servicing and subservicing
fees. We entered into no swap agreements during 2005 or 2004.

     The amortizing interest rate caps and floors we had purchased in 1999 to
hedge our interest rate exposure relating to our match funded loans and
securities matured in October 2003. Net realized and unrealized gains and
(losses) included in earnings to record these caps and floors at fair value
during 2003 amounted to $(592).

     During 2005, in connection with our Residential Origination Services
business, we acquired certain mortgage loan portfolios, which we held at
December 31, 2005 in anticipation of a securitization. Since the value of the
mortgages loans held are subject to interest rate risk, we sold short a series
of three-month Eurodollar interest rate futures contracts to hedge the exposure
to interest rate risk represented by our loans held for resale. Our policy is to
adjust the amount of Eurodollar futures contracts that we sell short to
accommodate changes in the amount of our mortgage loans held for resale. Since
the Eurodollar interest rate futures contracts were not designated as hedges,
changes in the fair value of the contracts and gains and losses from these
instruments are included in earnings in the period in which they occur, and we
report them as a component of other income (expense), net.

                                      F-28

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     The following table sets forth the terms and values of our Eurodollar
interest rate futures contracts as of December 31, 2005:


<TABLE>
<CAPTION>
Position             Maturity             Notional Amount   Contract Price      Fair Value
--------   ----------------------------   ---------------   --------------   ---------------
<S>        <C>                            <C>               <C>              <C>
Short      March 2006 to September 2010   $     3,261,000   94.92 to 95.46   $           731
</TABLE>


     Eurodollar interest rate futures contracts are exchange-traded; therefore,
holders of these instruments look to the exchange for performance under these
contracts and not to the holders of the offsetting futures contracts. Using
exchange-traded instruments minimizes our exposure to risk from nonperformance
under these contracts. The notional amount of our contracts does not represent
our exposure to credit loss.

     Market quotes are available for these agreements. The fair value of our
Eurodollar interest rate futures contracts represents the estimated amount that
we would receive or pay to terminate these agreements taking into account
current interest rates. The net realized and unrealized gains (losses) included
in earnings to record these contracts at fair value were $872 during 2005. The
following table summarizes our use of interest rate risk management instruments:

                                     Notional Amount
                                    Short Euro Dollar
                                      Interest Rate
                                         Futures
                                   ------------------
Balance at December 31, 2004 ...   $               --
  Sales ........................            4,089,000
  Maturities ...................             (828,000)
  Terminations .................                   --
                                   ------------------
Balance at December 31,2005 ....   $        3,261,000
                                   ==================

NOTE 19 INCOME TAXES

     The components of income tax expense (benefit) were as follows for the
years ended December 31:


<TABLE>
<CAPTION>
                                                         2005            2004            2003
                                                     ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>
Current:
  Federal ........................................   $      5,503    $    (23,019)   $        667
  State ..........................................            448             241              49
  Foreign ........................................          1,466             224             163
                                                     ------------    ------------    ------------
                                                            7,417         (22,554)            879
                                                     ------------    ------------    ------------
Deferred:
  Federal ........................................            866          25,742          (2,401)
  State ..........................................           (343)             --              95
  Foreign ........................................             --               6              --
  Provision for (reversal of) valuation allowance
   on deferred tax asset .........................         (2,125)        (35,518)          2,175
                                                     ------------    ------------    ------------
                                                           (1,602)         (9,770)           (131)
                                                     ------------    ------------    ------------
Total ............................................   $      5,815    $    (32,324)   $        748
                                                     ============    ============    ============
</TABLE>


                                      F-29

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     Income tax expense (benefit) differs from the amounts computed by applying
the U.S. Federal corporate income tax rate of 35% as follows for the years ended
December 31:


<TABLE>
<CAPTION>
                                                         2005            2004            2003
                                                     ------------    ------------    ------------
<S>                                                  <C>             <C>             <C>
Expected income tax expense (benefit) at statutory
 rate ............................................   $      7,308    $      8,890    $      1,760
Differences between expected and actual expense
 (benefit)
  Excess of cost over net assets acquired, net ...            (30)            (30)           (464)
  Indefinite deferral on earnings of non-U.S.
   affiliates ....................................         (2,023)           (993)           (467)
  State tax (after Federal tax benefit) ..........             68             157              94
  Low-income housing tax credits .................           (998)         (4,848)         (2,393)
  Deferred tax asset valuation allowance expense
   (benefit) .....................................         (2,125)        (35,518)          2,175
  Recapture of base year bad debt reserve ........          1,967              --              --
  Foreign tax ....................................          1,466             230             163
  Other ..........................................            182            (212)           (120)
                                                     ------------    ------------    ------------
    Actual income tax expense (benefit) ..........   $      5,815    $    (32,324)   $        748
                                                     ============    ============    ============
</TABLE>


     The net deferred tax asset was comprised of the following as of
December 31:


<TABLE>
<CAPTION>
                                                                        2005           2004
                                                                    ------------   ------------
<S>                                                                 <C>            <C>
Deferred tax assets:
  Tax residuals and deferred income on tax residuals ............   $      4,058   $      1,159
  State taxes ...................................................          8,685          8,465
  Accrued incentive compensation ................................          2,886          2,368
  Accrued other liabilities .....................................          2,625          1,423
  Valuation allowance on real estate owned ......................            678            444
  Bad debt and allowance for loan losses ........................          4,022          3,067
  Net unrealized gains and losses on securities
   securities ...................................................             --          7,226
  Mortgage servicing rights amortization ........................         66,187         61,216
  Goodwill amortization .........................................          1,533            960
  Foreign currency exchange .....................................            346          1,075
  Capital loss carryforward .....................................          9,910          8,601
  Net operating loss carryforward ...............................         27,900         27,086
  Partnership losses and low-income housing tax credits .........         54,915         62,904
  Deferred income ...............................................          2,171             --
  Other .........................................................          1,871             --
                                                                    ------------   ------------
                                                                         187,787        185,994
                                                                    ------------   ------------
Deferred tax liabilities:
  Deferred interest income on loans .............................             75          1,255
  Net unrealized gains and losses on securities .................          3,640             --
  Research and development costs ................................             --            324
  Other .........................................................             --            805
                                                                    ------------   ------------
                                                                           3,715          2,384
                                                                    ------------   ------------
                                                                         184,072        183,610
Valuation allowances ............................................       (163,802)      (165,927)
                                                                    ------------   ------------
Net deferred tax asset ..........................................   $     20,270   $     17,683
                                                                    ============   ============
</TABLE>


     We conduct periodic evaluations of positive and negative evidence to
determine whether it is more likely than not that the deferred tax asset can be
realized in future periods. Among the factors considered in this evaluation are
estimates of future taxable income, the future reversal of temporary
differences, tax character and the impact of tax planning strategies that can be
implemented if warranted. As a result of this evaluation, we included in the tax
provision decreases of $2,125 and $35,518 to the valuation allowance for 2005
and 2004, respectively, and an increase of $2,175 to the valuation allowance for
2003. The $35,518 reduction in the valuation allowance on the deferred tax asset
in 2004 is principally a result of refund claims of $56,526 filed with the IRS
that reduced our gross deferred tax asset and increased our income tax
receivable balance by the same amount. These refund claims, which were affirmed
in writing by the IRS

                                      F-30

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

agent during 2004, arose because of changes in the tax law that allowed us to
carry back net operating losses from 2001 and 2002 to taxes paid in earlier
years.

     As of December 31, 2005, we had a deferred tax asset valuation allowance
totaling $163,802. This allowance is comprised of $38,873 relating to built-in
loss limitations arising from our acquisition of OAC and $124,929 relating to
our evaluation of the future realization of prior years deferred tax asset.

     Before our acquisition of OAC, OAC was a REIT for federal tax purposes and
filed a REIT federal income tax return through October 20, 1999. We have
included OAC in our consolidated federal income tax return since October 21,
1999. OAC had, at October 6, 1999, approximately $131,567 of net unrealized
built-in losses. Any such losses recognized within the five-year period
beginning on October 7, 1999 (the "recognition period") are treated as
pre-change losses and, as such, are subject to an annual limit as to the amount,
which may offset the taxable income of Ocwen Financial Corporation and its
subsidiaries ("the IRC section 382 limitation"). A net unrealized built-in loss
is an amount by which the tax basis of the corporation's assets at the time of
the change in ownership exceeds the aggregate fair market value of those assets
at that time. The IRC section 382 limitation is determined by multiplying the
value of OAC's stock by the federal long-term tax-exempt rate and amounts to
approximately $5,700. If a deduction is denied for any recognized built-in loss
in any post-change year, the loss is carried forward to subsequent years under
rules similar to the standard loss carryforward rules. As a result of these
limitations, we established a corresponding deferred tax asset valuation
allowance at the acquisition date as part of purchase accounting in the amount
of $38,873. At December 31, 2005, we had realized built-in losses of $103,787
which consists of net operating loss carryforwards of $79,715 and capital loss
carryforwards of $24,072.

     Deferred tax assets, net of deferred fees, include tax residuals which
result from the ownership of Real Estate Mortgage Investment Conduits ("REMIC").
While a tax residual is anticipated to have little or no future cash flows from
the REMIC from which it has been issued, the tax residual does bear the income
tax liability and benefit resulting from the annual differences between the
interest paid on the debt instruments issued by the REMIC and the interest
received on the mortgage loans held by the REMIC. Typically, this difference
generates taxable income to the Company in the first several years of the REMIC
and equal amounts of tax losses thereafter, thus resulting in the deferred tax
asset. The current Federal income tax expense in 2003 is the result of excess
inclusion income generated by REMIC residuals.

     At December 31, 2003, we had net operating loss carryforwards of $123,699
and capital loss carryforwards of $35,767. During 2004, we filed claims with the
Internal Revenue Service to carryback these net operating losses and capital
losses to prior years in which taxes were paid. At December 31, 2005, we had
capital loss carryforwards of $4,242, which expire in 2009, and we had tax
credit carryforwards of $51,233 related to our low-income housing tax credits
which expire in the years 2018 through 2025.

     Prior to December 31, 1996, The Bank was permitted to deduct from taxable
income an allowance for bad debts which was in excess of the provision for such
losses charged to income. Accordingly, at December 31, 2004, retained earnings
included $5,700, for which no provision for income tax has been provided. The
base reserves were subject to recapture, if: (1) the Bank fails to qualify as a
"bank" for federal income tax purposes, (2) certain distributions are made with
respect to the stock of the Bank, (3) the bad debt reserves are used for any
purpose other than to absorb bad debt losses or (4) there is a change in federal
tax law.

     As a result of debanking, the Bank terminated its status as a federal
savings bank. We, therefore, recorded a one-time provision of $1,967, to
recognize a deferred tax liability arising from the recapture of bad debt
reserves.

NOTE 20 EMPLOYEE BENEFIT AND COMPENSATION PLANS

     We maintain a defined contribution plan to provide post retirement benefits
to our eligible employees. We also adopted a number of compensation plans for
certain of our employees. We designed these plans to facilitate a
pay-for-performance policy, further align the interests of our officers and key
employees with the interests of our shareholders and assist in attracting and
retaining employees vital to our long-term success. These plans are summarized
below.

RETIREMENT PLAN

     We maintain a defined contribution 401(k) plan. We match 50% of each
employee's contributions, limited to 2% of the employee's compensation. Our
contributions to the 401(k) plan were $590, $490 and $417 for the years ended
December 31, 2005, 2004 and 2003, respectively.

                                      F-31

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     In connection with our acquisition of Berkeley Federal Savings Bank in June
1993, the Bank assumed the obligations under a noncontributory defined benefit
pension plan (the "Plan") covering substantially all employees upon their
eligibility under the terms of the Plan. We froze and fully funded the Plan
after the plan year ended December 31, 1993.

ANNUAL INCENTIVE PLAN

     The Ocwen Financial Corporation Amended 1998 Annual Incentive Plan (the
"AIP") is our primary incentive compensation plan for executives and other key
employees. Under the terms of the AIP, participants can earn cash and
equity-based awards as determined by the Compensation Committee. The awards are
based on objective performance criteria established by the Committee, which
includes corporate profitability, growth in our core businesses, meeting budget
objectives and achieving cost savings through Six Sigma initiatives.
Non-qualified stock options to purchase our common stock are issued as part of
the AIP and are granted pursuant to the Ocwen Financial Corporation 1991
Non-Qualified Stock Option Plan.

     The following table provides a summary of our stock option activity for the
years ended December 31, 2005, 2004 and 2003, and stock options exercisable at
the end of each of those years:


<TABLE>
<CAPTION>
                                                   2005                            2004                            2003
                                      -----------------------------   -----------------------------   -----------------------------
                                                        Weighted                        Weighted                        Weighted
                                                         Average                         Average                         Average
                                        Number of       Exercise        Number of       Exercise        Number of       Exercise
                                         Options          Price          Options          Price          Options          Price
                                      -------------   -------------   -------------   -------------   -------------   -------------
<S>                                       <C>         <C>                 <C>         <C>                 <C>         <C>
Outstanding at beginning of year ..       4,279,269   $        8.34       4,581,370   $        8.08       4,723,166   $        7.97
Granted (1) .......................         411,703            6.10         633,169            8.01         431,982            6.15
Exercised .........................        (203,410)           4.56        (543,260)           4.47        (359,419)           4.51
Forfeited .........................        (259,667)           9.51        (392,010)          10.08        (214,359)           7.74
                                      -------------                   -------------                   -------------
Outstanding at end of year ........       4,227,895            8.24       4,279,269            8.34       4,581,370            8.08
                                      =============                   =============                   =============
Exercisable at end of year ........       3,034,098            8.97       2,805,555            9.60       2,541,593            9.72
                                      =============                   =============                   =============
</TABLE>


(1)  The weighted average grant-date fair value was $8.71 in 2005, $9.48 in 2004
     and $8.74 in 2003.

     The following table summarizes information about our stock options
outstanding at December 31, 2005:


<TABLE>
<CAPTION>
                                      Options Outstanding                     Options Exercisable
                                 -----------------------------   ---------------------------------------------
                                                                   Weighted
                                                   Weighted        Average                         Weighted
                                                   Average         Remaining                       Average
                    Exercise                       Exercise       Contractual                      Exercise
Award Year         Price Range      Number         Price (1)     Life (Years)       Number          Price
---------------  --------------  -------------   -------------   -------------   -------------   -------------
<S>              <C>                 <C>         <C>                        <C>      <C>         <C>
2005 ..........  $ 6.10                411,703   $        6.10              10          82,341   $        6.10
2004 ..........    6.57 - 10.60        558,436            8.12               9         107,631            8.07
2003 ..........    6.18                322,739            6.18               8         149,360            6.18
2002 ..........    1.87                348,955            1.87               7         212,498            1.87
2001 ..........    5.79 - 12.55        835,333            8.70               6         731,539            9.12
2000 ..........    4.09                625,525            4.09               5         625,525            4.09
1999 ..........    6.25                108,721            6.25               4         108,721            6.25
1998 ..........   12.31                 58,771           12.31               3          58,771           12.31
1997 ..........   20.35                437,132           20.35               2         437,132           20.35
1996 ..........   11.00                431,580           11.00               1         431,580           11.00
1995 (2) ......    2.88                 89,000            2.88              --          89,000            2.88
                                 -------------                                   -------------
                                     4,227,895            8.24                       3,034,098            8.97
                                 =============                                   =============
</TABLE>


(1)  Options outstanding for award year 2004 include 328,436 at an exercise
     price of $6.57, 30,000 at $8.56 and 200,000 at $10.60. Options outstanding
     for award year 2001 include 475,333 at an exercise price of $5.79 and
     360,000 at $12.55.

(2)  These options were exercised in January 2006 prior to the expiration date
     of January 31, 2006.

                                      F-32

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     After the awards of 411,703 options for 2005, the number of authorized
shares remaining and available for future awards of stock options is 5,248,682.

     Stock options awarded under the AIP prior to 1998 had a one-year vesting
period. Stock options awarded for 1998 and 1999 vested ratably over a three-year
period. Stock options awarded for 2000 and thereafter generally vest ratably
over a five-year period, including the award year. The term of all options
granted is ten years from the grant date, except in the case of where employment
terminates by reason of retirement, in which case the option will terminate no
later than three years after such retirement or the end of the option term,
whichever is earlier. We treat the difference, if any, between the fair market
value of our stock at the date of grant and the exercise price as compensation
expense. We recognize this compensation expense ratably over the vesting period
of the grant. Included in compensation expense for the years ended December 31,
2005, 2004 and 2003 was $864, $1,266 and $1,226, respectively, related to
options granted below fair market value. Effective with our adoption of SFAS No.
123 (R) on January 1, 2006, compensation expense related to options is measured
based on the grant-date fair value of the options using the Black-Scholes
option-pricing model.

     In 2003, the AIP was amended to provide the Compensation Committee the
option to award common stock in lieu of cash. These awards are granted at no
cost to the employee and vest ratably over a three-year period including the
award year. The shares are issued to the employee upon vesting. Because the
shares have not been registered with the Securities and Exchange Commission,
their transferability and sale by the employee are subject to restriction
periods and other conditions. Shares granted for the years ended December 31,
2005, 2004 and 2003 were 123,368, 115,074 and 126,643, respectively. The fair
value of the grant is recognized as compensation expense ratably over the
vesting period. Included in compensation expense for the years ended December
31, 2005, 2004 and 2003 was $920, $1,476 and $1,402, respectively relating to
these stock awards.

NOTE 21 STOCKHOLDERS' EQUITY

     On May 9, 2000, we announced that our Board of Directors authorized the
repurchase of up to 6,000,000 of our issued and outstanding shares of common
stock. To date, 431,100 shares have been repurchased under this plan (all in
2004). A total of 5,568,900 shares may still be purchased under this plan. On
May 16, 2003 we announced our initiation of a stock repurchase program to
purchase 700,000 shares of our issued and outstanding common stock with the
intent to utilize these repurchased shares as a portion of our annual incentive
awards to employees for service in 2002. During 2004 and 2003, we repurchased
200,000 and 500,000 shares, respectively, and issued 203,088 and 236,461 shares,
respectively, to employees. No shares remain to be purchased under this plan. We
also repurchased 4,850,000 shares in 2004 with a portion of the proceeds from
our issuance of the Convertible Notes in July. No shares remain to be purchased
under this plan.

NOTE 22 REGULATORY REQUIREMENTS

     Effective June 30, 2005, the Bank terminated its status as a federal
savings bank. Prior to returning its original thrift charter to the Office of
Thrift Supervision ("OTS"), the Bank operated as a federal savings bank and OCN
was a registered savings and loan holding company. Our primary regulatory
authority was the OTS.

     In connection with our debanking process, on February 4, 2005, OCN and the
Bank entered into a Branch Purchase and Deposit Assumption Agreement (the
"Branch Purchase Agreement") with Marathon National Bank of New York
("Marathon"). Pursuant to the Branch Purchase Agreement, Marathon agreed to
assume the deposit liabilities of the accounts associated with the Bank's branch
facility in Fort Lee, New Jersey. In addition, Marathon agreed to take over the
lease and other contracts and acquire the assets related to the branch. We
agreed to make a cash payment to Marathon, which was calculated based upon,
among other things, the amount of those deposit account liabilities as of the
closing. On June 13, 2005, the OTS approved our plan of voluntary dissolution
for the Bank subject to certain conditions, including, among other things, our
entering into an agreement to guaranty the obligations of the Bank (other than
the deposit and other liabilities that were assumed by Marathon in connection
with the Branch Purchase Agreement), a cash collateral agreement and a
collateral trust agreement, all on terms acceptable to the OTS.

     Following receipt of OTS approval, OCN entered into an Assignment and
Assumption Agreement, dated June 28, 2005, whereby the Bank assigned to OLS,
directly or indirectly, all of its assets, liabilities and business remaining
after the consummation of the transactions with Marathon.

                                      F-33

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     Pursuant to the conditions set forth in the OTS Approval, OCN entered into
an agreement (the "Guaranty") in favor of the OTS and any holders of claims with
respect to liabilities assumed by OLS from the Bank in connection with the
Assignment (the "Assumed Liabilities"). Assumed Liabilities include all legal
actions against the Bank. The Guaranty contains affirmative covenants relating
to the maintenance of a cash collateral account, reporting requirements,
transactions with affiliates, preservation of the existence of our subsidiaries
and maintenance of not less than $35,000 of unencumbered financial assets.
Pursuant to the Guaranty, we also agreed that OCN and its subsidiaries would
not, among other things:

o    incur debt (as defined) if, following the incurrence of such debt, the
     ratio of our consolidated debt to our tangible net worth (as defined) for
     the most recent fiscal quarter exceeds 7.25:1.00;
o    enter into any merger transaction or sale of all or substantially all of
     our assets, except for certain mergers among us and our subsidiaries or
     with an entity with a specified minimum credit rating that agrees to assume
     our obligations under the Guaranty, and provided that we maintain a
     specified minimum net worth;
o    sell, lease, transfer or otherwise dispose of any assets, except in
     exchange for consideration of at least 85% cash for fair value and provided
     that, after giving effect to any such sale, lease, transfer or disposition,
     the ratio of our consolidated debt to our tangible net worth for the most
     recent fiscal quarter does not exceed 7.25:1.00; or
o    declare or pay any dividends or acquire any of our capital stock, ownership
     interests or make any distributions or return of capital to our
     stockholders, partners or members, except for (i) such dividends or
     distributions that are payable only in OCN's common stock, (ii) such
     declarations, dividends, acquisitions, distributions or returns of capital
     in cash if we maintain a minimum net worth of $333,000 and rating of B2
     from Moody's and B- from S&P on our unsecured, non credit-enhanced debt and
     any such capital distributions do not exceed our consolidated net income
     for the year plus our retained earnings for the two preceding years or
     (iii) cash dividends paid by a subsidiary of OCN to OCN or to any of OCN's
     wholly owned subsidiaries of which such entity is a subsidiary.

     As of December 31, 2005, we were in compliance with all of the covenants
specified in the Guaranty.

     The Guaranty will remain in effect until the later of (a) the sixth
anniversary of the date on which the Bank's federal bank charter was cancelled
or (b) the date on which we have paid in full (i) any obligations that arise out
of the Assumed Liabilities with respect to which a claim has been asserted on or
prior to the sixth anniversary of the date on which the Bank's federal bank
charter was cancelled and (ii) all other amounts payable by us under the
Guaranty.

     OCN also entered into a Cash Collateral Agreement and a Collateral Trust
Agreement, each dated June 28, 2005, with the Bank of New York pursuant to which
we established a collateral trust account to secure payment of our obligations
under the Guaranty. We have agreed to maintain in the cash collateral account a
minimum of $5,000. The Cash Collateral Agreement and the Collateral Trust
Agreement will terminate upon termination of the Guaranty and receipt of proper
notice of such termination. This cash collateral deposit is included with other
assets in the consolidated balance sheet.

     On June 30, 2005, we completed our divestiture to Marathon of the deposit
liabilities of the accounts associated with the branch and our assignment of the
remaining assets, liabilities and business of the Bank to OLS. We recognized a
gain of $1,750 from the sale of our branch deposit liabilities to Marathon. In
addition, we recorded a one-time provision of $1,124, which is net of a related
adjustment to the deferred tax asset valuation allowance, arising from the
recapture of bad debt reserves in connection with our termination of the Bank's
status as a federal savings bank.

     Effective June 30, 2005, the Supervisory Agreement that the Bank and OTS
had entered into on April 19, 2004 terminated because we were no longer an FDIC
- insured institution. The OTS retains, for a period of six years after
termination of the Supervisory Agreement, the right to bring enforcement actions
in respect of any breach or noncompliance by the Bank with the Supervisory
Agreement, or other applicable regulations, that may have occurred prior to
debanking.

     We are continuing the Bank's residential mortgage servicing business under
OLS, which is a licensed servicer in all fifty states, the District of Columbia
and Puerto Rico. As a result of debanking, we are no longer able to accept
deposits in the U.S or benefit from federal preemption with regard to
post-debanking activities.

     OLS is subject to the rules and regulations of various Federal agencies,
Fannie Mae, Freddie Mac, Ginnie Mae and state regulatory authorities. In order
to remain a servicer of loans in good standing under these regulations, OLS is
required to maintain specified levels of stockholders' equity.

                                      F-34

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     BOK, our German subsidiary that we acquired on September 30, 2004, is
licensed as a credit institution (Kreditinstitut) under the laws of the Federal
Republic of Germany and is supervised and regulated in Germany by the German
Federal Financial Supervisory Authority (Bundesanstalt fur
Finanzdienstleistungsaufsicht, or BaFin), the German Central Bank (Deutsche
Bundesbank) and, in respect of minimum reserves on deposits, the European
Central Bank. BOK, under its license, may engage not only in a number of
traditional banking activities such as deposit and lending business, but also in
investment banking, underwriting and securities trading transactions, both for
its own account and for customers. BOK is currently not significant to our
operations.

NOTE 23 OTHER OPERATING EXPENSES

     The following table presents the principal components of other operating
expenses we incurred during the years ended December 31:


<TABLE>
<CAPTION>
                                                         2005           2004           2003
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>             <C>
Impairment of working capital investment
 in consolidated VIE .............................   $      7,238  $          --  $          --
Provision for bad debts ..........................          5,308          2,655            554
Valuation losses on loans held for resale ........          4,380             --             --
Provision for loan losses ........................            (37)        (1,881)        (2,684)
Travel, lodging, meals and entertainment .........          4,242          3,361          2,864
Other ............................................          5,929          4,198          6,970
                                                     ------------   ------------   ------------
                                                     $     27,060   $      8,333   $      7,704
                                                     ============   ============   ============
</TABLE>


NOTE 24 INTEREST INCOME

     The following table presents the components of interest income for each
category of our interest-earning assets for the years ended December 31:


<TABLE>
<CAPTION>
                                                         2005           2004           2003
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
Interest earning cash and short-term cash
 investments .....................................   $      2,641   $      3,380   $      1,759
Trading securities, at fair value
  Investment grade securities ....................          3,638          1,271            (71)
  Subordinates and residuals .....................         13,839         16,314         17,418
Match funded loans ...............................            364          1,035          3,402
Loans held for resale ............................          4,642             --             --
Loans ............................................            114          1,676          1,614
                                                     ------------   ------------   ------------
                                                     $     25,238   $     23,676   $     24,122
                                                     ============   ============   ============
</TABLE>


NOTE 25 INTEREST EXPENSE

     The following table presents the components of interest expense for each
category of our interest-bearing liabilities for the years ended December 31:


<TABLE>
<CAPTION>
                                                         2005           2004           2003
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
Match funded liabilities .........................   $     16,104   $      4,923   $      5,414
Lines of credit and other secured borrowings .....          4,865          2,718          5,827
Debt securities (1) ..............................         12,582          9,089          9,929
Deposits .........................................          3,710         13,634         17,546
                                                     ------------   ------------   ------------
                                                     $     37,261   $     30,364   $     38,716
                                                     ============   ============   ============
</TABLE>


(1)  Interest expense on Capital Securities as a result of our adoption of SFAS
     No. 150 effective July 1, 2003 was $6,027, $6,117 and $3,059 for the years
     2005, 2004 and 2003, respectively. Interest expense on our 3.25% Contingent
     Convertible Senior Unsecured Notes issued in July 2004 was $6,555 and
     $2,972 for the years 2005 and 2004, respectively.

                                      F-35

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

NOTE 26 OTHER, NET

     The following table presents the principal components of other income we
earned during the years ended December 31:


<TABLE>
<CAPTION>
                                                         2005           2004           2003
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>           <C>
Interest on federal tax refund claims ............   $      1,900   $      6,874  $          --
Gain (loss) on real estate .......................          1,815         (2,948)        (1,836)
Gain (loss) on investments in affordable housing
 properties ......................................         (1,750)           255           (284)
Gain (loss) on sales of interest-earning assets ..            872             --             27
Other ............................................          3,905          3,997          2,794
                                                     ------------   ------------   ------------
                                                     $      6,742   $      8,178   $        701
                                                     ============   ============   ============
</TABLE>


NOTE 27 BUSINESS SEGMENT REPORTING

     A brief description of our business segments, aligned within our two areas
of focus, is as follows:

     Servicing
       o  Residential Servicing. Through this business we provide loan servicing
          including asset management and resolution services to third party
          owners of subprime residential mortgage and high loan-to-value loans
          for a fee. We acquire the rights to service loans by purchasing them
          or by entering into subservicing contracts. This segment also includes
          our residential loan servicing system product (REALServicing).
       o  Commercial Servicing. This segment includes the results of both our
          domestic and international servicing of commercial assets (loans and
          real estate), as well as our commercial loan servicing product
          (REALSynergy). Prior to 2004, domestic commercial servicing was
          reported as a component of the Commercial Finance segment (re-named
          Commercial Assets), and the results of our international operations
          were reported as a separate segment. International servicing is
          conducted through GSS.
       o  Ocwen Recovery Group. This business conducts collection activities for
          third party owners of unsecured receivables and for a portfolio of
          unsecured credit card receivables that we acquired in 1999 and 2000.

     Loan Processing and Origination Services
       o  Residential Origination Services. This business provides various loan
          origination services, including residential property valuation
          services, mortgage due diligence, title services and loan refinancing
          for Residential Servicing customers. This segment also includes our
          internet-based vendor management system product (REALTrans) and our
          subprime residual trading securities.
       o  Business Process Outsourcing. This business segment began operations
          in December 2002. Business Process Outsourcing provides outsourcing
          services to third parties including mortgage underwriting, data entry,
          call center services and mortgage research.

     Corporate Items and Other. This segment includes items of revenue and
expense that are not directly related to a business, including business
activities that are individually insignificant, interest income on short-term
investments of cash and the related costs of financing these investments and
certain other corporate expenses.

     Based on the relative insignificance of the assets remaining in the
following segments, the remaining assets of these businesses and any related
income or loss arising from their resolution have been included in the Corporate
Items and Other segment beginning January 1, 2005. Segment information for the
prior periods has been restated to conform to this presentation.

       o  Commercial Assets. This segment comprised operations to acquire
          sub-performing commercial loans at a discount, as well as operations
          to invest in and reposition under-performing real estate assets.
       o  Affordable Housing. Includes our investments, primarily through
          limited partnerships, in qualified low-income rental housing for the
          purpose of obtaining Federal income tax credits.

     We allocate interest income and expense to each business segment for the
investment of funds raised or funding of investments made. We also make
allocations of non-interest expense generated by corporate support services to
each business segment.

                                      F-36

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)


<TABLE>
<CAPTION>
                                                                    Operating       Other Income       Pre-Tax           Total
                                                    Revenue          Expenses         (Expense)      Income (Loss)       Assets
                                                 --------------   --------------   --------------   --------------   --------------
<S>                                              <C>              <C>              <C>              <C>              <C>
At or for the year ended December 31, 2005
    Residential Servicing ....................   $      279,660   $      236,517   $      (21,448)  $       21,695   $      783,560
    Commercial Servicing .....................           19,511           16,419             (152)           2,940            6,433
    Ocwen Recovery Group .....................           11,683           12,715              348             (684)           1,002
    Residential Origination Services .........           54,732           71,221           12,039           (4,450)         679,432
    Business Process Outsourcing .............           11,265            9,945              (95)           1,225            1,193
                                                 --------------   --------------   --------------   --------------   --------------
                                                        376,851          346,817           (9,308)          20,726        1,471,620
    Corporate Items and Other ................           (1,475)           6,669            8,298              154          382,513
                                                 --------------   --------------   --------------   --------------   --------------
                                                 $      375,376   $      353,486   $       (1,010)  $       20,880   $    1,854,133
                                                 ==============   ==============   ==============   ==============   ==============
At or for the year ended December 31, 2004
    Residential Servicing ....................   $      280,809   $      244,758   $      (19,412)  $       16,639   $      687,233
    Commercial Servicing .....................           16,070           17,468            1,174             (224)          13,659
    Ocwen Recovery Group .....................           13,646            9,901              171            3,916              541
    Residential Origination Services .........           41,384           41,009           13,128           13,503           49,348
    Business Process Outsourcing .............            9,493            7,264              (24)           2,205            2,502
                                                 --------------   --------------   --------------   --------------   --------------
                                                        361,402          320,400           (4,963)          36,039          753,283
    Corporate Items and Other ................           (1,516)          15,039            5,916          (10,639)         829,249
                                                 --------------   --------------   --------------   --------------   --------------
                                                 $      359,886   $      335,439   $          953   $       25,400   $    1,582,532
                                                 ==============   ==============   ==============   ==============   ==============
At or for the year ended December 31, 2003
    Residential Servicing ....................   $      267,437   $      221,176   $      (20,578)  $       25,683   $      673,433
    Commercial Servicing .....................            7,261           13,766              769           (5,736)           5,674
    Ocwen Recovery Group .....................           11,904            6,856              252            5,300              323
    Residential Origination Services .........           23,021           35,586           18,098            5,533           44,662
    Business Process Outsourcing .............            4,496            2,598               (5)           1,893            1,010
                                                 --------------   --------------   --------------   --------------   --------------
                                                        314,119          279,982           (1,464)          32,673          725,102
    Corporate Items and Other ................            1,014           15,578          (12,589)         (27,153)         601,254
                                                 --------------   --------------   --------------   --------------   --------------
                                                 $      315,133   $      295,560   $      (14,053)  $        5,520   $    1,326,356
                                                 ==============   ==============   ==============   ==============   ==============
</TABLE>


NOTE 28 COMMITMENTS AND CONTINGENCIES

     We lease certain of our premises under non-cancelable operating leases with
terms expiring through 2012, exclusive of renewal option periods. Our annual
aggregate minimum rental commitments under these leases are summarized as
follows:

2006 ....................   $    3,626
2007 ....................        3,133
2008 ....................        1,886
2009 ....................        1,334
2010 ....................          990
Thereafter ..............        1,665
                            ----------
Minimum lease payments ..   $   12,634
                            ==========

     We converted rental commitments for our facilities outside the United
States of America to U.S. dollars using exchange rates in effect at December 31,
2005. Rent expense for the years ended December 31, 2005, 2004 and 2003 was
$3,928, $2,725 and $3,511, respectively.

     At December 31, 2005, we had commitments of $58,489 to fund loans secured
by mortgages on single family residential properties. We also have commitments
to sell $17,442 of these loans, generally within 30 days of funding.

     Through our investment in subordinated residual securities, which had a
fair value of $30,277 at December 31, 2005, we support senior classes of
securities. Principal from the underlying mortgage loans generally is allocated
first to the senior classes, with the most senior class having a priority right
to the cash flow from the mortgage loans until its payment requirements are
satisfied. To the extent that there are defaults and unrecoverable losses on the
underlying mortgage loans, resulting in reduced cash flows, the most subordinate
security will be the first to bear this loss. Because subordinate and residual
interests generally have no credit support, to the extent there are realized
losses on the mortgage loans comprising the mortgage collateral for such debt
securities, we may not recover our remaining investment.

                                      F-37

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

     Under the terms of the sales agreements entered into in connection with the
sale of certain of our affordable housing properties, we have a commitment to
fund cash deficits that may arise from the operations of those properties. The
remaining term of these commitments ranges from two to five years. The
obligation under these commitments was $4,470 as of December 31, 2005. Any
operating deficits we fund are supported by a promissory note to be repaid to us
from future cash flows of the property. In addition, we have provided to the
purchasers of certain affordable housing properties guaranties against the
possible recapture of future tax credits. We have never experienced a recapture
of tax credits on any of the affordable housing properties in which we invested
or sold. We have not recognized these guaranties as a liability because the
probability of recapture is considered remote.

     We are a limited guarantor under a master loan and security agreement that
terminates in October 2006. Our guarantee is limited to 5% of the aggregate
principal balance of the mortgage loans pledged to secure any debt under this
agreement. The maximum amount of potential future payments under the guaranty is
approximately $20,000, including $12,500 related to a consolidated VIE. We have
not recognized a liability for our guaranty because, based on the estimated fair
value of the loans securing the debt, we believe that the probability of
nonpayment is remote.

     Under the terms of the Assignment and Assumption agreement, OLS has become
the successor to the Bank with respect to all legal actions. Therefore, any
references to the Bank in connection with the following legal matters pertain to
OLS as successor.

     On April 13, 2004, the United States Judicial Panel on Multi-District
Litigation granted our petition to transfer and consolidate a number of lawsuits
against the Bank, OCN and various third parties arising out of the servicing of
plaintiffs' mortgage loans into a single case to proceed in the United States
District Court for the Northern District of Illinois under caption styled: In re
Ocwen Federal Bank FSB Mortgage Servicing Litigation, MDL Docket No. 1604 (the
"MDL Proceeding"). The consolidated lawsuits in which we are defendants involve
60 mortgage loans currently or previously serviced. Additional similar lawsuits
have been brought in other courts, some of which may be transferred to and
consolidated in the MDL Proceeding. The borrowers in these lawsuits seek class
action certification. No class has been certified in the MDL Proceeding or any
related lawsuits. On August 23, 2004, plaintiffs filed a Consolidated Complaint
containing various claims under federal statutes, including the Real Estate
Settlement Procedures Act and Fair Debt Collection Practices Act, state
deceptive trade practices statutes and common law. The claims are generally
based on allegations of improper loan servicing practices, including (i)
charging borrowers allegedly improper or unnecessary fees such as breach letter
fees, hazard insurance premiums, foreclosure-related fees, late fees and
property inspection fees; (ii) untimely posting and misapplication of borrower
payments; and (iii) improperly treating borrowers as in default on their loans.
While the Consolidated Complaint does not set forth any specific amounts of
claimed damages, plaintiffs are not precluded from requesting leave from the
court to amend the Consolidated Complaint or otherwise seeking damages should
the matter proceed to trial. On April 25, 2005, the court entered an Opinion and
Order granting us partial summary judgment finding that, as a matter of law, the
mortgage loan contracts signed by plaintiffs authorize the imposition of breach
letter fees and other legitimate default or foreclosure related expenses. The
court explained that its ruling was in favor of defendants to the specific and
limited extent that plaintiffs' claims challenge the propriety of the
above-mentioned fees. On March 22, 2006, the court denied defendants' motions to
dismiss various portions of the Consolidated Complaint on federal preemption and
procedural grounds, as well as our motion to dismiss OCN from the case for lack
of personal jurisdiction. The court has not ruled on class certification. We
cannot currently determine the ultimate outcome of the MDL Proceeding or the
other matters described above and have not established a reserve in respect
thereof. We believe the allegations in the MDL Proceeding are without merit and
will continue to vigorously defend against them.

     On November 3, 2004, the trial judge in litigation brought by Cartel Asset
Management, Inc. ("Cartel") against OCN, the Bank and OTX in federal court in
Denver, Colorado entered final judgment in the amount of $520 against OTX and
nominal damages of two dollars against the Bank. No damages were entered against
OCN. In the November 3, 2004 order, the judge reduced a prior jury verdict in
the amount of $9,320 after trial on this matter involving allegations of
misappropriation of trade secrets and contract-related claims brought by a
former vendor. The litigation does not relate to our Residential Servicing
business. Notwithstanding the nominal damage award against the Bank, it was
assessed a statutory award to Cartel of attorneys' fees in an additional amount
of $170, and the Bank and OTX were further assessed costs in the amount of $9.
Cartel and defendants are pursuing cross-appeals in the United States Court of
Appeals for the Tenth Circuit. We intend to continue to vigorously defend this
matter.

     On February 8, 2005, a jury in Circuit Court for Palm Beach County, Florida
returned verdicts of $1,000 and $1,056 in compensatory damages in favor of two
former employees of the Bank in a lawsuit against OCN and the Bank. The jury
rejected plaintiffs' request for punitive damages. The plaintiffs brought claims
under the Florida Civil Rights Act, the Florida Whistleblower Act and state tort
law, arising out of an alleged invasion of privacy and related incidents
allegedly committed by other former employees of the Bank in 1998 for which
plaintiffs sought to hold the Ocwen defendants vicariously liable. We believe
the verdicts, which were reduced to final judgments on May 20, 2005, as well as
an additional award of $900 in plaintiffs' attorneys' fees, are against the
weight of evidence and contrary to law.

                                      F-38

<PAGE>

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                        DECEMBER 31, 2005, 2004 AND 2003
                    (Dollars in thousands, except share data)

Our appeals therefrom have been taken to the Florida Court of Appeals for the
Fourth District. We intend to continue to vigorously defend this matter.

     On November 29, 2005, a jury in County Court for Galveston County, Texas,
returned a verdict of $11,500 in compensatory and punitive damages and
attorneys' fees against Ocwen in favor of a plaintiff borrower who defaulted on
a mortgage loan we serviced. The plaintiff claimed that Ocwen's foreclosure on
the loan violated the Texas Deceptive Trade Practices Act and other state
statutes and common law. On February 9, 2006, the trial court reduced the jury
verdict and entered judgment in the amount of $1,830 which was comprised of $5
in actual damages, approximately $675 in emotional distress, statutory and other
damages and interest, and $1,150 for attorneys' fees. We believe the judgment
was against the weight of evidence and contrary to law and have asked the trial
court to set it aside. We intend to continue to vigorously defend this matter
and, if necessary, will take an appeal to the Texas Court of Appeals.

     OCN is subject to various other pending legal proceedings. In our opinion,
the resolution of these proceedings will not have a material effect on our
financial condition, results of operations or cash flows. We continuously
monitor the status of our litigation, including advice from external legal
counsel, and perform periodic assessments of our litigation for potential loss
accrual and disclosure. We accrue and maintain litigation reserves when it is
probable that a liability has been incurred and the amount of loss can be
reasonably estimated.

NOTE 29 QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)


<TABLE>
<CAPTION>
                                                            Quarters Ended (3)
                                         ---------------------------------------------------------
                                         December 31,   September 30,     June 30,      March 31,
                                             2005           2005           2005           2005
                                         ------------   ------------   ------------   ------------
<S>                                      <C>            <C>            <C>            <C>
Revenue ..............................   $     94,962   $     96,910   $     92,015   $     91,489
Operating expense (1) ................         98,763         83,985         86,049         84,689
Other income (expense) ...............          6,344         (2,698)          (793)        (3,863)
                                         ------------   ------------   ------------   ------------
Income (loss) before income taxes ....          2,543         10,227          5,173          2,937
Income tax expense (benefit) .........            718          2,282          2,265            550
                                         ------------   ------------   ------------   ------------
Net income (loss) ....................   $      1,825   $      7,945   $      2,908   $      2,387
                                         ============   ============   ============   ============
Earnings (loss) per share
    Basic ............................   $       0.03   $       0.13   $       0.05   $       0.04
    Diluted ..........................   $       0.03   $       0.12   $       0.05   $       0.04
</TABLE>



<TABLE>
<CAPTION>
                                                            Quarters Ended (3)
                                         ---------------------------------------------------------
                                         December 31,   September 30,     June 30,      March 31,
                                             2004           2004           2004           2004
                                         ------------   ------------   ------------   ------------
<S>                                      <C>            <C>            <C>            <C>
Revenue ..............................   $     88,163   $     86,326   $     91,448   $     93,949
Operating expense ....................         85,832         80,608         82,668         86,331
Other income (expense) ...............           (310)         1,741            367           (845)
                                         ------------   ------------   ------------   ------------
Income (loss) before income taxes ....          2,021          7,459          9,147          6,773
Income tax expense (benefit) (2) .....           (544)       (31,846)            55             11
                                         ------------   ------------   ------------   ------------
Net income (loss) ....................   $      2,565   $     39,305   $      9,092   $      6,762
                                         ============   ============   ============   ============
Earnings (loss) per share
    Basic ............................   $       0.04   $       0.61   $       0.13   $       0.10
    Diluted ..........................   $       0.04   $       0.53   $       0.13   $       0.10
</TABLE>


(1)  Operating expenses for the fourth quarter of 2005 includes a charge of
     $7,238 to recognize the full impairment of a working capital investment in
     a consolidated VIE.
(2)  The income tax benefit for the third quarter of 2004 primarily reflects a
     partial reversal of the valuation allowance on our deferred tax asset. See
     Note 19 for additional information.
(3)  Previously reported quarterly results of operations for 2005 and 2004 have
     been reclassified to conform to the revised format that we adopted for our
     consolidated statement of operations effective December 31, 2005. See
     Note 1 for additional information.

                                      F-39



                                                                    EXHIBIT 12.1

                  OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
                    COMPUTATION OF EARNINGS TO FIXED CHARGES
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                  2005         2004         2003         2002          2001
                                                               ----------   ----------   ----------   ----------    ----------
<S>                                                            <C>          <C>          <C>          <C>           <C>
Earnings:
    Income (loss) from continuing operations before income
      taxes and effect of change in accounting principle ...   $   20,880   $   25,400   $    5,520   $  (81,959)   $  (41,782)

Add:
    Interest expensed and capitalized, except interest on
      deposits, and amortization of capitalized debt
      expenses..............................................       33,625       16,805       24,652       35,681        42,738
    Interest on deposits ...................................        3,710       13,634       17,546       27,455        59,967
    Interest component of rental expense ...................        1,308          907        1,169        1,108         1,176
                                                               ----------   ----------   ----------   ----------    ----------
    Total fixed charges (1) ................................       38,643       31,346       43,367       64,244       103,881
                                                               ----------   ----------   ----------   ----------    ----------
Earnings (losses) for computation purposes .................   $   59,523   $   56,746   $   48,887   $  (17,715)   $   62,099
                                                               ==========   ==========   ==========   ==========    ==========

Ratio of earnings to fixed charges:
    Including interest on deposits (2) .....................         1.54         1.81         1.13           (3)           (3)
    Excluding interest on deposits (2) .....................         1.60         2.43         1.21           (3)           (3)
</TABLE>


(1)      Fixed charges represent total interest expensed and capitalized,
         including and excluding interest on deposits, amortization of
         capitalized debt expenses, as well as the interest component of rental
         expense.

(2)      The ratios of earnings to fixed charges were computed by dividing (x)
         income from continuing operations before income taxes and effect of
         change in accounting
 principle, plus fixed charges by (y) fixed
         charges.

(3)      Due to our losses in 2002 and 2001, the ratio of earnings to fixed
         charges was less than 1:1. We would have had to generate additional
         earnings of $81,959 and $41,782, respectively, to achieve coverage of
         1:1.

                                                                    EXHIBIT 21.0

   SIGNIFICANT DIRECT AND INDIRECT SUBSIDIARIES OF OCWEN FINANCIAL CORPORATION


<TABLE>
<CAPTION>
Name                                                        State or Other Jurisdiction of Organization
------------------------------------------------            -------------------------------------------
<S>                                                                         <C>
Ocwen Loan Servicing, LLC (2)                                                Delaware
RMSI, Inc (2)                                                               New Jersey

Investors Mortgage Insurance Holding Company (1)                             Delaware
Ocwen Asset Investment Corp. (1)                                              Florida
Ocwen General, Inc. (1)                                                      Virginia
Ocwen Asset Investment - UK, LLC (2)                                         Delaware
Ocwen Mortgage Company, LLC (1)                                              Delaware
Ocwen Mortgage Asset Investment Company, LLC (1)                             Delaware
Ocwen Mortgage Asset Trust (2)                                               Delaware
Ocwen Partnership, L.P. (2)                                                  Virginia

Ocwen Capital Trust I (2)                                                    Delaware

Ocwen Luxembourg, Sarl (1)                                                  Luxembourg
Ocwen Asia Holdings Ltd. (1)                                                 Mauritius
Ocwen Financial Solutions Private Limited (2)                                  India

Global Servicing Solutions, LLC (2)                                          Delaware
</TABLE>


(1)  Holding company with no significant assets or operations
(2)  Operating company




                                                                    EXHIBIT 23.0

       CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 333-44999 and 333-62217) and Registration Statement
on Form S-3 (Nos. 333-64915 and 333-119698) of Ocwen Financial Corporation of
our report dated March 29, 2006 relating to the financial statements,
management's assessment of the effectiveness of internal control over financial
reporting and the effectiveness of internal control over financial reporting,
which appears in this Form 10-K.



/s/ PRICEWATERHOUSECOOPERS LLP


Fort Lauderdale, Florida
March 30, 2006



                                                                    EXHIBIT 31.1

                                 CERTIFICATIONS

I, William C. Erbey, certify that:

1.       I have reviewed this annual report on Form 10-K of Ocwen Financial
         Corporation;

2.       Based on my knowledge, this report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this report;

3.       Based on my knowledge, the financial statements, and the other
         financial information included in this report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this report;

4.       The registrant's other certifying officer(s) and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) and internal
         control over financial reporting (as defined in Exchange Act Rules 13a
         - 15(f) and 15d - 15(f)) for the registrant and have:

                  (a)      Designed such disclosure controls and procedures, or
                           caused such disclosure controls and procedures to be
                           designed under our supervision, to ensure that
                           material information
 relating to the registrant,
                           including its consolidated subsidiaries, is made
                           known to us by others within those entities,
                           particularly during the period in which this report
                           is being prepared;

                  (b)      Designed such internal control over financial
                           reporting, or caused such internal control over
                           financial reporting to be designed under our
                           supervision, to provide reasonable assurance
                           regarding the reliability of financial reporting and
                           the preparation of financial statements for external
                           purposes in accordance with generally accepted
                           accounting principles;

                  (c)      Evaluated the effectiveness of the registrant's
                           disclosure controls and procedures and presented in
                           this report our conclusions about the effectiveness
                           of the disclosure controls and procedures, as of the
                           end of the period covered by this report based on
                           such evaluation; and

                  (d)      Disclosed in this report any changes in the
                           registrant's internal control over financial
                           reporting that occurred during the registrant's most
                           recent fiscal quarter (the registrant's fourth fiscal
                           quarter in the case of an annual report) that has
                           materially affected, or is reasonably likely to
                           materially affect, the registrant's internal control
                           over financial reporting; and

5.       The registrant's other certifying officer(s) and I have disclosed,
         based on our most recent evaluation of internal control over financial
         reporting, to the registrant's auditors and the audit committee of the
         registrant's board of directors (or persons performing the equivalent
         functions):

                  (a)      All significant deficiencies and material weaknesses
                           in the design or operation of internal control over
                           financial reporting which are reasonably likely to
                           adversely affect the registrant's ability to record,
                           process, summarize and report financial information;
                           and

                  (b)      Any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal control over
                           financial reporting.

Date: March 30, 2006                                   /s/ WILLIAM C. ERBEY
                                                       -------------------------
                                                       William C. Erbey,
                                                       Chairman of the Board and
                                                       Chief Executive Officer

                                                                    EXHIBIT 31.2

                                 CERTIFICATIONS

I, Robert J. Leist, Jr., certify that:

1.       I have reviewed this annual report on Form 10-K of Ocwen Financial
         Corporation;

2.       Based on my knowledge, this report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this report;

3.       Based on my knowledge, the financial statements, and the other
         financial information included in this report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this report;

4.       The registrant's other certifying officer(s) and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) and internal
         control over financial reporting (as defined in Exchange Act Rules 13a
         - 15(f) and 15d - 15(f)) for the registrant and have:

                  (a)      Designed such disclosure controls and procedures, or
                           caused such disclosure controls and procedures to be
                           designed under our supervision, to ensure that
                           material information
 relating to the registrant,
                           including its consolidated subsidiaries, is made
                           known to us by others within those entities,
                           particularly during the period in which this report
                           is being prepared;

                  (b)      Designed such internal control over financial
                           reporting, or caused such internal control over
                           financial reporting to be designed under our
                           supervision, to provide reasonable assurance
                           regarding the reliability of financial reporting and
                           the preparation of financial statements for external
                           purposes in accordance with generally accepted
                           accounting principles;

                  (c)      Evaluated the effectiveness of the registrant's
                           disclosure controls and procedures and presented in
                           this report our conclusions about the effectiveness
                           of the disclosure controls and procedures, as of the
                           end of the period covered by this report based on
                           such evaluation; and

                  (d)      Disclosed in this report any changes in the
                           registrant's internal control over financial
                           reporting that occurred during the registrant's most
                           recent fiscal quarter (the registrant's fourth fiscal
                           quarter in the case of an annual report) that has
                           materially affected, or is reasonably likely to
                           materially affect, the registrant's internal control
                           over financial reporting; and

5.       The registrant's other certifying officer(s) and I have disclosed,
         based on our most recent evaluation of internal control over financial
         reporting, to the registrant's auditors and the audit committee of the
         registrant's board of directors (or persons performing the equivalent
         functions):

                  (a)      All significant deficiencies and material weaknesses
                           in the design or operation of internal control over
                           financial reporting which are reasonably likely to
                           adversely affect the registrant's ability to record,
                           process, summarize and report financial information;
                           and

                  (b)      Any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal control over
                           financial reporting.

Date: March 30, 2006                                 /s/ ROBERT J. LEIST, JR.
                                                     ---------------------------
                                                     Robert J. Leist, Jr.,
                                                     Senior Vice President and
                                                     Principal Financial Officer

                                                                    EXHIBIT 32.1


                                 CERTIFICATIONS

I, William C. Erbey, state and attest that:

(1)      I am the Chief Executive Officer of Ocwen Financial Corporation (the
"Registrant").

(2)      I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

         o        the Annual Report on Form 10-K of the Registrant for the year
                  ended December 31, 2005 (the "periodic report") containing
                  financial statements fully complies with the requirements of
                  Section 13(a) or 15(d) of the Securities Exchange Act of 1934
                  (15 U.S.C. 78m or 78o(d)); and

         o        the information contained in the periodic report fairly
                  represents, in all material respects, the financial condition
                  and results of operations of the Registrant for the periods
                  presented.


Name:   /s/ WILLIAM C. ERBEY
        ---------------------------
Title:  Chairman of the Board
        and Chief Executive Officer

Date:   March 30, 2006



                                                                    EXHIBIT 32.2


                                 CERTIFICATIONS

I, Robert J. Leist, Jr., state and attest that:

(1)      I am the Acting Chief Financial Officer of Ocwen Financial Corporation
(the "Registrant").

(2)      I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

         o        the Annual Report on Form 10-K of the Registrant for the year
                  ended December 31, 2005 (the "periodic report") containing
                  financial statements fully complies with the requirements of
                  Section 13(a) or 15(d) of the Securities Exchange Act of 1934
                  (15 U.S.C. 78m or 78o(d)); and

         o        the information contained in the periodic report fairly
                  represents, in all material respects, the financial condition
                  and results of operations of the Registrant for the periods
                  presented.

Name:   /s/ ROBERT J. LEIST, JR.
        -------------------------------
Title:  Senior Vice President
        and Principal Financial Officer

Date:   March 30, 2006