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                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-Q
(Mark one)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
            For the quarterly period ended June 30, 2000
                                      OR
[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
           For the transition period from: ___________to_____________

                         Commission File No. 1-14043

                         OCWEN ASSET INVESTMENT CORP.
            ------------------------------------------------------
            (Exact name of Registrant as specified in its charter)

                  FLORIDA                               65-078313
      -------------------------------                 ----------------
      (State or other jurisdiction of                 (I.R.S. Employer
       incorporation or organization)                Identification No.)

         1675 PALM BEACH LAKES BOULEVARD
             WEST PALM BEACH, FLORIDA                       33401
      ---------------------------------------             ----------
      (Address of principal executive office)             (Zip Code)

                                 (561) 682-8000
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

  Securities registered pursuant to Section 12(b) of the Act: Not applicable.

  Securities registered pursuant to Section 12(g) of the Act: Not Applicable.

Indicate by check mark whether the registrant; (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]

At July 31, 2000, there were 6,100 shares of common stock of the Registrant
outstanding, all of which are owned indirectly by Ocwen Financial Corporation.

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION (H)(1)(a)
AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED
DISCLOSURE FORMAT.
<PAGE>

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                         OCWEN ASSET INVESTMENT CORP.
                        SECOND QUARTER 2000 FORM 10-Q
                              TABLE OF CONTENTS


                                                                            PAGE

                        PART I - FINANCIAL INFORMATION


Item 1. Interim Consolidated Financial Statements (unaudited)................ 3

        Consolidated Statements of Financial Condition....................... 3

        Consolidated Statements of Operations................................ 4

        Consolidated Statements of Comprehensive Income (Loss)............... 5

        Consolidated Statements of Cash Flows................................ 6

        Consolidated Statements of Changes in Shareholders' Equity........... 7

        Notes to Consolidated Financial Statements........................... 8



Item 2. Management's Discussion and Analysis of Financial Condition and
         Operations..........................................................17




                         PART II - OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K.....................................19

        Signatures...........................................................21


                                       2
<PAGE>
<TABLE>
<CAPTION>
                             OCWEN ASSET INVESTMENT CORP.
              (A WHOLLY OWNED SUBSIDIARY OF OCWEN FINANCIAL CORPORATION)
                    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                                            June 30,       December 31,
                                                              2000            1999
                                                         -------------    -------------
ASSETS:
<S>                                                      <C>              <C>
 Cash and amounts due from depository institutions ...   $   3,462,845    $   2,085,437
 Interest-bearing deposits ...........................      12,606,063       77,031,043
 Repurchase agreements ...............................      25,000,000               --
 Securities available for sale, at fair value ........      61,130,221      103,444,568
 Commercial and multi-family loan portfolio, net .....      74,996,394       59,519,840
 Residential loan portfolio, net .....................       2,092,078        2,417,647
 Match funded residential loans and securities,
   net ...............................................     131,084,424      157,793,868
 Discount loan portfolio, net ........................      13,067,687               --
 Investment in real estate partnerships ..............      11,606,504               --
 Investment in real estate, net ......................      49,347,142      252,604,156
 Real estate held for sale ...........................     195,240,924               --
 Principal and interest receivable ...................       2,901,477        2,646,732
 Notes receivable on sale of real estate..............      19,000,000               --
 Other assets ........................................      20,764,455       31,389,621
                                                         -------------    -------------
   Total assets ......................................   $ 622,300,214    $ 688,932,912
                                                         =============    =============

LIABILITIES:

 Securities sold under agreements to repurchase ......   $   1,341,141    $  28,301,141
 Obligations outstanding under lines of credit .......      33,093,063       17,997,393
 Obligations outstanding under lines of credit
   - secured by real estate ..........................     141,595,976      141,173,063
 11.5% Redeemable Notes due 2005 .....................     110,997,038      140,486,483
 Bonds - match funded agreements .....................     121,796,822      141,515,143
 Excess of net assets over purchase price ............      51,042,628       56,840,751
 Accrued expenses, payables and other
 liabilities .........................................      14,142,719       23,911,170
                                                         -------------    -------------
   Total liabilities .................................     474,009,387      550,225,144
                                                         -------------    -------------

Commitments and Contingencies (Note 14)

SHAREHOLDER'S EQUITY:
 Common Stock, $.01 par value; 10,000 shares
 authorized, 6,100 shares issued and outstanding .....              61               61
 Additional paid-in capital ..........................     135,857,923      135,857,923
 Retained earnings ...................................      18,109,793        3,542,683
 Accumulated other comprehensive income, net of taxes:
   Unrealized losses on securities available
    for sale .........................................      (5,470,681)        (713,326)
   Cumulative translation adjustment .................        (206,269)          20,427
    Total accumulated other comprehensive loss .......      (5,676,950)        (692,899)
                                                         -------------    -------------

    Total shareholder's equity .......................     148,290,827      138,707,768
                                                         -------------    -------------

                                                         $ 622,300,214    $ 688,932,912
                                                         =============    =============
</TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements.

                                        3
<PAGE>
<TABLE>
<CAPTION>
                          OCWEN ASSET INVESTMENT CORP.
           (A WHOLLY OWNED SUBSIDIARY OF OCWEN FINANCIAL CORPORATION)
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                    Successor       Predecessor     Successor       Predecessor
                                                   ------------    ------------    ------------    ------------
                                                    For the Three Months Ended       For the Six Months Ended
                                                              June 30,                       June 30,
                                                   ----------------------------    ----------------------------
                                                       2000            1999            2000             1999
                                                   ------------    ------------    ------------    ------------
<S>                                                <C>             <C>                  <C>        <C>
INTEREST INCOME:
  Interest bearing deposits ....................   $    420,028    $    326,219         889,595    $    820,823
  Repurchase agreements ........................        127,058              --         127,058              --
  Securities available for sale ................      3,654,557      12,063,542       7,113,716      25,702,059
  Commercial and multi-family loans ............      2,101,694       2,220,840       3,850,474       3,869,354
  Match funded residential loans and securities       2,951,497       3,000,208       6,262,754       6,327,351
  Residential loans ............................         18,003         132,153          67,667         277,551
  Discount loans ...............................        470,205         132,400       1,028,673         258,718
  Notes receivable .............................          5,278              --           5,278              --
                                                   ------------    ------------    ------------    ------------
                                                      9,748,320      17,875,362      19,345,215      37,255,856
                                                   ------------    ------------    ------------    ------------
INTEREST EXPENSE:
  Securities sold under agreements to repurchase         14,549       2,039,165         252,486       4,681,167
  Obligations outstanding under lines of credit         442,667         705,826         726,353       1,312,510
  11.5% Redeemable Notes due 2005 ..............      3,498,853       4,111,250       7,510,807       8,265,400
  Bonds-match funded agreements ................      2,790,079       2,252,778       6,146,278       4,776,380
                                                   ------------    ------------    ------------    ------------
                                                      6,746,148       9,109,019      14,635,924      19,035,457
                                                   ------------    ------------    ------------    ------------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN
LOSSES .........................................      3,002,172       8,766,343       4,709,291      18,220,399
  Provision for loan losses ....................        (57,576)        221,239          20,126         479,091
                                                   ------------    ------------    ------------    ------------
  NET INTEREST INCOME AFTER PROVISION FOR
     LOAN LOSSES ...............................      3,059,748       8,545,104       4,689,165      17,741,308
                                                   ------------    ------------    ------------    ------------
REAL ESTATE-OPERATING INCOME:
  Rental income ................................      9,780,189       8,167,173      18,298,265      16,149,603
  Other ........................................         25,765          15,057          57,110          25,439
                                                   ------------    ------------    ------------    ------------
                                                      9,805,954       8,182,230      18,355,375      16,175,042
                                                   ------------    ------------    ------------    ------------
REAL ESTATE-OPERATING EXPENSES:
  Rental operation .............................      4,266,163       4,900,308       8,603,156       8,863,017
  Depreciation .................................        503,208       1,259,927         989,566       2,453,904
  Interest .....................................      2,958,537       2,695,211       5,670,788       5,352,537
                                                   ------------    ------------    ------------    ------------
                                                      7,727,908       8,855,446      15,263,510      16,669,458
                                                   ------------    ------------    ------------    ------------
REAL ESTATE INCOME (EXPENSE), NET ..............      2,078,046        (673,216)      3,091,865        (494,416)
                                                   ------------    ------------    ------------    ------------

OTHER EXPENSES (INCOME):
  Management fees ..............................      1,039,023       1,530,662       2,103,928       3,055,091
  Due diligence expenses .......................             --              --              --         122,745
  Amortization of excess net assets over
     purchase price ............................     (2,998,754)             --      (5,792,349)             --
  Other ........................................      1,295,074       2,393,481       2,290,350       3,603,790
                                                   ------------    ------------    ------------    ------------
                                                       (664,657)      3,924,143      (1,398,071)      6,781,626
                                                   ------------    ------------    ------------    ------------

GAINS (LOSSES) ON SECURITIES, DERIVATIVES AND
SALES OF REAL ESTATE HELD FOR SALE, NET ........      3,463,797     (23,906,787)      6,482,034     (31,362,420)
                                                   ------------    ------------    ------------    ------------

INCOME (LOSS) BEFORE TAXES AND MINORITY INTEREST      9,266,248     (19,959,042)     15,661,135     (20,897,154)
Income tax expense .............................      2,762,273              --       4,668,586              --

Minority interest in net loss of
consolidated subsidiary ........................             --       1,791,820              --       1,946,071
                                                   ------------    ------------    ------------    ------------
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS ...      6,503,975     (18,167,222)     10,992,549     (18,951,083)
                                                   ============    ============    ============    ============
   Extraordinary gain on repurchase of debt,
     net of taxes ..............................      1,392,354              --       3,574,561              --
                                                   ------------    ------------    ------------    ------------
  NET INCOME (LOSS) ............................   $  7,896,329    $(18,167,222)   $ 14,567,110    $(18,951,083)
                                                   ============    ============    ============    ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                          OCWEN ASSET INVESTMENT CORP.
           (A WHOLLY OWNED SUBSIDIARY OF OCWEN FINANCIAL CORPORATION)
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                                                                         Successor      Predecessor     Successor      Predecessor
                                                                        ------------    ------------   ------------    ------------
                                                                        For the Three Months Ended      For the Six Months Ended
                                                                                  June 30,                     June 30,
                                                                        ----------------------------   ----------------------------
                                                                            2000           1999           2000            1999
                                                                        ------------    ------------   ------------    ------------
<S>                                                                     <C>             <C>            <C>             <C>
Net income (loss) ..................................................... $  7,896,329    $(18,167,222)  $ 14,567,110    $(18,951,083)
Other comprehensive income, net of taxes:
  Change in unrealized gain (loss) on securities available
    for sale arising during the period (net of taxes of $1,562,610 and
    $2,561,653 for the three and six months ended June 30,
    2000, respectively) ...............................................   (3,204,943)      5,570,535     (4,757,355)      5,327,577
  Unrealized foreign currency translation adjustment arising
    during the period (net of taxes of $110,595 and $122,067
    for the three and six months ended June 30, 2000,
    respectively ......................................................     (197,933)        201,521       (226,696)        444,554
  Reclassification adjustment for losses (gains) included in
  net income ..........................................................      302,955       6,969,565             --              --
                                                                        ------------    ------------   ------------    ------------
Other comprehensive loss ..............................................   (3,099,921)     12,741,621     (4,984,051)      5,772,131
                                                                        ------------    ------------   ------------    ------------
Comprehensive income (loss) ........................................... $  4,796,408    $  5,425,601   $  9,583,059    $(13,178,952)
                                                                        ============    ============   ============    ============


Disclosure of reclassification adjustment:
Unrealized holding gains (losses) arising during the period
on securities sold or impaired ........................................ $   (153,693)   $(16,937,222)  $ (2,004,701)   $(23,062,749)

  Add:  Adjustment for realized (gains) losses
    and impairment charges on securities
    available for sale included in net income (loss) ..................      456,648      23,906,787      2,004,701      23,062,749
                                                                        ------------    ------------   ------------    ------------
Reclassification adjustment for losses (gains)  included in
net income ............................................................ $    302,955    $  6,969,565   $         --    $         --
                                                                        ============    ============   ============    ============
</TABLE>

                 The accompanying notes are an integral part of
                     these consolidated financial statements

                                       5
<PAGE>
<TABLE>
<CAPTION>

                          OCWEN ASSET INVESTMENT CORP.
           (A WHOLLY OWNED SUBSIDIARY OF OCWEN FINANCIAL CORPORATION)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                       Successor       Predecessor
                                                                     -------------    -------------
                                                                        For the Six Months Ended
                                                                               June 30,
                                                                     -------------------------------
                                                                          2000            1999
                                                                     -------------    -------------
<S>                                                                  <C>              <C>
Cash flows from operating activities:
     Net income (loss) ...........................................   $  14,567,110    $ (18,951,083)
     Adjustments to reconcile net income (loss) to net
        cash provided by operating activities:
       Premium amortization (discount accretion), net ............       8,863,779       13,389,650
       Depreciation ..............................................         989,566        2,453,904
       Amortization  of excess of net assets
        over purchase price ......................................      (5,792,349)              --
       Extraordinary gain on extinguishment of debt ..............      (5,092,693)              --
       Provision for loan losses .................................          20,126          479,091
       Net gains on sale of real estate held for sale ............      (3,897,375)              --
       Net (gains) losses on sales of securities and derivatives .      (2,584,659)      31,362,420
       (Increase) decrease in principal and interest receivable ..        (254,745)       3,123,111
       Decrease (increase) in other assets .......................      10,625,166       (3,283,257)
       (Decrease) increase in accrued expenses, payables,
         and other liabilities ...................................      (9,768,451)       1,615,528
       Minority interest in losses ...............................              --       (1,946,071)
                                                                     -------------    -------------
Net cash provided by operating activities ........................       7,274,140       28,243,293
                                                                     -------------    -------------

Cash flows from investing activities:
  Principal payments received on securities available for sale ...       9,497,000        9,998,074
  Principal payments received from loans .........................      29,358,539       43,586,358
  Purchase of  securities available for sale .....................      (9,948,000)              --
  Increase in repurchase agreements ..............................     (25,000,000)              --
  Proceeds from sale of securities ...............................      40,931,432       12,708,996
  Proceeds from sale of real estate ..............................       9,000,000               --
  Purchases of discount loans ....................................     (13,067,687)              --
  Purchases/originations of loans ................................     (14,892,924)     (14,002,510)
  Investment in real estate partnerships .........................     (11,606,504)              --
  Investment in real estate ......................................     (16,246,600)      (5,763,246)
                                                                     -------------    -------------
Net cash (used) provided by investing activities .................      (1,974,744)      46,527,672
                                                                     -------------    -------------
Cash flows from financing activities:
  Repurchase of notes ............................................     (29,880,000)              --
  Principal payments on bonds ....................................     (19,718,321)     (39,194,676)
  In securities sold under agreements to repurchase ..............     (26,960,000)     (64,764,776)
  (Decrease) increase in obligations outstanding under lines of
        credit ...................................................       8,438,049        7,741,437
                                                                     -------------    -------------
Net cash (used by)financing activities ...........................     (68,120,272)     (96,218,015)
                                                                     -------------    -------------

Net decrease in cash and cash equivalents ........................     (62,820,876)     (21,447,050)

Change in cumulative translation adjustment ......................        (226,696)         455,166

Cash and cash equivalents at beginning of period .................      79,116,480       53,365,205
                                                                     -------------    -------------
Cash and cash equivalents at end of period .......................   $  16,068,908    $  32,373,321
                                                                     =============    =============

Reconciliation of cash and cash equivalents at end of period:
  Cash and amounts due from depository institutions ..............   $   3,462,845    $   5,162,989
  Interest earning deposits ......................................      12,606,063       27,210,332
                                                                     -------------    -------------
     Total .......................................................   $  16,068,908    $  32,373,321
                                                                     =============    =============
Supplemental disclosure of cash flow information:
  Interest paid ..................................................   $  16,800,709    $  19,639,457
                                                                     =============    =============
Supplemental schedule of non-cash investing and financing
  activities:
  Exchange of note receivable for real estate held for sale ......   $  19,000,000    $          --
                                                                     =============    =============
  Reclassification of properties from investment in real estate
   to hold for sale ..............................................   $ 211,886,405    $          --
                                                                     =============    =============
</TABLE>

                 The accompanying notes are an integral part of
                     these consolidated financial statements

                                       6
<PAGE>
<TABLE>
<CAPTION>
                          OCWEN ASSET INVESTMENT CORP.
           (A WHOLLY OWNED SUBSIDIARY OF OCWEN FINANCIAL CORPORATION)
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

                                                                                                   Accumulated
                                           Common Stock            Additional                         other
                                   -----------------------------     paid-in        Retained       comprehensive
                                      Shares           Amount        capital        earnings           loss              Total
                                   -------------   -------------   -------------   -------------   -------------    -------------
<S>                                        <C>     <C>             <C>             <C>             <C>              <C>
Balance at December 31, 1999 .....         6,100   $          61   $ 135,857,923   $   3,542,683   $    (692,899)   $ 138,707,768

Net income .......................            --              --              --      14,567,110              --       14,567,110

Change in unrealized loss on
 securities available for sale ...            --              --              --              --      (4,757,355)      (4,757,355)
Change in cumulative translation              --              --              --              --        (226,696)        (226,696)
                                   -------------   -------------   -------------   -------------   -------------    -------------
 Balance at June 30, 2000 ........         6,100   $          61   $ 135,857,923   $  18,109,793   $  (5,676,950)   $ 148,290,827
                                   =============   =============   =============   =============   =============    =============
</TABLE>

                 The accompanying notes are an integral part of
                     these consolidated financial statements

                                       7
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000


NOTE 1   ACQUISITION OF THE COMPANY

BASIS OF PRESENTATION

         On October 7, 1999, Ocwen Asset Investment Corp. was acquired by Ocwen
Financial Corporation ("OCN"). On October 20, 1999, Ocwen Asset Investment Corp.
merged (the "Subsequent Merger") into Small Commercial Properties Corporation I
("SCP"), a Florida corporation and an indirect wholly owned subsidiary of OCN.
Immediately thereafter, SCP changed its name to Ocwen Asset Investment Corp.
(hereinafter referred to as "OAC" or the "Company"). As a result of the
Subsequent Merger, on October 20, 1999, the Company ceased to qualify as a real
estate investment trust under the Internal Revenue Code of 1986, as amended. A
vertical line has been used to separate the post-acquisition consolidated
financial statements of the Company from the pre-acquisition consolidated
financial statements of the Company (the "Predecessor"). The effects of the
acquisition resulted in a new basis of accounting reflecting fair values of
assets and liabilities at that date. The consolidated financial statements of
the Predecessor are presented at the Predecessor's historical cost.

NOTE 2   ORGANIZATION

         The Company's consolidated financial statements include the accounts of
the Company and its subsidiaries. The Company directly owns two subsidiaries,
Ocwen General, Inc. (the "General Partner") and Ocwen Limited, Inc. (the
"Limited Partner"). The General Partner and the Limited Partner own 0.9% and
90.4%, respectively, of Ocwen Partnership, L.P. (the "Operating Partnership").
Additionally, the Company, the General Partner, the Limited Partner and the
Operating Partnership have established a variety of wholly owned subsidiaries
for operational purposes.

         The Company has a management agreement with Ocwen Capital Corporation
("OCC"), a wholly owned subsidiary of OCN, under which OCC advises the Company
on various facets of its business and manages its day-to-day operations, subject
to the supervision of the Company's Board of Directors. For its services, OCC
receives a quarterly base management fee and, if certain thresholds are met, an
incentive fee. During the three months and six months ended June 30, 2000, OCC
earned from the Company $1.0 million and $2.1 million in management fees,
respectively.

         The Company also has servicing agreements with Ocwen Federal Bank FSB
(the "Bank"), a wholly owned subsidiary of OCN, for the servicing of all of the
Company's mortgage loans. In addition, the Bank in its capacity as servicer or
special servicer receives fees from certain mortgage-backed securities in which
the Company owns a subordinate or residual interest. During the three months and
six months ended June 30, 2000, the Bank earned from the Company $0.8 million
and $1.3 million in servicing fees, respectively.

NOTE 3   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The accounting and reporting policies of the Company and its
subsidiaries follow U.S. generally accepted accounting principles ("GAAP"). The
policies, which materially affect the determination of the Company's financial
position, results of operations and cash flows, are summarized below.

         In the opinion of management, the accompanying financial statements
contain all adjustments, consisting of normal recurring accruals, necessary for
a fair presentation of the Company's financial condition at June 30, 2000 and
December 31, 1999, the results of its operations for the three months and six
months ended June 30, 2000 and 1999, its comprehensive income for the three
months and six months ended June 30, 2000 and 1999, its cash flows for the six
months ended June 30, 2000 and 1999, and its changes in stockholder's equity for
the six months ended June 30, 2000. The results of operations and other data for
the three month and six month periods ended June 30, 2000 are not necessarily
indicative of the results that may be expected for any other interim periods or
the entire year ended December 31, 2000. The unaudited consolidated financial
statements presented herein should be read in conjunction with the audited
consolidated financial statements and related notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.

PRINCIPLES OF CONSOLIDATION

         The Company's consolidated financial statements include the accounts of
OAC and its subsidiaries as described in Note 2 above. All significant
intercompany transactions and balances have been eliminated.

                                       8
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000

USE OF ESTIMATES

         The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Material estimates that are particularly susceptible to
significant change in the near or medium term relate to the valuation of
securities available for sale and determination of the allowance for loan losses
on loans and discount loans.

REPURCHASE AGREEMENTS AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

         The Company enters into purchases of securities under agreements to
resell (repurchase agreements) and sales of securities under agreements to
repurchase. Interest is reported as interest income and interest expense,
respectively. At June 30, 2000, repurchase agreements amounted to $25.0 million.

INVESTMENT IN REAL ESTATE PARTNERSHIPS

         The Company's investments in real estate partnerships are accounted for
under the equity method of accounting. Under the equity method of accounting, an
investment in the shares or other interests of an investee is recorded at cost
of the shares or interests acquired and thereafter is periodically increased
(decreased) by the investor's proportionate share of earnings (losses) of the
investee and decreased by the dividends or distributions received by the
investor from the investee.

REAL ESTATE HELD FOR SALE

         Real estate held for sale is reported at the lower of the carrying
amount or fair value less cost to sell. Real estate is classified as held for
sale when the Company has committed to a plan to sell the assets, and
depreciation is discontinued. Gains and losses on the sale of real estate held
for sale are included as a component of income.

SECURITIES AVAILABLE FOR SALE

         Effective June 30, 2000, the Company refined its methodology for
estimating fair value of its securities portfolio at the end of each month. Fair
value is estimated within a range based on third party dealer quotations, where
available, and internal values, subject to an internal review process.
Previously, fair value was generally based on the lower of dealer quotations or
internal values, also subject to an internal review process.

RISKS AND UNCERTAINTIES

         In the normal course of business, the Company encounters primarily two
significant types of economic risk: credit and market. Credit risk is the risk
of default on the Company's loan portfolios that results from a borrower's
inability or unwillingness to make contractually required payments. Market risk
primarily reflects changes in the value of securities available for sale and
investments in real estate due to changes in interest rates or other market
factors, including the rate of prepayments of principal, the value of the
collateral underlying loans and the valuation of real estate held by the
Company.

                                       9
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000

RECENT ACCOUNTING STANDARDS

         In June, 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which amends FASB Statements No. 52 and
107, and supersedes FASB Statements No. 80, 105 and 119. SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. SFAS No. 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
condition and measure those instruments at fair value. SFAS No. 133, as amended
by SFAS No. 137 and SFAS No. 138, is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. Initial application of SFAS No. 133
should be as of the beginning of an entity's fiscal quarter; on that date,
hedging relationships must be designated anew and documented pursuant to the
provisions of SFAS No. 133. Earlier application of SFAS No. 133 is encouraged
but is permitted only as of the beginning of any fiscal quarter that begins
after issuance of SFAS No. 133. The Company has not yet determined the impact on
its results of operations, financial position or cash flows as a result of
implementing SFAS No. 133.

NOTE 4   RISK MANAGEMENT INSTRUMENTS

         The following table indicates the interest rate swaps outstanding at
June 30, 2000, pursuant to which the Company receives payments from a
counterparty based on a floating rate of interest equal to LIBOR and agrees to
pay a fixed rate of interest to such party on a specified notional amount:

                 Notional    LIBOR                 Floating Rate at
     Maturity     Amount     Index    Fixed Rate     End of Period   Fair Value
     --------   ----------  -------   ----------   ----------------  ----------
                             (Dollars In Thousands)

       2003     $   86,000   1-month    5.75%            6.65        $   3,137
       2001         75,000   1-month    6.00             6.65              586
                ----------                                           ---------
                $  161,000                                           $   3,723
                ==========                                           =========

         At June 30, 2000, the Company had foreign currency futures contracts to
hedge currency exposure in connection with its investment in residual interests
backed by residential mortgage loans originated in the United Kingdom, which are
held by a wholly-owned foreign subsidiary of the Company. Currency futures
contracts are commitments to either purchase or sell foreign currency at a
future date for a specified price. At June 30, 2000, the fair value of the
British Pound futures contracts was $0.1 million. In addition, the Company
entered into foreign currency futures contracts to hedge its Canadian dollar
exposure in connection with its investment in the shopping center located in
Halifax, Nova Scotia, which is held by a wholly owned foreign subsidiary of the
Company. At June 30, 2000, the fair value of the Canadian Dollar futures
contract was $0.1 million. Gains and losses on these foreign currency futures
contracts are recorded in the Consolidated Statements of Financial Condition
offsetting the item being hedged.

NOTE 5   SECURITIES AVAILABLE FOR SALE

         The following table sets forth the amortized cost, fair value and gross
unrealized gains and losses of the Company's securities available for sale at
the dates indicated.
<TABLE>
<CAPTION>

JUNE 30, 2000                                                      Gross            Gross
                                                Amortized        Unrealized       Unrealized          Fair
                                                   Cost            Gains            Losses            Value
                                             ---------------   ---------------  ---------------   ---------------
                                                                    (Dollars in Thousands)
<S>                                          <C>               <C>              <C>               <C>
Mortgage-related securities:
   Single-family residential:
     Subprime residuals..................    $        52,053   $           585  $            --   $        52,638
     Subordinates........................              4,618               909               --             5,527
                                             ---------------   ---------------  ---------------   ---------------
                                                      56,671             1,494               --            58,165
                                             ---------------   ---------------  ---------------   ---------------
   Multi-family and commercial:
     Subordinates........................              2,965                --               --             2,965
                                             ---------------   ---------------  ---------------   ---------------
                                                       2,965                --               --             2,965
                                             ---------------   ---------------  ---------------   ---------------
Total securities available for sale          $        59,636   $         1,494  $            --   $        61,130
                                             ===============   ===============  ===============   ===============

                                       10
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000

DECEMBER 31, 19999                                                 Gross            Gross
                                                Amortized        Unrealized       Unrealized          Fair
                                                   Cost            Gains            Losses            Value
                                             ---------------   ---------------  ---------------   ---------------
                                                                    (Dollars in Thousands)
<S>                                          <C>               <C>              <C>               <C>
Mortgage-related securities:
   Single-family residential:
     Subprime residuals..................    $        56,175                --  $           (27)  $        56,148
     Subordinates........................              5,882                --             (323)            5,559
                                             ---------------   ---------------  ----------------  ---------------
                                                      62,057                --             (350)           61,707
                                             ---------------   ---------------  ----------------  ---------------
   Multi-family and commercial:
     Subordinates........................             41,738                --               --            41,738
                                             ---------------   ---------------  ---------------   ---------------
                                                      41,738                --               --            41,738
                                             ---------------   ---------------  ---------------   ---------------
Total securities available for sale          $       103,795   $            --  $          (350)  $       103,445
                                             ===============   ===============  ================  ===============
</TABLE>

         During the three months and six months ended June 30, 2000, the Company
recorded impairment charges of $0.7 million and $0.8 million, respectively,
against its portfolio of securities available for sale. The charges resulted
from increases in projected prepayment speeds during the period and losses in
excess of assumptions, which resulted in the shortening of the weighted average
lives of certain individual securities in the portfolio. As a result, a
determination was made to write down the recorded investment in those securities
where the reduction in fair value was considered to be other than temporary.

         On June 26, 2000, the Company purchased at fair value from Investors
Mortgage Insurance Holding Company, a wholly owned subsidiary of OCN, four
residual securities in the amount of $9.9 million.

NOTE 6   LOAN PORTFOLIO

         The Company's loan portfolio consisted of the following at the dates
indicated.


                                                      June 30,     December 31,
                                                       2000            1999
                                                   ------------    ------------
                                                      (Dollars in Thousands)
Single-family residential ...................      $      2,210    $      2,541
Multi-family residential ....................            44,270          34,830
Commercial real estate:
  Hotel .....................................            30,542          24,809
                                                   ------------    ------------
    Total loans .............................            77,022          62,180
Premium/(discount) ..........................               813             488
Allowance for loan losses ...................              (747)           (731)
                                                   ------------    ------------
  Loans, net ................................      $     77,088    $     61,937
                                                   ============    ============

         The following table represents a summary of the Company's
non-performing loans (past due 90 days or more) at the dates indicated.


                                                       June 30,     December 31,
                                                         2000          1999
                                                     ------------   ------------
                                                        (Dollars in Thousands)
Single-family residential ...................        $      1,138   $        682
Multi-family ................................               3,016          3,005
                                                     ------------   ------------
                                                     $      4,154   $      3,687
                                                     ============   ============

         At June 30, 2000 and December 31, 1999, the Company had no investment
in impaired loans as defined in accordance with SFAS No. 114, as amended by SFAS
No. 118.

                                       11
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000

NOTE 7   MATCH FUNDED RESIDENTIAL LOANS AND SECURITIES, NET

         Match funded residential loans and securities is comprised of the
following at the dates indicated.
<TABLE>
<CAPTION>

                                                          June 30,     December 31,
                                                           2000           1999
                                                       -----------    -------------
                                                          (Dollars in Thousands)

<S>                                                    <C>            <C>
Single family residential loans ..................     $     92,930   $    105,596
Allowance for loan losses ........................             (433)          (495)
                                                       ------------   ------------
        Match funded residential loans, net.......           92,497        105,101
Match funded securities ..........................           38,587         52,693
                                                       ------------   ------------
Balance at end of period .........................     $    131,084   $    157,794
                                                       ============   ============
</TABLE>

         The following table represents a summary of the Company's
non-performing loans (past due 90 days or more) at the dates indicated in the
match funded loan portfolio.

                                              June 30, 2000    December 31, 1999
                                             --------------    -----------------
                                                  (Dollars in Thousands)
    Match funded loans...................     $       1,992      $      1,127
                                              =============      ============

         The following table sets forth the amortized cost, fair value and gross
unrealized gains and losses of the Company's match funded securities at June 30,
2000.

                                                Gross       Gross
                                 Amortized    Unrealized  Unrealized     Fair
                                    Cost        Gains       Losses       Value
                                 ---------    ----------  ----------   ---------
                                              (Dollars in Thousands)

Match funded securities .......   $ 48,818    $    --      $(10,231)    $ 38,587
                                  ========    =========    ========     ========

         Bonds-match funded agreements were comprised of the following at the
dates indicated:

                                                June 30, 2000  December 31, 1999
                                                -------------  -----------------
                                                    (Dollars in Thousands)

OAC Mortgage Residential Securities, Inc.....    $     86,118   $    100,968
Ocwen NIM Corp. .............................          35,679         40,547
                                                 ------------   ------------
                                                 $    121,797   $    141,515
                                                 ============   ============

NOTE 8   INVESTMENT IN REAL ESTATE PARTNERSHIPS

         During January 2000, the Company invested approximately $11.7 million
in real estate partnerships. At June 30, 2000, the Company's investment in real
estate partnerships consisted of interests in five limited partnerships
operating as real estate ventures, consisting of multi-family type properties.

                                       12
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000

NOTE 9   REAL ESTATE HELD FOR SALE

         During the second quarter of 2000, the Company reclassified from
investment in real estate to real estate held for sale two shopping centers, one
located in each of Bradenton, Florida and Havre, Montana for $21.6 million and
$1.5 million, respectively. At June 30, 2000, real estate held for sale also
included three commercial office properties in San Francisco, California. The
following table sets forth the Company's real estate held for sale:

                                                                June 30, 2000
                                                          (Dollars in Thousands)
                                                          ----------------------
    Office buildings......................................    $        169,742
    Building improvements.................................              15,686
    Tenant improvements and lease commissions.............               9,813
                                                              ----------------
                                                              $        195,241
                                                              ================

         On June 30, 2000, the Company sold its office building located at 690
Market Street in San Francisco, California for $28.0 million, less commissions
and closing costs, for a net gain of $3.9 million. The net proceeds consisted of
cash of approximately $7.1 million and a note receivable of $19.0 million

         During the second quarter of 2000, the Company entered into agreements
to sell the three San Francisco properties located at 225 Bush Street, 450
Sansome Street, and 10 U.N. Plaza for aggregate proceeds of more than $210
million less closing costs and pro rations of certain contractual obligations
that survive closing. Closing on 225 Bush Street and 450 Sansome Street is
contingent upon satisfactory completion of the buyers due diligence, while due
diligence on 10 United Nations Plaza has been completed. Each transaction is
also subject to the fulfillment of certain conditions, including but not limited
to delivery of clear title and receipt of required tenant estoppels. These
closings are expected to occur during the third quarter of 2000.

NOTE 10  INVESTMENT IN REAL ESTATE

         The investment in real estate at June 30, 2000 was comprised of an
office building in Jacksonville, Florida, and a shopping plaza located in
Halifax, Nova Scotia. The following table sets forth the Company's investment in
real estate for the dates indicated:

                                           June 30, 2000    December 31, 1999
                                           -------------    -----------------
                                                 (Dollars in Thousands)

Office buildings .......................... $     32,102     $    202,607
Retail ....................................        9,622           33,224
Building improvements .....................        8,472           17,590
Tenant improvements and lease commissions .          892            8,150
Furniture and fixtures ....................           47               44
                                            ------------     ------------
                                                  51,135          261,615

Accumulated depreciation and amortization .       (1,788)          (9,011)
                                            ------------     ------------
  Investment in real estate, net .......... $     49,347     $    252,604
                                            ============     ============

NOTE 11  SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OBLIGATIONS
         OUTSTANDING UNDER LINES OF CREDIT

         SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE. Securities sold under
agreements to repurchase were $1.3 million at June 30, 2000, compared to $28.3
million at December 31, 1999. These obligations are secured by certain of the
Company's investments in subordinated interests in commercial mortgage-backed
securities, residual interests in subprime residential loan securitizations and
U.K. mortgage loan residual securities. On July 25, 2000, the Company paid this
liability in full.

         Interest expense with respect to these obligations for the three months
and six months ended June 30, 2000 was $0.01 million and $0.25 million,
respectively.

                                       13
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000

         OBLIGATIONS OUTSTANDING UNDER LINES OF CREDIT. Obligations outstanding
under lines of credit amounted to $33.1 million and $18.0 million at June 30,
2000 and December 31, 1999, respectively. These borrowings are pursuant to a
three year agreement, which is collateralized by $62.8 million in commercial
loans. No further draws are permitted under this line of credit. Interest
expense was $0.4 million and $0.7 million for the three months and six months
ended June 30, 2000, respectively.

         OBLIGATIONS OUTSTANDING UNDER LINES OF CREDIT - REAL ESTATE.
Obligations outstanding under lines of credit secured by real estate amounted to
$141.6 million and $141.2 million at June 30, 2000 and December 31, 1999,
respectively. These borrowings are pursuant to a three-year agreement. Interest
expense during the three months and six months ended June 30, 2000 was $3.0
million and $5.7 million, respectively. Set forth below is information regarding
the Company's indebtedness relating to its investment in real estate at June 30,
2000:
<TABLE>
<CAPTION>

           Property               Principal Amount     Interest Rate   Maturity Date
--------------------------------  ----------------     -------------   --------------
                               (Dollars in Millions)

<S>                                  <C>    <C>       <C>               <C>
Bush Street Property............     $      75.0      LIBOR plus 1.75%   April, 2001
Other...........................     $      66.6      LIBOR plus 1.75%   June, 2001(1)
</TABLE>

(1)      As of June 30, 2000, this line of credit was collateralized by $110.1
         million in investments in real estate. No further draws are permitted
         under this line of credit.

         In addition to payment and, in the case of the Company's secured
indebtedness, collateralization requirements, the Company is subject to various
other covenants in the agreements evidencing its indebtedness, including the
maintenance of specified amounts of equity. At June 30, 2000, the Company was in
compliance with all obligations under the agreements evidencing its indebtedness
with respect to the Company's equity and that of its operating partnership's
equity, as defined in the applicable agreement.

NOTE 12  11.5% REDEEMABLE NOTES AND BONDS-MATCH FUNDED AGREEMENTS

         In June 2000, the Company repurchased in the open market $9.9 million
of its outstanding 11.5% Redeemable Notes due 2005. This resulted in the Company
realizing an extraordinary gain of $1.4 million, net of taxes, during the second
quarter of 2000. At June 30, 2000, the outstanding par balance of the Redeemable
Notes was $113.1 million. Interest expense on the Redeemable Notes during the
three months and six months ended June 30, 2000 was $3.5 million and $7.5
million, respectively.

         The indenture under which the Redeemable Notes were issued (the
"Indenture") prohibits the Company from incurring or issuing debt, other than
certain permitted indebtedness ("Permitted Indebtedness"), if certain financial
tests are not satisfied. One such test requires that the ratio of adjusted Funds
from Operations ("FFO") to adjusted fixed charges for the previous four fiscal
quarters exceeds 1.25 to 1.00. FFO to adjusted fixed charges for the four
quarters ended June 30, 2000 was 1.51 to 1.

         The Indenture also prohibits the Company from making certain restricted
payments, including dividends. As of June 30, 2000, the Company was not
permitted to pay dividends under the Indenture and the Company does not expect
that it will be able to pay dividends in the foreseeable future.

         At June 30, 2000 and December 31, 1999 bonds-match funded agreements
amounted to $121.8 million and $141.5 million, respectively. Interest expense
was $2.8 million and $6.1 million for the three months and six months ended June
30, 2000, respectively.

NOTE 13  BUSINESS SEGMENT REPORTING

         SFAS No. 131 requires public enterprises to report financial and
descriptive information about its reportable operating segments. Operating
segments are defined as components of an enterprise that (a) engage in business
activities from which they may earn revenues and incur expenses, (b) whose
operating results are regularly reviewed by the enterprise's chief operating
decision maker to make decisions about resources to be allocated to the segment
and assess its performance, and (c) for which discrete financial information is
available. An operating segment may engage in business activities for which it
has yet to earn revenues. The Company conducts a variety of business activities
within the following segments:

                                       14
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000

<TABLE>
<CAPTION>
                                                    Other       Real Estate
                                  Net Interest     Expenses       Income,      Net (Loss)        Total
                                     Income        (Income)         Net          Income          Assets
                                  -----------    -----------    -----------   -------------    ------------
AT OR FOR THE THREE MONTHS ENDED
 JUNE 30, 2000:
<S>                               <C>            <C>            <C>           <C>              <C>
Commercial real estate ........   $(9,486,804)   $(3,396,681)   $ 2,078,046   $   4,525,923    $247,894,518
Commercial loans ..............       401,855      1,733,545             --      (1,331,690)    132,160,771
Domestic subprime single family
  residential lending .........     1,100,253      1,226,256             --        (123,003)     92,278,523
Single family residential
  discount loans ..............     1,699,476        518,843             --       1,180,633     101,522,560
Corporate items and other .....       806,968     (2,837,497)            --       3,644,465      48,443,842
                                  -----------    -----------    -----------   -------------    ------------
                                  $ 3,059,748    $(2,758,534)   $ 2,078,046   $   7,896,329    $622,300,214
                                  ===========    ===========    ===========   =============    ============

AT OR FOR THE SIX MONTHS ENDED
 JUNE 30, 2000:

Commercial real estate ........   $(2,540,572)   $(3,364,589)   $ 3,091,865   $   3,915,882    $247,894,518
Commercial loans ..............     1,618,664        911,261             --         707,403     132,160,771
Domestic subprime single family
  residential lending .........     2,336,192      1,812,625             --         523,567      92,278,523
Single family residential
  discount loans ..............     2,548,687        947,870             --       1,600,817     101,522,560
Corporate items and other .....       726,194     (7,093,247)            --       7,819,441      48,443,842
                                  -----------    -----------    -----------   -------------    ------------
                                  $ 4,689,165    $(6,786,080)   $ 3,091,865   $  14,567,110    $622,300,214
                                  ===========    ===========    ===========   =============    ============
</TABLE>

         Interest income and expense have been allocated to each business
segment for the investment of funds raised or funding of investments made taking
into consideration the duration of such liabilities or assets. Allocations of
non-interest expense generated by corporate support services were made to each
business segment based upon management's estimate of time and effort spent in
the respective activity. Income taxes are allocated to each business segment
based on the Company's statutory tax rate. As such, the resulting amounts
represent estimates of the contribution of each business activity to the
Company. Other Expenses (Income) also includes: gains (losses) on securities,
derivatives and real estate held for sale, net; income tax expense; and
extraordinary gains on repurchase of debt, net of taxes.

         Prior to the acquisition of the Company by OCN, the Company did not
operate in business segments. Accordingly, it is not practicable to present
comparative segment data for the periods ended June 30, 1999.


NOTE 14  COMMITMENTS AND CONTINGENCIES

         At June 30, 2000, the Company had $11.1 million in outstanding
commitments to fund construction loans secured by multi-family and commercial
properties. The following table details the amounts committed at such date.

                                                               June 30, 2000
                                                               -------------
                                                          (Dollars in Thousands)

        Multi-family....................................        $   3,717
        Hotels..........................................            7,424
                                                                ---------
          Total committed amount........................        $  11,141
                                                                =========

                                       15
<PAGE>
OCWEN ASSET INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000

         On April 20, 1999, a complaint was filed on behalf of a putative class
of public shareholders of the Company in the Circuit Court of the Fifteenth
Judicial Circuit, Palm Beach County, Florida against OCN and the Company. On
April 23, 1999, a complaint was filed on behalf of putative classes of public
shareholders of the Company in the Circuit Court of the Fifteenth Judicial
Circuit, Palm Beach County, Florida against the Company and certain directors of
the Company. The plaintiffs in both complaints sought to enjoin consummation of
the acquisition of the Company by OCN. The cases were consolidated, and on
September 13, 1999 a consolidated amended complaint was filed. The injunction
was denied, and on October 14, 1999, OCN was dismissed as a party. Plaintiffs'
remaining claims are for damages for alleged breaches of common law fiduciary
duties. Discovery is ongoing.


         On June 3, 1999, Walton Street Capital, L.L.C. ("Walton") filed suit
against the Company and the Operating Partnership in the Circuit Court of Cook
County, Illinois. Walton has alleged that the Company committed an anticipatory
breach of contract with respect to the proposed sale by the Company of all of
its interest in its commercial mortgage-backed securities portfolio to Walton.
Walton has claimed damages in an amount in excess of $20 million. The Company
believes this suit is without merit and continues to vigorously defend against
the same. Discovery is ongoing.

         The Company is subject to various other pending legal proceedings. In
management's opinion, the resolution of these other claims will not have a
material effect on the consolidated financial statements.


                                       16
<PAGE>

ITEM 2.  MANAGEMENT'T DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Pursuant to General Instruction (H)(2)(a) of Form 10-Q, the following discussion
has been reduced to a narrative analysis of the results of operation, including
the reasons for changes in the amount of revenue and expense items during the
second quarter of 2000 versus the second quarter of 1999.

RESULTS OF OPERATIONS

         GENERAL. The Company recorded net income of $7.9 million for the
quarter ended June 30, 2000 as compared to a net loss of $18.2 million for the
quarter ended June 30, 1999. The increase in net income was primarily due to a
decline in the amount of impairment losses on securities to $0.8 million,
compared to losses of $23.9 million for the same period a year ago, a gain of
$3.9 million on the sale of real estate (see Note 9 to the Consolidated
Financial Statements, which is incorporated herein by reference), and an
extraordinary gain of $1.4 million on the repurchase of the 11.5% Redeemable
Notes due 2005. The impairment losses for the three months and six months ended
June 30, 2000 were taken against residential subprime bonds, reflecting
continuing market illiquidity for these instruments. Net income for the six
months ended June 30, 2000 was $14.6 million, compared to a net loss of $18.9
million for the same period a year ago.

        INTEREST INCOME. Interest income decreased $8.2 million to $9.7 million
for the quarter ended June 30, 2000, compared to $17.9 million for the
comparable period in 1999. This decrease was primarily due to a reduction in
interest income on the securities available for sale portfolio of $8.4 million,
which resulted from lower average balances in the residential securities
portfolio arising from the sale and securitization of some securities. Interest
income for the six months ended June 30, 2000 was $19.3 million, compared to
$37.3 million for the same period a year ago.

        INTEREST EXPENSE. Interest expense for the quarter ended June 30, 2000
decreased $2.4 million to $6.7 million as compared to $9.1 million for the same
period a year ago. This decrease was primarily due to a reduction of $2.0
million in interest expense from securities sold under agreements to repurchase,
primarily due to the sale of securities. Interest expense does not include the
expense associated with the borrowings secured by investments in real estate,
which is included in the operations of the Company's real estate. See " -Real
Estate Income (Expense), Net" below. Interest expense for the six months ended
June 30, 2000 was $14.6 million, compared to $19.0 million for the same period a
year ago.

         NET INTEREST INCOME. Net interest income during the quarter ended June
30, 2000 decreased $5.4 million to $3.1 million from $8.5 million in the same
period of 1999, as discussed above. Net interest income was $4.7 million for the
six months ended June 30, 2000, compared to $17.7 million for the same period a
year ago.

         PROVISION FOR LOAN LOSSES. The provision for loan losses, net of
recoveries, for the quarter ended June 30, 2000 was $(0.06) million, compared to
$0.2 million for the same period of 1999. This change reflects the Company's
evaluation of current economic conditions, a credit review of loans, an analysis
of specific loan situations and the size and composition of the commercial and
multi-family loan portfolio.

         REAL ESTATE INCOME (EXPENSE), NET. Real estate income, net increased
$2.8 million to $2.1 million for the quarter ended June 30 2000, compared to a
loss of $0.7 million for the same period in 1999. This increase was primarily
due to a $1.6 million increase in rental income, which resulted from higher
occupancy and increased rental rates and the discontinuance of depreciation
expense for real estate reclassified to held for sale. See Notes 9 and 10 to the
Consolidated Financial Statements, which are incorporated herein by reference.
Real estate income, net was $3.1 million for the six months ended June 30, 2000
compared to a net loss of $0.5 million for the same period a year ago.

         OTHER EXPENSES (INCOME). Other expenses (income) decreased $4.6 million
during the quarter ended June 30, 2000 to income of $0.7 million from an expense
of $3.9 million in the same period a year ago. This decrease was primarily due
to the amortization of excess of net assets over purchase price for $3.0
million, which resulted from the acquisition of the Company by OCN and a
decrease of $0.5 million in management fees due to lower Average Invested Assets
balances. See Notes 1 and 2 to the Consolidated Financial Statements, which are
incorporated herein by reference. Other expenses (income) of ($1.4) million for
the six months ended June 30, 2000, compared to an expense of $6.8 million for
the same period a year ago.

         GAINS (LOSSES) ON SECURITIES, DERIVATIVES AND SALE OF REAL ESTATE HELD
FOR SALE, NET. Gains (losses) on securities, derivatives and sale of real estate
held for sale, net increased $27.4 million to a gain of $23.9 million for the
quarter ended June 30, 2000 over the same period a year ago. This increase was
primarily due to a decrease of impairment losses on securities to $0.8 million
compared to $23.9 million for the quarter ended June 30, 1999 and a gain of $3.9
million on the sale of real estate. The impairment losses for the three months
and six months ended June 30, 2000 were taken against residential subprime
bonds, reflecting continuing market illiquidity for these instruments.

                                       17
<PAGE>

FORWARD-LOOKING STATEMENTS

         Certain statements contained herein are not, and certain statements
contained in future filings by the Company with the Securities and Exchange
Commission (the "Commission"), in the Company's press releases or in the
Company's other public or shareholder communications may not be, based on
historical facts and are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements,
which are based on various assumptions (some of which are beyond the Company's
control), may be identified by reference to a future period(s) or by the use of
forward-looking terminology such as "anticipate," "believe," "commitment,"
"consider," "continue," "could," "encourage," "estimate," "expect," "foresee,"
"intend," "in the event of," "may," "plan," "present," "propose," "prospect,"
"update," "whether," "will," "would," future or conditional verb tenses, similar
terms, variations on such terms or negatives of such terms. Although the Company
believes the anticipated results or other expectations reflected in such
forward-looking statements are based on reasonable assumptions, it can give no
assurance that those results or expectations will be attained. Actual results
could differ materially from those indicated in such statements due to risks,
uncertainties and changes with respect to a variety of factors, including, but
not limited to, international, national, regional or local economic environments
(particularly in the market areas where the Company operates), government fiscal
and monetary policies (particularly in the market areas where the Company
operates), prevailing interest or currency exchange rates, effectiveness of
interest rate, currency and other hedging strategies, laws and regulations
affecting investment companies and real estate (including access for disabled
persons and environmental compliance), credit, prepayment, basis, default,
subordination and asset/liability risks, loan servicing effectiveness, course of
negotiations and ability to reach agreement with respect to material terms of
any particular transaction, satisfaction or fulfillment of agreed upon terms and
conditions of closing or performance, timing of transaction closings,
discontinuation of investment activities, availability of and costs associated
with obtaining adequate and timely sources of liquidity, dependence on existing
sources of funding, ability to repay or refinance indebtedness (at maturity or
upon acceleration), ability to meet collateral calls by lenders (upon
re-valuation of the underlying assets or otherwise) and to generate revenues
sufficient to meet debt service payments and other operating expenses, size of,
nature of and yields available with respect to the secondary market for mortgage
loans and financial, securities and securitization markets in general,
allowances for loan losses, geographic concentrations of assets (temporary or
otherwise), timely leasing of unoccupied square footage (generally and upon
lease expiration), changes in real estate conditions (including liquidity,
valuation, revenues, rental rates, occupancy levels and competing properties),
adequacy of insurance coverage in the event of a loss, known or unknown
environmental conditions, external management, other factors generally
understood to affect the real estate acquisition, mortgage and leasing markets
and securities investments, and other risks detailed from time to time in the
Company's reports and filings with the Commission, including its periodic
reports on Forms 10-Q, 8-K, and 10-K and Exhibit 99.2, Risk Factors, filed with
the Company's 1999 Form 10-K. Given these uncertainties, readers are cautioned
not to place undue reliance on such statements. The Company does not undertake,
and specifically disclaims any obligation, to publicly release the results of
any revisions which may be made to any forward-looking statements to reflect the
occurrence of anticipated or unanticipated events or circumstances after the
date of such statements.

                                       18
<PAGE>
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

                  2.1      Agreement of Merger dated as of July 25, 1999 among
                           Ocwen Financial Corporation, Ocwen Asset Investment
                           Corp. and Ocwen Acquisition Company (1)

                  2.2      Agreement and plan of Merger and Reorganization dated
                           as of October 19, 1999 between Ocwen Asset Investment
                           Corp. and Small Commercial Properties Corporation I
                           (2)

                  3.1      Amended and Restated Articles of Incorporation (2)

                  3.2      Amended and Restated Bylaws (2)

                  4.1      Form of Common Stock certificate (2)

                  4.2      Form of Indenture between the Company and Norwest
                           Bank Minnesota, National Association, as Trustee
                           thereunder for the 11.5% Redeemable Notes due 2005
                           (3)

                 10.1      First Amended and Restated Management Agreement (4)

                 10.2      Loan Agreement, dated as of April 24, 1998, between
                           OAC and Greenwich Financial Products Inc. (4)

                 10.3      Third Amended and Restated Agreement of Limited
                           Partnership of Ocwen Partnership L.P., (5)

                 10.4      Amended and restated Loan Agreement, dated as of June
                           10, 1998, by and among, inter alia, OAIC California
                           Partnership, L.P., OAIC California Partnership II,
                           L.P., Salomon Brothers, Realty Corp. and LaSalle
                           National Bank. (5)

                  10.5     Loan Agreement, dated as of April 7, 1998, between
                           OAIC Bush Street, LLC and Salomon Brothers Realty
                           Corp. (6)

                  10.6     Second Extension of Term Agreement (2)

                  10.7     Compensation and Indemnification Agreement, dated as
                           of May 6, 1999, between the Company and the
                           independent committee of the Board of Directors (7)
                           10.8 First Amendment to Loan Agreement and Guaranty,
                           dated as of July 9, 1999, made by and among OAIC Bush
                           Street, LLC, Salomon Brothers Realty Corp, Ocwen
                           Partnership, L.P. and LaSalle Bank National
                           Association (7) 10.9 Second Amendment to Guarantee of
                           Payment, dated as of July 9, 1999, made by and
                           between Salomon Brothers Realty Corp. and Ocwen
                           Partnership, L.P. (7) 10.10 Indemnity Agreement,
                           dated August 24, 1999, among OCN and the Company's
                           directors (7) 10.11 First Amendment to Agreement,
                           dated March 30, 2000 between HCT Investments, Inc.
                           and OAIC Partnership I, L.P. (8)

                  27       Financial Data Schedule for the period ended June 30,
                           2000 (filed herewith)

                  99.1     Investment Guidelines (3)

                  99.2     Risk Factors (2)
================================================================================
                  (1)      Incorporated by reference to Ocwen Financial
                           Corporation's Current Report on Form 8-K filed with
                           the Commission on July 26, 1999.
                  (2)      Incorporated by reference to the Company's Annual
                           Report on Form 10-K for the year ended December 31,
                           1999.
                  (3)      Incorporated by reference to the Company's
                           Registration Statement on Form S-4 (File No.
                           333-64047), as amended, as declared effective by the
                           Commission on February 12, 1999.
                  (4)      Incorporated by reference to the Company's Quarterly
                           Report on Form 10-Q for the quarterly period ended
                           March 31, 1998.
                  (5)      Incorporated by reference to the Company's Quarterly
                           Report on Form 10-Q for the quarterly period ended
                           June 30, 1998.
                  (6)      Incorporated by reference to the Company's Current
                           Report on Form 8-K filed with the Commission on April
                           23, 1998.
                  (7)      Incorporated by reference to the Company's Quarterly
                           Report on Form 10-Q for the quarterly period ended
                           September 30, 1999. (8) Incorporated by reference to
                           the Company's Quarterly Report on Form 10-Q for the
                           quarterly period ended March 31, 2000.

         (b)      Reports on Form 8-K filed during the quarter ended June 30,
                  2000:

                  None.




                                       20
<PAGE>
                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.


      OCWEN ASSET INVESTMENT CORP.




       By:   /s/ Mark S. Zeidman
             -------------------------------------
             Mark S. Zeidman
             Senior Vice President and Chief Financial Officer (On behalf of the
             Registrant and as its principal financial officer)



       Date:    August 14, 2000

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