Ocwen Financial Corporation Announces Plan to Spin Off BPO and ARM Operation

Ocwen Financial Corporation (NYSE: OCN) has announced plans to separate its knowledge-based business process outsourcing operation, Ocwen Solutions, in a spin-off to OCN shareholders. Once the tax-free transaction is completed, Ocwen Solutions will be a separate publicly traded company. A registration statement is intended to be filed by March 31, 2009, and Ocwen expects to target the second quarter of 2009 for the completion of the spin-off.

Ocwen Solutions serves the mortgage and consumer finance industries through three business segments: Mortgage Services, Technology Products and Financial Services. These businesses provide knowledge-based outsourcing and technology services across the mortgage lifecycle, as well as receivables and customer relationship management solutions to consumer finance and other companies.

Ocwen Solutions uses many of the proprietary approaches and technology that have made Ocwen Financial Corporation the loss mitigation leader in subprime mortgage servicing.

"We believe that there are a number of benefits to making Ocwen Solutions an independent company," said Ocwen Chairman and CEO William C. Erbey. "As an independent company, Ocwen Solutions will be better positioned to pursue business opportunities with other servicers. The separation will allow potential investors to choose between the contrasting business models of servicing and business process outsourcing as each is valued differently by the equity markets. Ocwen Solutions, which operates an "asset light" business model, had less than $24 million in tangible assets at September 30, 2008 but generated approximately $163 million of trailing twelve months revenue. Another advantage is that Ocwen Solutions will have the option of offering its stock to potential acquisition targets."

William B. Shepro, President of Ocwen Solutions, added, "Our robust suite of products and services helps asset managers to administer portfolios and resolve delinquencies, a tremendous value-add in this very difficult economic environment. Through our Mortgage Services business, we provide our customers with due diligence, underwriting, valuation, real estate sales, default processing services, property inspection and preservation services, homeowner outreach, title services and knowledge process outsourcing services. Our Financial Services segment provides outsourced collections and customer relationship management services to many well-known companies in the financial services and consumer services verticals.

"Ocwen Solutions will deploy the strengths that have made Ocwen Financial such an effective subprime mortgage servicer. Those include proprietary technology, superior analytics and workflow processes, talent management and customer service. All of this is scalable and portable to other situations in which asset holders and loan servicers need help managing difficult assets."

Ocwen Financial’s core mortgage servicing business handles approximately 342,000 mortgages, approximately 85% of which are subprime. That represents an aggregate unpaid balance of $42 billion. Not only are Ocwen’s servicing costs less than half the industry average, but Ocwen’s losses on subprime mortgages are also half industry losses making Ocwen the low-cost, high-quality provider.

So far this year, Ocwen has achieved loan workouts avoiding foreclosures for approximately 60,000 homes around the country. Ocwen’s proprietary software and expert systems allow it to identify and reach at-risk borrowers, structure customized payment plans and loan modifications and prevent foreclosures — keeping homeowners in their homes and preserving income for lenders and investors.

"The robust and scalable technology and approaches that have enabled us to help many at-risk homeowners — and also keep loans performing — will be increasingly available through Ocwen Solutions to the growing number of companies and institutions that need to improve the performance of challenged portfolios. Meanwhile, Ocwen Financial will continue to work to grow its core mortgage servicing business and evaluate acquiring additional servicing portfolios," Mr. Erbey said.

Ocwen’s stake in Bankruptcy Management Solutions (BMS) and Global Servicing Solutions LLC (GSS) will remain with Ocwen Financial.

Consummation of the spin-off transaction is subject to several conditions, including receipt of confirmation of the tax-free treatment of the spin-off, receipt of certain regulatory approvals and permits and the filing with the Securities and Exchange Commission and the effectiveness of a registration statement, and there can be no assurances that such conditions will be met, that the spin-off will adhere to the terms or timing described above or that the spin-off will be consummated.

About Ocwen Financial Corporation
Ocwen Financial Corporation is a leading asset manager and business process solutions provider specializing in loan servicing, special servicing, mortgage loan due diligence and receivables management services. Ocwen is headquartered in West Palm Beach, Florida with offices in Arizona, California, Florida, Georgia and New York and global operations in Canada, Germany and India. Utilizing our global infrastructure, state of the art technology, world-class training and six sigma processes, we provide solutions that make our clients’ loans worth more. Additional information is available at www.ocwen.com.