Ocwen Financial Corporation
Mar 4, 2010

Ocwen Financial Corporation Announces Preliminary Fourth Quarter and 2009 Financial Results

WEST PALM BEACH, Fla., March 4, 2010 -- Ocwen Financial Corporation ("Ocwen" or the "Company") (NYSE:OCN) today reported estimated net income of $9.4 million or $0.09 per diluted share for the fourth quarter of 2009. This compares to a net loss of $4.3 million or $0.07 per share for the fourth quarter of 2008. Pre-tax income from continuing operations was $20.2 million for the fourth quarter of 2009 as compared to a pre-tax loss of $4.0 million for the fourth quarter of 2008. For the year ended December 31, 2009, the $50.6 million one-time tax expense arising from the separation of Altisource Portfolio Solutions S.A. (formerly Ocwen Solutions) in August, and the fourth quarter valuation allowance related to a non-cash deferred tax asset arising from deductibility of losses in a finance vehicle, lowered estimated net income to $0.3 million as compared to $13.2 million or $0.21 per diluted share for 2008.The company's estimated fourth quarter 2009 financial results are preliminary and subject to change.

Income from continuing operations before income taxes was $93.3 million for the full year 2009 compared to $31.0 million for 2008.This improvement of 201% was driven by a $46.7 million swing in gains versus losses in trading securities, a $23.6 million reduction in interest expense and a reduction of equity in losses of unconsolidated entities of $10.2 million.

FOURTH QUARTER BUSINESS PERFORMANCE HIGHLIGHTS

"Ocwen continues its quality leadership in special servicing.We have the highest conversion rate from trial to completed modifications under HAMP while maintaining a re-default rate of one-half the industry," said Ron Faris, President of Ocwen."I am pleased that our portfolio grew 24% to $50.0 billion in the fourth quarter.Coupled with our growth in modifications, revenue for our Servicing segment increased 15% over the third quarter while operating expenses declined by 4%.Our Servicing pre-tax income increased 66% from the prior quarter."

Chairman and CEO William Erbey added, "Strategic priorities for 2010 are:

"Establishing predictable and sustainable revenue growth is our most pressing issue.As such, we have a three pronged approach:

Servicing

In comparison to the fourth quarter of 2008, revenue was 5% lower while operating expenses were 24% favorable as the shift towards subservicing and special servicing reduced amortization expense by 45%.Pre-tax income for Servicing of $29.3 million was 65% higher than the same quarter last year due to decreases in amortization of servicing rights, servicing and origination and interest expense.

Loans and Residuals

Loans and Residuals incurred a loss from continuing operations before taxes of $2.1 million as compared to $5.1 million in the fourth quarter of 2008.The change is primarily due to lower unrealized losses driven by declines in the estimated market value of loans and real estate.

Asset Management Vehicles

Losses from continuing operations before taxes for Asset Management Vehicles decreased to $1.8 million as compared to $3.1 million in the fourth quarter of 2008.This improvement reflects lower unrealized losses on residual securities and lower realized and unrealized losses on real estate.

Corporate

In the fourth quarter of 2009, losses from continuing operations before taxes improved 71% primarily due to reduced unrealized losses on auction rate securities, as compared to the fourth quarter of 2008.Since September 30, 2009, auction rate securities with a carrying value of $124.4 million were sold at a $1.4 million loss and the Investment line was repaid.As a result of the sales and changes in fair value, holdings in auction rate securities are currently $124.6 million.Of the auction rate securities remaining on the balance sheet, $86.5 million were financed by $75.0 million of non-recourse debt with a maturity in October 2012.

Total consolidated assets declined 21% to $1,769.4 million for the year due to $234.1 million of reductions in advances and match funded advances, the distribution of $88.5 million of assets in the separation of Altisource Portfolio Solutions S.A. and our strategy to use cash to lower interest expense.Corresponding changes in liabilities resulted in a 44% reduction to $903.5 million.

Prior periods were adjusted to give effect to the required retrospective adoption of new accounting guidance which caused us to recognize additional non-cash interest expense related to the convertible notes outstanding.

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 proprietary 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 Registration Statement No. 333-160626 and 333-163996 on Form S-3 and its periodic report on Form 10-K for the year ended December 31, 2008 and Forms 10-Q for the quarters ended March 31, 2009, June 30, 2009, and September 30, 2009. 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.

Residential Servicing Statistics (Dollars in thousands)

At or for the three months ended
December 31, 2009 September 30, 2009 June 30,
2009
March 31,


2009
December 31, 2008
Total unpaid principal balance of loans and REO serviced (1) $49,980,077 $40,293,698 $38,406,007

$40,789,135
$40,171,532
Non-performing loans and REO

serviced as a % of total UPB (1) 25.6%

26.9%
27.4% 25.1% 24.3%
Prepayment speed (average CPR) 19% 20% 22% 22% 25%
(1) Loans for which borrowers are making scheduled payments under modification, forbearance or bankruptcy plans are considered performing loans. 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, 2009 2008 2009

2008


(As adjusted)
(As adjusted)


Ocwen Asset Management


Servicing

Revenue $72,327 $75,740 $ 272,725 $ 340,725
Operating expenses 30,472 40,060 129,252 164,292
Income from operations 41,855 35,680 143,473 176,433
Other expense, net (12,555) (17,886) (55,792)

(75,663)
Income from continuing operations before taxes 29,300 17,794 87,681 100,770
Loans and Residuals

Revenue

Operating expenses 631 800 2,831 3,025
Loss from operations (631) (800) (2,831)

(3,025)
Other expense, net (1,427) (4,315) (6,290) (11,657)
Loss from continuing operations before taxes (2,058) (5,115) (9,121) (14,682)
Asset Management
Revenue 422 667 1,851 3,664
Operating expenses 578 896 3,108

4,113
Loss from operations (156) (229) (1,257) (449)
Other expense, net (1,594) (2,822) (4,060) (9,364)
Loss from continuing operations before taxes (1,750) (3,051) (5,317)

(9,813)
Income from continuing operations before income taxes 25,492 9,628 73,243 76,275
Ocwen Solutions


Mortgage Services


Revenue

15,153
54,052 58,733
Operating expenses 12,162

37,040
46,299
Income from operations 2,991 17,012

12,434
Other income, net 181 803 828
Income from continuing operations before taxes 3,172 17,815 13,262
Financial Services
Revenue 16,653 40,293 73,835
Operating expenses 17,617 45,002

79,757
Loss from operations (964) (4,709) (5,922)
Other expense, net (524) (1,260) (1,953)
Loss from continuing operations before taxes (1,488) (5,969)

(7,875)
Technology Products

Revenue 10,717 28,331

45,283
Operating expenses 7,685 18,638 35,895
Income from operations 3,032 9,693 9,388
Other expense, net (87) (103)

(5,808)
Income from continuing operations before taxes 2,945 9,590 3,580
Income from continuing operations before income taxes 4,629 21,436 8,967
Corporate Items and Other

Revenue

385
2 1,066 156
Operating expenses 4,942 4,537 16,308 18,743
Loss from operations (4,557) (4,535) (15,242)

(18,587)
Other income (expense), net (741) (13,679) 13,824 (35,673)
Loss from continuing operations before taxes (5,298) (18,214) (1,418) (54,260)
Corporate Eliminations

Revenue

(386)
(7,541) (17,590) (30,268)
Operating expenses (117) (7,201) (16,525) (28,769)
Loss from operations (269) (340) (1,065)

(1,499)
Other income, net 269 340 1,065 1,499
Income from continuing operations before taxes
Consolidated income (loss) from continuing operations


before income taxes

$20,194

$(3,957)

$93,261

$30,982
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, 2009 2008 2009 2008
(As Adjusted) (As Adjusted)
Revenue
Servicing and subservicing fees $62,635 $77,826 $ 264,467 $ 368,026
Process management fees 9,710 31,450 108,082 113,244
Other revenues 403 2,115 8,179 10,858
Total revenue 72,748 111,391 380,728

492,128


Operating expenses
Compensation and benefits 12,862 28,982 87,620 125,549
Amortization of servicing rights 6,485 11,749 32,228

52,461
Servicing and origination 2,376 15,362 38,653 52,951
Technology and communications 5,712 4,614 20,066 22,327
Professional services 4,428 7,557 26,200

34,615
Occupancy and equipment 3,929 5,507 18,985 22,978
Other operating expenses 714 2,785 11,902 12,474
Total operating expenses 36,506 76,556 235,654

323,355


Income from operations 36,242 34,835 145,074

168,773


Other income (expense)
Interest income 2,375 3,204 8,786 14,696
Interest expense (12,846) (20,061) (62,954)

(86,574)
Gain (loss) on trading securities (2,159) (13,114) 11,187 (35,480)
Loss on loans held for resale, net (2,349) (5,984) (11,132) (17,096)
Equity in losses of unconsolidated entities (1,325) (2,482) (2,933)

(13,110)
Other, net 256 (355) 5,233 (227)
Other expense, net (16,048) (38,792) (51,813) (137,791)
Income (loss) from continuing operations before income taxes 20,194 (3,957) 93,261 30,982
Income tax expense 13,307 313 96,110

12,006
Income (loss) from continuing operations 6,887 (4,270) (2,849) 18,976
Income (loss) from discontinued operations, net of income taxes 2,488 (195) 3,121 (5,767)
Net income (loss) 9,375 (4,465) 272

13,209
Net loss (income) attributable to non-controlling interests 14 184 25 41
Net income (loss) attributable to Ocwen Financial
Corporation (OCN)
$9,389

$(4,281)

$297

$13,250


Basic earnings per share

Income (loss) from continuing operations $0.07 $(0.07) $0.04 $0.30


Income (loss) from discontinued operations
0.02 0.04 (0.09)
Net income (loss) attributable to OCN $0.09 $(0.07) $-- $0.21


Diluted earnings per share

Income (loss) from continuing operations $0.07 $(0.07) $(0.04) $0.30


Income (loss) from discontinued operations
0.02 0.04 (0.09)
Net income (loss) attributable to OCN $0.09 $(0.07) $-- $0.21


Weighted average common shares outstanding

Basic 99,871,247 62,716,530

78,252,000
62,670,957
Diluted 107,150,497 62,716,530 78,252,000

62,935,314
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(UNAUDITED)


December 31,
2009
December 31,
2008
(As Adjusted)
Assets
Cash $90,919 $201,025
Trading securities, at fair value
Auction rate 247,464 239,301
Subordinates and residuals 3,692 4,369
Loans held for resale, at lower of cost or fair value 33,197 49,918
Advances 145,914 102,085
Match funded advances 822,615 1,100,555
Mortgage servicing rights 117,802 139,500
Receivables, net 67,095 39,907
Deferred tax assets, net 132,683 175,145
Intangibles, including goodwill of $9,836 at December 31, 2008 46,227
Premises and equipment, net 3,325 12,926
Investments in unconsolidated entities 15,008 25,663
Other assets 89,636 100,479
Total assets $1,769,350

$2,237,100


Liabilities and Equity

Liabilities

Match funded liabilities $465,691 $961,939
Lines of credit and other secured borrowings

55,810
116,870
Investment line 156,968 200,719
Servicer liabilities 38,672 135,751
Debt securities 95,564 133,367
Other liabilities 90,782 78,813
Total liabilities 903,487 1,627,459
Equity
Ocwen Financial Corporation stockholders' equity
Common stock, $.01 par value; 200,000,000 shares authorized;


99,956,833 and 62,716,530 shares issued and outstanding at
December 31, 2009 and 2008, respectively
1,000 627
Additional paid-in capital 459,542 201,831
Retained earnings 405,198 404,901
Accumulated other comprehensive income (loss), net of income taxes (129) 1,876
Total Ocwen Financial Corporation stockholders' equity 865,611 609,235
Non-controlling interest in subsidiaries 252 406
Total equity 865,863 609,641
Total liabilities and equity $1,769,350

$2,237,100
CONTACT:  Ocwen Financial Corporation
          David J. Gunter, Executive Vice President
           & Chief Financial Officer
          (561) 682-8367
          David.Gunter@Ocwen.com