Amended Reply to Ocwen Filed 12-26-14

8/10/2019 Amended Reply to Ocwen Filed 12-26-14

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12/24/2014 Ocwen Shares Fall 16% in Morning Trade - WSJ

http://www.wsj.com/articles/ocwen-shares-fall-16-in-morning-trade-1419348692

Shares of embattled mortgage-servicing firm Ocwen Financial Corp. fell sharply again

Tuesday after the company outlined changes to its business strategy in the wake of a

$150 million settlement with New York’s top financial regulator.

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MARKETS

O c w e n S h a r e s F a l l f o r S e c o n d D a y

Mortgage-Servicing Firm Outlines Strategy Changes After Settlement With Regulator

Ocwen CEO Ronald Faris, pictured in 2009, said Monday the company would withdraw from the bus iness of servicing

mortgages backed by the U.S. government.REUTERS

Dec. 23, 2014 10:31 a.m. ET

By JAMES STERNGOLD And ALAN ZIBEL

USCA Case #14-5265 Document #1529247 Filed: 12/26/2014 Page 1 of 3

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The company’s stock fell $2.51, or 16%, to $13.50 in morning trading after falling below

$13 at one point. Analysts at Sterne Agee said Tuesday morning that the mortgage

servicer’s share price is likely to stabilize around $11.50 to $13 per share, and sliced its

price target to $14.

In a phone

call withanalysts on

Monday

afternoon,

Ocwen CEO

Ronald

Faris said

the

company will

withdraw

from the

business of

servicing

mortgages

backed by

theU.S.

government. He said that Ocwen would be selling off that servicing portfolio and wouldfocus just on so-called nonagency mortgages.

The company didn’t take questions on the call, which concerned analysts. “We have a

lot of work to do before we can accurately estimate what a post-settlement [Ocwen]

will look like,” Sterne Agee analysts wrote.

Ocwen announced what amounted to a significant plan to downsize going forward,

said Guy Cecala, the publisher of Inside Mortgage Finance, an industry publication.

RELATED

Erbey’s Exit Ends Heady Era at Ocwen (http://www.wsj.com/articles/new-york-financial-regulator-

announces-settlement-with-ocwen-1419257065)

Timeline: Ocwen’s Regulatory Troubles (http://blogs.wsj .com/moneybeat/2014/12/22/ocwens-regulatory-

troubles-a-timeline)

Read the Consent Order (http://dfs.ny.gov/about/ea/ea141222.pdf)


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http://localhost/var/www/apps/conversion/tmp/scratch_7/dfs.ny.gov/about/ea/ea141222.pdf

http://blogs.wsj.com/moneybeat/2014/12/22/ocwens-regulatory-troubles-a-timeline

http://www.wsj.com/articles/new-york-financial-regulator-announces-settlement-with-ocwen-1419257065





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“The non-agency market is much, much smaller, so they are going to be a smaller

company going forward,” said Mr. Cecala. “They have to rethink their whole business

strategy.”

He said that, as a nonbank, Ocwen does not have a deposit base to fall back on, but that

the mortgage-servicing business generally does not require large amounts of capital to

operate. And in his presentation on Monday Mr. Faris said that selling off the agency mortgage rights would free up about $1.7 billion in capital that would be reinvested or

returned to Ocwen’s shareholders.

The company has already been shrinking due to New York State regulator Benjamin

Lawsky’s prohibition on new acquisitions. Ocwen reported that at the end of the third

quarter the balances in its servicing portfolio had declined to $411 billion from $465

billion at the end of last year.

Ocwen also plans to build its small business originating new mortgages while engaging

in transactions to repackage residential mortgage-backed securities, activities that

Mr. Faris said would be profitable.

Write to James Sterngold at [email protected] and Alan Zibel at

[email protected]


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