Ocwen Financial Corporation
Nov 4, 2010

Ocwen Financial Corporation Announces Third Quarter 2010 Financial Results

WEST PALM BEACH, Fla., Nov. 4, 2010 -- Ocwen Financial Corporation ("Ocwen" or the "Company") (NYSE:OCN) today reported a net loss of $8.8 million for the third quarter of 2010 compared to a net loss of $42.0 million for the third quarter of 2009. The loss in the third quarter of 2010 is attributable to one-time expenses including $33.9 million in transaction related charges for the HomEq acquisition and $20.1 million in charges for litigation primarily related to the Cartel judgment. The most significant item contributing to the reduction in the net loss between the third quarter of 2009 and the third quarter of 2010 is the absence of $56.5 million in one-time income tax expense recognized in the third quarter of 2009, most in connection with the separation of Altisource (f/k/a Ocwen Solutions).The majority of the remaining favorable variance is attributable to an increase in the size of Ocwen's Servicing segment where the total unpaid principal balance increased from $40.3 billion in the third quarter of 2009 to $76.1 billion in the third quarter of 2010, or 89%, and to lower servicing cost per loan.Net loss per diluted share was $.09 for the third quarter of 2010 compared to a loss of $0.51 for the third quarter of 2009.

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

Net income for the nine months ended September 30, 2010 was $28.1 million or $0.27 per share, compared to a net loss of $9.1 million or $0.13 per share for the same period in 2009.

THIRD QUARTER BUSINESS PERFORMANCE HIGHLIGHTS

Chairman William Erbey stated, "The closing of the acquisition of HomEq and boarding of this portfolio on Ocwen's platform has gone exceptionally well. September revenue for the HomEq portfolio met our internal expectations.Furthermore, revenue from our Saxon servicing portfolio increased almost three fold in our first full quarter, fully recovering from a slow start.Both of these acquisitions demonstrate the scalability of Ocwen's platform and enable us to significantly lower our cost per loan serviced."

Ronald Faris,President and CEOof Ocwen, stated, "The performance of our loan portfolio continues to improve, resulting in declining advances and increased liquidity. The delinquency rate on the Saxon portfolio has started to decline, contributing to a decrease in Ocwen's advances on the Saxon portfolio by $47.0 million during the third quarter. We expect advances to decline further as we bring the performance of the Saxon and HomEq portfolios more in line with similar loans in Ocwen's legacy portfolio.Our results to date with newly acquired portfolios support our belief that Ocwen can improve the performance of any seasoned non-prime portfolio that may become available for purchase."

Faris added, "After completing the HomEq and Saxon acquisitions, Ocwen ended the third quarter with $312.6 million in cash and fully collateralized available credit. 79% of our advance borrowings are financed on term notes with the largest having a revolving period extending through August of 2013.On this basis, Ocwen's liquidity and positioning for growth are stronger than ever."

The Company does not believe that the recent issues in the residential mortgage business regarding foreclosure processes and loan put backs had a measurable effect on Ocwen's results in the third quarter.

Servicing

In comparison to the third quarter of 2009, revenue was 51% higher, and the total unpaid principal balance serviced increased from $40.3 billion at September 30, 2009 to $76.1 billion at September 30, 2010.Operating expenses increased by 118% primarily due to $33.9 million in transaction expenses related to the HomEq acquisition.Pre-tax income for Servicing of $5.4 million was 69% lower than the same quarter last year but after adjusting for one-time charges income was 121%, or $21.6 million, higher due to growth and unit cost reductions.

Loans and Residuals

Loans and Residuals incurred a loss from continuing operations before taxes of $0.8 million as compared to a loss of $3.4 million in the third quarter of 2009.The balance of assets in this segment was $109.9 million at September 30, 2010, which includes $69.7 million of non-recourse assets associated with the four securitization trusts that we first included in our financial statements in 2010.The improvement in operating results reflects fewer loans becoming non-performing and a flattening of the decline in real estate valuations.

Asset Management Vehicles

The loss from continuing operations before taxes for Asset Management Vehicles was $0.3 million as compared to $1.1 million in the third quarter of 2009.The carrying value of our investment in asset management vehicles was $12.3 million at September 30, 2010.

Corporate

In the third quarter of 2010, Corporate losses from continuing operations before taxes were $27.0 million compared to pre-tax profit of $3.9 million in the third quarter of 2009.The following items affected results in the quarter:

Total consolidated assets increased by 84%, or $1.49 billion, to $3.26 billion during the first nine months of 2010, and total liabilities increased by 162%, or $1.46 billion, to $2.37 billion.These increases were primarily the result of purchasing and financing advances and mortgage servicing rights for the $6.9 billion in servicing acquired from Saxon and the $22.4 billion in servicing acquired from HomEq.

Ocwen Financial Corporation is a leading provider of residential and commercial loan servicing, special servicing and asset management services.Ocwen is headquartered in West Palm Beach, Florida with offices in California, the District of Columbia and Georgia 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, the securitization market and our plans to securitize loans and expectations as to the impact of rising interest rates 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 its annual report on Form 10-K for the year ended December 31, 2009 and Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010.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
September 30,
2010
June 30,


2010
March 31,
2010
December 31,
2009
September 30,
2009
Total unpaid principal balance of loans and REO serviced $76,140,022 $55,244,576 $49,677,999 $49,980,077 $40,293,698


Non-performing loans and REO serviced as a % of total UPB (1)
27.2% 26.2% 25.3% 25.6% 26.9%
Prepayment speed (average CPR) 13% 13% 12%

15%
20%
(1)Loans for which borrowers are less than 90 days delinquent or are making scheduled payments under modification, forbearance or bankruptcy plans are considered performing loans.This measure excludes loans serviced under special servicing agreements where we have no obligation to advance.




Segment Results (Dollars in thousands) (UNAUDITED)

Three months Nine months
For the periods ended September 30, 2010 2009

2010
2009


Ocwen Asset Management
Servicing


Revenue
$95,369 $62,977

$246,581
$200,398
Operating expenses 69,012 31,608 141,039

98,781
Income from operations 26,357 31,369 105,542 101,617
Other expense, net (20,929) (13,688) (46,181) (43,236)
Income from continuing operations before taxes 5,428 17,681 59,361

58,381
Loans and Residuals

Revenue

Operating expenses 819 891 3,381 2,202
Loss from operations (819) (891) (3,381) (2,202)
Other income (expense), net 2,004 809 3,519

(4,861)
Income (loss) from continuing operations before taxes 1,185 (82) 138 (7,063)
Asset Management

Revenue

166
432 530 1,429
Operating expenses 593 753 1,505 2,530
Loss from operations (427) (321) (975)

(1,101)
Other income (expense), net 147 (1,317) 818 (2,466)
Loss from continuing operations before taxes (280) (1,638) (157) (3,567)
Income from continuing operations before taxes 6,333 15,961 59,342

47,751


Ocwen Solutions
Mortgage Services

Revenue

11,869 54,052
Operating expenses 8,131 37,039
Income from operations 3,738

17,013
Other income, net 81 802
Income from continuing operations before taxes 3,819 17,815
Financial Services
Revenue 6,506 40,293
Operating expenses 9,295

45,001
Loss from operations (2,789) (4,708)
Other expense, net (146) (1,261)
Loss from continuing operations before taxes (2,935)

(5,969)
Technology Products

Revenue 5,648

28,331
Operating expenses 3,343 18,638
Income from operations 2,305 9,693
Other income (expense), net 26

(103)
Income from continuing operations before taxes 2,331 9,590
Income from continuing operations before taxes 3,215 21,436
Corporate Items and Other

Revenue

369
319 1,143 681
Operating expenses 23,166 3,555 27,904 11,367
Loss from operations (22,797) (3,236) (26,761)

(10,686)
Other income (expense), net (4,248) 7,518 (8,586) 14,566
Income (loss) from continuing operations before taxes (27,045) 4,282 (35,347) 3,880
Corporate Eliminations

Revenue

(335)
(3,540) (1,146) (17,204)
Operating expenses (216) (3,344) (620) (16,410)
Loss from operations (119) (196) (526)

(794)
Other income, net 119 196 526 794
Income from continuing operations before taxes
Consolidated income (loss) from continuing operations before taxes $(20,712) $23,458 $ 23,995 $73,067
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
(UNAUDITED)
Three months Nine months
For the periods ended September 30, 2010 2009 2010 2009
Revenue

Servicing and subservicing fees

$86,424
$57,534 $218,840

$201,832
Process management fees 7,911 24,594 24,132 98,372
Other revenues 1,234 2,083 4,136 7,776
Total revenue 95,569 84,211 247,108

307,980


Operating expenses
Compensation and benefits 43,886 18,959 69,752 74,758
Amortization of mortgage servicing rights 7,874 7,159 22,103

25,743
Servicing and origination 1,707 7,804 4,756 36,277
Technology and communications 6,727 5,065 18,582 14,354
Professional services 25,132 6,378 37,521

21,772
Occupancy and equipment 5,201 4,192 13,517 15,056
Other operating expenses 2,847 4,675 6,978 11,188
Total operating expenses 93,374 54,232 173,209

199,148


Income from operations 2,195 29,979 73,899

108,832


Other income (expense)
Interest income 2,962 1,992 8,507 6,411
Interest expense (24,187) (16,145) (50,017)

(50,108)
Gain (loss) on trading securities (3,013) 8,291 (3,958) 13,346
Loss on loans held for resale, net (539) (1,242) (2,626) (8,783)
Equity in earnings (losses) of unconsolidated entities 266 (1,059) 1,344

(1,608)
Other, net 1,604 1,642 (3,154) 4,977
Other expense, net (22,907) (6,521) (49,904) (35,765)
Income (loss) from continuing operations before taxes (20,712) 23,458 23,995 73,067
Income tax expense (benefit) (7,487) 65,294 310

82,803
Income (loss) from continuing operations (13,225) (41,836) 23,685 (9,736)
Income (loss) from discontinued operations, net oftaxes
4,383

(231)
4,383 633
Net income (loss) (8,842) (42,067)

28,068
(9,103)
Net loss (income) attributable to non-controlling interests 7 36 (5)

11
Net income (loss) attributable to Ocwen Financial Corporation (OCN) $(8,835) $(42,031) $28,063 $(9,092)


Basic earnings per share

Income from continuing operations attributable to OCN $(0.13) $(0.51) $0.24 $(0.14)


Income from discontinued operations attributable to OCN
0.04 0.04 0.01
Net income (loss) attributable to OCN $(0.09) $(0.51) $0.28 $(0.13)


Diluted earnings per share

Income from continuing operations attributable to OCN $(0.13) $(0.51) $0.23 $(0.14)


Income from discontinued operations attributable to OCN
0.04 0.04 0.01
Net income (loss) attributable to OCN $(0.09) $(0.51) $0.27 $(0.13)


Weighted average common shares outstanding

Basic 100,329,915 82,614,456

100,159,547
70,966,393
Diluted 100,329,915 82,614,456 107,379,725

70,966,393
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)



(UNAUDITED)


September 30,
2010
December 31,
2009
Assets
Cash $163,911 $90,919


Restricted cash – for securitization investors
942
Trading securities, at fair value:
Auction rate 74,712 247,464
Subordinates and residuals 3,692
Loans held for resale, at lower of cost or fair value 29,352 33,197
Advances 218,936 145,914
Match funded advances 2,126,991 822,615
Loans, net – restricted for securitization investors 69,736
Mortgage servicing rights 203,930 117,802
Receivables, net 42,747 67,095
Deferred tax assets, net 133,782 132,683
Goodwill 19,457
Premises and equipment, net 11,892 3,325
Investments in unconsolidated entities 12,284 15,008
Other assets 147,101 89,636
Total assets $3,255,774

$1,769,350


Liabilities and Equity

Liabilities

Match funded liabilities $1,606,346 $465,691
Secured borrowings – owed to securitization investors

64,564
Lines of credit and other secured borrowings 444,499 55,810
Investment line 156,968
Servicer liabilities 2,368 38,672
Debt securities 82,554 95,564
Other liabilities 166,751 90,782
Total liabilities 2,367,082 903,487
Equity
Ocwen Financial Corporation stockholders' equity
Common stock, $.01 par value; 200,000,000 shares authorized;


100,476,378 and99,956,833 shares issued and outstanding
at September 30, 2010 and December 31, 2009, respectively
1,005 1,000
Additional paid-in capital 465,005 459,542
Retained earnings 435,535 405,198
Accumulated other comprehensive loss, net of income taxes (13,104) (129)
Total Ocwen Financial Corporation stockholders' equity 888,441 865,611
Non-controlling interest in subsidiaries 251 252
Total equity 888,692 865,863
Total liabilities and equity $3,255,774

$1,769,350
CONTACT:  Ocwen Financial Corporation
          John P. Van Vlack, Executive Vice President, 
            Chief Financial Officer & Chief Accounting Officer
          (561) 682-7721
          John.VanVlack@Ocwen.com