Does Ocwen Loan Servicing Back End Past Due Payments

Taking Decisive Action to Address COVID-19

Updating 2020 Earnings Guidance due to Evolving Business and Fiscal Implications of COVID-xix

WEST PALM BEACH, Fla., April 03, 2020 (GLOBE NEWSWIRE) -- Ocwen Financial Corporation (NYSE: OCN) ("Ocwen" or the "Visitor"), a leading non-banking company mortgage servicer and originator, today provided an update on its actions to address the COVID-xix pandemic, too every bit its liquidity, mortgage originations, mortgage servicing rights ("MSR") valuations and 2020 earnings guidance in the context of the COVID-19 pandemic.

Glen A. Messina, President and CEO of Ocwen, said, "As the COVID-xix pandemic continues to impact our communities, our first priority is safeguarding and supporting our employees and maintaining business continuity so that we can proceed providing service and back up to our clients and customers. Approximately 85% of our global team is working remotely, we are following guidelines established past the CDC and WHO and from the local governments where nosotros operate, and nosotros are committed to helping borrowers experiencing hardships wherever possible, including from the COVID-19 pandemic."

Mr. Messina connected, "We are executing on our strategic plans while navigating the current landscape with commitment and focus. Equally of March 31, 2020, we had approximately $264 million in unrestricted cash, and we currently expect to be in compliance with all of our financial covenants under our debt agreements at the end of the first quarter. The duration and magnitude of the COVID-xix affect is uncertain and we anticipate that the impact to our concern will exist largely determined by the number of homeowners who need assistance and the duration of aid needed. Nosotros are proactively working with industry trade groups, the Agencies and our regulators to support their efforts on stabilizing the housing finance system in response to what may be an unprecedented level of requests for aid from homeowners impacted by the COVID-nineteen pandemic."

COVID-19

Ocwen is taking decisive actions to address the COVID-19 global pandemic. These actions include a prohibition on international travel, non-essential domestic travel, and in-person meetings, besides equally increased sanitary protocols in its facilities. The Company is post-obit CDC, WHO and local guidelines and its business continuity and crunch management teams and executive leadership are coming together virtually on a daily basis. Ocwen is currently operating through a remote workforce model for approximately 85% of its global workforce. Approximately 10% of its U.S. workforce is working out of its facilities to support activities that cannot be performed remotely. For those jobs that cannot exist performed remotely, social distancing and facilities hygiene recommendations are existence followed, as well as added disinfection cleaning of facilities that proceed to exist occupied by its workforce. The Company believes its ability to maximize deployment of a remote piece of work model offers the all-time protection for employees and the communities in which they live and provides the best assurance of its continued ability to serve borrowers and investors. Ocwen continues to hire and has non terminated, furloughed or laid off employees due to the COVID-19 pandemic. Furthermore, the Company intends to maintain compensation levels and price of living related compensation adjustments. Ocwen is committed to supporting its global employees equally they are dedicated to servicing the needs of its borrowers and mortgage loan investors during this time.

Liquidity and Covenant Compliance

Ocwen currently expects to be in compliance with all of its fiscal covenants under its debt agreements at the end of the starting time quarter. As of March 31, 2020, the Company airtight the quarter with approximately $264 meg in unrestricted cash. Ocwen also had undrawn committed availability of $104 million under its servicer advance funding facilities, $225 million under its MSR financing facilities, and $156 million under its mortgage warehouse funding facilities, which, in each case, the Company may utilize to the extent it has sufficient eligible collateral to borrow against and otherwise satisfies the applicable weather condition to funding.

The Company recognizes the considerable dubiety in the electric current environment relating to the touch on of the COVID-19 pandemic, including with respect to the response of the U.South. government, country governments, Fannie Mae, Freddie Mac, Ginnie Mae and regulators, besides every bit the potential for ongoing disruption in the financial markets and in commercial action mostly. In this context, forecasting our liquidity and financial condition is particularly challenging. Estimates of the COVID-19 impact past economists and mortgage industry experts vary considerably.

Ocwen is responding by focusing on what it can control and by proactively evaluating the potential touch of COVID-19 under various scenarios. For example, the Company is evaluating the potential impact of COVID-19 related borrower chore losses and reductions in income, too every bit other related impacts as it assesses the timing and magnitude of potential increases in servicer advance levels and servicing costs based on increased borrower delinquency levels, among other factors that could affect its liquidity and financial condition assessments. Ocwen is communicating proactively with Fannie Mae, Freddie Mac, Ginnie Mae, and its lenders, including with respect to the potential impact of borrower assistance programs on its concern. Ocwen is working with mortgage industry trade associations who are working with authorities officials to inform them of the impact of borrower relief programs on the funding and liquidity needs of the housing finance industry (and in particular, not-depository financial institution servicers such equally Ocwen) and to assistance them in designing advisable solutions to navigate the challenges of the electric current surround.

Ocwen serviced approximately $200 billion in unpaid principal balance ("UPB") of forward residential mortgages, as of March 31, 2020. Under the Visitor's agreements with New Residential Investment Corp. ("NRZ"), NRZ reimburses Ocwen daily for private label securities ("PLS") and weekly for Freddie Mac and Fannie Mae servicing advances on approximately $114 billion in UPB. Other subservicing clients have the responsibility to reimburse the Visitor for advances inside one week to 30 days afterwards advances accept been made on roughly $17 billion in UPB. The loans for which Ocwen has sole advancing responsibility is limited to approximately $69 billion in UPB, which is 39% PLS, 24% Freddie Mac, 19% Ginnie Mae and 18% Fannie Mae as of March 31, 2020.

For the quarter ended March 31, 2020, Ocwen provided approximately 27,500 COVID-19 related forbearance plans to its customers. NRZ has the responsibility to advance on approximately 16,800 or 61%, Ocwen has the responsibility to advance on approximately nine,400 or 34%, and no advances are required on approximately 1,300 or 5% of the loans subject to these abstinence plans. Of the loans subject to these plans for which the Company is responsible for making advances, its subservicing clients are obligated to reimburse Ocwen within 30 days of the Visitor making an advance on approximately iii,900 of these loans. Ocwen has sole responsibility to advance on approximately 5,500 of these loans. Of this amount, 68% are PLS and 20% are Freddie, where in both cases Ocwen has its ain servicing advance financing lines.

For PLS loans, while they are not explicitly covered under the CARES Deed, Ocwen nevertheless intends to provide payment relief to such borrowers forth the lines of the guidance the Company has received from several states for borrowers adversely impacted by the COVID-19 pandemic. In particular, the Company intends to grant borrowers an initial iii months of forbearance and related protection administrated through a series of ane-month forbearance plans each of which advance the due date upon completion and move the resulting missed payment to or well-nigh the loan's maturity every bit a non-involvement begetting balance. Every bit such, Ocwen does not expect to be out of pocket greenbacks for whatever more than one calendar month for each loan with forbearance protection. Before the completion of this initial flow of forbearance, Ocwen will try to contact the borrower to assess their power to resume making payments and hash out other options which may be available if their hardship persists. The Company has a PLS servicing advance financing line that provides financing at weighted average advance rates of 92% of eligible chief and interest advances. As of March 31, 2020, Ocwen had approximately $59 meg in remaining committed financing capacity under our PLS servicing advance financing line.

For Ginnie Mae, advance requirements are mitigated by the power to use excess funds in custodial accounts to cover principal and interest advances, though the remaining advances are covered by corporate greenbacks. Ginnie Mae has announced information technology intends to provide financing to servicers to fund servicer advances through its PTAP plan. Ocwen intends to work with Ginnie Mae to establish accelerate financing solutions through either the PTAP programs or the Company'south existing MSR financing facility, to the extent eligible.

For Freddie Mac advances, Ocwen has a servicing advance financing line that provides financing at weighted average advance rates of 98% of eligible main and involvement advances. Every bit of March 31, 2020, the Company had approximately $45 1000000 in remaining committed financing capacity nether this servicing advance financing line. For Fannie Mae, advances are funded through corporate cash. To the extent necessary, Ocwen intends to utilize for financing through the Federal Reserve Emergency Funding Programs when such programs are fabricated available to the manufacture. Ocwen's power to utilize these programs will exist subject to eligibility requirements applicative to the Company and the collateral existence financed. The eligibility criteria and the timing of financing availability is not yet known.

Track Record of Helping Homeowners

The Company believes the disruption created by the measures beingness taken to drive social distancing may give ascent to manufacture-wide elevated delinquency levels. Ocwen is an experienced special servicer with proven capability to help borrowers who are facing financial difficulties and generate positive outcomes for mortgage loan investors. The Company has the necessary operating processes, practices and systems to track large servicer accelerate balances at a detailed level and drive potent accelerate recoveries within elevated delinquency portfolios. Ocwen believes the current environment may create opportunities to assist borrowers who are facing fiscal difficulties in retaining their homes while improving cash flow for mortgage loan investors.

Mortgage Originations

Recent declines in involvement rates and the connected execution of the Company's originations strategy have led to an increase in mortgage refinancing activity in the Company's portfolio retention channel. Daily lock volume in March 2020 increased by a factor of 2.v as compared to January 2020. Ocwen continues to increase staffing levels to maximize its recapture potential. Lock book for the get-go quarter was approximately $870 million and funded book was approximately $196 million.

Bid volume in the Company's correspondent lending channel was approximately $3 billion in February and approximately $v billion in March. Ocwen continues to approach MSR purchases with discipline equally information technology has seen increased volatility in primary and secondary margins besides as the average xxx-year mortgage charge per unit. The Company is behest conservatively, especially on higher coupon loans, while mortgage spreads are high, and the market place is going through price discovery. Offset quarter 2020 contributor lock volume was approximately $618 million and funded volume originated through correspondent and all other flow channels was approximately $1.85 billion.

In the current environment, there are several factors that could bear on Ocwen's volume and manufacture-wide book levels in all channels, including COVID-19 related impacts to the lending ecosystem (e.g., appraiser unwillingness to enter homes; borrower unwillingness to let appraisers into homes; title amanuensis office closings; and delays in obtaining, and doubt relating to the validity of, verifications of borrower employment), volatility of market interest rates, main and secondary spread volatility, industry capacity constraints, and doubt regarding the time to come value of newly originated MSRs in light of the electric current wide spread between the 10-year treasury rate and the 30-year conventional fixed rate mortgage rate.

In this environment, the Visitor's current majuscule allocation priorities are maintaining liquidity to back up its operations and funding its flow origination channels. The Company continues to monitor its liquidity and calibrate its originations activity based on its evolving assessment of the business environment and the Company's liquidity and financial condition. The situation is fluid with many unknowns. As a result, the Company no longer has the visibility necessary to re-calibrate its 2020 lending volume targets at this time. Ocwen continues to proactively execute on its balance sheet optimization initiatives and intends to provide an update on the Company'south capital allotment priorities too every bit its mortgage originations activity and targets during its beginning quarter 2020 earnings call.

MSR Valuation

Based on the decline in the 10-year treasury rate of 118 ground points from yr-end 2019 to March 31, 2020, the Company estimates that its net hedged MSR valuation adjustment is approximately $72 million equally of such date. This estimate is calculated based on the Company'due south Cyberspace Agency MSR exposure of $402 million as of December 31, 2019, plus the value of MSRs purchased and originated in the first quarter. The estimated reduction in value of frontward MSRs due to interest rate movements of $130 million was offset by positive adjustments due to interest charge per unit movements in the Visitor's reverse MSRs of $17 million, mortgage loan pipeline of $12 million and hedges of $29 million.¹These initial MSR valuation estimates are more often than not derived from market interest rate sensitivity analyses. Additional MSR valuation adjustments may be recorded at March 31, 2020 upon completion of Ocwen's valuation governance procedure. The impact of the turn down in the x-yr treasury rate on the fair value of the Company's MSRs is partially offset by the previously disclosed favorable $47 million adjustment to shareholders' equity associated with the adoption of the new credit loss accounting standard referred to as CECL in the first quarter 2020 relating to our reverse mortgage future tail draws.

^¹ For additional detail, please see Ocwen's 2019 Form x-K filed with the SEC on February 26, 2020, including the sensitivity assay on page 76. Please annotation the limitations of illustrative examples of interest rate impacts. In particular, delight notation that changes in fair value cannot exist extrapolated because the human relationship to the change in fair value may non be linear.

Opposite Stock Split

Management is focused on positioning Ocwen'south stock to be an attractive investment to the broadest possible base of investors. Every bit such, the Company intends to seek shareholder blessing at its 2020 almanac shareholder meeting for a reverse stock split.

Guidance Update

Every bit a effect of COVID-19 and the associated doubt in the majuscule markets and mortgage lending and servicing ecosystems, equally well as impacts on borrower behavior, employee productivity, and the economy generally, Ocwen no longer has the visibility to reaffirm its previous guidance that it expects to achieve pre-tax profitability, excluding income statement notables and amortization of New Residential Investment Corp. (NRZ) lump-sum payments, in the third quarter of 2020 nor that pre-tax earnings, excluding income statement notables, will be positive for the full twelvemonth 2020. Equally stated in the Company's February 26 earnings call, both pre-taxation earnings expectations assumed a mortgage market environs consequent with the Mortgage Bankers Association and Government Sponsored Enterprises' forecasts as of January 2020, that the Company achieved its objectives, and that at that place were no adverse changes to market, business or industry conditions, or legal and regulatory matters. The Company expects to update shareholders on market, concern and industry conditions as well as legal and regulatory matters during its beginning quarter 2020 earnings briefing call.

Almost Ocwen Fiscal Corporation

Ocwen Financial Corporation (NYSE: OCN) is a leading non-banking company mortgage servicer and originator providing solutions through its main brands, PHH Mortgage and Liberty Reverse Mortgage. PHH Mortgage is i of the largest servicers in the country, focused on delivering a diversity of servicing and lending programs. Freedom is one of the nation'southward largest reverse mortgage lenders dedicated to education and providing loans that help customers meet their personal and financial needs. We are headquartered in West Palm Beach, Florida, with offices in the United States and the U.Southward. Virgin Islands and operations in India and the Philippines, and have been serving our customers since 1988. For boosted information, please visit our website (world wide web.ocwen.com).

Frontwards-Looking Statements

This printing release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, every bit amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified past a reference to a future period or by the employ of forwards-looking terminology. Forrad-looking statements are typically identified by words such as "expect", "believe", "foresee", "anticipate", "intend", "estimate", "goal", "strategy", "plan" "target" and "project" or conditional verbs such equally "will", "may", "should", "could" or "would" or the negative of these terms, although not all frontward-looking statements contain these words. Forward-looking statements past their nature address matters that are, to unlike degrees, uncertain. Our business has been undergoing substantial alter and we are in the midst of a menstruum of significant capital markets volatility and experiencing significant changes inside the mortgage lending and servicing ecosystem which has magnified such uncertainties. Readers should acquit these factors in listen 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 bodily results to differ materially. In the past, bodily results take differed from those suggested by forward looking statements and this may happen once more. Important factors that could cause actual results to differ materially from those suggested by the frontward-looking statements include, only are not express to, dubiousness relating to the impacts of the COVID-19 pandemic, including with respect to the response of the U.South. regime, state governments, Fannie Mae, Freddie Mac, Ginnie Mae and regulators, as well every bit the potential for ongoing disruption in the fiscal markets and in commercial activity more often than not, increased unemployment, and other financial difficulties facing our borrowers; impacts on our operations resulting from employee illness, social distancing measures and our shift to greater utilization of remote piece of work arrangements; the adequacy of our financial resources, including our sources of liquidity and power to sell, fund and recover servicing advances, forward and contrary whole loans, and HECM and forward loan buyouts and put backs, as well equally repay, renew and extend borrowings, infringe additional amounts as and when required, come across our MSR or other asset investment objectives and comply with our debt agreements, including the financial and other covenants contained in them; increased servicing costs based on increased borrower delinquency levels or other factors; the size and timing of a potential reverse divide of our mutual stock, and whether shareholders will approve such a split; our ability to maintain compliance with the continued list standards of the New York Stock Exchange; the futurity of our long-term relationship and remaining servicing agreements with NRZ; our ability to execute an orderly and timely transfer of responsibilities in connection with the previously disclosed termination by NRZ of the PHH Mortgage Corporation (PMC) subservicing agreement; the reactions of regulators, lenders and other contractual counterparties, rating agencies, stockholders and other stakeholders to the announcement of the termination by NRZ of the PMC subservicing agreement; our power to adjust our cost construction and operations equally the loan transfer process is being completed in response to the previously disclosed termination past NRZ of the PMC subservicing understanding, including unanticipated costs and the timeline on which nosotros can execute on these actions; our ability to devote sufficient management attention and fiscal resource to our growth and other strategic objectives as nosotros operate in the midst of a period of pregnant capital markets volatility and modify within the mortgage lending and servicing ecosystem; uncertainty related to our ability to execute on continuous cost re-engineering efforts and the other actions we believe are necessary for united states of america to better our financial performance; our power to acquire MSRs or other avails or businesses at adequate risk-adjusted returns and at sufficient book to reach our growth goals, including our ability to allocate resources for investment, negotiate and execute buy documentation and satisfy endmost conditions so as to consummate such acquisitions; uncertainty related to our ability to grow our lending business and increment our lending volumes in a competitive market and uncertain interest rate environment; uncertainty related to claims, litigation, end and desist orders and investigations brought by regime agencies and private parties regarding our servicing, foreclosure, modification, origination and other practices, including doubtfulness related to by, nowadays or time to come investigations, litigation, cease and desist orders and settlements with land regulators, the Consumer Financial Protection Bureau (CFPB), Land Attorneys General, the Securities and Exchange Commission (SEC), the Department of Justice or the Department of Housing and Urban Evolution (HUD) and deportment brought under the Faux Claims Human action regarding incentive and other payments made by governmental entities; adverse effects on our concern as a result of regulatory investigations, litigation, cease and desist orders or settlements; reactions to the announcement of such investigations, litigation, terminate and desist orders or settlements by key counterparties, including lenders, the Federal National Mortgage Clan (Fannie Mae), the Federal Dwelling house Loan Mortgage Corporation (Freddie Mac, and together with Fannie Mae, the GSEs) and the Government National Mortgage Association (Ginnie Mae); our ability to comply with the terms of our settlements with regulatory agencies and the costs of doing so; limits on our power to repurchase our ain stock as a result of regulatory settlements and other conditions; increased regulatory scrutiny and media attention; whatsoever adverse developments in existing legal proceedings or the initiation of new legal proceedings; our power to finer manage our regulatory and contractual compliance obligations; our ability to translate correctly and comply with liquidity, net worth and other financial and other requirements of regulators, Fannie Mae, Freddie Mac and Ginnie Mae, also as those prepare forth in our debt and other agreements; 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; the touch on Ocwen of our implementation of the CECL methodology for fiscal instruments (ASU 2016-13 and ASU 2019-04); our ability to fund time to come draws on existing loans in our reverse mortgage portfolio; our servicer and credit ratings as well as other deportment from diverse rating agencies, including the impact of prior or futurity downgrades of our servicer and credit ratings; as well every bit other risks and uncertainties detailed in Ocwen's reports and filings with the SEC, including its annual study on Form 10-Yard for the year ended December 31, 2019 and its current and quarterly reports since such date. Anyone wishing to sympathize Ocwen's business should review its SEC filings. Our forward-looking statements speak only every bit of the date they are fabricated and, we disclaim any obligation to update or revise forward-looking statements whether as a outcome of new information, future events or otherwise.

Note Regarding Fiscal Performance Estimates and Statements Regarding the Impact of the COVID-xix Pandemic

This printing release contains statements relating to our preliminary first quarter financial performance and our current assessments of the impact of the COVID-xix pandemic. These statements are based on currently available data and reflect our current estimates and assessments, including about matters that are beyond our control. Nosotros are operating in a fluid and evolving environs and actual outcomes may differ materially from our electric current estimates and assessments. The Company has not finished its first quarter fiscal closing procedures. At that place tin be no assurance that bodily results will non differ from our electric current estimates and assessments, including as a upshot of first quarter financial endmost procedures, and whatever such differences could be material.

Note Regarding Non-GAAP Financial Measures

This printing release contains references to non-GAAP financial measures, such every bit our references to pre-tax profitability, excluding income statement notables and amortization of NRZ lump-sum payments and pre-tax earnings excluding income argument notables.

For additional information relating to these non-GAAP fiscal measures and Ocwen'due south use of these non-GAAP financial measures, see Ocwen's February 26, 2020 earnings call webcast and the accompanying presentation materials, which are available in the Shareholder Relations section of Ocwen's website (www.ocwen.com).

We believe these non-GAAP financial measures provide a useful supplement to discussions and analysis of our financial condition. However, these measures should not be analyzed in isolation or as a substitute to analysis of our GAAP expenses and pre-taxation income (loss). There are certain limitations to the analytical usefulness of the adjustments nosotros make to GAAP expenses and pre-tax income (loss) and, accordingly, we rely primarily on our GAAP results and apply these adjustments merely for purposes of supplemental analysis. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Ocwen'southward reported results under accounting principles generally accustomed in the United States. Other companies may use not-GAAP financial measures with the same or similar titles that are calculated differently to our non-GAAP financial measures. Equally a result, comparability may be limited. Readers are cautioned non to identify undue reliance on analysis of the adjustments we make to GAAP expenses and pre-taxation income (loss).

Pre-tax profitability, excluding income statement notables and amortization of NRZ lump-sum payments refers to our pre-revenue enhancement income/(loss) afterward excluding the positive touch of the amortization of NRZ lump-sum payments and after adjusting GAAP pre-tax income/(loss) for the following factors (1) Expense Notables (excluding MSR Valuation Adjustments, net), (2) changes in fair value of our Not-Agency MSRs due to changes in interest rates, valuation inputs and other assumptions, (3) changes in fair value of our Bureau MSRs due to changes in interest rates, valuation inputs and other assumptions, net of hedge position, (4) offsets to changes in fair value of our MSRs in our NRZ financing liability due to changes in involvement rates, valuation inputs and other assumptions, (5) changes in fair value of our reverse lending portfolio due to changes in involvement rates, valuation inputs and other assumptions (6) gains related to exercising servicer telephone call rights, and (seven) certain other costs, including pension benefits (collectively, Other) consistent with the intent of providing management and investors with a supplemental ways of evaluating our pre-tax income/(loss). Collectively, we refer to these adjustments as "income statement notables." "Expense Notables" includes (1) expense related to severance, retentivity and other cost re-technology deportment, (2) certain significant legal and regulatory settlement expense items, (3) CFPB, Florida Attorney General/Florida Office of Financial Regulations and Massachusetts Chaser General litigation related legal expenses, state regulatory action related legal expenses and country regulatory action settlement related escrow analysis costs (collectively, CFPB and country regulatory defence and escrow analysis expenses), (4) NRZ consent process expenses related to the transfer of legal title in MSRs to NRZ, (five) PHH Corporation acquisition and integration planning expenses, (6) expense recoveries related to insurance recoveries of legal expenses, mortgage insurance claim settlement recoveries and amounts previously expensed from a service provider and (vii) certain other costs including compensation expense reversals relating to departing executives and reversals of management incentive bounty payouts and reversals of reserves related to a legacy MSR sale (collectively, Other) consistent with the intent of providing management and investors with a supplemental means of evaluating our expenses.

Pre-taxation earnings excluding income statement notables adjusts GAAP pre-tax income/(loss) for income statement notables.

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