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12/24/2014

Ocwen Shares Fall 16% in Morning Trade - WSJ

USCA Case #14-5265

Document #1529247

Filed: 12/26/2014

Page 1 of 3

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers
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http://www.wsj.com/articles/ocwen-shares-fall-16-in-morning-trade-1419348692

MARKETS
Ocwen Shares Fall for Second Day

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 business of servicing
mortgages backed by the U.S. government. REUTERS

By JAMES STERNGOLD And ALAN ZIBEL


Dec. 23, 2014 10:31 a.m. ET
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 Yorks top financial regulator.
http://www.wsj.com/articles/ocwen-shares-fall-16-in-morning-trade-1419348692

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Ocwen Shares Fall 16% in Morning Trade - WSJ

USCA Case
#14-5265
Document
Filed: 12/26/2014
Page
2 of 3below
The companys
stock
fell $2.51,
or 16%,#1529247
to $13.50 in morning
trading after
falling
$13 at one point. Analysts at Sterne Agee said Tuesday morning that the mortgage

servicers share price is likely to stabilize around $11.50 to $13 per share, and sliced its
price target to $14.
In a phone
call with
analysts on
Monday
afternoon,
Ocwen CEO
Ronald
Faris said
the
company
will
withdraw
from the
business of
servicing
mortgages
backed by
the
RELATED

U.S.

Erbeys Exit Ends Heady Era at Ocwen (http://www.wsj.com/articles/new-york-financial-regulatorannounces-settlement-with-ocwen-1419257065)


Timeline: Ocwens Regulatory Troubles (http://blogs.wsj.com/moneybeat/2014/12/22/ocwens-regulatorytroubles-a-timeline)
Read the Consent Order (http://dfs.ny.gov/about/ea/ea141222.pdf)

government. He said that Ocwen would be selling off that servicing portfolio and would
focus just on so-called nonagency mortgages.
The company didnt 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.
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Ocwen Shares Fall 16% in Morning Trade - WSJ

USCA Case market


#14-5265is much,
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3 of 3
The non-agency
much
smaller, so they
are
going to bePage
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 Ocwens shareholders.
The company has already been shrinking due to New York State regulator Benjamin
Lawskys 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 james.sterngold@wsj.com and Alan Zibel at
alan.zibel@wsj.com

Copyright 2014 Dow Jones & Company, Inc. All Rights Reserved
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