Ocwen Reports Third Quarter 2012 EPS of $0.37 Per Share, Revenue of $232.7 Million and Net Income of $51.4 Million

Ocwen Financial Corporation reported net income of $51.4 million, or $0.37 per share, for the third quarter of 2012 on November 1. This compares with net income of $20.2 million, or $0.19 per share, for the third quarter of 2011. Revenue for the third quarter of 2012 is a record-setting $232.7 million, up 90% from the third quarter of 2011. Income from operations is also a record at $139.9 million for the third quarter of 2012 as compared to $56.8 million for the third quarter of 2011, an increase of 146%. There were no normalizing items in the third quarter of 2012, so Ocwen's normalized pre-tax earnings are $80.7 million which represents a 69% increase over normalized pre-tax earnings in the third quarter of 2011.

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, Houston, Texas, St. Croix, US Virgin Islands and Washington, DC and support operations in India and Uruguay. Utilizing advanced technology and world-class training and processes, we provide solutions that help homeowners and make our clients' loans worth more.

Net income for the nine months ended September 30, 2012 is $115.6 million, or $0.84 per share, as compared to $68.7 million, or $0.64 per share, for the same period in 2011.

Third quarter business performance highlights:

• Acquired mortgage servicing rights (MSRs) and boarded loans from flow deals totaling $6.1 billion of unpaid principal balance (UPB).

• Boarded flow non-performing loan subservicing portfolio with a UPB $1.1 billion (4,400 loans) in August and another $2.5 billion (8,800 loans) in September from a large bank.

• Purchased $2.2 billion UPB (7,100 loans) of Fannie Mae MSRs which boarded on October 1, 2012.

• Purchased $316 million UPB (1,700 loans) of Fannie Mae and Freddie Mac MSRs in July 2012.

• Generated Cash flow from operations of $533.5 million for a total of $1.4 billion through the first nine months of 2012.

• Reduced overall delinquencies from 24.5% at the end of June 2012 to 23.6% at the end of September 2012.

• Completed 18,135 loan modifications. HAMP modifications accounted for 29% of completed modifications.

• Completed three sales to Home Loan Servicing Solutions (HLSS) in August and September 2012 of rights to receive the servicing fees on approximately $29.9 billion of UPB and associated servicing advances. Ocwen received total sales proceeds of $1.1 billion.

•    Deferred servicing fees related to delinquent borrower payments not accrued on Ocwen's balance sheet amounted to $295 million at the end of September 2012.

On October 3, 2012, Ocwen entered into a merger agreement that will make Homeward Residential Holdings, Inc. ("Homeward") a wholly owned subsidiary of Ocwen. In the merger, Ocwen will acquire approximately $77 billion in UPB of MSRs as well as Homeward's existing origination platform and certain other ancillary businesses. As consideration for the merger, Ocwen will pay approximately $750 million. Of this amount, approximately $588 million will be paid in cash and $162 million will be paid in preferred shares. The merger is expected to close in December 2012.

As previously announced on October 24, 2012, Ocwen Loan Servicing, LLC, the mortgage servicing arm of Ocwen Financial Corporation, and Walter Investment Management Corp. were the successful bidders for the mortgage servicing and origination platform assets of Residential Capital, LLC (ResCap). The bid, with a purchase price of $3 billion, is subject to definitive documentation and Bankruptcy Court approval.

Upon closing, Ocwen would acquire approximately $126.6 billion of UPB in MSRs and $31 billion of UPB of subservicing as of August 31, 2012. These numbers exclude approximately $120 billion of subservicing for Ally Bank that is likely to be sold prior to closing. Under the joint bidding arrangement, Walter Investment Management Corp. will acquire the Fannie Mae mortgage servicing rights (MSR) portion of ResCap's servicing portfolio, representing approximately $50.4 billion in UPB, as well as the origination and capital markets platform.

On October 26, 2012, Ocwen and Genworth Financial Corporation (NYSE:GNW) entered into an agreement whereby Ocwen will acquire Genworth Financial Home Equity Access, Inc. for approximately $22 million in cash. The company, which will be renamed Liberty Home Equity Solutions, Inc. ("Liberty"), is the number one reverse mortgage lender, according to the latest monthly data, with strong positions in both retail and wholesale originations. The acquisition is expected to close in the first quarter of 2013.

"With the closing of the ResCap and Homeward acquisitions, Ocwen will become the fifth largest mortgage servicer in the country. More importantly, the infrastructure, management and staff from these acquisitions expand and enhance our capabilities in important areas such as Ginnie Mae and master servicing. Moreover, the Homeward origination platform will provide Ocwen with organic growth and improved ability to work with existing borrowers on refinancing opportunities," said Ron Faris President and CEO. "Additionally, the acquisition of Liberty positions us well in a market with enormous future growth potential."
Mr. Faris continued, "Our record-setting results in the third quarter of 2012 show the strong earnings power of the business currently on the books and points to our ability to generate strong results on acquired portfolios. Modifications for the quarter came in at the midpoint of our expectations and lower than last quarter as Ocwen tested delinquent loans for HAMP 2 eligibility. This delayed modifications in the short-run, but we expect the program to be positive longer-term. We are already seeing a rebound in modifications this quarter. Our financial performance also indicates that our revenue ramp-up and delinquency performance on recently boarded portfolios continue to track well against our pro forma expectations."

Chairman Bill Erbey stated, "The strong market acceptance of the HLSS follow-on offering and their recently completed term note issuance positions Ocwen well to fund expected growth at a reduced cost. HLSS, combined with our track-record of strong cash-flow from operations, will likely enable us to execute both the Homeward and ResCap transactions without issuing new equity beyond the $162 million of preferred shares used to acquire a portion of Homeward. We expect both transactions to provide attractive returns to our shareholders."


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