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Verifying a performance statistic in Ocwen's latest 8-K

Since we are a data mining organization, we feel compelled to check performance statistics produced by others. When you have many variables affecting an outcome combined with data of questionable quality, a simple analysis can produce results that can be unjustified or incorrect. Whether by intent or through ignorance or carelessness, the misuse of statistics is commonplace in our society. Politicians and others may twist, inflate, confuse, oversimplify or exaggerate a statistic to justify a position. The statistic presented may accurately reflect the sample used, but the sample may either not be representative of the population or have a built in bias that can distort the results.

We always try to provide a fair analysis that removes bias. We are very cognizant of the data problems that plague our industry and we do our best to remove from the population data that may distort the results. We show our performance statistics stratified in different ways to present a more balanced viewpoint.

Below is a statement from Ocwen’s Form 8-K Current Report (page 8) filed February 5th, 2015, which we felt compelled to verify:

“We believe our performance on Ocwen-serviced pools, as calculated by BlackBox Logic data for subprime Non-Agency securities, is evidence of our PLS servicing strength. As communicated previously, Ocwen outperforms other servicers by almost 10 percentage points in the percentage of subprime PLS loans that have made 10 or more payments in the prior 12 months. Similarly, the percentage of borrowers who have made all 12 payments in the last 12 month [sic] is 10 percentage points higher.”

With any statistic presented, you need to have some degree of skepticism until you fully understand how it was derived. In this commentary, we will show our approach and analysis of this statistic. No matter how we stratify the population, we cannot verify the statement in Ocwen’s 8-K. The “10 percentage points higher” just does not hold up.

Contact us at 203-276-0672 to become a client and access all reports and attachments.

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