Slide 1: Business Update: Full Year and Fourth Quarter 2021
Business Update Full Year and Fourth Quarter 2021 February 25, 2022 © 2022 Ocwen Financial Corporation. All rights reserved.
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS servicing growth targets; the extent to which we will be able to detailed in our reports and filings with the SEC, including, when This presentation contains forward-looking statements within execute call rights transactions, and whether such transactions filed, our annual
Slide 3: Ocwen is a mortgage originator and servicer
Ocwen is a mortgage originator and servicer focused on creating positive outcomes for clients, homeowners, investors and communities Balanced and Diversified Business Model Competitive Advantages Diversified originations sources to Four pillar servicing portfolio balance earnings and drive servicing
Slide 4: Executive Summary
Executive Summary • FY21 GAAP Net Income $18M; Adjusted Pre-tax Income $59M Full-year earnings exceeded • Q4 Adjusted Pre-tax Income $10M consistent with Q3’21 1 expectations; Q4 consistent • Q4 GAAP Net Loss ($2M) including ($14M) in income statement notables; Q4 ROE 12% excluding these items • Ori
Slide 5: Originations delivering solid progress on accelerating growth
Originations delivering solid progress on our actions to accelerate growth, improve recapture performance, and grow our client and consumer base Servicing Additions ($B) Seller Base Refinance Recapture Up 166% YoY Up 3.1x YoY Rate Up 8pts YoY 152 Q4’21 Actual 31% 55 +166% +8 pts +208% 57 56 963 26%
Slide 6: Enhancing cost competitiveness through technology, process simplification, scale
Enhancing cost competitiveness through technology, process simplification, scale and portfolio composition Continuing automation and expanding Servicing operating costs(a) communication channels ↓4.4 bps YoY Achieved 11 bps EOY Target in Q2 11.9 bps 7.5 bps Omni-channel 140+ processes Investor / Sub
Slide 7: Servicing driving superior value proposition through best-in-class performance
Servicing driving superior value proposition to clients, investors and consumers through best-in-class operating performance Gold 2021 Freddie Mac SHARPSM Average speed of answer 7- 8X Abandon rates 35% of Award in Top Tier Servicing Group faster than MBA average MBA average Q4 ‘21 Q4 ‘21 (Minutes)
Slide 8: Service experience that consistently delivers on our commitments
Origination and servicing focused on providing a service experience that consistently delivers on our commitments Servicing(a) Net Promoter Consumer Direct(b) Net Reverse Wholesale(c) Net Score up 12pts (57%) YoY Promoter Score up 56pts YoY Promoter Score up 3pts YoY 45 88 91 33 21 (11) Q4 '20 Q4 '2
Slide 9: Positioning combined forward and reverse subservicing platforms to double in 2022
Positioning combined forward and reverse subservicing platforms(a) to double in 2022 Best-in-class servicing platform that can offer a compelling value proposition to subservicing clients with capacity for growth COMPETENCY: Leading, high-scale servicer with diversified Swift portfolio; proven track
Slide 10: 2022 industry environment presents challenges and opportunities
2022 industry environment presents challenges and opportunities Industry Forecasts Decline 30%+ YoY for 2022 Industry Highlights $4.4 • Consensus industry forecast for 30%+ reduction in $4.1 Refinance ($T) industry origination volume Purchase ($T) $3.0 • Originations margin pressure until excess cap
Slide 11: Operating Targets for 2022
Operating Targets for 2022 OBJECTIVES Targets for 2022 ~$100B in total servicing additions Prudent growth to navigate dynamic market 1 Add 125-150 new seller clients CL higher margin products and services up ~3X Maintain 30%+ recapture rate; 65%+ cash-out Strengthen Consumer Direct performance 2 Imp
Slide 12: Ninth consecutive quarter of positive Adjusted Pre-tax Income
Ninth consecutive quarter of positive Adjusted Pre-tax Income Q4 performance consistent with Q3, excluding call right gains and RMS acquisition impact Adjusted Pre-Tax Income Walk QoQ ($ millions) 37 Q4'21 Q3'21 Adjusted Pre-tax Income (Loss)(a) $10 $37 4 10 Notables(b)(c) (14) (27) (27) (4) Income
Slide 13: Balanced business model across Servicing and Originations
Expecting balanced business model across Servicing and Originations to insulate against market volatility Growing Originations products and deliveries to offset Servicing building scale and volume and margin declines operating profitably 12 250 Adjusted PTI ($M) (b)(c) Revenue Margins (Bps) (d) Adju
Slide 14: RMS platform acquisition positions us in reverse mortgage space
RMS platform acquisition uniquely positions us in reverse mortgage space Deep reverse servicing leadership experience & our Reverse subservicing platform acquisition infrastructure support additional portfolio growth from RMS is on track to be accretive in 2H ’22 ($ millions) • Volume additions $11M
Slide 15: Well positioned for 2022 targets by segment
Well positioned for 2022 …targets by segment Objectives Originations Servicing Corporate (a) Total originations revenue (GOS, origination fees and 1000+ Industry Refi Qtrly MSR vol interest income)/(orig. vol.). ~70% of originations will be Prudent vol dropping ~13% total prepays on-book, ~30% will
Slide 16: Wrap Up
Wrap Up • FY21 GAAP Net Income $18M; Adjusted Pre-tax Income $59M Full-year earnings exceeded • Q4 Adjusted Pre-tax Income $10M consistent with Q3’21 1 expectations; Q4 consistent • Q4 GAAP Net Loss ($2M) including ($14M) in income statement notables; Q4 ROE 12% excluding these items • Originations
Slide 17: Appendix
Appendix • Notes Regarding Non-GAAP Financial Measures • Expense Notables • Income Statement Notables • Expense Notables by Segment • Income Statement Notables by Segment • GAAP ROE & After-tax ROE Before Notable Items • Reverse Subservicing Expense Notables • Reverse Subservicing Income Notables •
Slide 18: Note Regarding Non-GAAP Financial Measures
Note Regarding Non-GAAP Financial Measures In the following slides, we present supplemental information (including reconciliations) relating to certain illustrative adjustments to GAAP expenses, and pre-tax income (loss). We believe this information is instructive as an alternative way to view certa
Slide 19: Expense Notables
Expense Notables Expense Overview $ Millions Q4'21 Q3'21 Q4'20 OCN OCN OCN I Operating Expenses (as reported) 174 145 144 (a) Adjustments for Notables Re-engineering costs - - (6) Significant legal and regulatory settlement expenses (1) (3) (16) CFPB & state regulatory defense & escrow analysis cost
Slide 20: Income Statement Notables
Income Statement Notables Income Overview $ Millions Q4'21 Q3'21 Q4'20 OCN OCN OCN I Reported Pre-Tax Income / (Loss) (4) 10 (1) Adjustments for Notables(a) Expense Notables (from prior slide) 19 5 16 Non-Agency MSR FV Change(b) (14) (68) (6) (b) Agency MSR FV Change, net of macro hedge (4) 10 (9) N
Slide 21: Expense Notables by Segment
Expense Notables by Segment Expense Overview $ Millions Q4'21 Q3'21 Q4'20 Servicing Originations Servicing Originations Servicing Originations I Operating Expenses 95 51 81 43 76 36 (a) Adjustments for Notables Re-engineering costs (0) - (0) - (1) (1) Significant legal & regulatory settlement expens
Slide 22: Income Statement Notables by Segment
Income Statement Notables by Segment $ Millions Q4'21 Q3'21 Q4'20 Servicing Originations Servicing Originations Servicing Originations I Reported Pre-Tax Income / (Loss) 5 19 17 17 (1) 33 Adjustments for Notables (a) Expense Notables (from prior table) 8 2 2 (0) 3 2 (b) Non-Agency MSR FV Change (14)
Slide 23: GAAP ROE & After-Tax ROE Before Notable Items
GAAP ROE & After-Tax ROE Before Notable Items GAAP ROE Calculations $ Millions Q4'21 Q3'21 OCN OCN I Reported Net Income (2) 22 II Annualized Net Income (I * 4) (7) 86 Equity Beginning Period Equity 470 447 Ending Period Equity 477 470 III Average Equity 473 458 IV GAAP ROE (II / III) -1% 19% After-
Slide 24: Reverse Subservicing Adjusted PTI – Expense Notables
Reverse Subservicing Adjusted PTI – Expense Notables Expense Overview $ Millions Q4'22 Q4'21 Reverse Reverse Subservicing Subservicing I Operating Expenses 18 13 (a) Adjustments for Notables Re-engineering costs 0 - Significant legal & regulatory settlement expenses - - CFPB & state regulatory defen
Slide 25: Reverse Subservicing Adjusted PTI – Income Notables and Adj. PTI
Reverse Subservicing Adjusted PTI – Income Notables and Adj. PTI Income Overview $ Millions Q4'22 Q4'21 Reverse Reverse Subservicing Subservicing I Pre-Tax Income / (Loss) 4 (3) Adjustments for Notables (a) Expense Notables (from Expense Overview table above) 0 1 (b) Non-Agency MSR FV Change - - (b)
Slide 26: MSR Valuation Assumptions – Owned MSRs
MSR Valuation Assumptions – Owned MSRs (a) 3rd party broker assumptions (b) Total voluntary payoffs and involuntary defaults; does not include scheduled payments (c) Annual $ per loan; Ancillary includes REO fee income on Non-Agency MSRs (d) NRZ sale transactions did not achieve sale accounting trea
Slide 27: End Notes
End Notes SLIDE 3 SLIDE 10 SLIDE 13 a) Consumer Direct channel is higher margin a) NRMLA, “Senior Housing Wealth Tops $10 Trillion a) Includes interim subservicing boarded and exited within the lending without use of a third-party originator For the First Time” January 14, 2022 quarter (formerly Ocw