Good day ladies and gentlemen and welcome to the Ocwen Financial fourth quarter 2016 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. I would now like to introduce your host for today's conference, Mr. Stephen Swett. You may begin.

Good afternoon and thank you for joining us today for Ocwen's fourth quarter and full-year 2016 earnings conference call. Before we begin, please note that a slide presentation is available to accompany today's call. To access the presentation, please go to the Shareholder Relations section on our website at www.ocwen.com and click on the Events and Presentations link. As a reminder, the presentation and our comments today may contain forward-looking statements made pursuant to the Safe Harbor provisions of the federal securities laws. These forward-looking statements may be identified by reference to a future period or by use of forward-looking terminology. Forward-looking statements, by their nature, address matters that are to a different degree uncertain. Our business has been undergoing substantial change, which has magnified such uncertainties. You should bear these factors in mind when considering such statements and should not place undue reliance on such statements. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. In the past, actual results have differed from those suggested by forward-looking statements and this may happen again. Our forward-looking statements speak only as of the date they are made and we disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. In addition, the presentation and our comments contain references to non-GAAP financial measures, such as adjusted operating expense, adjusted pretax income, adjusted pretax income before corporate debt expense, normalized adjusted cash flow from operations, illustrative servicing cash flow or servicing cash generation, adjusted liquidity, the off-balance sheet value of some of our economic assets and the economic value to Ocwen of our MSRs. We believe these non-GAAP financial measures provide useful supplement to discussions and analysis of our financial condition. We also believe these non-GAAP financial measures provide an alternate way to view certain aspects of our business that is instructive. 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 the factors I just discussed, please refer to our presentation and today's earnings release as well as the company's filings with the Securities and Exchange Commission, including Ocwen's 2016 Form 10-K which should be filed soon. Joining me on the call today is Ron Faris, President and Chief Executive Officer and Michael Bourque, Chief Financial Officer. Now, I will turn the call over to Ron.

Good evening and thank you for joining us today. 2016 was a year of significant accomplishments as we work to transform Ocwen. Quite simply, the team performed at a high level, executed well and achieved significant progress. We went from a large loss in the first half of the year to about breakeven in the second half, made great strides in rightsizing our cost structure and continued investing in our growth businesses. We also made significant progress on many legacy matters. Due to our continued revenue decline from portfolio runoff, we knew coming out of last quarter that it would be a challenge to duplicate or improve upon the results this quarter. However, had we not taken some additional regulatory reserves, we would have reported a profit in Q4 as well, I am very proud of the results our team has produced under difficult circumstances. We are excited to tackle the challenges ahead and we believe we can be a leader in all of our business segments. We entered 2016 focused on three primary areas, our core financial performance, our legacy regulatory challenges and our future growth prospects. We ended the year with significant progress in all three areas, which we hope to build upon in 2017. Many of these successes are highlighted on page five of our presentation. In addition to the improved P&L performance in the second half of the year, some of the highlights include resolving significant legal and regulatory matters, increasing our servicer ratings refinancing our corporate debt, improving our customer service levels and helping 75,000 struggling families remain in their homes. On that last point, we remain steadfast in our belief that the Ocwen team has done more than any other financial services firm to help homeowners recover from the housing crisis. Without Ocwen's outstanding…

Thank you Ron. In my comments today, I will discuss our fourth quarter financial results, discuss our progress reducing costs and summarize our balance sheet and liquidity position as we enter 2017. Let me begin by stating that our fourth quarter results were in line with our expectations and directionally consistent with the progress we made in the third quarter. We recorded a net loss of $10 million, $20 million worse than the $9 million profit last quarter. I would again note that in the second half of 2016, we lost only $1 million after-tax versus $198 million loss in the first half of the year. That's terrific progress. Our fourth quarter revenue was $324 million, which was down $36 million from the prior quarter. Servicing revenue was $295 million, down 7% quarter-to-quarter as expected, due to the run off of our servicing UPB and lower HAMP fees as that program winds down. As it relates to HAMP, during the fourth quarter, we completed more than 4,100 streamlined HAMP modifications, generating $9 million in incremental revenue and we still expect to complete over 7,500 HAMP modifications in the first quarter of 2017, which reflects completed modifications to borrowers who were offered modification trials before the expiration of the program at the end of 2016. In the fourth quarter, our origination volumes totaled $1.3 billion compared to $1.4 billion in the third quarter. Forward mortgage origination volume was $1.1 billion, down 12% compared to the third quarter of 2016. Reverse mortgage origination volumes totaled $214 million in the quarter, up 1% compared to the third quarter of 2016. The decline in forward originations was largely due to seasonality. Both our forward and reverse products were up versus the fourth quarter of last year. Our wholesale and direct channels drove the forward…

[Operator Instructions]. Our first question comes from the line of Bose George with KBW. Your line is now open.

Hi guys. Good afternoon. First question, in terms of future growth, once you settle or you settle with the New York DFS, t that point can you acquire MSRs or the issue with the CFPB need to be resolved as well?

If the New York restriction is lifted, there would be no restriction on our ability to acquire MSRs.

Okay. And then the regulatory reserves that you booked this quarter, does that suggest that you have some visibility into resolution over there?

I think what I am going to do is, we will have our Q out shortly and I think we will just direct you to the disclosures that we in there on that point. But I am not going to discuss that on the call today.

Okay. Yes. Fair enough. And then, just in terms of the monitor expenses, you said there was $82 million for the year. Is that both for California and New York combined?

So that's California and New York and the national monitor which is still in place. So it's all three.

Okay. And then actually one last one, do you have a number for the HAMP, the fees for the fourth quarter? And when we think about HAMP going forward, does that just pro-rate down over three years that number goes from what is now down to zero just over three years?

It will come down over that three-year period. We are not going to forecast it but Mike, I will let you answer the first part.

Sure. In the quarter and you will see it in the filing, Bose, we had $22 million of HAMP fees, down about $10 million from last quarter. And I think last quarter, we indicated to folks that just on a run rate basis, we might expect $70 million headwind or so in 2017 from HAMP and we are necessarily updating that. But that's by directionally correct guidance.

Okay. Great. Thank you.

Thanks Bose.

Our next question comes from the line of Fred Small with Compass Point. Your line is now open.

Hi. Thanks for taking my question. Just on the guidance for 2017, for a loss, how much cost do you think you need to take out in order to break even or generate a profit? Can you help us scale that at all or size it?

Yes. No, I don't think we can. We are not going to give specifics on that. Michael just spoke about the decline in the HAMP revenue. So obviously, that's revenue that is going away and we would need to find cost reductions to offset that. But we are not going to give actual guidance on what our expected view on that loss is nor what our cost reductions are going to be.

Okay. Is it something that you think is, is there a scenario where break even or profitability is achievable in 2017?

I am not going to comment on that, Fred.

Okay. And then just as a result of the -- congratulations on terminating the consent order with California. Is there any sort of effect -- do you have a sense of how much monitor expense goes away as the California auditor drops off?

As you saw, we saw a significant decline in the monitor expense in the fourth quarter. Once you dig into the numbers, you will see that. I think that we have talked about the fact that the New York monitorship, the two-year consent order ends or at least the two-year monitorship is scheduled to end at the end of March. We don't have word yet as to whether it will be extended or not. If it were to end, there would be an additional drop off. But I think the fourth quarter would be a good proxy for the first quarter. After that, it's really going to depend on what happens to New York and the national monitor should also start to wind itself down as the year progresses into 2018. But I am not going to go beyond that.

Okay. And for the lending segment, is there, I think that you said either in the deck or in the presentation that your expected you could grow volumes in 2017. Do you think that the lending segment can generate a profit in 2017? Is Q4 sort of an anomaly there just because of the moving rates?

So, yes, we did say in, I think, both my prepared remarks and in the presentation that despite rising rates and what we anticipate will be a pretty big slowdown in the overall market that we are still in a position to grow our origination volumes over what we had in 2016. We think partly because of the makeup of our portfolio, partly because we are still no putting in place various pieces like technology to position ourselves better to go out there and expand. But yes, we do think that we can be profitable in our origination segment next year. There is no guarantee of that. But we do think we can be profitable.

Okay. Got it. And last one just on the CFPB. Any sense of timing or how long that may take to actually get resolved with whatever the issue is?

Again,. I think like Bose, I am going to just point you to the disclosures in the 10-K, which will be out soon and that's all we are going to say about that at this point in time.

All right. Thanks a lot.

Okay. Thanks Fred.

[Operator Instructions].

Okay.

I am showing no further questions at this time. That concludes today's Ocwen Financial Corporation earnings call. Thank you for attending and you may disconnect. Thank you.

Thank you everybody.