• Net Loss of $(128.5) million for 2017, a $70.9 million improvement over 2016

  • Generated $412 million of Cash Flows from Operating Activities in 2017

  • Helped over 45,000 struggling families remain in their homes through loan modifications

WEST PALM BEACH, Fla., Feb. 28, 2018 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation (NYSE:OCN) (“Ocwen” or the “Company”), a leading financial services holding company, today reported a net loss of $(128.5) million, or $(1.01) per share, for the full year of 2017 compared to a net loss of $(199.4) million, or $(1.61) per share, for the full year of 2016, a $70.9 million improvement. Ocwen generated Revenue of $1.2 billion and Cash Flows from Operating Activities of $412 million for the full year of 2017, and ended the year with $260 million of cash.

For the three months ended December 31, 2017, Ocwen reported a net loss of $(45.3) million, or $(0.34) per share.

“2017 was another challenging year for Ocwen and our industry. However, we continued to make progress on a number of fronts, reducing our year over year loss by $70.9 million and helping over 45,000 struggling families retain their home through affordable loan modifications. We are also in an improved cash and liquidity position following the closing of our amended agreements with New Residential Investment Corp. in January 2018,” commented Ron Faris, President and CEO of Ocwen. Mr. Faris continued, “Our servicing business continued to perform well despite the challenges posed by continued portfolio runoff and posted its sixth consecutive quarter of pre-tax income."

Fourth Quarter and Full Year 2017 Results

Pre-tax loss for the fourth quarter of 2017 was $(45.3) million. Pre-tax results for the quarter were impacted by a number of significant items, the largest of which was $(49.8) million in litigation and regulatory settlement-related expenses. Excluding these settlement-related expenses and other adjusting items that largely offset, the Company had an adjusted pre-tax income of $4.0 million.

The Servicing business segment recorded $28.6 million of pre-tax income for the fourth quarter of 2017. For the full year 2017, the Servicing business recorded $46.7 million of pre-tax income, an increase of $43.3 million over 2016.

The Lending segment recorded $2.6 million of pre-tax income for the fourth quarter of 2017, a $10.2 million improvement over the prior quarter, driven by $(6.8) million in restructuring costs in the prior quarter and higher gains in the reverse lending business as a result of increased origination volume and improved margins. For the full year 2017, the Lending business recorded a pre-tax loss of $(4.4) million, a decrease of $4.6 million versus 2016. The 2017 loss in Lending was driven by our Forward Lending business, which had a pre-tax loss of $(28.4) million inclusive of the restructuring costs, which was partially offset by $24.0 million of pre-tax income in our Reverse Lending business.

Additional Business Highlights

  • In 2017, Ocwen completed 45,682 loan modifications with HAMP modifications accounting for 27.9% of the total. Note that the HAMP program ended on December 31, 2016, but modifications in process at that time were permitted to close after the deadline.
  • Delinquencies decreased from 9.4% at September 30, 2017 to 9.3% at December 31, 2017, primarily driven by ongoing consumer assistance efforts.
  • The constant pre-payment rate (“CPR”) marginally decreased from 14.7% in the third quarter of 2017 to 14.4% in the fourth quarter of 2017.  In the fourth quarter of 2017, the prime CPR was 17.3%, and the non-prime CPR was 12.7%.
  • For the full year 2017, Ocwen originated forward and reverse mortgage loans with an unpaid principal balance (UPB) of $2.5 billion and $1.0 billion, respectively. The decrease in forward mortgage originations compared to prior year was driven by our decision to exit the unprofitable Correspondent and Wholesale businesses.
  • Our reverse mortgage portfolio ended the year with an estimated $101.5 million in undiscounted future gains from future draws on existing loans. Neither the anticipated future gains nor future funding liability are included in the Company’s financial statements.
  • We announced the exit of our Automotive Capital Services business in January 2018 and the exit is expected to be completed during the first half of 2018.

Webcast and Conference Call

Ocwen will host a webcast and conference call on Wednesday, February 28, 2018, at 8:30 a.m., Eastern Time, to discuss its financial results for the fourth quarter and full year 2017 as well as other recent events. The conference call will be webcast live over the internet from the Company’s website at www.Ocwen.com. To access the call, click on the “Shareholder Relations” section. A replay of the conference call will be available via the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days.

About Ocwen Financial Corporation

Ocwen Financial Corporation is a financial services holding company which, through its subsidiaries, originates and services loans. We are headquartered in West Palm Beach, Florida, with offices throughout the United States and in the U.S. Virgin Islands as well as operations in India and the Philippines. We have been serving our customers since 1988. We may post information that is important to investors on our website (www.Ocwen.com).

Forward Looking Statements

This press 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. These forward-looking statements may be identified by a reference to a future period or by use of forward-looking terminology.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Our business has been undergoing substantial change which has magnified such uncertainties. Readers should bear these factors in mind when considering such statements and should not place undue reliance on such statements.

Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. In the past, actual results have differed from those suggested by forward looking statements and this may happen again.

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: uncertainty related to claims, litigation, cease and desist orders and investigations brought by government agencies and private parties regarding our servicing, foreclosure, modification, origination and other practices, including uncertainty related to past, present or future investigations, litigation, cease and desist orders and settlements with state regulators, the Consumer Financial Protection Bureau (CFPB), State Attorneys General, the Securities and Exchange Commission (SEC), the Department of Justice or the Department of Housing and Urban Development (HUD) and actions brought under the False Claims Act by private parties on behalf of the United States of America regarding incentive and other payments made by governmental entities; adverse effects on our business as a result of regulatory investigations, litigation, cease and desist orders or settlements; reactions to the announcement of such investigations, litigation, cease and desist orders or settlements by key counterparties, including lenders, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Government National Mortgage Association (Ginnie Mae); our ability to comply with the terms of our settlements with regulatory agencies, increased regulatory scrutiny and media attention; any adverse developments in existing legal proceedings or the initiation of new legal proceedings; our ability to effectively manage our regulatory and contractual compliance obligations; our ability to comply with our servicing agreements, including our ability to comply with our agreements with, and the requirements of, Fannie Mae, Freddie Mac and Ginnie Mae and maintain our seller/servicer and other statuses with them; our ability to contain and reduce our operating costs; our ability to complete our proposed acquisition of PHH Corporation (PHH), to successfully integrate its business, and to realize the strategic objectives and other benefits of the acquisition at the time anticipated or at all, including our ability to integrate, maintain and enhance PHH’s servicing, subservicing and other business relationships; the adequacy of our financial resources, including our sources of liquidity and ability to sell, fund and recover advances, repay borrowings and comply with our debt agreements, including the financial and other covenants contained in them; our ability to maintain our long-term relationship with NRZ under our 2017 and 2018 agreements; our servicer and credit ratings as well as other actions from various rating agencies, including the impact of prior or future downgrades of our servicer and credit ratings; uncertainty related to our ability to continue to collect certain expedited payment or convenience fees and potential liability for charging such fees; our ability to realize anticipated future gains from future draws on existing loans in our reverse mortgage portfolio; volatility in our stock price; the characteristics of our servicing portfolio, including prepayment speeds along with delinquency and advance rates; our ability to successfully modify delinquent loans, manage foreclosures and sell foreclosed properties; uncertainty related to legislation, regulations, regulatory agency actions, government programs and policies, industry initiatives and evolving best servicing and lending practices; as well as other risks detailed in Ocwen’s reports and filings with the SEC, including its amended annual report on Form 10-K/A for the year ended December 31, 2016 and any current and quarterly reports since such date, as well as its annual report on Form 10-K for the year ended December 31, 2017, when filed. Anyone wishing to understand Ocwen’s business should review its SEC filings. Ocwen’s forward-looking statements speak only as of the date they are made and, we disclaim any obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures, such as our reference to adjusted pre-tax income. We believe these non-GAAP financial measures provide a useful supplement to discussions and analysis of our financial condition. We believe these non-GAAP financial measures provide an alternative way to view certain aspects of our business that is instructive. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Ocwen's reported results under accounting principles generally accepted in the United States. Other companies may use non-GAAP financial measures with the same or similar titles that are calculated differently to our non-GAAP financial measures. As a result, comparability may be limited. For a full reconciliation of adjusted pre-tax income to GAAP pre-tax income, please see slides 33 and 38 of the Company’s 2017 earnings presentation, which may be found in the “Shareholder Relations” section of the Company’s website at www.Ocwen.com.  

FOR FURTHER INFORMATION CONTACT:

Investors:Media:
Stephen SwettJohn LovalloDan Rene
T: (203) 614-0141T: (917) 612-8419T: (202) 973-1325
E: shareholderrelations@ocwen.comE: jlovallo@levick.comE: drene@levick.com
   


 
Residential Servicing Statistics
(Dollars in thousands)
 At or for the Three Months Ended
December 31,
2017		September 30,
2017		June 30, 2017March 31,
2017		December 31,
2016
Total unpaid principal balance of loans and REO serviced$179,352,554 $187,468,318 $194,798,424 $202,369,014 $209,092,130 
      
Non-performing loans and REO serviced as a % of total UPB (1)9.3%9.4%9.6%10.7% 11.2%
      
Prepayment speed (average CPR) (2) (3)14.4%14.7%15.0%14.0% 15.1%

(1) Performing loans include those loans that are less than 90 days past due and those loans for which borrowers are making scheduled payments under loan modification, forbearance or bankruptcy plans. We consider all other loans to be non-performing.

(2) Average CPR for the prior three months. CPR measures prepayments as a percentage of the current outstanding loan balance expressed as a compound annual rate.

(3) Average CPR for the three months ended December 31, 2017 includes 17.3% for prime loans and 12.7% for non-prime loans.

        
Segment Results
(Dollars in thousands)		       
 For the Three Months Ended
December 31,		 For the Twelve Months Ended
December 31,
 2017 2016 2017 2016
Servicing       
Revenue$238,943  $295,432  $1,041,290  $1,247,159 
Expenses78,978  176,251  716,384  910,577 
Other expense, net(131,315) (73,403) (278,226) (333,218)
Income before income taxes28,650  45,778  46,680  3,364 
        
Lending       
Revenue32,018  23,108  127,475  112,363 
Expenses27,430  28,728  128,058  114,199 
Other income (expense), net(1,947) 9  (3,848) 1,967 
Income (loss) before income taxes2,641  (5,611) (4,431) 131 
        
Corporate Items and Other       
Revenue5,809  5,369  25,811  27,646 
Expenses61,895  32,927  154,203  198,483 
Other expense, net(20,519) (22,811) (57,830) (39,019)
Loss before income taxes(76,605) (50,369) (186,222) (209,856)
        
Corporate Eliminations       
Revenue—  (5) —  (5)
Expenses—  (5) —  (5)
Other income (expense), net—  —  —  — 
Income (loss) before income taxes—  —  —  — 
        
Consolidated loss before income taxes$(45,314) $(10,202) $(143,973) $(206,361)


 
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS 
(Dollars in thousands, except per share data)
    
 For the Three Months Ended
December 31,		 For the Twelve Months Ended
December 31,
  2017  2016  2017  2016
Revenue       
Servicing and subservicing fees$227,853  $279,627  $989,376  $1,186,620 
Gain on loans held for sale, net 26,426   21,317   103,402   90,391 
Other 22,491   22,960   101,798   110,152 
Total revenue 276,770   323,904   1,194,576   1,387,163 
        
Expenses       
Compensation and benefits 86,244   93,727   358,994   381,340 
Professional services 83,800   47,791   229,451   305,586 
Servicing and origination (62,277)  30,571   142,670   279,801 
Technology and communications 20,960   24,814   100,490   110,333 
Occupancy and equipment 16,450   17,978   66,019   80,191 
Amortization of mortgage servicing rights 13,228   14,383   51,788   32,978 
Other 9,898   8,637   49,233   33,025 
Total expenses 168,303   237,901   998,645   1,223,254 
        
Other income (expense)       
Interest income 3,864   4,595   15,965   19,083 
Interest expense (150,767)  (104,500)  (363,238)  (412,583)
Gain on sale of mortgage servicing rights, net 2,674   803   10,537   8,492 
Other, net (9,552)  2,897   (3,168)  14,738 
Total other expense, net (153,781)  (96,205)  (339,904)  (370,270)
        
Loss before income taxes (45,314)  (10,202)  (143,973)  (206,361)
Income tax (benefit) expense (51)  228   (15,516)  (6,986)
Net loss (45,263)  (10,430)  (128,457)  (199,375)
Net (income) loss attributable to non-controlling interests 780   (14)  491   (387)
Net loss attributable to Ocwen stockholders$  (44,483) $  (10,444) $  (127,966) $  (199,762)
        
Loss per share attributable to Ocwen common stockholders       
Basic$(0.34) $(0.08) $(1.01) $(1.61)
Diluted$(0.34) $(0.08) $(1.01) $(1.61)
        
Weighted average common shares outstanding       
Basic 130,893,025   123,988,784   127,082,058   123,990,700 
Diluted 130,893,025   123,988,784   127,082,058   123,990,700 
                


 
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
(Dollars in thousands, except share data) 
 December 31,
  2017		 December 31,
 2016
Assets   
Cash$259,655  $256,549 
Mortgage servicing rights ($671,962 and $679,256 carried at fair value)1,008,844  1,042,978 
Advances, net211,793  257,882 
Match funded assets (related to variable interest entities (VIEs))1,177,357  1,451,964 
Loans held for sale ($214,262 and $284,632 carried at fair value)238,358  314,006 
Loans held for investment, at fair value4,715,831  3,565,716 
Receivables, net199,529  265,720 
Premises and equipment, net37,006  62,744 
Other assets ($8,900 and $20,007 carried at fair value)(amounts related to VIEs of $27,359 and $43,331)554,791  438,104 
Total assets$8,403,164  $7,655,663 
    
Liabilities and Equity   
Liabilities   
HMBS-related borrowings, at fair value$4,601,556  $3,433,781 
Other financing liabilities ($508,291 and $477,707 carried at fair value)593,518  579,031 
Match funded liabilities (related to VIEs)998,618  1,280,997 
Other secured borrowings, net545,850  678,543 
Senior notes, net347,338  346,789 
Other liabilities ($635 and $1,550 carried at fair value)769,410  681,239 
Total liabilities7,856,290  7,000,380 
    
Equity   
Ocwen Financial Corporation (Ocwen) stockholders’ equity   
Common stock, $.01 par value; 200,000,000 shares authorized; 131,484,058 and 123,988,160 shares issued and outstanding at December 31, 2017 and 2016, respectively1,315  1,240 
Additional paid-in capital547,057  527,001 
Retained earnings (accumulated deficit)(2,083) 126,167 
Accumulated other comprehensive loss, net of income taxes(1,249) (1,450)
Total Ocwen stockholders’ equity545,040  652,958 
Non-controlling interest in subsidiaries1,834  2,325 
Total equity546,874  655,283 
Total liabilities and equity$8,403,164  $7,655,663 
        


 
OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Dollars in thousands)
 For the Years Ended
December 31,
 2017 2016
Cash flows from operating activities   
Net loss$(128,457) $(199,375)
Adjustments to reconcile net loss to net cash provided by operating activities:   
Amortization of mortgage servicing rights51,788  32,978 
Loss on valuation of mortgage servicing rights, at fair value4,540  80,238 
Impairment charge (reversal) on mortgage servicing rights(3,366) 10,813 
Gain on sale of mortgage servicing rights, net(10,537) (8,492)
Realized and unrealized losses on derivative financial instruments191  1,724 
Provision for bad debts76,828  81,079 
Depreciation26,886  25,338 
Loss on write-off of fixed assets, net8,502  — 
Amortization of debt issuance costs2,738  25,662 
Provision for (reversal of) valuation allowance on deferred tax assets(29,979) 15,639 
Decrease (increase) in deferred tax assets other than provision for valuation allowance30,710  (11,119)
Equity-based compensation expense5,624  5,181 
Gain on valuation of financing liability41,282  — 
Loss (gain) on trading securities6,756  (335)
Net gain on valuation of mortgage loans held for investment and HMBS-related borrowings(23,733) (26,016)
Gain on loans held for sale, net(53,209) (65,649)
Origination and purchase of loans held for sale(3,695,163) (6,090,432)
Proceeds from sale and collections of loans held for sale3,662,065  5,969,812 
Changes in assets and liabilities:   
Decrease in advances and match funded advances330,052  452,435 
Decrease in receivables and other assets, net202,153  181,835 
Decrease in other liabilities(100,650) (7,143)
Other, net6,944  492 
Net cash provided by operating activities411,965  474,665 
    
Cash flows from investing activities   
Origination of loans held for investment(1,277,615) (1,098,758)
Principal payments received on loans held for investment444,388  243,596 
Purchase of mortgage servicing rights(1,658) (17,356)
Proceeds from sale of mortgage servicing rights4,234  47,044 
Proceeds from sale of advances and match funded advances9,446  103,017 
Issuance of automotive dealer financing notes(174,363) (100,722)
Collections of automotive dealer financing notes162,965  65,688 
Additions to premises and equipment(9,053) (33,518)
Other, net2,440  (610)
Net cash used in investing activities(839,216) (791,619)
    



OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — (continued)
(Dollars in thousands)
 For the Years Ended
December 31,
 2017 2016
Cash flows from financing activities   
Repayment of match funded liabilities, net(282,379) (303,052)
Proceeds from mortgage loan warehouse facilities and other secured borrowings7,215,264  9,242,671 
Repayments of mortgage loan warehouse facilities and other secured borrowings(7,431,763) (9,463,063)
Payment of debt issuance costs(841) (11,136)
Proceeds from sale of mortgage servicing rights accounted for as a financing54,601  — 
Proceeds from sale of reverse mortgages (HECM loans) accounted for as a financing (HMBS-related borrowings)1,281,543  1,086,795 
Repayment of HMBS-related borrowings(418,503) (230,045)
Issuance of common stock13,913  — 
Repurchase of common stock—  (5,890)
Other(1,478) (49)
Net cash provided by financing activities430,357  316,231 
    
Net increase (decrease) in cash3,106  (723)
Cash at beginning of year256,549  257,272 
Cash at end of year$259,655  $256,549 
    

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