Ocwen Financial Corporation Announces Second Quarter 2010 Financial Results

Asset Management Vehicles

The loss from continuing operations before taxes for Asset Management Vehicles was $0.1 million as compared to $1.4 million in the second quarter of 2009. The carrying value of our investment in asset management vehicles was $13.5 million at June 30, 2010.

Corporate

In the second quarter of 2010, Corporate losses from continuing operations before taxes were $7.1 million compared to pre-tax profit of $3.0 million in the second quarter of 2009. The following unique items impacted the quarter:

• We sold $46.8 million of auction rate securities on June 29 ^th at a loss of $1.7 million. In comparison, gains on auction rate securities in the second quarter of 2009 were $6.0 million.
• We wrote off a $3.0 million interest in a real estate partnership which was deemed uncollectible during the second quarter.

Our exposure to non-core assets subject to valuation estimates has decreased significantly as our portfolio of Auction rate securities, Subordinates and residuals, Loans held for resale and Investments in unconsolidated entities have decreased by 59% since December 31, 2009.

Total consolidated assets increased by 17%, or $308.2 million, to $2,077.5 million during the first six months of 2010, and Total liabilities increased by 30%, or $274.1 million, to $1,177.6 million. These increases were primarily the result of advances from the $6.9 billion in servicing acquired from Saxon.  

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 annual report on Form 10-K for the year ended December 31, 2009 and Form 10-Q for the quarters ended March 31, 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
	June 30, 2010	March 31, 2010	December 31, 2009	September 30, 2009	June 30, 2009
Total unpaid principal balance of loans and REO serviced	$ 55,244,576	$ 49,677,999	$ 49,980,077	$ 40,293,698	$ 38,406,007
Non-performing loans and REO serviced as a % of total UPB (1)	26.2%	25.3%	25.6%	26.9%	27.4%
Prepayment speed (average CPR)	13%	12%	15%	20%	22%
(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		Six months
For the periods ended June 30,	2010	2009	2010	2009
Ocwen Asset Management
Servicing
Revenue	$ 75,759	$ 62,726	$ 151,212	$ 137,421
Operating expenses	41,241	32,955	72,028	67,173
Income from operations	34,518	29,771	79,184	70,248
Other expense, net	(13,093)	(14,268)	(25,253)	(29,548)
Income from continuing operations before taxes	21,425	15,503	53,931	40,700
Loans and Residuals
Revenue	—	—	—	—
Operating expenses	1,369	747	2,561	1,309
Loss from operations	(1,369)	(747)	(2,561)	(1,309)
Other income (expense), net	449	(2,096)	1,514	(5,672)
Loss from continuing operations before taxes	(920)	(2,843)	(1,047)	(6,981)
Asset Management
Revenue	176	460	364	997
Operating expenses	443	1,016	910	1,778
Loss from operations	(267)	(556)	(546)	(781)
Other income (expense), net	149	(846)	671	(1,148)
Income (loss) from continuing operations before taxes	(118)	(1,402)	125	(1,929)
Income from continuing operations before income taxes	20,387	11,258	53,009	31,790
Ocwen Solutions
Mortgage Services
Revenue	—	24,165	—	42,182
Operating expenses	—	16,017	—	28,909
Income  from operations	—	8,148	—	13,273
Other income, net	—	700	—	722
Income from continuing operations before taxes	—	8,848	—	13,995
Financial Services
Revenue	—	16,471	—	33,787
Operating expenses	—	17,557	—	35,706
Loss from operations	—	(1,086)	—	(1,919)
Other expense, net	—	(647)	—	(1,115)
Loss from continuing operations before taxes	—	(1,733)	—	(3,034)
Technology Products
Revenue	—	12,108	—	22,682
Operating expenses	—	7,121	—	15,294
Income from operations	—	4,987	—	7,388
Other expense, net	—	(52)	—	(129)
Income from continuing operations before taxes	—	4,935	—	7,259
Income from continuing operations before income taxes	—	12,050	—	18,220
Corporate Items and Other
Revenue	425	112	774	365
Operating expenses	1,817	3,830	4,740	7,813
Loss from operations	(1,392)	(3,718)	(3,966)	(7,448)
Other income (expense), net	(5,733)	6,755	(4,336)	7,047
Income (loss) from continuing operations before taxes	(7,125)	3,037	(8,302)	(401)
Corporate Eliminations
Revenue	(407)	(6,863)	(811)	(13,665)
Operating expenses	(212)	(6,593)	(404)	(13,066)
Loss from operations	(195)	(270)	(407)	(599)
Other income, net	195	270	407	599
Income from continuing operations before taxes	—	—	—	—
Consolidated income from continuing operations before income taxes	$ 13,262	$ 26,345	$ 44,707	$ 49,609

OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
(UNAUDITED)
	Three months		Six months
For the periods ended June 30,	2010	2009	2010	2009
Revenue
Servicing and subservicing fees	$ 65,936	$ 65,488	$ 132,416	$ 144,298
Process management fees	8,315	40,086	16,221	73,778
Other revenues	1,702	3,605	2,902	5,693
Total revenue	75,953	109,179	151,539	223,769
Operating expenses
Compensation and benefits	13,089	27,254	25,866	55,799
Amortization of mortgage servicing rights	7,854	8,543	14,229	18,584
Servicing and origination	2,458	15,835	3,049	28,473
Technology and communications	6,191	4,481	11,855	9,289
Professional services	9,134	8,208	12,389	15,394
Occupancy and equipment	3,870	4,818	8,316	10,864
Other operating expenses	2,062	3,511	4,131	6,513
Total operating expenses	44,658	72,650	79,835	144,916
Income from operations	31,295	36,529	71,704	78,853
Other income (expense)
Interest income	1,900	2,254	5,545	4,419
Interest expense	(13,359)	(17,300)	(25,830)	(33,963)
Gain (loss) on trading securities	(1,710)	5,435	(945)	5,055
Loss on loans held for resale, net	(1,049)	(2,987)	(2,087)	(7,541)
Equity in earnings (losses) of unconsolidated entities	343	(576)	1,078	(549)
Other, net	(4,158)	2,990	(4,758)	3,335
Other expense, net	(18,033)	(10,184)	(26,997)	(29,244)
Income from continuing operations before income taxes	13,262	26,345	44,707	49,609
Income tax expense (benefit)	(2,777)	9,472	7,797	17,509
Income from continuing operations	16,039	16,873	36,910	32,100
Income from discontinued operations, net of income taxes	—	1,052	—	864
Net income	16,039	17,925	36,910	32,964
Net income attributable to non-controlling interests	(1)	(95)	(12)	(25)
Net income attributable to Ocwen Financial Corporation (OCN)	$ 16,038	$ 17,830	$ 36,898	$ 32,939
Basic earnings per share
Income from continuing operations attributable to OCN	$ 0.16	$ 0.25	$ 0.37	$ 0.49
Income from discontinued operations attributable to OCN	—	0.01	—	0.02
Net income attributable to OCN	$ 0.16	$ 0.26	$ 0.37	$ 0.51
Diluted earnings per share
Income from continuing operations attributable to OCN	$ 0.15	$ 0.24	$ 0.35	$ 0.48
Income from discontinued operations attributable to OCN	—	0.02	—	0.01
Net income attributable to OCN	$ 0.15	$ 0.26	$ 0.35	$ 0.49
Weighted average common shares outstanding
Basic	100,168,953	67,316,446	100,072,950	65,045,842
Diluted	107,728,092	72,854,415	107,526,786	70,375,555

OCWEN FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(UNAUDITED)
	June 30, 2010	December 31, 2009
Assets
Cash	$ 143,386	$ 90,919
Restricted cash – for securitization investors	1,012
Trading securities, at fair value
Auction rate	78,073	247,464
Subordinates and residuals	52	3,692
Loans held for resale, at lower of cost or fair value	30,696	33,197
Advances	150,870	145,914
Match funded advances	1,184,851	822,615
Loans, net – restricted for securitization investors	70,860	—
Mortgage servicing rights	126,668	117,802
Receivables, net	56,939	67,095
Deferred tax assets, net	117,253	132,683
Premises and equipment, net	3,528	3,325
Investments in unconsolidated entities	13,533	15,008
Other assets	99,808	89,636
Total assets	$ 2,077,529	$ 1,769,350
Liabilities and Equity
Liabilities
Match funded liabilities	$ 835,172	$ 465,691
Secured borrowings – owed to securitization investors	67,199	—
Lines of credit and other secured borrowings	100,667	55,810
Investment line	—	156,968
Servicer liabilities	1,970	38,672
Debt securities	82,554	95,564
Other liabilities	90,037	90,782
Total liabilities	1,177,599	903,487
Equity
Ocwen Financial Corporation stockholders' equity
Common stock, $.01 par value; 200,000,000 shares authorized;   100,192,127 and 99,956,833 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively	1,002	1,000
Additional paid-in capital	461,890	459,542
Retained earnings	444,370	405,198
Accumulated other comprehensive loss, net of income taxes	(7,572)	(129)
Total Ocwen Financial Corporation stockholders' equity	899,690	865,611
Non-controlling interest in subsidiaries	240	252
Total equity	899,930	865,863
Total liabilities and equity	$ 2,077,529	$ 1,769,350

CONTACT:  Ocwen Financial Corp.
          David J. Gunter, Executive Vice President, Chief Financial 
           Officer & Chief Accounting Officer
          [phone]
          [e-mail]

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