Good day, ladies and gentlemen, and welcome to the Ocwen Financial First Quarter 2014 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to John Britti, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us today. My name is John Britti, I'm Executive Vice President and Chief Financial Officer of Ocwen Financial Corporation. Before we begin, I want to remind you that a slide presentation is available to accompany our remarks. To access the slides, log on to our website at www.ocwen.com, select Shareholder Relations, then, under Events and Presentations, you will see the date and time for Ocwen Financial's First Quarter 2014 Earnings. Click on this link. When done, click on Access Event. As indicated on Slide 2, our presentation contains forward-looking statements made pursuant to the Safe Harbor provisions of the federal security law. These forward-looking statements may be identified by reference to a future period, or by using forward-looking terminology. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. They may involve risks and uncertainties that could cause the company's actual results to differ materially from the results discussed in the forward-looking statements. Our presentation also contains references to GAAP financial measures such as normalized results and adjusted cash flow from operations. We believe these non-GAAP financial measures may provide additional meaningful comparisons between current results and results from prior periods. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company's reported results under accounting principles generally accepted in the United States. For an elaboration of these factors I just discussed, please refer to today's earnings release as well as the Company’s filings with the Securities and Exchange Commission, including Ocwen’s 2013 Form 10-K and quarterly 10-Qs. Note that we expect to file our first quarter 2014 10-Q by tomorrow. If you would like to receive our news releases, SEC filings or other materials, please email Linda Ludwig at linda.ludwig@ocwen.com. Joining me today for the presentation are Bill Erbey, our Chairman; and Ron Faris, President and Chief Executive Officer. Now I will turn it over to Bill Erbey. Bill?

Thank you, John. Good morning, and thank you for joining today's call. Today, I'd like to cover 2 topics in my prepared remarks. First, why we believe the trends in the marketplace are beneficial to Ocwen's competitive position and second, why we believe that demand for our services is as powerful as ever and more importantly, should remain robust well into the future. After my comments, Ron will discuss the consequences of the emerging regulatory environment in more detail and provide an update on our results and operations. Finally, John will provide additional information on our first quarter financial results and future funding strategies. Let me begin with an overview of the 3 trends that we believe reinforce Ocwen's competitive position in the marketplace. First, regulators, legislators, sellers and other stakeholders insist upon near perfection in servicing transfers, and as we will discuss, Ocwen has both unique capabilities and a long history of success in this regard. Second, it's important to be in sync with the fullest regulatory mandates, and Ocwen is the only non-bank fully subject to the national servicing settlement requirements. Moreover, Ocwen's record of helping homeowners provides an exemplary record of complying with the spirit of emerging consumer protection. And third, capital and counterparty strength are increasingly important to regulators, legislators and sellers. Ocwen has the strongest balance sheet of any large non-bank servicer. Starting with the expectation of near-perfect transfers, let me make several observations. Most importantly, Ocwen is unique in the length and consistency of its track record of successful servicing transfers. In an environment where MSR transfers are expected to be flawless and companies selling MSRs are on notice from regulators that they will be held accountable for a transfer's success, our track record is among our biggest competitive advantages. Our success is demonstrated…

Thank you, Bill. This morning, I will cover 2 main topics in my prepared remarks. First, I will provide some thoughts regarding the near-term and longer-term effects the regulatory environment is having on Ocwen and the industry. And second, I will cover some of our operational results for the quarter in more detail and discuss some of our ongoing borrower outreach efforts through community organizations. Before I get into the effects of the evolving regulatory environment, let me remind you how Ocwen is regulated. Historically, Ocwen has been primarily regulated by each of the 50 states as a licensed mortgage servicer and originator. As a result of Dodd-Frank, we are now also supervised at the federal level by the Consumer Financial Protection Bureau or CFPB. In addition, we are subject to oversight from a host of others, including Freddie Mac, Fannie Mae, their conservator, the FHFA, Ginnie Mae, FHA, VA, private trustees and a broad range of clients from whom we service or subservice loans, including some large national banks. Overall, we welcome additional consistency, scrutiny and clarity by regulators as we believe that over the longer term it is very good for the industry, because it instills confidence in all stakeholders and allows the market to move forward. Moreover, we believe that stricter regulation is ultimately a competitive advantage for Ocwen. As Bill mentioned, we are the only large non-bank fully subject to National Mortgage Settlement Standards and Monitoring. We also have the strongest capital position among large nonbanks. We also believe that our competitive strengths in process management and automation are particularly valuable in the context of the evolving regulatory environment. Before I describe why this will play to our strengths, let me first go over the key impact of the evolving environment. Two major operational impacts of…

Thank you, Ron. Today on the call, I'll cover 4 areas. First, I'll review our normalized and quarter-to-quarter results in more detail. Second, I will go over the impact of HLSS rights to collect servicing fees on our financials and provide some guidance on those related expenses in Q2. Third, and in response to investor requests, we've pulled together additional thoughts on valuation. Lastly, I will talk about our funding and stock repurchase strategy over the next couple of quarters. First, let's start with a review of our normalized results on Slide 12. Normalized pretax earnings for the first quarter 2014 were $114 million. Approximately 80% of normalization expenses relate to the ResCap platform transition. The lower normalized income quarter-over-quarter was due to a variety of items, including substantially higher overhead and variable costs associated with regulatory mandates, as Ron discussed earlier. There are also several items to note when comparing quarter-to-quarter normalized income. The first is the swing in MSR value. While we carry 95% of our MSR book value at lower of cost or market, we carry about $7.6 billion of EPB or $110 million of current MSR book value at fair value. This small portfolio generated a fourth quarter 2013 gain of $19.1 million compared to a first quarter 2014 loss of $5.1 million. We use third-party broker marks to value our portfolio and the broker model is very sensitive to interest-rate movements. So the drop in value is a direct function of the 23 basis point drop in 10-year Treasury swaps from the end of December to the end of March. On top of that, we had a $2.4 million reversal of MSR impairment in Q4 2013, with no such changes in Q1 of this year. The net MSR changes for these items totaled $26.6 million.…

[Operator Instructions] The first question comes from Bose George from KBW. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: First, actually Ron, can you just -- the $30 to $40 increase in servicing costs that you mentioned, is that increase similar on the GSE on the private label side?

Well it's related to nonperforming loans and it would be similar regardless of what type of loan it is. It's related to nonperforming loans. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, great. And then, the reserve for uncollectible receivables, was that related to the slowdown in property liquidations, are those the compensatory fees that GSEs are charging? Just curious what that was.

It was not related to that. We're not going to get into the details of it, but there are -- as you're servicing GSE loans, there are certain expenses that you occur, some of which are recoverable from the GSEs, others depending on the ultimate outcome of the loan, et cetera or not, and so in this quarter we just had a larger amount that we deemed we would not be able to recover, but we're not going to get into any other details on that. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: And then, just one last one, on capital. Bill sort of referred to potential capital rules for the industry and just curious what your thoughts are about how -- what that could look like, and who would be imposing those capital rules?

We're not going to really comment on that, although we think that we are the best positioned firm, whatever the capital rules might be. Some states already have capital requirements for servicers, some are even fairly substantial. None of them are a problem for us, so we're not going to speculate on where the industry's going to go with that, but we actually see it as more of an advantage than a disadvantage, if that actually occurs.

The next question comes from Mike Grondahl from Piper Jaffrey.

In a general sense, how much of that $59 million kind of negative swing would you consider sort of one-time in nature?

Well its -- I mean, on one hand, you could say all of it, but it is very difficult, for example, with the Origination business, to project out in the future where that's going to be, I mean most originators have been experiencing declines. I don't think we would expect the kinds of declines quarter-over-quarter that we had in the near-term, but it is a little bit difficult to project out that in particular.

Okay. And if we look at your normalized operating expenses of about $325 million in the quarter, how should we think about that number normalized, post the ResCap, Energy and whatnot? And others?

Well, Mike, I think the normalization is aimed at doing exactly that. I think we -- what we put up for normalized expenses is about 80% of that is aimed at reducing the expenses down to where we think they should be on a run rate basis, once we consolidate it onto a single platform.

Okay. And are there any other synergies you expect to affect those normalized expenses?

I mean there are -- I think it's difficult to quantify. There are complications that I'm sure result in expenses throughout the organization, simply because we have 2 servicing platforms. We have to maintain compliance and other things, for multiple platforms. So we do expect that, that -- as we move entirely off of the old ResCap platform, we've made our best estimate of where we think the expenses will kind of come out, but it also eliminates a variety of complications within the organization, which we think will probably provide other benefits down the road.

Okay, and then maybe just -- the OASIS deal, I just want to -- those proceeds are not included in the $204 million of adjusted cash flow from operating activities. Is that correct?

That would show up in investing exit.

The next question comes from Brad Ball from Evercore.

Can you size the impact of the lower deferred servicing fees in the quarter? Can you give us a sense as to how much of the rebound we should expect from increased REO sales that you're talking about in the first half of April?

Well I think what we said in our prepared comments was that we felt that the benefit that we got from the OneWest and Greenpoint transaction is a little over $15 million in the quarter -- were largely offset by that slowdown, so I would think that would be best and only guidance we're going to give there.

And can you give us any indication, has the rebound that you talked about in the first half of April, we've completed the month now, is that rebound continuing? And is it entirely weather-related, or were there other factors that slowed REO sales in the first quarter?

We don't think there's any other real environmental factors. Obviously, the interest rate environment's a little bit higher than it was -- earlier part of last year, and that's always going to impact home sales, but we think most of that slowdown, based on what we were expecting in the first quarter, was related to the weather. And I think that we haven't seen anything different in the second half of April than what we saw in the first half, so I think our statements are consistent.

And do you disclose the amount of REO or the REO unit that you have available-for-sale at quarter end?

I believe our Q has information on it.

So that will be in the Q tomorrow?

Yes.

Okay. And then on HARP, so like, you've been consistent with your comment about HARP likely slowing in coming quarters. Can you tell us how much of your existing book is HARP-eligible?

I don't think we have that data available. It's going down in part because rates go up. I mean the -- because when you think about HARP eligibility, they may be eligible for the program, but the incentive to refinance does shrink as rates rise, but I don't have the number available.

Okay, and just getting back to Bill's initial commentary. In terms of the broader market opportunity, is there any reason to think that the pipeline that you discussed before the New York DSS halted the Wells Fargo transaction, is there any reason to think that, that pipeline has changed in any way?

Yes, I think we're not going to really comment on pipeline. I mean, a lot of that is going to be driven by how the -- what the larger banks decides to do. As Bill's comments indicated, we think there's still strong incentives for them to relook at their mortgage servicing books and we think that's an opportunity for us, but we're not going to -- we're not going to provide any other kind of color on the pipeline.

The final question comes from Kevin Barker from Compass Point. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: In regards to the uncollectible servicing receivables, how much of that would be apples-to-apples to the $182 million of accounts receivable you have on the balance sheet right now?

So can you just... Kevin Barker - Compass Point Research & Trading, LLC, Research Division: So if you look at the reserves, the impairment on the reserves on the uncollectible servicing receivables, that it is uncollectible servicing receivables, you have similar assets that are currently on the balance sheet, would you consider the $182 million of the accounts receivable to be similar in structure?

I mean the $182 million is going to include a whole host of different things, so I would not -- it would not be appropriate to sort of say that, that $182 million is the same kind of receive -- all of it is the same kind of receivable as what the, we increased the reserve on, so that 182 has a lot of different things in there, and that I would not characterize them as all the same. That -- was taken on a smaller piece of that. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: If we were to quantify the percentage of accounts receivable that is related to, sort of, those types of servicing receivables, how big is that? Can you help quantify that, or maybe give some context?

Don't have those numbers kind of right now, so I don't think we can comment on that right now. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay. And then, looking at the transitional and transaction expenses, I mean they've continued for several quarters now, they've gone down quite a bit this quarter versus last quarter. At what point do you see those finally abating or running off, given that there is no near-term acquisitions given the Wells Fargo portfolios unfolds?

Well, I think the -- as we indicated, we do expect some contract breakage expense in the third quarter, but beyond that, we shouldn't be incurring very much in the way of these expenses beyond the second quarter, or maybe a little bit in the third quarter, but it's largely -- done once we get off the ResCap platform. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay, and then if we look at the -- once you remove the ResCap platform, how much expense do you expect from that? And if you were to put some quantification around how much your pretax margins per EPB would go up from the decline in expenses, related to that transfer or that move?

Well, I mean, that's, that is -- as I mentioned earlier, I think that's the point of the normalization, and most of the normalized expenses relate to that, that why, as we said, that 80% of the normalized expenses relate to the ResCap platform. And so I think that's our best indicator. Now as Ron also mentioned, it's part art, part science. There are complexities that are driven throughout the organization as a result of having 2 platforms, so it's difficult to assess, I think, with perfection, what our run rate would be. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay, and in regards to the acquisitions that you spoke about earlier, are title insurers or possibly originators still, some of the top things on your list of potential acquisitions? Or can you just give some context on what would be your main target for something you're looking at to bring into the Ocwen business?

We can say definitely we're not looking at originators. In terms of acquiring one, we tend to build that organically with our processes, and the controls in place that more mirror our servicing business. Obviously, we're looking at a number of different opportunities right now. Your difficulty in the title space, even though we very much like that, is that there are just not a lot of meaningful acquisition targets that are available within that space. So probably would not see something in terms of title insurance. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay and then finally, looking at the OASIS deal, do you expect to continue to come to the market with similar type deals, given you have a significant amount of performing HC servicing still on -- in your sourcing portfolio?

Yes.

Definitely. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay, could you give a quantification of the size of that type of transaction you're looking at?

Well, I don't about that -- I do not want to talk about any specific transaction, but I would say that we estimate that we could probably issue as much as another $600 million worth of notes associated with -- OASIS-type notes and maybe more.

I mean our ultimate objective is to eliminate as much as possible, the prepayment risk associated with our prime portfolio and keeping in mind that some of that embedded gain is not yet reflected on our -- in our -- since we booked things at lower of cost or market. So some of what we're protecting is stuff that's not on the balance sheet today. But our objective is to reduce significantly our prepayment risk.