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48 | Th e M Rep o RT O r i g i nat i O n S e r v i c i n g a na ly t i c S S e c O n da r y m a r k e t SERVICING The laTesT Preliminary report Shows Q1 net income of $34 million For Ocwen Despite a major 2014 loss, ocwen Ceo Ron Faris remains optimistic about the year to come. O cwen Financial rebounded from a tumultuous 2014 that included legal troubles, multi-million dollar settlements, ratings downgrades, and several multi-billion dollar sales of MSR portfolios with a preliminary Q1 2015 net income of $34 million, or $0.27 per share, according to an announcement from the company on April 30. Atlanta-based Ocwen, one of the largest non-bank mortgage servicers in the nation, posted a total write-down of $546 million for the full year of 2014. In Q1 2014, the company reported a total net income of $60.5 million, or $0.43 per share. The compa- ny's Q1 2015 preliminary revenue of $510.4 million represents a 7 percent year-over-year decline, and preliminary income from operations dropped from $202.1 million in Q1 2014 down to $132.1 million in Q1 2015. Meanwhile, preliminary cash flow from operating activities for Q1 totaled $323 million, a year-over-year increase of 65 percent. "I am proud of what we have accomplished as far as managing the business through this dif- ficult transition period. We made great progress on our asset sale strategy, have returned to profit- ability and continue to generate substantial operating cash flow," said Ron Faris, president and CEO of Ocwen. "However, I am not satisfied with only making $34 million in the quarter. We intend to do better." Factors that influenced Ocwen's pre-tax income during Q1 were as follows: A gain of $26.9 million from an MSR sale of Freddie Mac performing loans with an unpaid principal balance of $9.1 billion, a gain of $12.9 mil- lion on a sale of legacy perform- ing and non-performing whole loans; an impairment charge of $17.8 million due to the fair market value decline of govern- ment-insured MSRs (which was primarily the result of the FHA lowering the mortgage insurance premiums by 50 basis points early in the year; monitor costs of $9.0 million; strategic advisor expenses and fair value-related charges of $8.4 million and $8.3 million, respectively. Also during Q1, Ocwen's lending segment was responsible for generating $16.0 million of pre-tax income. The Q1 results were prelimi- nary—the company announced that it plans to file its 2014 Form 10-K and Q1 2015 Form 10-Q on or before May 29—and comes on the back of a previous report from April 14, when the com- pany revealed a $564 million loss for 2014. According to the earlier report, the company lost $4.18 per share for a total write-down of $546 million, one year after reporting a $310 million profit. The loss was not, however, a surprise. The firm announced in early February that it was anticipating a loss in its then-coming earnings report. That announcement was followed by a spate of sales of servicing rights to several firms. In the three months previous, Ocwen had sold its $9.8 billion mortgage servicing rights portfo- lio, and later another: $25 billion in MSR to Nationstar Mortgage, a subsidiary of Nationstar Mortgage Holdings; $45 billion worth of Agency home loans to JPMorgan Chase; and $9.6 billion worth of servicing rights to Green Tree.