The following Management's Discussion and Analysis of Financial Condition and
Results of Operations, as well as other portions of this Form 10-Q, may contain
certain statements that constitute forward-looking statements within the meaning
of the federal securities laws. You can identify forward-looking statements by
terminology such as "may," "will," "should," "could", "intend," "consider,"
"expect," "plan," "anticipate," "believe," "estimate," "predict" or "continue"
or the negative of such terms or other comparable terminology. Such statements
are not guarantees of future performance and involve a number of assumptions,
risks and uncertainties that could cause actual results to differ materially
from expected results. You should not place any undue reliance on any
forward-looking statement and should consider all uncertainties and risks
discussed in this report, including those under "Forward-Looking Statements" and
Item 1A, Risk Factors, as well as those provided in any subsequent SEC filings.
Management's Discussion and Analysis of Financial Condition and Results of
Operations has been revised to give effect to the restatement of our unaudited
Consolidated Financial Statements for the three months ended March 31, 2014 and
2013 to correct an accounting error in connection with the application of the
interest method to certain financing liabilities. For additional information,
see Note 1A - Restatement and Revision of Previously Issued Consolidated
Financial Statements to our unaudited Consolidated Financial Statements and
"Explanatory Note" preceding Part I.
Ocwen Financial Corporation is a financial services holding company which,
through its subsidiaries, is one of the largest mortgage companies in the United
States. We are the fourth largest mortgage servicer in the United States and are
a leader in the servicing industry in helping keep borrowers in their homes
through foreclosure prevention. Ocwen has completed more than 480,000 loan
modifications since January 2008 (through March 31, 2014) and is an industry
leader in completing sustainable loan modifications as evidenced by the number
of completed modifications that remain less than 90 days delinquent. Through our
Homeward and Liberty lending operations, we purchased or originated 6,235 and
1,673 forward and reverse mortgage loans with a UPB of $1.1 billion and $163.2
million, respectively, during the first quarter of 2014. We added 28,972
mortgage loans with a UPB of $4.5 billion onto our servicing platforms (boarded)
during the first quarter 2014.
Our success in completing sustainable loan modifications, among other servicing
practices, has enabled us to consistently reduce deliquencies in our servicing
portfolio, improving outcomes for investors and borrowers. In addition to
financial incentives we receive in connection with certain modifications, we
collect delinquent service fees and accelerate the recovery of servicing
advances, lowering our financing costs and improving our liquidity. Our forward
origination platform provides an effective means of replacing run-off in our
serviced portfolio as well as improving our portfolio retention. We have been
successful in executing transactions that align with our 'capital light'
strategy through the sale of servicing with retention of subservicing and
financing transactions that mitigate our prepayment risk. We expect to continue
to execute innovative transactions which mitigate market risk and enhance our
capital and liquidity position.