Executed settlement with Oaktree follows rigorous strategic evaluation course of
Continued profitability enchancment and originations quantity progress
Reworked into balanced and diversified originator and servicer positioned for worthwhile progress
WEST PALM BEACH, Fla., Feb. 09, 2021 (GLOBE NEWSWIRE) — Ocwen Monetary Company (NYSE: OCN) (“Ocwen” or the “Firm”), a number one non-bank mortgage servicer and originator, right this moment introduced it has executed an settlement with particular objective entities owned by funds and accounts managed by Oaktree Capital Administration, L.P. (“Oaktree”) for a debt funding within the Firm that will generate $250 million in proceeds, and offered preliminary info relating to its fourth quarter 2020 outcomes. A presentation with extra element relating to right this moment’s announcement can be obtainable on the Ocwen Monetary Company web site at www.ocwen.com (via a hyperlink on the Shareholder Relations web page) previous to the Firm’s preliminary fourth quarter 2020 earnings convention name scheduled for Wednesday, February 10, 2021 at 8:30 am ET.
The announcement of the anticipated debt funding from Oaktree marks the completion of a radical and rigorous strategic evaluation course of that started in Could 2020. The Firm intends to make the most of $100 million of the proceeds to pay down and assist the refinancing of its present company debt. The remaining proceeds of $150 million are anticipated to be utilized to assist continued progress in servicing and to additional diversify the Firm’s originations channel, together with via potential acquisitions. The transaction is topic to the refinancing of Ocwen’s present company debt and sure different closing circumstances. Barclays and Credit score Suisse acted as Placement Brokers to Ocwen in reference to Oaktree’s funding. For added particulars, please see the Firm’s Present Report on Kind 8-Ok filed with the Securities and Alternate Fee on February 9, 2021.
This funding is along with the strategic relationship introduced with Oaktree in December 2020 to launch an MSR asset car to amass Fannie Mae and Freddie Mac MSRs. The mixed agreements with Oaktree are anticipated to offer as much as $463 million of capital to speed up progress and scale back capital construction threat.
Glen A. Messina, President and CEO of Ocwen, stated, “We initiated the strategic evaluation course of in Could 2020 to judge all choices to maximise worth for our shareholders. The strategic evaluation was fulsome, sturdy and included potential sale and merger transactions. We finally decided that the funding from Oaktree is the most effective long-term worth creation possibility for our shareholders. The alliance with Oaktree supplies significant progress capital whereas supporting our company debt refinancing. We imagine it allows a stage of progress, EPS accretion, and potential worth creation that we couldn’t obtain on a stand-alone foundation. We stay up for a long-term alliance with Oaktree, a well-respected, large-scale investor skilled within the mortgage sector.”
Preliminary Fourth Quarter Outcomes
The Firm reported a web lack of $7.2 million and a pre-tax lack of $0.8 million for the three months ended December 31, 2020, in comparison with web earnings of $34.8 million and pre-tax earnings of $37.2 million for the three months ended December 31, 2019. The Firm’s profitability within the quarter was considerably impacted by sure legacy authorized issues as additional detailed under. Adjusted pre-tax earnings was $15.2 million for the quarter in comparison with a $13.6 million adjusted pre-tax loss excluding NRZ lump-sum amortization within the prior 12 months interval; fifth consecutive quarter of constructive adjusted pre-tax earnings (see “Notice Relating to Non-GAAP Monetary Measures” under).
Mr. Messina commented, “We’ve got efficiently reworked Ocwen right into a balanced and diversified mortgage originator and servicer that’s well-positioned for worthwhile progress. The actions taken to take care of our value management place and execute on a multi-channel progress technique are driving improved profitability, document originations progress and continued sturdy working efficiency in our servicing enterprise. Trying forward, we’re centered on sustainable long-term profitability by accelerating our progress trajectory, strengthening recapture efficiency, bettering our value management place, sustaining high-quality operational execution and increasing servicing income alternatives.”
The Firm reported the next preliminary outcomes for the fourth quarter 2020 (see “Notice Relating to Non-GAAP Monetary Measures” and “Notice Relating to Monetary Efficiency Estimates” under):
- Fourth quarter annualized pre-tax loss improved by $242 million in comparison with the mixed annualized pre-tax lack of Ocwen and PHH Company for the second quarter 2018; fourth quarter annualized adjusted pre-tax earnings run fee excluding amortization of NRZ lump-sum funds improved by $383 million in comparison with the mixed annualized adjusted pre-tax earnings run fee of Ocwen and PHH Company for the second quarter 2018.
- Notable objects for the quarter embody, amongst others, $13 million of extra accrual associated to the Firm’s efforts to resolve the legacy CFPB matter, $4 million of different authorized accruals and $1 million of different web favorable objects.
- Added roughly $30 billion of servicing and subservicing UPB within the quarter, up 4X from prior 12 months.
- Enough liquidity at December 31, 2020 with roughly $285 million of unrestricted money; roughly $190 million in MSR investments within the quarter.
Webcast and Convention Name
Ocwen will maintain a convention name on Wednesday, February 10, 2021 at 8:30 a.m. (ET) to evaluation the Firm’s preliminary fourth quarter 2020 working outcomes and to offer a enterprise replace. A stay audio webcast and slide presentation for the decision can be obtainable by visiting the Shareholder Relations web page at www.ocwen.com. Individuals can entry the convention name by dialing (877) 407-0792 or (201) 689-8263 roughly 10 minutes previous to the decision. A replay of the convention name can be obtainable by way of the web site roughly two hours after the conclusion of the decision and can stay obtainable for roughly 30 days. The Firm expects to launch remaining fourth quarter and full-year 2020 leads to mid-February.
About Ocwen Monetary Company
Ocwen Monetary Company (NYSE: OCN) is a number one non-bank mortgage servicer and originator offering options via its main manufacturers, PHH Mortgage and Liberty Reverse Mortgage. PHH Mortgage is likely one of the largest servicers within the nation, centered on delivering quite a lot of servicing and lending applications. Liberty is likely one of the nation’s largest reverse mortgage lenders devoted to schooling and offering loans that assist prospects meet their private and monetary wants. We’re headquartered in West Palm Seaside, Florida, with workplaces in the USA and the U.S. Virgin Islands and operations in India and the Philippines, and have been serving our prospects since 1988. For added info, please go to our web site (www.ocwen.com).
Notice Relating to Monetary Efficiency Estimates
This press launch incorporates sure statements regarding our preliminary fourth quarter monetary efficiency. These statements are primarily based on at the moment obtainable preliminary info and are topic to materials modifications following completion of our quarter-end and year-end closing procedures and different changes that could be made earlier than our monetary outcomes are finalized and the audit of our monetary statements is full. There will be no assurance that precise remaining outcomes is not going to differ from the preliminary monetary outcomes introduced within the press launch and any such variations could possibly be materials. As well as, these preliminary outcomes aren’t complete monetary outcomes for the fourth quarter, shouldn’t be considered as an alternative choice to full GAAP monetary statements or extra complete monetary info, and aren’t indicative of the outcomes for any future interval.
This press launch incorporates forward-looking statements throughout the which means of Part 27A of the Securities Act of 1933, as amended, and Part 21E of the Securities Alternate Act of 1934, as amended. These forward-looking statements could also be recognized by a reference to a future interval or by means of forward-looking terminology. Ahead-looking statements are sometimes recognized by phrases corresponding to “anticipate”, “imagine”, “foresee”, “anticipate”, “intend”, “estimate”, “aim”, “technique”, “plan” “goal” and “challenge” or conditional verbs corresponding to “will”, “could”, “ought to”, “may” or “would” or the detrimental of those phrases, though not all forward-looking statements include these phrases. Ahead-looking statements by their nature handle issues which might be, to totally different levels, unsure. Readers ought to bear these elements in thoughts when contemplating such statements and shouldn’t place undue reliance on such statements.
Ahead-looking statements contain quite a lot of assumptions, dangers and uncertainties that might trigger precise outcomes to vary materially. Prior to now, precise outcomes have differed from these prompt by ahead trying statements and this will occur once more. Essential elements that might trigger precise outcomes to vary materially from these prompt by the forward-looking statements embody, however aren’t restricted to, our potential to consummate on favorable phrases or in any respect the extra debt financing that may be a situation to issuance and sale of the senior secured notes to Oaktree; our potential to fulfill the opposite circumstances precedent to the issuance and sale of the senior secured notes to Oaktree; our potential to refinance our Senior Secured Time period Mortgage and redeem the 6.375% senior unsecured notes due 2021 and the 8.375% senior secured second lien notes due 2022; our potential to acquire regulatory approvals and fulfill the closing circumstances beneath the Transaction Settlement regarding our MSR three way partnership with Oaktree and the timing for doing so; our potential to deploy the proceeds of the senior secured notes, if issued, in appropriate investments at applicable returns; uncertainty regarding the long run impacts of the COVID-19 pandemic, together with with respect to the response of the U.S. authorities, state governments, the Federal Nationwide Mortgage Affiliation (Fannie Mae), the Federal Residence Mortgage Mortgage Company (Freddie Mac, and along with Fannie Mae, the GSEs), the Authorities Nationwide Mortgage Affiliation (Ginnie Mae) and regulators, in addition to the impacts on debtors and the economic system typically; the adequacy of our monetary assets, together with our sources of liquidity and skill to promote, fund and get well servicing advances, ahead and reverse complete loans, and HECM and ahead mortgage buyouts and put backs, in addition to repay, renew and prolong borrowings, borrow extra quantities as and when required, meet our MSR or different asset funding targets and adjust to our debt agreements, together with the monetary and different covenants contained in them; elevated servicing prices primarily based on elevated borrower delinquency ranges or different elements; our potential to gather anticipated tax refunds, together with on the timeframe anticipated; the way forward for our long-term relationship and remaining servicing agreements with New Residential Funding Corp. (NRZ); our potential to proceed to enhance our monetary efficiency via value re-engineering efforts and different actions; our potential to proceed to develop our origination enterprise and improve our origination volumes in a aggressive market and unsure rate of interest surroundings; uncertainty associated to claims, litigation, stop and desist orders and investigations introduced by authorities businesses and personal events relating to our servicing, foreclosures, modification, origination and different practices, together with uncertainty associated to previous, current or future investigations, litigation, stop and desist orders and settlements with state regulators, the Client Monetary Safety Bureau (CFPB), State Attorneys Common, the Securities and Alternate Fee (SEC), and the Division of Justice or the Division of Housing and City Growth (HUD); antagonistic results on our enterprise because of regulatory investigations, litigation, stop and desist orders or settlements and associated responses by key counterparties, together with lenders, the GSEs and Ginnie Mae; our potential to adjust to the phrases of our settlements with regulatory businesses, in addition to basic regulatory necessities, and the prices of doing so; elevated regulatory scrutiny and media consideration; any antagonistic developments in present authorized proceedings or the initiation of latest authorized proceedings; our potential to interpret appropriately and adjust to monetary and different necessities of regulators, the GSEs and Ginnie Mae, in addition to these set forth in our debt and different agreements; our potential to adjust to our servicing agreements, together with our potential to adjust to our agreements with, and the necessities of, the GSEs and Ginnie Mae and preserve our vendor/servicer and different statuses with them; our potential to fund future attracts on present loans in our reverse mortgage portfolio; our servicer and credit score rankings in addition to different actions from varied score businesses, together with the influence of prior or future downgrades of our servicer and credit score rankings; in addition to different dangers and uncertainties detailed in Ocwen’s stories and filings with the SEC, together with our annual report on Kind 10-Ok for the 12 months ended December 31, 2019 and present and quarterly stories since such date, in addition to our annual report on Kind 10-Ok for the 12 months ended December 31, 2020 when obtainable. Anybody wishing to grasp Ocwen’s enterprise ought to evaluation our SEC filings. Our forward-looking statements communicate solely as of the date they’re made and, we disclaim any obligation to replace or revise forward-looking statements whether or not because of new info, future occasions or in any other case.
Notice Relating to Non-GAAP Monetary Measures
This press launch incorporates references to non-GAAP monetary measures, corresponding to our references to adjusted pre-tax earnings (loss) and adjusted pre-tax earnings (loss) excluding amortization of NRZ lump-sum funds.
We imagine these non-GAAP monetary measures present a helpful complement to discussions and evaluation of our monetary situation. As well as, administration believes that these displays could help buyers with understanding and evaluating our value re-engineering efforts and different initiatives to drive improved monetary efficiency. Nonetheless, these measures shouldn’t be analyzed in isolation or as an alternative to evaluation of our GAAP bills and pre-tax earnings (loss). There are particular limitations to the analytical usefulness of the changes we make to GAAP bills and pre-tax earnings (loss) and, accordingly, we rely totally on our GAAP outcomes and use these changes just for functions of supplemental evaluation. Non-GAAP monetary measures ought to be considered along with, and never instead for, Ocwen’s reported outcomes beneath accounting ideas typically accepted in the USA. Different firms could use non-GAAP monetary measures with the identical or comparable titles which might be calculated in another way to our non-GAAP monetary measures. Because of this, comparability could also be restricted. Readers are cautioned to not place undue reliance on evaluation of the changes we make to GAAP bills and pre-tax earnings (loss).
Starting with the three months ended June 30, 2020, we refined our definitions of Expense Notables, which we beforehand known as “Bills Excluding MSR Valuation Changes, web, and Expense Notables,” and Revenue Assertion Notables in an effort to be extra descriptive of the sorts of objects included.
Within the desk titled “Expense Notables”, we alter GAAP working bills for the next elements (1) bills associated to severance, retention and different actions related to steady value and productiveness enchancment efforts, (2) vital authorized and regulatory settlement expense objectsa, (3) NRZ consent course of bills associated to the switch of authorized title in MSRs to NRZ, (4) PHH acquisition and integration planning bills, and (5) sure different vital actions together with, however not restricted to, insurance coverage associated expense and settlement recoveries, compensation or incentive compensation expense reversals and non-routine transactions (collectively, Different) in step with the intent of offering administration and buyers with a supplemental technique of evaluating our bills.
|($ in tens of millions)||Q2 ’18||This autumn ’19 (c)||This autumn ’20 (c)|
|OCN||PHH|| OCN +
|OCN + PHH
|I||Bills (as reported) (a)||206||71||277||1,107||139||144|
|III||Deduction of MSR valuation changes, web||(33||)||—||(33||)||(132||)|
|IV||Working Bills (I+II+III)||173||72||245||979||139||557||144||577|
|Changes for Notables|
|Important authorized and regulatory settlement bills||(2||)||(3||)||(5||)||(20||)||(3||)||(16||)|
|CFPB & state regulatory protection & escrow evaluation prices||(5||)||—||(6||)||(22||)||(4||)||(1||)|
|NRZ consent course of bills||(1||)||—||(1||)||(2||)||—||0|
|PHH acquisition and integration planning bills||(2||)||—||(2||)||(8||)||—||—|
|Covid-19 Associated Bills||—||—||(3||)|
|VI||Adjusted Bills (IV+V)||164||65||229||916||133||531||128||514|
(a) Q2’18 bills as per OCN Kind 10-Q of $206 filed on July 26, 2018 and PHH Kind 10-Q of $71 filed August 3, 2018, annualized to equal $1,107 on a mixed foundation
(b) Reclassifications made to PHH reported bills to adapt to Ocwen presentation
(c) OCN modified the presentation of bills in This autumn’ 19 to individually report MSR valuation changes, web from working bills
a Together with nonetheless not restricted to CFPB, Florida Lawyer Common/Florida Workplace of Monetary Rules and Massachusetts Lawyer Common litigation associated authorized bills, state regulatory motion associated authorized bills and state regulatory motion settlement associated escrow evaluation prices (collectively, CFPB and state regulatory protection and escrow evaluation bills)
Revenue Assertion Notables
Within the desk titled “Revenue Assertion Notables”, we alter GAAP pre-tax loss for the next elements (1) Expense Notables, (2) modifications in truthful worth of our Company and Non-Company MSRs on account of modifications in rates of interest, valuation inputs and different assumptions, web of hedge positions, (3) offsets to modifications in truthful worth of our MSRs in our NRZ financing legal responsibility on account of modifications in rates of interest, valuation inputs and different assumptions, (4) modifications in truthful worth of our reverse originations portfolio on account of modifications in rates of interest, valuation inputs and different assumptions, (5) sure different transactions, together with however not restricted to pension profit value changes and good points associated to exercising servicer name rights and truthful worth assumption modifications on different investments (collectively, Different) and (6) amortization of NRZ lump-sum money funds in step with the intent of offering administration and buyers with a supplemental technique of evaluating our web earnings/(loss).
|($ in tens of millions)||Q2 ’18||This autumn ’19||This autumn ’20|
|OCN||PHH|| OCN +
|OCN + PHH
|I||Reported Pre-Tax Revenue / (Loss)(a)||(28||)||(35||)||(63||)||(253||)||37||149||(1||)||(3||)|
|Adjustment for Notables|
|Expense Notables (from prior desk)||9||7||16||7||16|
|Non-Company MSR FV Change(b)||(5||)||—||(5||)||—||(6||)|
|Company MSR FV Change, web of macro hedge(b)||(61||)||(9||)|
|NRZ MSR Legal responsibility FV Change (Curiosity Expense)||9||—||9||30||4|
|Reverse Lending FV Change||4||—||4||3||11|
|II||Whole Revenue Assertion Notables||11||7||18||72||(25||)||16|
|III||Adjusted Pre-tax Revenue (Loss) (I+II)||(17||)||(28||)||(45||)||(181||)||12||50||15||61|
|IV||Amortization of NRZ Lump-sum Money Funds||(35||)||—||(35||)||(141||)||(26||)||(104||)||—|
|V||Adjusted Pre-tax Revenue (Loss) excluding Amortization of NRZ Lump-sum (III+IV)(c)||(52||)||(28||)||(81||)||(322||)||(14||)||(54||)||15||61|
(a) Q2’18 pre-tax loss as per respective Varieties 10-Q filed on July 26, 2018 and August 3, 2018, respectively, annualized to equal $(253) million on a mixed foundation
(b) Represents FV modifications which might be pushed by modifications in rates of interest, valuation inputs or different assumptions, web of unrealized good points / (losses) on macro hedge. Non-Company = Whole MSR excluding GNMA & GSE MSRs. Company = GNMA & GSE MSRs. The adjustment doesn’t embody $15 million valuation good points of sure MSRs that have been opportunistically bought in disorderly transactions as a result of market surroundings in This autumn 2020 (nil in Q2 2018).
(c) Represents OCN and PHH mixed adjusted pre-tax earnings (loss) excluding amortization of NRZ lump-sum money funds, annualized to equal $(322) million on a mixed foundation in Q2’18
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