Onity Group Inc. · NYSE:ONIT
Onity — Ocwen Financial — Debt Investor Presentation (January 2013)
39 slides from Onity's debt investor presentation, Jan 17, 2013
Slide 1: Lenders' Presentation, January 17, 2013
Exhibit 99.1 Lenders’17, January Presentation 2013 -- Public
Slide 2: Forward-looking statements and non-GAAP disclosure
- looking similar materially information statements will filings gainis Company Exclusion measure; occurred havenon-recurring, make suchthatit with words in andAdjustment statements sadditional of the speak the debt ischarges or SEC. based past SEC, agreements has statements only recurwithin two may
Slide 3: Agenda and presenters
Ocwen IntroductionBarclays Homeward Key Financial Summary Questions Investment Business Overview Terms and andAnswers ResCap Highlights and Overview Ocwen Timeline Ocwen Transactions Ocwen -- John Barclays -- Britti Ocwen William Ronald -- Faris Erbey Ronald Faris
Slide 4: Introduction
Introduction Senior Secured Term Loan 3 O Propeietary & Confiderttial
Slide 5: Executive biographies
BA andvarious The GEMortgage Executive Kidder, Chief Served Dartmouth’s Oxford Financial as Peabody Vice Vice Financial Amos Insurance President President Officer & Tuck Co., Group, since BA Inc.1984 School at GE from Freddie inCollegeOcwen: 2012, aEconomics, 1998 private toExecutive Mac 1986: to in
Slide 6: Ocwen Business Overview
Ocwen Business Overview Senior Secured Term Loan 5 O Propeietary & Confiderttial
Slide 7: Ocwen overview
Leading capitalization as ResCap does andofsubtracts not September Management provider include advance 20+30, $46.0 of years 2012 residential and reductions billion of-- the innovation $362 Board ofand ResCap used billion commercial own in to loss pro pay master approximately forma down mitigation m
Slide 8: Mortgage servicer overview
Mortgage the The cost rightofto servicing funding be repaid servicer overviewServicers for these advances servicer Inreceive advances most cases, contractual is “top-of-the-waterfall”Represents if therefees is abased shortfall on the in monthly unpaid principal collections 46 timesbalance collateral
Slide 9: Growing opportunity in non-prime servicing
Growing beginning borrowers future distressed $1,934 472 9 Foreclosures of Q4 forma 1/7/2013. PHH $306 2012, 425 for market 1185 billion $0.6 Wells demand and Walter assets of are $0.0 a(%) .4% opportunity ~$215 not secular in Fargo 0%10 (2) Investment Source: for UPB “core” 5.7% ($ billion high-tou
Slide 10: Homeward and ResCap Transactions
Homeward and ResCap Transactions
Slide 11: Homeward acquisition overview
On December servicing billion aggregate Ocwen Homewardof Homeward assets servicer price origination 27, of with Ocwen advances $766 loans approximately platform million expected closed Origination to including: itspurchase toacquisition $77.4 transfer (Agency-only) billion Adding the during of equit
Slide 12: ResCap acquisition overview
ResCap acquisition overview @ On October 24, 2012, Ocwen, along with Walter Investment Management Corp. (“Walter”), was awarded the highest and best bid to purchase certain mortgage servicing assets from Residential Capital, LLC out of bankruptcy = Ocwen will acquire private label, Freddie Mac, Ginn
Slide 13: Investment rationale
vestment rationale = Further expands Ocwen’s servicing portfolio on a pro forma basis to $362 billion in UPB as of September 30, 2012‘) Top 10 Mortgage Servicers — Pro Forma ® Intends to board most of ResCap servicing Rank Servicer UPB ($ In bn) assets onto Ocwen’s platform by the end of 1 Wells Far
Slide 14: Key investment highlights
Over two down board delinquencies acquisitions decades of Substantial and servicing advances cash led Highly by flow an experienced generation scalable platform management with lowest team operating Stable business cost inmodel the industry with recurring Low riskrevenue balancestreams sheet and Sup
Slide 15: Predictable revenues
Revenues Predictable Ocwen’s Q4 22,563 53.8% UPB) 59.6 Q155.2 RevenueServicing 55.5% Q2 23,156 earnings 60.0 are Q3 revenue fee-based 64.4% Q4 25,086 65.4 Q1 will 74.5 and 69.1% Q2 24,867 remain and cash 72.8Source: and Q368.9% recurring Average Subservicing flow 23,346 at anenabled 67.4% elevated 1
Slide 16: Growth opportunities
began2-3 next growth grow hasGrowthpipeline contracts to1996 opportunities over yearsLarge of record $46.0 $1 billion UPB ofbank Ocwen $per 12-18 atsub-servicing period102000to month expects months,bank Co-issue from opportunities its $77.4 and sub-servicing forward small billion$432005in Additional
Slide 17: Superior servicing and loss mitigation practices
Superior speeds Fairbanks Fast 0% Lynch Saxon Ocwen processors report classification servicing Litton Ameriquest Option dated / Countrywide liquidators and One 7/2009, 12% Ocwen loss New Fast based mitigation Middle WaMu New Nat processors on City Centex of Centex 2006 2the Equity practices... /vint
Slide 18: Superior servicing and loss mitigation practices
Superior servicing and loss mitigation practices... Roll rate from 90+ days delinquent to current subprime adjustable rate () Farbarks Roll rate from 90+ days delinquent to current subprime fixed rate (+) Subprime Servicer Processing Speeds ‘?) FCL / REO processing speeds classification Fast process
Slide 19: Effective at driving down delinquencies and advances
...Effective at driving down delinquencies and advances Delinquency Percentage (90+ Days) by Portfolio Advances as a % of UPB “) 4% 49% ~ ——Legey Cowen —— Bison Homa Legacy Cowen Son or — seen? —crase — seen? = For acquired portfolios, superior loss mitigation processes enable Ocwen to reduce delinq
Slide 20: Cash flow and advance reduction scenarios
Assets increase Solutions in $150 starts prepay millions) $119 with are the 25%, (“HLSS”) self-liquidating net new $100 2013 free cash term Delinquency 2014 cash provided As loan 2015 assets flow relative and($ by would rates move can in operating to millions) pay $45 only to Ocwen’s USVI, off $51 d
Slide 21: Proven ability to close transactions and board loans
Proven ability to close transactions and effectively board loans Chase Litton BOA ® Portfolio acquired in late May of 2012 with approximately $10.1 billion in UPB = Boarding complete = Portfolio acquired in early April of 2012 with approximately $8.0 billion in UPB = Delinquency rates started fallin
Slide 22: High quality asset base
of Grade Quality PPE Source: assets sufficient and Investors hedged 152 including Advances Company 4% Quality arising equity against LHFS MSRs to from Accounts $2,910 filings. cover LIBOR andFAS and Investment all 71% The Assets advances 167 increases debt balance Cash accounting and Grade in271 83%
Slide 23: Collateral coverage for term loan
$2,156 94% average traditionally of $142 face cost amount been and $1,184 ancillary rated $124 forTerm pledged $706 revenue matched Collateral less Cash projected loan inMSR excess valued borrowing; of of projected 12/31/2012 $50 million 65% using covenant for --revenue unpledged 100%Agreements ofin
Slide 24: Lowest cost operating platform
Can Achieves A decade quickly of its experience scale competitive its servicing operating position platform through in India to[Graphic the efficiently use ofAppears aboard technology-enabled acquired Here] with portfolios Cost servicing 70%with $260 platform onlyOcwen modest and superior additions
Slide 25: Financial Overview
Financial Overview Propeistary & Confiserrtal 24 O Senior Secured Term Loan
Slide 26: Sources and uses
Sources Reserve Facility Uses ($ in 27millions) ResCap Bid Cash Deposit on Hand 57 $29 Repay ResCap Existing Servicing SeniorAssets Secured$660 Term New Loan Senior 314 Secured Transaction TermFees Loan and1,300 Expenses ResCap 36 Net TotalAdvances Sources $2,744 1,707 ResCap Total Uses Advance $2,7
Slide 27: Pro forma capitalization
Pro Forma Borrowings Loan 1,523 Debt change.Does portfolios and Adjusted 30/75 (11) Total bps, (75) EBITDA based 1,512 Capitalization respectively. 301 Net not - Promisory on Worth (8) Total include for the 293sales Equity UPB 2.2 Secured Figures equity Table Note xof of 3.6 $1,685 assets 26 servici
Slide 28: Run-rate revenue and Adjusted EBITDA
“Run-Rate“servicing contractual Revenue fees and Adjusted of 50 bpsEBITDA and 30 bps, assume respectively. steady state Adjusted performance EBITDA forassumes the Homeward Ocwen’sand 60%ResCap historical portfolios averagebased Adjusted on theEBITDA UPB of margin servicing applied rightstoasRevenue
Slide 29: Adjusted EBITDA impact of asset sales to HLSS
Adjusted average on portfolio the UPB Adjusted EBITDA of servicing EBITDA impactrights of margin sales at 8/31/2012 of applied assetstoto with the HLSS. Ocwen’s weighted Assumes 60% average steady historical contractual state average performance servicing Adjusted for feeEBITDA the of 50 Homeward bp
Slide 30: Leverage and deleveraging
The increased Here] will be (1) leverage Litton associated 1.7x 8/5/2011A with the 4.5xacquisition 8/5/2011Aofother the ResCap non-cash assets and ResCap will be temporary Adjusted assets in nature to HLSS. ¾ The term loan, prepayable at par, will be reduced with excess cash flows [Graphic Appears
Slide 31: Key takeaways
takeawaysbusiness leading cost structure model management with recurring teamwith revenue strong servicing alignment andloss mitigation capabilities cashflow generation tocloseand effectively board acquisitions collateral coverage and conservative balance
Slide 32: Summary Terms and Timeline
Summary Terms and Timeline Propeistary & Confiserrtal 31 O Senior Secured Term Loan
Slide 33: Summary of terms
Summary (“Parent”) bps current Substantially carve-outs from including, Maximum LIBOR ResCap andTerms but and Loan future Floor: similar (the not each reinvestment to and limited “Transaction”), domestic 1.25% Value ofto Conditions the theRatio to: Original existing existing subsidiaries rights, ƒ M
Slide 34: What are servicer advances?
What advance” payments Advances “stop is a servicer include: are recovered if itadvance Principal believes at the When and that “top-of-the-waterfall” interest an there advance exists Taxeswill a and deficiency not insurance first be recoverable from in monthly Property proceeds from collections pro
Slide 35: Questions and Answers
Questions and Answers Senior Secured Term Loan oO Propeittary & Confiseerial 34 °
Slide 36: Appendix
Senior Secured Term Loan 35 O Propeietary & Confiderttial
Slide 37: What are servicer advances?
What advance” payments Advances “stop is a servicer include: are recovered if itadvance Principal believes at the When and that “top-of-the-waterfall” interest an there advance exists Taxeswill a and deficiency not insurance first be recoverable from in monthly Property proceeds from collections pro
Slide 38: Deferred servicing fees and balance sheet
Deferred waterfall, sheet by servicing value of the loan like include loans level servicing function right servicer records interest above advances? throughout fees and rates, servicer arereferenced contractually-obligated prepayment Ocwen’s the advances lifeinofconservative the Collected assumption
Slide 39: Pro forma advance funding and collateral
Pro which considered $50mm implies BBB Total 3 @ Funded 142 BBB forma, Match collateral Equity still are an Liabilities is DSF Level top 100% advance exceeds Ocwen toMatch in Unpledged be of MSR --Match the investment ofPro @ has the Match rate waterfall Pledged 94% Forma $2,156mm Funded term balanc
Ocwen Financial — Debt Investor Presentation (January 2013) on 6ix