Ocwen Financial (OCN) Reports 'Strong Originations Results in July and August'

Ocwen Financial Corporation (NYSE: OCN) today announced that the Company originated approximately $2.5 billion of volume across all of its originations channels for the month of August, which was nearly double the volume for the month of June. Total funded volume for the first two months of the third quarter was approximately $4.4 billion.

“Our team continues to generate strong progress on our growth and profitability initiatives. We increased quarter-to-date originations volume in August by 62% over the same period last quarter and by 16X over the same period last year. This is a testament to the dedication of our team, the benefits of our multi-channel approach and the breadth of our product offering,” said Glen A. Messina, President and CEO of Ocwen. “As demand for mortgages remains high, we believe our multi-channel, profitable originations platform combined with our specialty servicing and subservicing expertise position us well to originate or acquire assets at very strong returns. I am extremely proud of how well our Originations business is performing, and I am excited for the opportunities ahead.”

The Company’s originations platform comprised of both forward and reverse mortgages achieved an annualized run-rate volume of $30 billion in August. While mortgage rates remain at historically low levels, Ocwen’s steadily and rapidly growing Originations business is primarily being driven by the actions the Company is taking to grow its flow MSR and correspondent seller base, expand portfolio recapture capacity and capabilities, and execute on its enterprise sales strategy.

The Company grew its correspondent seller base by 23% from June 30th to 117 sellers in August and continues to sign new flow MSR clients through the Fannie Mae Servicing Marketplace and Freddie Mac Cash Release and Co-Issue Xchange programs. In August, the Company increased its portfolio replenishment rate to 89%, up from 76% in the second quarter. Ocwen’s Enterprise Sales team continues to gain momentum and the opportunity pipeline for its top 9 prospects includes more than $100 billion in subservicing, monthly flow MSR and recapture services opportunities.

To support the Company’s growth strategy, Ocwen has increased its originations headcount by approximately 40% since January 1, 2020 and plans to increase headcount by an additional 35% through the balance of 2020. These actions will approximately double its total originations staffing by year-end 2020 versus year-end 2019. Notwithstanding the staffing increases to support originations growth, the Company expects total staffing to decline by 4% by year-end 2020 versus year-end 2019 resulting from its continuous cost improvement initiatives.

“In addition to the great progress we are making in growing originations, we are executing well on our key business priorities, and our results through the third quarter to date demonstrate continued positive momentum in our operating and financial performance,” said Messina. “Our profitability trajectory continues to improve, and we continue to drive productivity and operational effectiveness to maintain a low-cost, well-controlled infrastructure to maximize profitability. We also have sufficient liquidity and access to capital to support our growth and fulfill our role as a large-scale mortgage servicer. Our Servicing team is doing a tremendous job supporting our customers, especially those who have been impacted by the pandemic, and our employees globally are performing at high level while working remotely. I am very pleased with how well our teams are responding to the current environment and delivering on our mission of creating positive outcomes for homeowners, communities and investors.”

Additional business highlights include:

• Both GAAP income and adjusted pre-tax income were positive in July and August and continue to trend favorably compared to second quarter 2020.

• Previously identified balance sheet optimization actions and total company liquidity position remain on track.

• Received $51.4 million of the estimated $65 million federal net tax refunds in August, resulting from modifications to the tax rules as part of the CARES Act. The Company expects to receive the remaining balance in 2020, once its 2019 tax returns are filed and pending IRS processing.

• Favorable trends in servicing advance levels compared to base case levels with August balance of $855 million, an improvement from the $901 million reported at the end of the second quarter 2020.

• Favorable trends in percentage of loans on forbearance in owned MSR portfolio with August percentage of loans on forbearance of 7.9%, down 100 basis points from June 2020.

• Completed 24 virtual borrower outreach events nationally in partnership with the NAACP to help customers who have been negatively impacted by COVID-19.

• Refinanced $470 million of 2019 Ocwen Master Advance Receivables Trust (“OMART”) term notes with new $475 million, two-year term notes at improved terms and rates.

• CreditWatch with negative implications removed by S&P, citing better-than-expected financial performance through the second quarter 2020.

• Notified by the New York Stock Exchange (“NYSE”) on September 1, 2020 that the Company has regained compliance with the NYSE’s continued listing standard rules.

The Company expects to provide its next business update and release preliminary third quarter 2020 results in October.

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