Ocwen Financial Corporation
Feb 24, 2011

Ocwen Reports Net Income of $9.9 Million for Q4 2010 and $38 Million for Full Year 2010

ATLANTA, Feb. 24, 2011 -- Ocwen Financial Corporation ("Ocwen" or the "Company") (NYSE:OCN) today reported net income for the twelve months ended December 31, 2010 of $38.0 million or $0.36 per share, compared with net income of $0.3 million or $0.00 per share in 2009. 2010 net income includes the reversal of a $9.1 million valuation allowance for income tax expense.

For the fourth quarter of 2010 Ocwen reported net income of $9.9 million compared to net income of $9.4 million for the fourth quarter of 2009.Pre-tax income from continuing operations was $15.2 million for the fourth quarter of 2010 versus $20.2 million for the fourth quarter of 2009.

Fourth quarter 2010 pre-tax income from continuing operations was affected by:

FOURTH QUARTER BUSINESS PERFORMANCE HIGHLIGHTS

"Ocwen remains very pleased with our acquisition of HomEq as revenues are ramping up as expected and both delinquency rates and advances are dropping," said Ron Faris, President and CEO.In addition, we completed the transition in 2010 at a cost of $52.6 million, which was below our previous estimate of $56.0 million, and we do not expect any material expenses for the HomEq legacy platform beyond 2010. We were able to complete 19,999 loan modifications in the fourth quarter of 2010, tying a previous quarterly record, which along with a reduction in the number of newly delinquent loans helped contribute to the $237 million decline in servicing advances.We take great pride in our ongoing leadership in completing sustainable loan modifications that help more families keep their homes," Faris added.

Chairman Bill Erbey stated, "Our strong cash flow generation enabled us subsequent to year-end 2010 to repay all but $35 million of the $350 million Senior Secured Term Loan.Ocwen has sufficient liquidity to repay this loan in full and once completed will save the $9.3 million in interest and amortization incurred on this loan in the fourth quarter of 2010. However, it was important to leave a small amount of the Senior Secured Term Loan outstanding to maintain the accordion feature which provides financing flexibility should we acquire a significant portfolio.We substantially reduced non-core assets to less than $50 million excluding the non-recourse assets for the four securitization trusts that we now include on our balance sheet."

Servicing

In comparison to the fourth quarter of 2009, revenue was 57% higher, and the total of unpaid principal balance serviced increased from $50.0 billion at December 31, 2009 to $73.9 billion at December 31, 2010.

Operating expense increased by $28.6 million due to $17.5 million in non-recurring transaction expenses related to the HomEq acquisition and to growth in our Servicing business.After adjusting for the non-recurring expenses, operating expenses increased by 36.4% over the fourth quarter of 2009.

Pre-tax income for Servicing was $18.8 million in the fourth quarter of 2010.After adjusting for the one-time items affecting the Servicing segment in the fourth quarter of 2010, pre-tax income was $37.5 million or 28.0% higher than in the fourth quarter of 2009.Excluding the interest expense on the Senior Secured Term loan that was almost fully repaid subsequent to the end of 2010, adjusted pre-tax income in Servicing would have been $45.6 million or 56% higher due to growth in our servicing portfolio and unit cost reductions.

Loans and Residuals

Loans and Residuals incurred a loss from continuing operations before taxes of $3.0 million as compared to a loss of $2.1 million in the fourth quarter of 2009.The fourth quarter 2010 loss includes a $2.1 million reduction in the valuation of performing loans as a result of changes in market conditions.The balance of assets in this segment was $103.9 million at December 31, 2010. Excluding $67.3 million in non-recourse assets associated with the four securitization trusts that we first included in our financial statement in 2010, our assets were $36.6 million.

Asset Management Vehicles

The loss from continuing operations before taxes for Asset Management Vehicles was $0.6 million as compared to a loss of $1.8 million in the fourth quarter of 2009.The carrying value of our investment in Asset Management Vehicles was $12.1 million at December 31, 2010.

Corporate

In the fourth quarter of 2010 losses from continuing operations before taxes were $0.05 million compared to a pre-tax loss of $5.3 million in the fourth quarter of 2009.The following items affected results in the quarter:

Ocwen Financial Corporation is a leading provider of residential and commercial loan servicing, special servicing and asset management services.Ocwen is headquartered in Atlanta, Georgia with offices in West Palm Beach and Orlando, Florida, and Washington DC and support operations in India and Uruguay.Utilizing advanced technology and world-class training and processes, we provide solutions that make our clients' loans worth more.Additional information is available at www.ocwen.com.

This news release 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, successful completion of the HomEq transaction, future liquidity and cost-effective resources in India.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: general economic and market conditions, prevailing interest or currency exchange rates, governmental regulations and policies, international political and economic uncertainty, availability of adequate and timely sources of liquidity, federal income tax rates, real estate market conditions and trends and the outcome of ongoing litigation as well as other risks detailed in Ocwen's reports and filings with the Securities and Exchange Commission, including Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010 and its annual report on Form 10-K for the year ended December 31, 2010 to be filed on or before March 1, 2011.The forward-looking statements speak only as of the date they are made and should not be relied upon.Ocwen undertakes no obligation to update or revise the forward-looking statements.

Residential Servicing Statistics (Dollars in thousands)
At or for the three months ended
December 31,
2010
September 30,
2010


June 30,
2010
March 31,
2010
December 31,


2009
Total unpaid principal balance of loans and REO serviced $73,886,391 $76,140,022 $55,244,576 $49,677,999 $49,980,077
Non-performing loans and REO serviced as a % of total UPB (1)

27.3%
27.2% 26.2% 25.3% 25.6%
Prepayment speed (average CPR) 13% 13% 13% 12%

15%


(1) The increase in non-performing loans and REO serviced as a % of total UPB is due entirely to the acquisition of portfolios with higher delinquency rates.Non-performing loans exclude those serviced under special servicing agreements where we have no obligation to advance.
Segment Results (Dollars in thousands) (UNAUDITED)


Three months Twelve months


For the periods ended December 31,
2010 2009 2010 2009
Ocwen Asset Management


Servicing


Revenue $113,216 $72,327 $359,798 $272,725
Operating expenses 59,069 30,472 200,108 129,252
Income from operations 54,147 41,855 159,690

143,473
Other expense, net (35,313) (12,555) (81,495) (55,792)
Income from continuing operations before taxes 18,834 29,300 78,195 87,681
Loans and Residuals
Revenue $—
Operating expenses 862 631 4,240

2,831
Loss from operations (862) (631) (4,240) (2,831)
Other income (expense), net (2,124) (1,427) 1,394 (6,290)
Loss from continuing operations before taxes (2,986) (2,058) (2,846)

(9,121)
Asset ManagementVehicles


Revenue
$166 422 696 1,851
Operating expenses 596 578 2,099 3,108
Loss from operations (430) (156) (1,403) (1,257)
Other income (expense), net (212) (1,594) 606

(4,060)
Loss from continuing operations before taxes (642) (1,750) (797) (5,317)
Income from continuing operations before taxes 15,206 25,492 74,552 73,243
Ocwen Solutions

Mortgage Services

Revenue

54,052
Operating expenses

37,040
Incomefrom operations 17,012
Other income, net 803
Income from continuing operations before taxes

17,815
Financial Services

Revenue

40,293
Operating expenses 45,002
Loss from operations (4,709)
Other expense, net

(1,260)
Loss from continuing operations before taxes (5,969)
Technology Products

Revenue

28,331
Operating expenses 18,638
Income from operations

9,693
Other expense, net (103)
Income from continuing operations before taxes 9,590
Income from continuing operations before taxes

21,436


Corporate Items and Other
Revenue 275 385 1,416 1,066
Operating expenses 2,883 4,942 30,791

16,308
Loss from operations (2,608) (4,557) (29,375) (15,242)
Other income (expense), net 2,561 (741) (6,023) 13,824
Loss from continuing operations before taxes (47) (5,298) (35,398)

(1,418)


Corporate Eliminations
Revenue (384) (386) (1,529) (17,590)
Operating expenses (145) (117) (764)

(16,525)
Loss from operations (239) (269) (765) (1,065)
Other income, net 239 269 765 1,065
Income (loss) from continuing operations before taxes

Consolidated income from continuing operations
before taxes



$15,159

$20,194



$39,154

$93,261
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)


(UNAUDITED)
Three months Twelve months
For the periods ended December 31, 2010 2009 2010 2009
Revenue


Servicing and subservicing fees
$102,859 $62,635

$321,699
$264,467
Process management fees 9,572 9,710 33,704

108,082
Other revenues 842 403 4,978 8,179
Total revenue 113,273 72,748 360,381 380,728
Operating expenses

Compensation and benefits

17,892
12,862 87,644 87,620
Amortization of mortgage servicing rights 9,352 6,485 31,455 32,228
Servicing and origination 2,095 2,376 6,851

38,653
Technology and communications 7,062 5,712 25,644 20,066
Professional services 5,316 4,428 42,837 26,200
Occupancy and equipment 19,407 3,929 32,924

18,985
Other operating expenses 2,141 714 9,119 11,902
Total operating expenses 63,265 36,506 236,474 235,654
Income from operations 50,008 36,242 123,907 145,074
Other income (expense)

Interest income

2,352
2,375 10,859 8,786
Interest expense (35,906) (12,846) (85,923) (62,954)
Gain (loss) on trading securities (4,010) (2,159) (7,968)

11,187
Loss on loans held for resale, net (3,239) (2,349) (5,865) (11,132)
Equity in earnings (losses) of unconsolidated entities 27 (1,325) 1,371 (2,933)
Other, net 5,927 256 2,773

5,233
Other expense, net (34,849) (16,048) (84,753) (51,813)
Income from continuing operations before taxes 15,159 20,194 39,154 93,261
Income tax expense 5,235 13,307 5,545 96,110
Income (loss) from continuing operations 9,924 6,887 33,609

(2,849)
Income from discontinued operations, net of taxes 2,488 4,383 3,121
Net income 9,924 9,375 37,992 272
Net loss (income) attributable to non-controlling interests (3) 14 (8)

25
Net income attributable to Ocwen Financial
Corporation
(OCN)
$9,921 $9,389 $37,984 $297


Basic earnings per share


Income (loss) from continuing operations $0.10 $0.07 $0.34 $(0.04)
Income from discontinued operations 0.02 0.04 0.04
Net income attributable to OCN $0.10 $0.09 $0.38 $—


Diluted earnings per share


Income (loss) from continuing operations $0.09 $0.07 $0.32 $(0.04)
Income from discontinued operations 0.02 0.04 0.04
Net income attributable to OCN $0.09 $0.09 $0.36 $—


Weighted average common shares outstanding


Basic 100,610,141

99,871,247
100,273,121 78,252,000
Diluted 107,441,874 107,150,497

107,483,015
78,252,000





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

(UNAUDITED)


December 31,
2010
December 31,
2009
Assets
Cash $127,796 $90,919
Restricted cash – for securitization investors 727
Trading securities, at fair value:
Auction rate 247,464
Subordinates and residuals 3,692
Loans held for resale, at lower of cost or fair value 25,803 33,197
Advances 184,833 145,914
Match funded advances 1,924,052 822,615
Loans, net – restricted for securitization investors 67,340
Mortgage servicing rights, net 193,985 117,802
Receivables, net 69,518 67,095
Deferred tax assets, net 138,716 132,683
Goodwill 12,810
Premises and equipment, net 5,475 3,325
Investments in unconsolidated entities 12,072 15,008
Other assets 158,282 89,636
Total assets $2,921,409

$1,769,350


Liabilities and Equity

Liabilities

Match funded liabilities $1,482,529 $465,691
Secured borrowings – owed to securitization investors

62,705
Lines of credit and other secured borrowings 246,073 55,810
Investment line 156,968
Servicer liabilities 2,492 38,672
Debt securities 82,554 95,564
Other liabilities 140,239 90,782
Total liabilities 2,016,592 903,487
Equity
Ocwen Financial Corporation stockholders' equity
Common stock, $.01 par value; 200,000,000 shares authorized;100,726,947 and 99,956,833 shares issued andoutstanding


at December 31, 2010 and December 31, 2009, respectively
1,007 1,000
Additional paid-in capital 467,500 459,542
Retained earnings 445,456 405,198
Accumulated other comprehensive loss, net of income taxes (9,392) (129)
Total Ocwen Financial Corporation stockholders' equity 904,571 865,611
Non-controlling interest in subsidiaries 246 252
Total equity 904,817 865,863
Total liabilities and equity $2,921,409

$1,769,350


CONTACT: John P. Van Vlack
         Executive Vice President
         Chief Financial Officer & Chief Accounting Officer
         T: (561) 682-7721
         E: John.VanVlack@Ocwen.com