OCWEN FINANCIAL CORP

[Pages:48]OCWEN FINANCIAL CORP

FORM 8-K

(Current report filing)

Filed 12/03/13 for the Period Ending 12/03/13

Telephone CIK

Symbol SIC Code

Industry Sector

Fiscal Year

561-682-8000 0000873860 OCN 6162 - Mortgage Bankers and Loan Correspondents Consumer Financial Services Financial 12/31

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selling MSR's

more loans to service

Secular Trends Secular Trends Reduction in population G overnment plans to Large banks narrow focus that can qualify as prime reduce exposure to to core cus tomers borrower Mortgage Credit Ris k Leverage competitive advantages of Strategic Allies to create opportunities 9

Trend 1: Banks N arrow Focus to Core Customers Banks Returning to Core Cus tomers S hift of MSR Portfolios from Repositioning Mortgage Reducing Exposure to O ther Banks to Specialty Servicers O rigination Nonprime Lending Markets 1 1 Exiting correspondent and M ore than $500 billion of s ervicing UP B Auto finance w holesale busines s transacted in the past year. More than $1 trillion servicing U PB es timated to 2 2 Emphasizing direct transact in next few years 1 origination with core Student loans cus tomers Banks focus ing on their core customers 3 shedding high cos t servicing w ith high Other pers onal loans reputational and regulatory ris k 1. G oldman Sachs 10

OCN will enter here with their origination Trend 2: Decline ofPrime Market -QualifiedMortgage Impact of QM onCredit SupplyCredit supplytoUSconsumersis restricted due to Tighter underwritingstandardsand Declining credit worthiness ofborrowers Newly enactedQualifiedMortgage (QM)rulesexpectedtoseverely limit mortgage availability Accordingto Core Logic, less than 25%of home buyers will qualifyfor a purchase mortgage based onrecent regulatorychanges1Homeownership inDecline (0.6%peryear)2Supply Problem andnot a DemandProblem336% 72%Rental Rate HomeownershipRate 35%70% Potential 34%68% deficit incredit 33% 66%available to Rental Rate nonprime 32%64% Homeownership Rate borrowers 31%62% 30%60% 20052006 20072008 20092010 20112012 201311

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Ocwen F inancial Corporation (O CN) Vision o Leading provider of servicing and lending for loan inves tors and consumers S trategy o Focus on acquiring s ervicing UP B - $one trillion of servicing U PB estimated to transact in next few years o Develop Mortgage O rigination bus iness particularly in non-agency space to capitalize on tighter credit standards ASP S F inancing Fulfillment Vehicle Ocwen Distribution Lenders One Origination Investor D es k Business Whole loan sold Warehous e Ocwen retains Financing servicing 18

Ocwen F inancial Corporation (O CN) Strategy o Explore opportunities [organic or inorganic] in adjacent markets A. Ins urance Domain o Evaluating opportunities w ithin insurance domain which are more operationally intens ive and have very low risk expos ure o Ins urance segments like Title Insurance and Warranty satisfy our investment criteria as they are operationally intens ive and do not have catastrophic risk component o We like Mortgage Ins urance but are not very comfortable w ith the embedded catastrophic ris k and lack of pricing/capital discipline B. Consumer Lending o Evaluating opportunities in consumer lending space [stay away from s egments having competitors w ith lower cost of capital] o Share repurchase program 19

Competitive Advantage Identify Secular Trends and Leverage Core Operating Principles Capture A djacent Revenue Ass ume Improve Operational Quality and Risk, Lower O pEx selective through Credit Ris k S Technology and little to tr a and G lobal no Interes t t e Resources Rate Ris k g i c A lli e s Lower Cos t Low er of Capital Effective Tax and follow Rate Capital Light Strategy Large banks narrow focus to core customers Reduction in population that can qualify as prime borrow er Government plans to reduce expos ure to Mortgage Credit Risk 20

Investor/A nalyst D ay Presentation December 2013 S teve Grundleger, S enior V ice P res ident, RM BS Relations Ocwen Financial Corporation ? 2013 Ocwen Financial Corporation. All rights res erved.

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