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Loan Servicer Partnership and Outreach Workshop April 21, 2009. © 2009 Ocwen Financial Corporation. All rights reserved. . Summary of Points. Ocwen company overview and loan modification program Role of our Consumer/Community Advocate Partners

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loan servicer partnership and outreach workshop april 21 2009
Loan Servicer Partnership and Outreach Workshop

April 21, 2009

© 2009 Ocwen Financial Corporation. All rights reserved.

summary of points
Summary of Points
  • Ocwen company overview and loan modification program
  • Role of our Consumer/Community Advocate Partners
  • What more can we do together in the fight to stem the foreclosure crisis?
ocwen overview
Ocwen Overview
  • Ocwen Financial Corporation
    • Incorporated 1987; based in West Palm Beach; NYSE (OCN)
    • Servicing arm is Ocwen Loan Servicing, LLC
  • Independent, third party servicer – we do not originate loans, we service (and repair) them as we find them
    • 325,000 loans in 400+ MBS Trusts with UPB of $42 billion
    • 85% subprime loans
  • Ocwen is recognized in government, industry and media circles as a leader in foreclosure prevention through loan modifications
    • Scalability – Ocwen has saved over 90,000 families from foreclosure since the mortgage crisis
    • Sustainability – Ocwen’s redefault rate is 24% vs 41% industry average (OCC/OTS Report, 6mo/60+days)
keys to scalability of loan modifications
Keys to Scalability of Loan Modifications
  • Two related fundamentals – Staffing and Technology
  • Staffing
    • 2007 – increased Home Retention Consultant staff by 50% in anticipation of problems due to poor underwriting and other issues in mortgage industry
    • 2008 – increased HRCs again by 35% in response to the unprecedented spike in delinquencies
  • Technology – over $100M in R&D
    • Interactive scripting engines
      • Facilitate personnel training for fast ramp up
      • Effective borrower communication for better results
    • Robust platform provides capacity to handle multiples of the volume of loan mods we have executed in our own portfolio
      • Freddie Mac special servicer for “high risk” loans
      • Discussions with agencies/private sector to provide much needed servicing capacity
keys to sustainability of loan modifications
Keys to Sustainability of Loan Modifications
  • Customized approach -- address homeowner delinquencies on a loan-by-loan basis
    • First, comprehensively re-underwrite each delinquent loan (i.e., the way it should have been done by the broker or lender at origination)
    • Second, determine whether modification is both affordable by the homeowner on a sustainable basis and maximizes net present value (or “NPV”) for the loan owner as compared to a foreclosure
    • Third, provide one-on-one financial counseling to the homeowner, utilizing behavioral science research on proven psychological principles of persuasion and commitment
keys to sustainability of loan modifications continued
Keys to Sustainability of Loan Modifications (continued)
  • Principal reductions
    • Appropriate where necessary to achieve affordability
    • Motivates homeowners with negative equity
    • 18.7% of Ocwen’s loan modifications include writing down the loan balance -- leads the industry with 70% of all principal reduction modifications (Credit Suisse Report)
  • Early intervention
    • Government “Home Affordable Modification” Plan permits modifications in cases of “imminent default” (adopting American Securitization Forum standard)
    • Ocwen’s Early Intervention unit avoided 9,000 foreclosures using this standard
ocwen advocacy partnership program
Ocwen Advocacy Partnership Program
  • When for whatever reason a homeowner in distress does not respond to our letters or phone calls, we are unable to help them
  • We partner with non-profit community advocacy and faith-based groups all around the country in homeowner outreach
    • Complete the communication link and information flow
    • Counseling and education programs
  • Historical Six Sigma studies demonstrate that our advocacy partnerships increased the successful delinquency resolution rates from mid 70% range to over 85%
  • Flexible contractual, fee for service and other monetary support arrangements
  • Leveraging these partnerships enables our loan modification program to be more scalable and more sustainable
sampling of ocwen s advocacy group partnerships
Sampling of Ocwen’s Advocacy Group Partnerships
  • Advisory Council of the NeighborWorks America Center for Foreclosure Solutions (charter member)
  • Dominion Community Development Corp
  • East Side Organizing Project
  • HomeFree-USA
  • Homeownership Preservation Foundation
  • Homes on the Hill
  • HOPE NOW Alliance
  • National Association of Neighborhoods
  • National Community Reinvestment Coalition
  • National Council of La Raza
  • National Fair Housing Alliance
  • National Training and Information Center
  • Neighborhood Assistance Corp. of America
  • Neighborhood Housing Services
  • Pittsburgh Community Reinvestment Group
  • Project to End Predatory & Deceptive Real Estate Practices at the Community Law Center
  • St. Ambrose Housing Aid Center
  • South Brooklyn Legal Services
what more can we do together
What More Can We Do Together?
  • Intensify Outreach Effort
    • Focus on communities hardest hit by the foreclosure crisis
  • “Prime the Pump”
    • Educate homeowners on the eligibility and documentation requirements of the Home Affordable Modification Plan
  • Inclusive Networking
    • Develop participation of minority- and women-owned organizations in government programs
  • Watchdog Role
    • Monitor for-profit modification “consultants” which are of dubious value and report suspicious activity to law enforcement
appendix

APPENDIX

Selected Media Excerpts from

TIME Magazine, New York Times, Washington Post, Wall Street Journal, CNNMoney.com, Default Servicing News

ocwen media coverage
Ocwen Media Coverage
  • “Forestalling Foreclosure: A subprime services has devised a plan for modifying loans to keep people in their homes” by Barbara Kivat—Time, January 12, 2009 *
    • “…Then there is Ocwen, which has already revised 16% of its 340,000 mortgages, in many cases cutting monthly payments 20% to 40%....”
    • “…What really sets Ocwen apart, though, is its vigor. From doing just a couple of hundred modifications a month in the first half of 2007, Ocwen was up to 4,000 a month by the beginning of 2008, with 77% involving a reduction of the interest rate and 20% including a permanent write-down of the principal balance.
    • “…That’s why, unlike a lot of loan-modification programs, such as those rolled out by Citigroup and IndyMac Bank, Ocwen’s doesn’t use broad guidelines. . . When Ocwen rewrites a loan, it starts from scratch, with an agent at one of its four call centers—two in Florida, two in India—following an adaptive script to reconstruct a borrower’s financial data…”

* Full article at http://www.time.com/time/magazine/article/0,9171,1869202,00.html

ocwen media coverage13
Ocwen Media Coverage
  • “Modifying Mortgages Can Be Tricky” by Vikas Bajaj and John Leland—The New York Times, February 19, 2009 (front page)
    • “…In the case of Ms. Reeves, Ocwen cut the interest rate to 5.6 percent, from 8.9 percent, lowering her payments by $125, to $1,027. Officials at the company said the reduction would cost less than seizing and selling Ms. Reeves’s modest two-bedroom house near Dolphin Stadium.
    • “’Ocwen was very patient with me, and they really worked with me,’ said Ms. Reeves, who has back problems and breast cancer.”
  • “Lenders Cite Gain on Loan Relief” by Renae Merle—Washington Post, December 23, 2008
    • “…mortgage servicer Ocwen Financial performed thousands of principal reductions this year, accounting for 70 percent of the industry's efforts, according to a recent Credit Suisse report.”
ocwen media coverage14
Ocwen Media Coverage
  • “New Tack in Default Battle: Cutting Mortgage Principal” by Ruth Simon—The Wall Street Journal, November 20, 2008
    • “…The long-term impact of erasing principal from mortgages will depend on borrowers such as Bruce Moreau, who lives in Merrimack, N.H. Mr. Moreau was five months behind on his mortgage payments when Ocwen canceled a planned foreclosure and agreed to modify his loan. In January, the company reduced Mr. Moreau's loan balance by $47,000, to $177,000, and converted his 8.65% adjustable-rate mortgage to a fixed-rate loan with the same interest rate. The new arrangement cut Mr. Moreau's payments by more than $800, to roughly $1,830.”
    • “…Ocwen Financial Corp., a West Palm Beach, Fla., loan servicer that has shrunk the amount owed on 10,884 delinquent mortgages as of Sept. 30. That is 23% of all the loans modified by Ocwen so far this year.”
ocwen media coverage15
Ocwen Media Coverage
  • “Obama to test home loan do-overs” by Tami Luhby—CNNmoney.com, March 3, 2009
    • “…Advocates also take heart in the relative success rate of servicers who have long focused on affordability. Take Ocwen Financial Corp. The servicers boats of a 19.4% redefault rate, less than half of the industry average.
    • “The West Palm Beach, Fla.-based firm says most of its borrowers remain current because of its customized approach to modifications. Ocwen looks at borrowers’ income and expenses and comes up with a payment plan that the homeowner can afford long-term. The company says it has prevented more than 90,000 foreclosures since the mortgage crisis began.”
  • “Ocwen First to Begin Federal Loan Mods” by Carrie Bay—Default Servicing News, April 14, 2009
    • “…Over the past 10 years, Ocwen has invested more than $100 million in designing and refining its default servicing systems.”
ocwen contact information
Ocwen Contact Information

Paul Koches

Executive Vice President

Ocwen Financial Corporation

2300 M Street, N.W.

Suite 800

Washington, DC 20007

(202) 416-1602

Paul.Koches@ocwen.com

Opal Comfort

Community Relations, Senior Manager

(561) 682-7671

Fax: (561) 682-8177

Opal.Comfort@ocwen.com

Felipe Ruiz (English and Spanish)

Home Retention Consultant

(866) 570-3930

Fax: (407) 737-5331

Felipe.Ruiz@ocwen.com

Joanne Perez (English and Spanish)

Home Retention Consultant

(866) 513-2944

Fax: (407) 381-6989

Joanne.Perez@ocwen.com

Charlie Wilson

Home Retention Consultant

(800) 236-5557

Fax: (407) 737-5263

Charlie.Wilson@ocwen.com