Ocwen CEO Discusses Q3 2010 - Earnings Call Transcript
Ocwen Financial Corporation, (
)
Q3 2010 Earnings Call
November 4, 2010 11:00 am ET
Executives
Bill Erbey – Chairman
Ron Faris – President and Chief Executive Officer
John Van Vlack – Executive Vice President, Chief Financial Officer & Chief Accounting Officer
Analysts
Bob Napoli – Piper Jaffray
Ryan Zacharia – Jacobs Asset Management
Sam Crawford – Stone Harbor Investment Partners
Mike Randall
Bose George – KBW
DeForest Hinman – Walthausen & Company
Jake Blair – Highbridge Capital Management
Rob Schwartzberg – Compass Point
Charles Gregg - Barclays
Presentation
Operator
Compare to:
Previous Statements by OCN
»
Ocwen Financial Corporation Q2 2010 Earnings Call Transcript
»
Ocwen Financial Corporation Q1 2010 Earnings Call Transcript
»
Ocwen Financial Q2 2009 Earnings Transcript
»
Ocwen Financial Q4 2008 Earnings Call Transcript
Welcome to the Ocwen Q3 2010 Results Conference Call. (Operator instructions.) Today’s conference is being recorded; if you have any objections you may disconnect at this time. I’d now like to turn the call over to John Van Vlack. Sir, you may begin.
John Van Vlack
Thank you. Good morning, everyone, and thank you for joining us today. My name is John Van Vlack and I’m the Executive Vice President and Chief Financial Officer of Ocwen. Before we begin I want to remind you that the slide presentation is available to accompany our remarks. To access the slides, log onto our website at
www.ocwen.com
, select Shareholder Relations then Calendar of Events, then “Click Here to Listen to Conference Call.” Then under Conference Call Q3 2010 Earnings, select “Click Here to Listen and View Slides.” Each viewer will be able to control the progression of the slides during the presentation. To move the slides ahead please click on the grey button pointing to the right.
As indicated on slide 2, our presentation may contain forward-looking statements that are made pursuant to the safe harbor provisions on the federal securities laws. These forward-looking statements may be identified as a reference to a future period or by use of forward-looking terminology. They may involve risks and uncertainties that could cause the company’s actual results to differ materially from the results discussed in the forward-looking statements. For an elaboration of the factors that may cause such a difference, please refer to the Risks Disclosure statement in today’s earnings release as well as the company’s filings with the Securities and Exchange Commission, including Ocwen’s Form F3, Q2 2010 Form 10Q, and 2009 Form 10K. If you would like to receive our news releases, SEC filings or other materials via email please contact Linda Ludwig at
Linda.ludwig@ocwen.com
.
As indicated on slide 3, joining be for today’s presentation are Bill Erbey, Chairman of Ocwen, and Ron Faris, President and Chief Executive Officer of Ocwen. Now we will turn the call over to Bill Erbey. Bill?
Bill Erbey
Thank you, John. First, borrowing from Mark Twain I’d like to say that the rumors of my retirement are greatly exaggerated. We promoted Ron in recognition of his leadership and contributions to the company, and I would like to congratulate him. As indicated on our 8K filling, Ron’s promotion has been in the planning stages for awhile now, and I intend to remain a fulltime Executive Chairman of the company, focusing primarily on strategy, key personnel developments, and corporate finance. I remain Ocwen’s largest shareholder and am committed to increasing shareholder value.
We completed our acquisition and integration of HomEq in the Q3 and became the third largest non-prime servicer with more than $76 billion in unpaid principal balances. Since 2001 our servicing portfolio has grown at an annual rate of 15.3%, as shown on slide 4. While still early, the HomEq acquisition is meeting our performance expectations as is the Saxon portfolio as shown on slide 5. Note that in September, shown to the far right of the chart, the HomEq performance is well ahead of Saxon in its first month after acquisition. We expect the HomEq portfolios to continue to ramp over the next four quarters, particularly in terms of ROE as reductions in delinquent loans reduce advances.
Loan modification performance has improved both in terms of acceptance rate and re-default rate. Driven by new technology that went into production in August of last year, the six month re-default rate for loan modifications declined 43%. The re-default rate for all of our mods completed in Q4 of 2009 is 13.5% at six months, while our HAMP default rate for modifications completed six months ago currently stands at 11%. To the best of our knowledge in both of these metrics we lead the industry. We are particularly excited about the HAMP program’s new emphasis on principal reductions, as we believe this will increase offer acceptance rates and decrease re-default rates. We deployed this enhancement in October of this year and have scheduled a very significant release regarding non-HAMP modifications for the end of this month. It is our expectation that these enhancements will further minimize foreclosures, increase cash flows to the securities that we service, and reduce advances.
Given the heightened concern regarding foreclosure timelines, our ability to resolve a loan without foreclosing is a key differentiator for Ocwen. We have seen foreclosure timelines extend throughout the entire housing downturn. This year alone through September foreclosure timelines have lengthened by 29 days. However we have shortened the overall time that a non-performing loan remains in foreclosure by a net 22 days, even with the 29 day foreclosure extension. This has been accomplished through modifications and improvements in other non-foreclosure resolutions. As a result of these efforts, advances on our existing portfolio, without HomEq, have continued to decline. And while no one knows the extent of potential further foreclosure delays, we are cautiously optimistic regarding advances given the technology enhancements that we have and will deploy over the next several weeks.
Read the rest of this transcript for free on seekingalpha.com
