Good morning, and welcome to Ocwen's second quarter earnings call. [Operator Instructions] This call is being recorded. If you have any objections, you may disconnect at this point. Now, I will turn the meeting over to Chief Financial Officer, John Britti. Sir, you may begin.

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's Financial Second Quarter 2013 Earnings. Click on this link. When done, click on Access Event. As indicated on Slide 2, our presentation may contain certain forward-looking statements pursuant to the Safe Harbor provisions of the federal security laws. These forward-looking statements may be identified by reference to a future period or by using -- or by use of forward-looking terminology. They may involve risks and uncertainties that could cause the company’s results to differ materially from the results discussed in the forward-looking statements. Our presentation also contains references to normalized results and adjusted cash flow from operations, which are non-GAAP performance measures. We believe these non-GAAP performance measures may provide additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance 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 the factors I just discussed, please refer to the Risk Disclosure statement in today’s earnings release, as well as the company’s filings with the Securities and Exchange Commission, including Ocwen’s 2012 Form 10-K and first quarter 2013 Form 10-Q. If you would like to receive our news releases, SEC filings and other materials by e-mail, please e-mail 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 Mr. Erbey. Bill?

Thank you, John. Good morning, and thank you for joining today's call. This morning, I would like to first review the key characteristics that make Ocwen a unique company, including our best-in-class operations, strong cash flow and ability to grow without dilution. And second, discuss our current outlook for growth and why we're excited about Ocwen's prospects, especially as the economy improves. Third, I'd like to discuss why we believe that conservative accounting and value not in our balance sheet may obscure Ocwen's relative worth. After my comments, Ron will discuss the regulatory environment, review our recent financial results, and provide an update on our operations, including acquisition integration. And finally, John will provide an additional detail on our second quarter results and liquidity position. Let me begin by reviewing what makes Ocwen uniquely successful in the mortgage servicing space. First, Ocwen enjoys substantive and sustainable competitive advantages within the servicing business, both in terms of cost and performance. As shown on Slide 4, Ocwen's cost to service nonperforming loans is 70% lower than the industry average. Moreover, the design of our systems and platform allow us to manufacture new capacity more efficiently and effectively than other servicers. We can take people with strong empathy, language skills and intelligence and have them producing as world-class home retention counselors within 90 days. Slide 5 shows the results of our ability to scale our platform. Ocwen has a superior track record of successfully boarding large new servicing portfolios and substantially lowering delinquencies and advances. Our ability to lower delinquency further enhances our operating cost advantage in 2 ways. As delinquencies fall, so do advances and interest expense on related financing. Secondly, as delinquent loans are more expensive to service than nondelinquent loans, further reducing delinquencies lowers our operating expense and improves our…

Thank you, Bill. I will cover 3 topics this morning. First, I'll provide additional details on our progress toward a possible agreement with state and federal agencies. Second, I will review our financial and operating results, including an update on the Homeward and ResCap integration efforts. Finally, I'll talk about our recently announced acquisitions and new business pipeline. Let me start by updating you on the progress we have made with various state and federal agencies, including state attorneys general, state regulators and the CFPB. As we have previously disclosed and discussed, in February, we were requested to consider a proposal to contribute to a consumer relief fund that would provide cash payments to former borrowers who were closed upon by Homeward, Litton and Ocwen loan servicing. At the time, we estimated our net maximum exposure of $135 million. We were also asked to consider agreeing to the National Mortgage Servicing standards, along with the monitoring process, which we were already partially subject to as a result of the ResCap acquisition. We are pleased to report that we have made significant progress towards an overall agreement. As such, and in accordance with GAAP, we have recorded an expense of $52.8 million, which we believe will be adequate after taking into account indemnifications we have from the sellers of Homeward and Litton. We look forward to finalizing this process, which we expect will occur very soon. As the fourth-largest residential mortgage servicer in the country, we will continue to strive to be the best we can, including helping as many families as possible remain in their homes and avoid foreclosure, while at the same time improving loan portfolio performance. Since 2009, Ocwen has helped over 340,000 families to get sensible modifications, enabling borrowers to work through their challenges and avoid foreclosure.…

Thank you, Ron. Today, on the call, I will cover 3 areas. First, I will provide more detail on our normalized results for the second quarter of 2013. Second, I will discuss our funding and liquidity, including the impact of HLSS on our financials. Finally, I will use our latest OneWest transaction to discuss better ways to model Ocwen's earnings. As you can see on Slide 18, normalized pretax earnings for the second quarter 2013 were $165.9 million. There were 3 main areas of normalizing adjustments. First, we incurred $26.5 million of transition-related expenses related to Homeward, ResCap and Ally. These expenses include such things such as severance costs, legal expenses and other costs for transitioning loans on to the Ocwen platform. Second, as Ron has described, we included a $52.8 million net charge related to our possible regulatory settlement. Note that the amount we booked is $66.4 million, but $3.6 million was booked to goodwill as an adjustment against the Homeward purchase. Third, we adjusted income to remove $900,000 of contribution from discontinued operations, this was primarily contribution from loans we currently subservice, but will transfer to Quicken in August, as part of the Ally transaction. On Slide 19, we break down the normalizing adjustments across the more detailed line items of the income statement. As Bill showed earlier, accounting differences can cause large variances among companies. For example, we book all but a small portion of our MSRs at lower of cost or market. Given the run up in rates in the past quarter, Ocwen would have booked an estimated $219 million of additional pretax income, had all our MSRs been carried at fair market value. Also, if we were booking as income, 5% of advances collected for newly acquired portfolios at Ally, Homeward and ResCap, we estimate…

[Operator Instructions] Our first question comes from Mr. Mike Grondahl.

The first one is really -- there was some new language around the pipeline, kind of being probability-weighted. Could you kind of explain that for us? And could you talk about a little bit about the mix between non-GSE and GSE in the pipeline?

Mike, I think, as we've mentioned in the past, we don't, for example, put much weighting on prime deals that we see. So as an example, the Ally transaction, which we knew we were going to be bitter on but never actually showed up on our pipeline. We tend to discount wholly prime deals on our pipeline and in some cases, placing no value on them at all, even though we know that they're coming to market. And most of our pipeline is not, for that reason, prime. It's mostly non-prime.

Okay. And is any of the $400 billion sort of exclusive to you guys?

Well, as you know, Mike, when you go through a process, in some cases, they can be exclusive deals. In other cases, they can evolve to that point. But it's -- it would be hard for me to say much more than that without probably giving away too much.

Okay. And then just one more question, maybe for you, Bill. Clearly, your capital-light strategy is working. And what I mean by that is, if we track your ROE, really just on a normalized basis, a year or 2 ago, it was 12%, 14%. In the first quarter, I think it was 20%. And then in the second quarter here, it was about 33%. Where can that go, Bill? I mean, how much more juice is left there?

Well, I think, the big change that we're talking about, Mike, is the ability to find a very capital-efficient way to -- for a vehicle that would perform much like HLSS performs in the non-prime space, to have a comparable vehicle in the prime space. It would give us lower -- access to lower cost of capital than is present in the market today. We're cautiously optimistic that we're fairly close to achieving that. At which case, we could effectively, off -- basically, do the same thing with HLSS, is to sell all of our prime assets into that vehicle. So essentially, we will then have tools on both sides of the business to make ourselves have a capital-light structure. So it can go quite a bit further than where it is today if we are able to achieve that goal.

That ROE, it does keep going up. Great.

Our next question comes from the line of Mr. Henry Coffey. Henry J. Coffey - Sterne Agee & Leach Inc., Research Division: John, I heard the information on the buyback -- saying that you had about $900 million of stock you could buy back without triggering adverse tax consequences. Is that because you simply just keep the assets onshore? Or how does that dynamic work?

No. That's a function of where the capital resides. Henry J. Coffey - Sterne Agee & Leach Inc., Research Division: And then -- but I wasn't able to catch, you were talking, just before that, about sort of the amount of servicing you could buy with the resources you had on hand, and I just didn't catch those numbers.

So we thought it was $4 billion to $5 billion of total assets, or maybe another way to think about it would be roughly 2 more OneWest size transactions. Henry J. Coffey - Sterne Agee & Leach Inc., Research Division: You mean you could buy $4 billion to $5 billion of MSRs?

Well, total assets -- because... Henry J. Coffey - Sterne Agee & Leach Inc., Research Division: I mean I don't understand the [indiscernible].

The MSRs... Henry J. Coffey - Sterne Agee & Leach Inc., Research Division: Right, right.

Our next question comes from the line of Mr. Daniel Furtado.

Could you help us just kind of broadly think about -- when we look at this very nice delinquency improvement, how it breaks down between, say, modifications and just, I guess, for lack of a better word, organic improvement and the underlying credit performance in the current environment?

This is Ron. I don't know that we have specific information on that, but I do think it is a combination of a variety of factors. Maybe with the exception of June, we generally have been seeing an improvement in current loans staying current. So less loans rolling in to delinquent status, which helps keep overall delinquencies down. As we take over the portfolios, our capabilities that we discussed in my prepared remarks, would allow us to do generally improve upon the performance of the prior servicers and help more borrowers stay in their homes through modifications that are NPV positive for investors, as well as sustainable by the borrowers. And so, we continue to improve upon that. We continue to improve upon portfolios that we acquire. And then lastly, I think we continue to make progress. I've talked about this, I think, in earlier calls. In improving our REO disposition timelines, in improving our execution of short sales where appropriate. All of those things help contain and drive down delinquencies. So I don't have specifics as to how much is each one of those components -- modifications is definitely the largest driver of it. But it is -- those 3 or 4 factors are all driving the better performance.

Understood. And then how should investors think about kind of the incremental margin or operating leverage, when you think about new assets coming on board? I assume there's some incremental operating margin? Or is that not the correct way to think about it?

I'm sorry, you mean operating leverage in terms of...

Yes, I'm sorry, operating leverage. I said margin, I meant, yes, leverage. I apologize.

Well, I think that that's true. Yes, and I think we do expect some operating leverage as we bring on new portfolios. But at our size, that operating leverage is a little less than it was when we were much smaller.

I think a lot of it relates to -- just to different technology enhancements and different process improvements is really what -- from this point forward, where you'll see margin enhancement. This also absorbed a tremendous amount of additional cost related to the current environment in terms of processes and procedures that people are focusing on. But you could still see, I think, there's still room for significant process improvements that do it faster, better, cheaper.

Okay. And then, finally, to the -- I don't know that you necessarily have any data, but just kind of a broad outlook or assumption. I know there's been recent talk about HAMP redefault rates going up. I know your organization is substantially better than the industry as a whole. But how are you thinking about HARP redefault rates and vis-à-vis expectations that you see out there in either the home loan or MSR markets?

We don't have as much experience with the HARP program, I think, as others. And we recognize that when you HARP a loan, the loan has to had been current for 12 prior months. So we would tend to expect that those loans will perform quite well. Because -- both because any loans that made all this -- made the prior 12 payments is probably a low risk loan to begin with. But then you're moving the person into a lower-cost mortgage, so generally speaking, we should expect the performance of HARP loans to be pretty good. But we don't -- frankly, nobody has a long track record of it. So I don't know that we would have the better estimate than anybody else.

Yes -- no, I was just trying to get more than a feel than GPS coordinates, frankly.

Our next question comes from Mr. Kevin Barker. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Could you speak about the Slide 22 and the cash -- the adjusted cash flow from operations of $295 million. If we were to back out the amount of mortgages sold going in to that cash flow number, what would be the free cash flow number?

Well, I think what I could do is I could tell you that gain on sale contributed about $115 million positively to cash flow in the first quarter and would've had a negative $40 million impact in the second quarter, if that's what you're referring to. So I didn't put that on the chart. And won't try to do the math here on the phone, but with those 2 numbers, my guess is, you could figure it out. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: So essentially, it would be, if you pulled out the cash flow associated with originations, it would be $40 million higher than what is disclosed on the slide?

Yes, that's right. And the first quarter would've been lower. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay, and then how does the transactions with HLSS affect the cash -- the adjusted cash flow from operations?

Well, the biggest impact would be, as we remove advances to HLSS, our opportunity to generate cash by reducing advances on those goes away. But otherwise, it does affect our operating [indiscernible]. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: And that's just closing the $243 million?

Yes, it's all that. Yes, I mean, you can come up with your own number. That's why -- and I think the forecast interest expense on HLSS is your best indicator of how that will flow through our income statement. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: And then when we think about the $400 billion pipeline, does that include a big piece of Ginnie mortgages? Or is that primarily non-agency NBS service?

It would be primarily not agency, but it would include some elements of what I would describe as high delinquency GSE product, as well as Ginnie Mae product.

And that's not -- that's not the pipeline. That's the weighted average probability assessment of what we'll win.

Our next question comes from the line of Mr. DeForest Hinman. DeForest R. Hinman - Walthausen & Co., LLC: I had a question on the number, the $52.8 million regulatory charge. It sounds like you mentioned an adjustment to goodwill around the purchase price of Homeward. I know there was some loss-sharing or, however you want to phrase it, in the contracts -- the purchase contracts that we saw with Homeward, Litton. I think those terms are also in Saxon. So, can you help us get a better understanding of what the actual total charge is relative to what we're actually putting the accrual for?

Yes -- so, first off, let me clarify something John said in his remarks. Ocwen actually expects its contribution based on the best information we have today to be about $66.4 million. That would be our net contribution. What John said in his remarks, just to clarify, is $13.6 million of that was put up as an adjustment to the kind of the goodwill from the Homeward acquisition. And so the expense that flowed through was $52.8 million. Without getting into specific details, since this is not a finalized agreement, the overall settlement amount is larger than that. And in the case of Homeward and Litton, there will be contributions from other parties to make up the additional amount. Saxon is -- was an asset purchase and, therefore, not really subject to this. So it's really only Homeward and Litton. But I -- probably not appropriate to get into kind of the overall numbers, but you have the information that we think -- the best information we have on what Ocwen's component would be. DeForest R. Hinman - Walthausen & Co., LLC: Okay, that's helpful. And then just building on that line of questioning, obviously this industry and a number of associated players have had a lot of legal over hangs and they've had to pay fines and settlements. And obviously, this is some sort of negotiated thing that's occurring. But what is the give-back in terms of what Ocwen would be receiving in terms of either federal investigations or even state-level investigation from some of the AGs? Is there any settlement of any of those outstanding issues? Or are those still open, potentially?

Because we're not finalized here, it is a little difficult to get into great details. But this is intended to put behind Homeward and Litton and Ocwen various examinations and other things that have occurred going back to when the mortgage crisis and other things hit. So we, from that standpoint, we think we are clearing up some of the overhang from some of our acquisitions and from our own portfolio and can focus more on just the go-forward basis. But again, difficult to get into too much detail because we don't have anything finalized at this point. But, I think, hopefully, that gives you some idea. DeForest R. Hinman - Walthausen & Co., LLC: No, that's helpful. And my last question would be on single point of contact in terms of that. It sounds like we've had some success by, in fact, not having single point of contact when we're working on the modifications, are we going to be able to maintain that going forward?

Well, let me clarify something. We do utilize single point of contact. And generally speaking, that's prescribed by HAMP and other programs. We do have, we think, a better single point of contact model. We refer to it as our appointment model. So if a borrower is looking for assistance, they are assigned a specific relationship manager. But generally, the way we work it is we have, because we set an appointment or a series of appointments up with that customer, with their single point of contact in order to -- in a more planned out fashion, giving both sides time to prepare for those appointment calls so that they're more productive. We do have expanded capabilities where, if, for whatever reason, their relationship manager maybe is not available at a convenient time for them, they can request to speak to another relationship manager that has a more convenient time. So there's flexibility built into our model. But I don't want anybody to be misled. We do utilize a single point of contact model. It is different though and we hope and think that it is better than what others in the industry are using.

As a matter of fact -- excuse me, we've put in a single point of contact before it was even requested. DeForest R. Hinman - Walthausen & Co., LLC: I think I understand that. But I mean, with the negotiations that we're having, can we still use that program going forward?

Yes. We have no reason to believe that our program will not -- well, we'll have to change because of anything. We're discussing, particularly the fact that we're getting better results. I think nobody in this process is interested in hurting our good results. So we don't expect there to be any issues with that.

Our next question comes from the line of Mr. Vik Agrawal.

I wanted to know -- we had -- what were the drivers behind the increase in the amortization, given that the CPR was only increased 70 basis points?

I'm sorry, I missed the last part of your question.

I said that given that the CPR only increased 70 basis points, I want to just understand what was the driver of the amortization increase?

You mean the dollar amount of the amortization increase?

Correct.

Certainly. We had -- first of all, we acquired the ResCap portfolio on February 15. So you had really only half a quarter, where we had a full quarter this period. We also acquired the Ally MSRs on, basically, the first day of the quarter. So you had a full quarter of amortization on that portfolio, which would not have been there at all in the first quarter. John, if you have anything else?

I also think that there were some loans that offboarded that we -- I think -- we had a portion of the Quicken deal deboard in June. We had some subservicing deboard in -- that was anticipated as part of the original Ally transaction that just didn't happen until this quarter. And we had a -- we had a GSE portfolio that deboarded to -- because we had been subservicing and another player bought the MSR. So and that totaled -- again, it happened at various points in the quarter, but I think it was a little over $10 billion, among those. So that's probably what's maybe messing up your numbers.

Okay. And second question I had was, while we know that you carry more than 90% of your MSRs as LOCOM, how do you anticipate carrying OneWest?

LOCOM.

Our next question comes from the line of Mr. Bose George. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: Actually, just to follow-up on the servicing transfer. Actually, how much of the Ally -- of the Quicken portfolio is left to transfer in the third quarter?

I actually don't have the exact number on that. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: But in terms of the unpaid principal balance, you should think of that coming down by that amount during the third quarter, right?

There will be an additional amount that we expect will transition out, we believe, by August. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, great. Actually, just on your consolidated income statement, you have a $19.9 million in other income. And I was wondering where that goes when you move to the segment breakdown?

I'm sorry, what was the -- what was the line of your question? Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: On the consolidated income statement, it said $19.9 million other income gain. And I'm just wondering, when I move to that segment, where that flows through on the segment side? It's $19.903 million in the consolidated income statement.

Yes -- let me check on that. I want to be sure that I give you the right answer. I'll come back -- I'll try to answer that a little bit later in the call. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, sure. And then, actually, one last thing, on the mortgage banking revenues, I just wanted to confirm, is that number -- does that get the same tax rate? Like, do we have to think of a different tax rate for mortgage banking income?

Generally speaking, it should be higher because a lot of lending operations could have a proportionately larger amount of their operations associated with the U.S. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: But it still won't be a full tax rate? It will be somewhere -- somewhere in the middle or...

Well, I think right now, you would expect a full tax rate. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: Tax rate on that piece, okay. Great.

And I think the main driver of that $19.9 million is, as we take Ginnie Mae loans on to our balance sheet and sell them back, we would -- to drive income as well as some losses through that corporate. Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. So there are expenses related to that on the expense side as well?

Yes, I mean I think you can... Bose T. George - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. Second follow-up, John...

Bose, it's included -- it should be included in the servicing segment. If you're trying to figure out whether it's in origination or servicing, most of that should be included in the servicing segment, with some portion maybe being in corporate.

You'll see -- it's on our balance sheet. You'll see a fairly sizable jump up in those loans held for resale.

Our next question comes from the line of Mr. Henry Coffey. Henry J. Coffey - Sterne Agee & Leach Inc., Research Division: Yes, I was wondering if you could talk a little bit potentially about the prime vehicle, as well as the whole issue of refi and recapture. Is that something you're going to do? Obviously, that's a big part of managing that. Is that something you're going to do internally? Exactly where are you in the process of building that out? And if you could give us a sense, sort of unrelated but on HARP margins, what did the margins look like at retail versus where they were in the March quarter?

So, Henry, I think maybe there's a little bit of this for all 3 of us to answer. Let me start by just giving you some idea of our approach to recapture and HARP and what we're building. So as you're aware, we have limited -- direct-to-consumer origination capabilities. With the acquisition of Homeward, we announced that we were going to try to start to build that process out and we've been spending a lot of time and effort in building out our direct-to-consumer capabilities. I think we said in the prepared remarks that the amount of loans closed doubled in the second quarter over the first quarter. It's still relatively small though. And as a result, we're working with other originators in the marketplace to partner with them to serve our customers. And so, the larger volume and larger kind of revenue items are coming from our partnerships, as opposed to what we're doing directly. Over time, we hope to continue to build out our direct capabilities and we'll capture more of that directly. As far as the margins go, I don't know if John has anything to kind of share on that. It's a little difficult for us to say because in working on partnerships, there's going to be some sharing and then what we do direct since we're so early on in the process and our volumes are relatively small. I'm not sure I would use that for anything going forward. But -- John?

Right. I think that's right. Actually, quarter-to-quarter, our margins were roughly flat in HARP. But again, I'm not sure that that's a good indicator of what's going on in the marketplace. I think it's more an indicator of the fact that we're still ramping up our operations and our capability. Henry J. Coffey - Sterne Agee & Leach Inc., Research Division: And then the partnership situation, is it fee sharing or cost sharing? How is that structured?

It's probably not -- let's just say there's a variety of different ways those are structured. And, again, some of it's proprietary and confidential. So I don't think we want to get into all that here. But there's a variety of different structures that we've utilized and continue to look for. What serves our customers best and what can provides the best shareholder value. Henry J. Coffey - Sterne Agee & Leach Inc., Research Division: And so what I'm gathering from this is that you're working with multiple parties?

That is correct.

Our next question comes from the line of Mr. Ryan Zacharia.

I just want to understand a little bit more about the $3 billion subservicing that came. It looks like it was from Flagstar. They have mentioned that their cost to service that segment of loans was $30 million. So I guess I just want to understand how the economics work to you on the value proposition for a bank like that is so great? And how replicable you think that is? How many banks have similar small segments to their portfolios that you guys could service so much more efficiently? And where the value proposition just makes so much sense to those banks?

So first off, the information about where it's coming from is not correct. So we're not at liberty to say where it came from, but we'll just say that, that is not accurate on where you're saying it came from. And generally speaking, I think it's not -- what generally our special servicing and subservicing arrangements are not so much driven by the fact that we can do them way more efficiently than the larger banks. But many times, we can do it more effectively. They need assistance on dealing with large chunks of delinquent loans, whether they be a GSE delinquent portfolio or just a sub prime kind of PLS-type of situation where there's 30%, 40% delinquency rates and they're just not fully equipped to handle that. The driver is not so much about providing the other party massive cost savings, it's more about providing them a more effective way of dealing with that particular group of loans. As we point out, we do a very good job of loan modifications, of short sales, of REO time lines. They basically are able to tap into that and free up those resources on their end to focus on things that maybe are more strategic to them. But it's not necessarily driven by cost.

Our next question comes from the line of Mr. Hugh Miller. Hugh M. Miller - Sidoti & Company, LLC: I was wondering, I guess, as you guys get in to doing a bit more in the servicing of prime mortgages, can you just talk about to what extent, if at all, the analytics that you have and the strength that you were able to generate for the subprime space is transferable at all to the prime space? Is that, at all, a potential benefit for you guys, as you start to deal with a little more business in that space?

I think for the cost side of the equation, it's very transferable and we have very good understanding of what our cost structure is, regardless of whether it's prime or subprime loans. So from that standpoint, I think that it fits very well. But the prepayment risk and kind of interest rate exposure on the prime portfolio compared to the subprime portfolio does not transfer over as well. I also think Ocwen is not good at portraying itself as the absolute expert in that, part of modeling or whatever. And that's one of the reasons why -- on Bill's remarks, we commented that what we'd like to do is only really manage the operational risk component and maybe, in select circumstances, some credit risk and really move the prepayment and interest rate risk to other parties that are much more advanced and -- in that and who are looking to manage that kind of risk. And so we -- we're, if anything, cautious when we think about the interest rate risk side of things and how we go about modeling and again are looking to actually reduce that risk on a go-forward basis.

And most of the pools that we went in the prime space are pools that are not foreseeing prime. They tend to have more delinquency associated with them. So they -- to an extent, they're much closer to subprime than in terms of, say, in newly originated prime mortgage. Hugh M. Miller - Sidoti & Company, LLC: Great. That's very helpful. And then I was also wondering, with the steepening of the yield curve that we've seen for commercial banks likely to be a bit of a positive for their margins. Does that -- do you think that plays a function at all with their kind of now desire to possibly monetize the MSR assets on their balance sheets? And then for once, the pace at which they'll shed them. Or is it just the reputational risk is still kind of driving them to look to offload?

I think it's more a function that they want to focus really on their core business and their core client base. And those assets that require a much heavier servicing component to them. They're just making a strategic decision that they want to deploy their resources where they have competitive advantages. And I don't think this -- I wouldn't describe it as sticking to the yield curve for safe driving. I think it's a far more fundamental shift in the way many of the banks are looking at the servicing business. Hugh M. Miller - Sidoti & Company, LLC: And then one other question about -- obviously a lot of questions in the pipeline and just talking about obviously that you are -- it's probability-weighted. Can you give us any sense about -- from a qualitative standpoint, how discounted you guys are viewing that pipeline? Would you say that it's somewhat discounted or heavily discounted? I'm just trying to get a sense of what the pipeline is, above and beyond that $400 billion in total?

The pipeline would be much higher if we didn't discount it. Hugh M. Miller - Sidoti & Company, LLC: Okay. So you say it's heavily discounted?

I think that we -- look, we hear about transactions and, in many cases, we hear about much larger transactions than we're willing to put into our pipeline because in many cases, based on experience, we know that something smaller is likely to materialize. In other cases we have -- we can put it put the full amount of it. But I think, in total, it's a substantial discount. Hugh M. Miller - Sidoti & Company, LLC: Sure. And my last question, I apologize, I missed the discussion here. I know you guys mentioned that complementary businesses is likely to take a front seat to share repurchase at this point. But can you just talk about kinds of the businesses that you guys see at this point, as being attractive for you to move into?

We prefer not to do that because we might affect negotiations in pricing.

Our next question comes from the line of Mr. Ken Bruce.

My question is, maybe more strategic in nature. I guess, I'm very interested in knowing, now that you've built this top 5 servicer, how you're looking at the originations business. I think you've been somewhat reluctant to go deep into that piece of the mortgage value chain. But could you discuss what you're thinking around that area, please?

Sure. I mean, there are 2 aspects of the origination space where we don't think we have a competitive advantage. And that's -- as a result that's historically has made us cautious in terms of wading into that market. I think that the one we discussed heavily on the call here is really understanding prepayment and interest rate exposure. I mean that's something that we don't think we're world-class at. We think there are many other players that spend a great deal more resources dealing with it. So we're going to try to basically come up with a business model where we don't take that risk. Other people who are more adept at it will take that risk. I think the other part of it is that through other strategic allies, have a very interesting distribution model. Altisource owns Lenders One, which has grown to 11% of the entire mortgage origination market, mostly retail. We think there are ways that we can participate with the members and provide more value to them. At the same time, be able, for us, to build a fairly strong origination capability with them. So we're not -- we don't think we'll necessarily ever be the largest having our own mortgage brokers, but we will -- and we will build that capability, definitely. But also, we have access to the second-largest retail origination capacity in the industry.

Okay and does -- when you think of origination in the context of the prime HLSS vehicle, I mean, does that -- is there any interplay between how you look at that? I mean it would seem that when we look at other vehicles that are set up around prime, excess MSRs, the ability to effectively recapture otherwise reduce some of that sensitivity to rate this as an important feature. Does that play in your overall thinking around prime HLSS?

We -- I mean, obviously, being able to have access to distribute that exposure to other people who wish to buy it will help us accelerate the business much more rapidly. I mean, we are very cautious about taking prepayment risk. So definitely the ability to put that in place not only makes Ocwen far more capital-light, dramatically so, but it also enables us to grow significantly within the origination market. We would not feel comfortable dramatically ramping up our origination capability and putting prime MSRs on our balance sheet and suffering mark-to-market exposure.

Right, I understand that. That's why I'm just trying to reconcile some of the different aspects of your strategy, which I guess we have to think about across a broader cross-section of company. It's just because there's a lot of capabilities that are kind of outside of Ocwen Central. But obviously, kind of factor into the longer-term growth potentials. I'm just trying to organize these in my own mind.

Our next question comes from the line of Mr. Mike Grondahl.

Yes, just 2 follow up questions. The first one, if we think about the $530 million of revenues in 2Q, can you give us some sense for how ramped up Homeward, ResCap and Ally were?

So those -- ResCap would have been on the entire quarter. Homeward would be on the entire quarter. The only one that had some portion which -- it wasn't much. Most of Ally came on either on April 1 or April 15. So -- and then we had about $2.4 billion, I think, that closed in the quarter in May and June. Mostly in May. So, not quite...

Doesn't it typically take you a couple of quarters to sort of board the loans and begin to earn your ancillary fees?

Oh, yes, I'm sorry. That is certainly true that you'll start to see on the ResCap -- you won't see the ResCap portfolio get its full delinquent servicing fee boost until we get those loans on to our pipeline.

So, Mike, I think what you're getting at, and I think the best thing for us to do is point you to our past transactions. On the PLS component, in particular, whether our deferred servicing fees and we talk about the $500 million or whatever that's outstanding, as we are able to fully integrate into our platform and our programs kick in and we start to liquidate REO at a faster pace, do more short sales and execute our modification strategy and drive delinquencies down, we do start to capture some of that deferred servicing fee, which drives them -- the revenue number higher during that period. So I think on the GSE portfolios, like Ally that John has mentioned, you're going to see that, that you really won't see much fluctuation in that. The first quarter you put it on and whether it's on the prior ResCap platform or the Ocwen platform, you probably won't see a significant difference in the revenue on the GSE side. But on the PLS, just look to the past transactions and some of the charts that we've shown, and that should be a good way to think about Homeward and ResCap on a go-forward basis. Homeward was boarded in February, March and April. The ResCap, as we just, as we pointed out in these prepared remarks, the first PLS transfer took place in July. We hope to complete all of it by the end of the summer. And so, we would expect them to see some pickup in revenue, like we've seen in other portfolios following that.

Okay. And then, I missed -- what was the delinquency percent of the portfolio at June 30?

Nonperforming was 14.4%.

Okay. And what was the prime?

We don't -- we didn't -- we haven't disclosed the prime versus non-prime component. We will probably put that out at the supplemental disclosure.

Our last question comes from the line of Mr. Kevin Barker. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Could you just speak about the breakout of different servicing fees this quarter as a -- in basis points? Difference between loan and subservicing fees and then late charges, and possibly, the other fees associated with servicing?

Well, I suggest is -- I'll direct you to the 10-Q for that information, rather than walk through that. I think that will be in detail in our 10-Q and there may be some additional information that will be available by portfolio in our supplemental disclosures that I think will get at those questions. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay. If you were to say the fee revenue in basis points, where it would peak, absent any further acquisitions, would you expect that to be sometime in the middle of next year? Or possibly into 2015, given all the acquisitions you've done?

Look, I mean, I have to go through and do a little bit of the -- I haven't done it the way you're exactly suggesting. We certainly have a pro forma. But I think, as Ron described, if you look at our past performance on a non-prime portfolio as it boards on to our system, in basis points, it takes several months, say, 6 months or so, to ramp up to the level that it then remains for a substantial period of time. I think that if you were trying to do you your forecast by portfolio, I think that's the way to think about it.

Yes, I mean -- and you'll see, Homeward will ramp up earlier than ResCap. ResCap will then ramp up some on the PLS component. And OneWest and the other transaction that we talked about will follow as those portfolios are boarded. And so it -- I don't know that we can sit here and say when exactly it will peak. And there'll be different peaks, depending on which portfolio kicks in at what point in time. Obviously, as we get bigger and bigger, no single portfolio is going to drive that number as much as it maybe did in the past. But again, I think that looking at the historical numbers that we've provided should be the best way to kind of gauge it.

We have one final question coming from the line of Mr. Brad Ball.

Ron, you mentioned in your prepared remarks that the profitability of the pipeline should not differ from past transactions. I just wondered if you could clarify that. Did you mean that the average servicing fees should be in line with past deals? Like are you pointing to the OneWest deal or to Saxon, Litton? Or are you talking more about, I think what John was referring to in his comments about profitability. So not each dollar of UPB is alike, so you'll be able to operate some servicing more efficiently as you look at the $400 billion pipeline going forward. It may not have the same level of delinquency, but again, it can be serviced more efficiently. Just if you could help me clarify that thought.

Yes. What we're talking about is what we expect to -- the return we expect to get on the capital that we deploy. Now the good news is, as we pointed out, we still -- we could deploy a lot of capital without having to raise new equity. So most of that capital would be in the form of debt. But we are talking about, not revenue or basis points or anything like that. We're talking about similar types of return on the capital that we would deploy for future transactions should look similar to what a Litton or a Homeward or what we were expecting to get on ResCap as we move forward, similar to those transactions.

Okay, yes, that's very helpful. So we may have diminishing average fee margins on each incremental deal, but the underlying profitability, based on the capital invested should remain stable?

Yes, I mean, the profitability and the capital that we deploy should remain stable. And, since -- but from an earnings per share standpoint, it's all incremental, because we could do a lot more without having to add any additional equity.

Sure, sure. And then, just real quick, 2 quick ones. You mentioned that the average fee on the private label was 35 basis points; and on the agency, 28 basis points. Is that the base fee? Or is that the all-in, including ancillary?

That's the contract rate.

Okay. So you can earn above that, based on performance?

Yes. You'll earn additional ancillary revenues, plus we would earn a collection of delinquent servicing.

On the prime portfolio, that base fee will probably be more indicative. There's no -- the ancillary fees are not going to drive it as much. And you don't -- generally, don't get deferred servicing fees on the prime portfolio. But on the private label portfolio, yes, that's the base fee. Because it's an Alt-A, that's why it's 30-some basis points as opposed to 50. But the loan balances tend to be bigger. But, yes, you will see it more of, as delinquencies decline, you'll pull in more of the deferred servicing fee. And there is reasonably substantial ancillary fees on any non-prime portfolio.

Great. And then John, do you have the number -- what is the average UPB service during the quarter?

I actually don't have that in front of me. But it will easily be calculable from our disclosures, I think.

Is it -- if you do the straight average, it comes out higher than it actually would be, right? Because the Ally transaction happened early in the quarter?

Yes. I'm sorry, I just don't have -- I mean, I don't have that immediately available. But you'll be able to easily tease that out of our 10-Q. Sorry, I just don't have that available.

Keep in mind that the Ally portfolio -- if you're looking just at raw UPB service, the Ally portfolio was on there at the beginning of the quarter as well. It was just in the form of a subservicing contract and it converted to an MSR purchase in this quarter. So from a UPB standpoint, there wasn't a tremendous amount of new UPB boarded in the quarter. In fact, John even mentioned that there was some amount of deboarding. So I think if you actually look at the beginning and ending balance, the average is probably not going to be that far off from what you're trying to do.

But you were -- I'm sorry, you were subservicing $120 billion for Ally and you purchased around $90 billion in MSR -- in UPB servicing. So that's $30 billion that you didn't -- that you're not subservicing anymore?

Well the $30 billion, that's [indiscernible] at the other buyer. That hasn't moved -- only a small portion of that has moved off...

Not all of it is going to move off either. Some of it is going to stay. So I -- it's going to be -- but the biggest portion that will move off is going to move off in August.

Yes, which John talked about earlier.

Speakers, we have no further questions on queue.

Thank you very much, everyone. Have a great day.

Thank you. Bye.

That concludes today's conference. Thank you for participating. You may now disconnect.