Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 30, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Ocwen Financial Corporation | |
Entity Central Index Key | 873860 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | FALSE | |
Entity Common Stock, Shares Outstanding | 125,306,121 |
UNAUDITED_CONSOLIDATED_BALANCE
UNAUDITED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Assets | ||
Cash | $242,332 | $129,473 |
Mortgage servicing rights ($897,797 and $93,901 carried at fair value) | 1,820,651 | 1,913,992 |
Advances | 942,538 | 893,914 |
Match funded advances | 2,252,967 | 2,409,442 |
Loans held for sale ($339,508 and $401,120 carried at fair value) | 407,997 | 488,612 |
Loans held for investment - reverse mortgages, at fair value | 1,808,141 | 1,550,141 |
Receivables, net | 299,836 | 270,596 |
Deferred tax assets, net | 68,708 | 76,987 |
Premises and equipment, net | 42,945 | 43,310 |
Other assets ($7,701 and $7,355 carried at fair value) | 500,659 | 490,811 |
Total assets | 8,386,774 | 8,267,278 |
Liabilities | ||
Match funded liabilities | 2,000,676 | 2,090,247 |
Financing liabilities ($2,296,892 and $2,058,693 carried at fair value) | 2,488,607 | 2,258,641 |
Other secured borrowings | 1,603,707 | 1,733,691 |
Senior unsecured notes | 350,000 | 350,000 |
Other liabilities | 822,244 | 793,534 |
Total liabilities | 7,265,234 | 7,226,113 |
Commitments and Contingencies | ||
Ocwen Financial Corporation (Ocwen) stockholders’ equity | ||
Common stock, $.01 par value; 200,000,000 shares authorized; 125,302,788 and 125,215,615 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 1,253 | 1,252 |
Additional paid-in capital | 517,915 | 515,194 |
Retained earnings | 607,562 | 530,361 |
Accumulated other comprehensive loss, net of income taxes | -7,995 | -8,413 |
Total Ocwen stockholders’ equity | 1,118,735 | 1,038,394 |
Non-controlling interest in subsidiaries | 2,805 | 2,771 |
Total equity | 1,121,540 | 1,041,165 |
Total liabilities and equity | $8,386,774 | $8,267,278 |
UNAUDITED_CONSOLIDATED_BALANCE1
UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Mortgage servicing rights, at fair value | $897,797 | $93,901 |
Loans held for sale, at fair value | 339,508 | 401,120 |
Other assets, at fair value | 7,701 | 7,355 |
Financing liabilities, at fair value | $2,296,892 | $2,058,693 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 125,302,788 | 125,215,615 |
Common stock, shares outstanding (in shares) | 125,302,788 | 125,215,615 |
UNAUDITED_CONSOLIDATED_STATEME
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenue | ||
Servicing and subservicing fees | $446,541 | $490,459 |
Gain on loans held for sale, net | 44,504 | 43,987 |
Other revenues | 19,399 | 16,815 |
Total revenue | 510,444 | 551,261 |
Expenses | ||
Compensation and benefits | 105,144 | 105,637 |
Amortization of mortgage servicing rights | 38,494 | 62,094 |
Servicing and origination | 101,802 | 43,947 |
Technology and communications | 39,351 | 36,976 |
Professional services | 56,931 | 21,398 |
Occupancy and equipment | 25,714 | 32,051 |
Other | 10,922 | 47,091 |
Total expenses | 378,358 | 349,194 |
Other income (expense) | ||
Interest income | 5,575 | 5,327 |
Interest expense | -119,396 | -139,873 |
Gain on sale of mortgage servicing rights | 26,406 | 0 |
Gain on extinguishment of debt | 0 | 2,253 |
Other, net | -1,842 | 1,929 |
Total other expense, net | -89,257 | -130,364 |
Income (loss) before income taxes | 42,829 | 71,703 |
Income tax expense | 8,440 | 11,217 |
Net income | 34,389 | 60,486 |
Net (income) loss attributable to non-controlling interests | -34 | 15 |
Net income attributable to Ocwen stockholders | 34,355 | 60,501 |
Preferred stock dividends | 0 | -581 |
Deemed dividends related to beneficial conversion feature of preferred stock | 0 | -416 |
Net income attributable to Ocwen common stockholders | $34,355 | $59,504 |
Earnings per share attributable to Ocwen common stockholders | ||
Basic (in USD per share) | $0.27 | $0.44 |
Diluted (in USD per share) | $0.27 | $0.43 |
Weighted average common shares outstanding | ||
Basic (in shares) | 125,272,228 | 135,227,067 |
Diluted (in shares) | 126,999,662 | 141,089,455 |
UNAUDITED_CONSOLIDATED_STATEME1
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Statement of Comprehensive Income [Abstract] | ||||
Net income | $34,389 | $60,486 | ||
Other comprehensive income, net of income taxes: | ||||
Reclassification adjustment for losses on cash flow hedges included in net income | 418 | [1] | 608 | [1] |
Other | 0 | 1 | ||
Total other comprehensive income, net of income taxes | 418 | 609 | ||
Comprehensive income | 34,807 | 61,095 | ||
Comprehensive income attributable to non-controlling interests | -34 | 15 | ||
Comprehensive income attributable to Ocwen stockholders | $34,773 | $61,110 | ||
[1] | Net of tax expense of $0.2 million for the three months ended March 31, 2014. These losses are reclassified to Other, net in the unaudited Consolidated Statements of Operations. |
UNAUDITED_CONSOLIDATED_STATEME2
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Statement of Comprehensive Income [Abstract] | |
Income tax expense | ($0.20) |
UNAUDITED_CONSOLIDATED_STATEME3
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $) | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss), Net of Taxes [Member] | Non-controlling Interest in Subsidiaries [Member] |
In Thousands, except Share data, unless otherwise specified | ||||||
Beginning Balance at Dec. 31, 2013 | $1,812,591 | $1,352 | $818,427 | $1,002,963 | ($10,151) | |
Beginning Balance (in shares) at Dec. 31, 2013 | 135,176,271 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 60,486 | 60,501 | -15 | |||
Preferred stock dividends ($9.38 per share) | -581 | -581 | ||||
Deemed dividends related to beneficial conversion feature of preferred stock | -416 | -416 | ||||
Repurchase of common stock | -2,308 | -1 | -2,307 | |||
Repurchase of common stock (in shares) | -60,000 | |||||
Exercise of common stock options | 1,039 | 3 | 1,036 | |||
Exercise of common stock options (in shares) | 244,000 | |||||
Equity-based compensation and other | 2,206 | 2,206 | ||||
Equity-based compensation (in shares) | 4,903 | |||||
Non-controlling interest in connection with acquisition of controlling interest in Ocwen Structured Investments, LLC | 2,526 | 2,526 | ||||
Other comprehensive income (loss), net of income taxes | 609 | 609 | ||||
Ending Balance at Mar. 31, 2014 | 1,876,152 | 1,354 | 819,362 | 1,062,467 | -9,542 | 2,511 |
Ending Balance (in shares) at Mar. 31, 2014 | 135,365,174 | |||||
Beginning Balance at Dec. 31, 2014 | 1,041,165 | 1,252 | 515,194 | 530,361 | -8,413 | 2,771 |
Beginning Balance (in shares) at Dec. 31, 2014 | 125,215,615 | 125,215,615 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 34,389 | 34,355 | 34 | |||
Preferred stock dividends ($9.38 per share) | 0 | |||||
Deemed dividends related to beneficial conversion feature of preferred stock | 0 | |||||
Cumulative effect of fair value election - Mortgage servicing rights | 42,846 | 42,846 | ||||
Exercise of common stock options | 509 | 1 | 508 | |||
Exercise of common stock options (in shares) | 85,173 | |||||
Equity-based compensation and other | 2,213 | 2,213 | ||||
Equity-based compensation (in shares) | 2,000 | |||||
Other comprehensive income (loss), net of income taxes | 418 | 418 | ||||
Ending Balance at Mar. 31, 2015 | $1,121,540 | $1,253 | $517,915 | $607,562 | ($7,995) | $2,805 |
Ending Balance (in shares) at Mar. 31, 2015 | 125,302,788 | 125,302,788 |
UNAUDITED_CONSOLIDATED_STATEME4
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Statement of Stockholders' Equity [Abstract] | |
Preferred stock dividends (dollar per share) | $9.38 |
UNAUDITED_CONSOLIDATED_STATEME5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities | ||
Net income | $34,389 | $60,486 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of mortgage servicing rights | 38,494 | 62,094 |
Amortization of debt issuance costs – senior secured term loan | 3,755 | 1,087 |
Depreciation | 4,344 | 5,540 |
Provision for bad debts | 14,170 | 31,386 |
Impairment of mortgage servicing rights | 17,769 | 0 |
Gain on sale of mortgage servicing rights | -26,406 | 0 |
Gain on loans held for sale, net | -44,504 | -43,987 |
Realized and unrealized losses on derivative financial instruments | 1,154 | 920 |
Gain on extinguishment of debt | 0 | -2,253 |
Loss on valuation of mortgage servicing rights, at fair value | 33,175 | 5,148 |
Increase in deferred tax assets, net | -890 | -3,680 |
Equity-based compensation expense | 2,117 | 1,427 |
Origination and purchase of loans held for sale | -1,036,150 | -2,378,056 |
Proceeds from sale and collections of loans held for sale | 1,142,282 | 2,414,699 |
Changes in assets and liabilities: | ||
Decrease in advances and match funded advances | 104,258 | 13,434 |
Decrease in receivables and other assets, net | 1,330 | 48,437 |
Increase (decrease) in other liabilities | 20,127 | -41,170 |
Other, net | 15,604 | 20,270 |
Net cash provided by operating activities | 325,018 | 195,782 |
Cash flows from investing activities | ||
Purchase of mortgage servicing rights, net | -3,267 | -6,698 |
Acquisition of advances in connection with the purchase of mortgage servicing rights | -83,942 | |
Acquisition of advances in connection with the purchase of loans | 0 | -60,482 |
Proceeds from sale of advances and match funded advances | 1,765 | 0 |
Proceeds from sale of mortgage servicing rights | 49,465 | 0 |
Origination of loans held for investment – reverse mortgages | -235,271 | -176,658 |
Principal payments received on loans held for investment - reverse mortgages | 26,170 | 14,030 |
Additions to premises and equipment | -3,918 | -3,308 |
Other | 301 | 891 |
Net used in investing activities | -164,755 | -378,220 |
Cash flows from financing activities | ||
Repayment of match funded liabilities | -89,571 | -3,151 |
Proceeds from other secured borrowings | 1,858,258 | 1,497,669 |
Repayments of other secured borrowings | -2,042,969 | -1,652,903 |
Payment of debt issuance costs | -12,643 | -175 |
Proceeds from sale of mortgage servicing rights accounted for as a financing | 0 | 123,551 |
Proceeds from sale of loans accounted for as a financing | 238,615 | 226,626 |
Proceeds from sale of advances accounted for as a financing | 472 | 55,702 |
Repurchase of common stock | 0 | -2,308 |
Payment of preferred stock dividends | 0 | -581 |
Proceeds from exercise of common stock options | 413 | 1,176 |
Other | 21 | 706 |
Net cash (used in) provided by financing activities | -47,404 | 246,312 |
Net increase in cash | 112,859 | 63,874 |
Cash at beginning of year | 129,473 | 178,512 |
Cash at end of period | 242,332 | 242,386 |
Supplemental non-cash investing and financing activities | ||
Transfer of loans held for sale to loans held for investment | 0 | 110,874 |
ResCap [Member] | ||
Cash flows from investing activities | ||
Cash paid to acquire business | 0 | -54,220 |
Ocwen Structured Investments, LLC (OSI) [Member] | ||
Cash flows from investing activities | ||
Cash paid to acquire business | $0 | ($7,833) |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 3 Months Ended | |
Mar. 31, 2015 | ||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Description of Business and Basis of Presentation | Note 1 – Description of Business and Basis of Presentation | |
Organization | ||
Ocwen Financial Corporation (NYSE: OCN) (Ocwen, we, us and our) is a financial services holding company which, through its subsidiaries, is engaged in the servicing and origination of mortgage loans. Ocwen is headquartered in Atlanta, Georgia with offices throughout the United States (U.S.) and in the United States Virgin Islands (USVI) with support operations in India and the Philippines. Ocwen is a Florida corporation organized in February 1988. | ||
Ocwen owns all of the common stock of its primary operating subsidiary, Ocwen Mortgage Servicing, Inc. (OMS), and directly or indirectly owns all of the outstanding stock of its other primary operating subsidiaries: Ocwen Loan Servicing, LLC (OLS), Ocwen Financial Solutions Private Limited, Homeward Residential, Inc. (Homeward), and Liberty Home Equity Solutions, Inc. (Liberty). | ||
We perform primary and master servicer activities on behalf of investors and other servicers, including the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the GSEs), the Government National Mortgage Association (Ginnie Mae) and private-label securitizations (non-Agency). As primary servicer, we may be required to make certain payments of property taxes and insurance premiums, default and property maintenance payments, as well as advances of principal and interest payments before collecting them from borrowers. As master servicer, we collect mortgage payments from primary servicers and distribute the funds to investors in the mortgage-backed securities. To the extent the primary servicer does not advance the scheduled principal and interest, as master servicer we are responsible for advancing the shortfall subject to certain limitations. | ||
We originate, purchase, sell and securitize conventional (conforming to the underwriting standards of Fannie Mae or Freddie Mac; collectively referred to as Agency loans) and government insured (Federal Housing Authority (FHA) or Department of Veterans Affairs (VA) forward and reverse mortgages. The GSEs or Ginnie Mae guarantee these securitizations. | ||
Note 1A — Business Environment and Other Uncertainties | ||
We are facing certain challenges and uncertainties that could have significant adverse effects on our business, liquidity and financing activities. We may be adversely impacted by the following, among other things: | ||
• | Failure to maintain sufficient liquidity to operate our servicing and lending businesses; | |
• | Failure to comply with covenants; | |
• | Downgrades in our third-party servicer ratings; | |
• | Regulatory actions against us; or | |
• | Our relationship with Home Loan Servicing Solutions, Ltd. (HLSS). | |
Liquidity | ||
Our ability to finance servicing advances is a significant factor that affects our liquidity. Our use of advance financing facilities is integral to our servicing advance financing strategy, as these advance financing facilities are necessary for us to meet our daily advance funding obligations under our servicing agreements. Our advance funding facilities have a 364-day term and the revolving periods for all of our advance funding facilities end in 2015. At March 31, 2015, we had $2.0 billion outstanding under these facilities. In the event we are unable to renew, replace or extend one or more of these advance funding facilities, repayment of the outstanding balance must begin at the end of the respective revolving period. In addition, we use mortgage loan warehouse facilities to fund newly originated loans on a short-term basis until they are sold to secondary market investors, including GSEs or other third-party investors. All of our master repurchase and participation agreements for financing new loan originations have 364-day terms and mature in 2015 under the same construct of 364-day facilities that are typically renewed annually. At March 31, 2015, we had $373.0 million outstanding under these financing arrangements. | ||
We currently plan to renew, replace or extend all of these debt agreements consistent with our historical experience. We currently are in negotiations with our lenders for the renewal, replacement or extension of our debt arrangements that mature or begin amortization in 2015. We may also consider other capital markets transactions including, but not limited to, the sale and financing of advance receivables in the event we do not renew, replace or extend a portion or all of our existing advance financing facilities. We have entered into commitment letters to refinance certain of our debt agreements and extended certain facilities ahead of their scheduled maturity, as detailed below under “Recent Actions.” Our lenders’ obligations to fund under these commitment letters are subject to conditions precedent, some of which are outside our control. In the event we are unable to renew, replace or extend all of these debt agreements, we may not have adequate sources of funding for our business. Due to the significant level of cash requirements related to servicing advances, we may not have sufficient levels of liquidity to fund the operations without our advance financing facilities. We typically require significantly more liquidity to meet our advance funding obligations than our available cash on hand. | ||
Covenants | ||
Under the terms of our existing debt agreements, we are subject to various qualitative and quantitative covenants. These covenants include: | ||
• | Financial covenants; | |
• | Covenants to operate in material compliance with applicable laws; | |
• | Restrictions on our ability to engage in various activities, including but not limited to incurring additional debt, paying dividends, repurchasing or redeeming capital stock, transferring assets or making loans, investments or acquisitions; | |
• | Monitoring and reporting of various specified transactions or events, including specific reporting on defined events affecting collateral underlying certain debt agreements; and | |
• | Requirements to provide audited financial statements within specified timeframes, including a requirement under our SSTL that Ocwen’s financial statements and the related audit report be unqualified as to going concern. | |
Financial covenants in our debt agreements require that we maintain, among other things: | ||
• | a specified interest coverage ratio, which is defined under our SSTL as the ratio of trailing four quarter adjusted EBITDA to trailing four quarter interest expense (each as defined therein); | |
• | a specified corporate leverage ratio, which is defined under our SSTL as consolidated debt to trailing four quarter adjusted EBITDA (each as defined therein); | |
• | a specified consolidated total debt to consolidated tangible net worth ratio; | |
• | a specified loan to value ratio, as defined under our SSTL; and | |
• | specified levels of consolidated tangible net worth, liquidity and, at the OLS level, net operating income. | |
As a result of the covenants to which we are subject, we may be limited in the manner in which we conduct our business and may be limited in our ability to engage in favorable business activities or raise additional capital to finance future operations or satisfy future liquidity needs. In addition, breaches or events that may result in a default under our debt agreements include, among other things, noncompliance with our covenants, nonpayment of principal or interest, material misrepresentations, the occurrence of material adverse change, insolvency, bankruptcy, certain material judgments and changes of control. Covenants and defaults of this type are commonly found in debt agreements such as ours. Certain of these covenants and defaults are open to subjective interpretation and, if our interpretation were contested by a lender, a court may ultimately be required to determine compliance or lack thereof. In addition, our debt agreements generally include cross default provisions such that a default under one agreement could trigger defaults under other agreements. If we fail to comply with our debt agreements and are unable to avoid, remedy or secure a waiver of any resulting default, we may be subject to adverse action by our lenders, including termination of further funding, acceleration of outstanding obligations, enforcement of liens against the assets securing or otherwise supporting our obligations, and other legal remedies. Our lenders can waive their contractual rights in the event of a default. | ||
OLS, Homeward and Liberty are parties to seller/servicer agreements and/or subject to guidelines and regulations (collectively, seller/servicer obligations) with one or more of the GSEs, the Department of Housing and Urban Development (HUD), FHA, VA and Ginnie Mae. These seller/servicer obligations include financial covenants that include capital requirements related to tangible net worth, as defined by the applicable agency, an obligation to provide audited consolidated financial statements within 90 days of the applicable entity’s fiscal year end as well as extensive requirements regarding servicing, selling and other matters. To the extent that these requirements are not met or waived, the applicable agency may, at its option, utilize a variety of remedies including, requirements to deposit funds as security for our obligations, sanctions, suspension or even termination of approved seller/servicer status, which would prohibit future originations or securitizations of forward or reverse mortgage loans or servicing for the applicable agency. To date, none of these agencies has communicated any material sanction, suspension or prohibition in connection with our seller/servicer obligations. We believe we were in compliance with the related net worth requirements at March 31, 2015. Our non-Agency servicing agreements also contain requirements regarding servicing practices and other matters, and a failure to comply with these requirements could have an adverse impact on our business. | ||
Servicer Ratings | ||
Standard & Poor’s (S&P), Moody’s Investors Service (Moody’s), Fitch Ratings Inc. (Fitch) and Morningstar, Inc. (Morningstar) rate us as a mortgage servicer. Each of these rating agencies has downgraded our servicer rating within the last nine months. Additionally, three of these rating agencies currently have our ratings outlook as ‘negative’ or ‘on review for downgrade.’ Maintaining minimum ratings from these agencies are important to the conduct of our loan servicing and lending businesses. Further downgrades in servicer ratings could adversely affect our ability to finance servicing advances and maintain our status as an approved servicer by Fannie Mae and Freddie Mac. The servicer rating requirements of Fannie Mae do not necessarily require or imply immediate action, as Fannie Mae has discretion with respect to whether we are in compliance with their requirements and what actions it deems appropriate under the circumstances in the event that we fall below their desired servicer ratings. | ||
In addition, out of approximately 4,100 non-Agency servicing agreements, approximately 700 with approximately $45.0 billion of UPB as of March 31, 2015 have minimum servicer ratings criteria. As a result of downgrades in our servicer ratings, termination rights have been triggered in approximately 400 of these non-Agency servicing agreements. This represents approximately $25.0 billion in UPB as of March 31, 2015, or approximately 12% of our total non-Agency servicing portfolio. We recently received notices terminating us as the servicer under four of our non-Agency servicing agreements due to rating downgrades. Pursuant to our servicing agreements, generally we are entitled to payment of accrued and unpaid servicing fees through termination as well as all advances and certain other previously unreimbursed amounts, although we lose the future servicing fee revenue. While the financial impact of the termination of servicing under these four servicing agreements, which represent 0.15% of our overall servicing portfolio as of March 31, 2015, is immaterial to our overall financial condition, we could be subject to further terminations, either as a result of recent servicer ratings downgrades or future adverse actions by rating agencies, which could have an adverse effect on our business, financing activities, financial condition and results of operations. | ||
Under one of its advance financing agreements, OLS must maintain certain minimum servicer ratings assigned by S&P, Moody’s and Fitch. If any of these rating agencies withdraws its rating or if the assigned ratings falls below the minimum ratings established in the lending agreement, an early amortization event occurs under the lending agreement if the lender’s agent notifies the indenture trustee that an early amortization event has occurred. As a result of downgrades in our servicer ratings, the lender has the right to deliver such notice at any time. The lender has agreed not to deliver such a notice to the indenture trustee subject to its ongoing monthly review. If an early amortization event occurs and is not waived by the lender, no new advances can be funded under the facility, all collections on advances funded through the facility must be used to pay interest and principal on currently outstanding borrowings under the facility, minimum facility balance repayments would be instituted, and the interest rate margin on 1-month LIBOR would increase. At March 31, 2015, we had $348.3 million of borrowings outstanding under this facility out of a maximum borrowing capacity of $400.0 million. The scheduled date to begin amortization of this facility is June 2015. As described below under “Recent Actions,” one of our commitment letters provides for replacement financing should the existing lender seek not to renew or extend the revolving period upon its completion in June 2015. | ||
Downgrades in our servicer ratings could also affect the terms and availability of debt financing facilities that we may seek in the future. | ||
Our failure to maintain minimum or specified ratings could adversely affect our dealings with contractual counterparties, including GSEs, and regulators, any of which could have a material adverse effect on our business, financing activities, financial condition and results of operations. | ||
Regulatory Uncertainties | ||
As a result of the current regulatory environment, we have faced, and expect to continue to face, increased regulatory and public scrutiny as well as stricter and more comprehensive regulation of our business. We have recently entered into a number of regulatory settlements which have significantly impacted our ability to grow our servicing portfolio and which subject us to ongoing monitoring or reporting. See Note 18 - Regulatory Requirements and Note 20 - Contingencies for further information regarding regulatory requirements, our recent regulatory settlements and regulatory-related contingencies. | ||
To the extent that an examination or other regulatory engagement reveals a failure by us to comply with applicable law, regulation or licensing requirement, or if we fail to comply with the commitments we have made under our regulatory settlements or if other regulatory actions are taken in the future against us of a similar or different nature, this could lead to (i) loss of our licenses and approvals to engage in our servicing and lending businesses, (ii) governmental investigations and enforcement actions, (iii) administrative fines and penalties and litigation, (iv) civil and criminal liability, including class action lawsuits, (v) breaches of covenants and representations under our servicing, debt or other agreements, (vi) inability to raise capital and (vii) inability to execute on our business strategy. Any of these occurrences could increase our operating expenses and reduce our revenues, hamper our ability to grow or otherwise materially and adversely affect our business, reputation, financial condition and results of operations. | ||
Our Relationship with HLSS | ||
We have sold rights to receive servicing fees, excluding ancillary income, with respect to certain non-Agency MSRs (Rights to MSRs), together with the related servicing advances, to HLSS. As of March 31, 2015 and through the date of HLSS’ sale transaction with New Residential Investment Corp. (NRZ) on April 6, 2015, we were dependent upon HLSS for financing of servicing advance obligations for loans underlying Rights to MSRs where we are the servicer but HLSS assumed this obligation under the terms of our agreements with HLSS. HLSS, in turn, was dependent upon its advance financing facilities in order to fund a substantial portion of the servicing advances that it was contractually obligated to make pursuant to our agreements with HLSS. As of March 31, 2015, we were the servicer on Rights to MSRs pertaining to approximately $156.3 billion in UPB and the associated outstanding servicing advances as of such date were approximately $5.8 billion. | ||
HLSS’ advance funding facilities had a 364-day term and the revolving periods for a significant portion of their advance funding facilities were scheduled to end in 2015. We are contractually required under our servicing agreements to make the relevant servicing advances even if HLSS did not, or was unable to, perform in accordance with its contractual obligations to fund those advances. If an event of default were to be determined, HLSS’ advance financing facilities revolving periods would terminate and the facilities would begin amortization. There were no provisions under which Ocwen would have been obligated to repay the HLSS advance financing facilities upon an event of default by HLSS. Instead, Ocwen, as servicer, would have been immediately responsible for all new advances. We do not have any committed or executed financial arrangements to provide for this need should it arise, and we cannot provide any assurances that such financing would be available, or if available, could be obtained at terms and conditions acceptable to us. | ||
On April 6, 2015, HLSS closed on the sale of substantially all of its assets to NRZ. Following the sale, NRZ, is the owner of the Rights to MSRs and related advances and has assumed HLSS’ rights and obligations under the associated agreements. NRZ is a public company listed on the New York Stock Exchange, whose business is focused on investing in, and actively managing, investments related to residential real estate, including MSRs. NRZ is externally managed and advised by an affiliate of Fortress Investment Group LLC, a global investment management organization. | ||
Recent Actions | ||
To address the uncertainties set forth above, we have proactively engaged with our lenders to address our maturing debt agreements. Recent financing developments include the following: | ||
• | On April 17, 2015, we entered into an agreement with a lender to provide, subject to a definitive master repurchase agreement and other funding conditions, up to $125.0 million of backup financing for new loan originations should existing facilities not renew at their maturity date. | |
• | On April 17, 2015, we entered into an amendment to the SSTL facility agreement. Effective as of April 20, 2015, the amendment, among other things (1) removed, with respect to the 2014 fiscal year, the requirement that our financial statements and the related audit report must be unqualified as to going concern; and (2) extended the required time period for delivery of the 2014 audited financial statements to May 29, 2015. | |
• | On May 11, 2015, we entered into an agreement with a global financial institution to refinance, subject to definitive documentation, the maintenance of our current servicer ratings with Standard & Poor’s Ratings Services, and other funding conditions, $500.0 million of commitments under an existing $1.8 billion servicing advance financing facility and to extend the applicable revolving period to or beyond March 31, 2016. | |
• | Prior to the issuance of these unaudited consolidated financial statements, we entered into amendments or obtained waivers from each lender, to the extent necessary, extending the contractually required time period for delivery of audited financial statements for fiscal year 2014 to May 29, 2015. | |
On April 6, 2015, we entered into an amendment to certain of the agreements governing our relationship with HLSS. In consideration of our consent to the assignment by HLSS to NRZ of all HLSS’ right, title and interest in, to and under our arrangements with HLSS (including the Rights to MSRs), the amendment, among other things: | ||
• | extended the term during which we are scheduled to be the servicer on loans underlying the Rights to MSRs (along with the associated economic benefits) for two additional years or until April 30, 2020, whichever is earlier, which would depend on the sale date for the applicable Rights to MSRs (existing terms ranged from February 2018 through October 2019 prior to the amendment); | |
• | provided that such extension will not apply with respect to any servicing agreement that, as of the date that it was scheduled to terminate under our original agreements, is affected by an uncured termination event due to a downgrade of our servicer rating to “Below Average” or lower by S&P or to “SQ4” or lower by Moody’s; | |
• | provided that the parties will commence negotiating in good faith for an extension of the contract term and the servicing fees payable to us no later than six months prior to the end of the applicable term as extended pursuant to the amendment; and | |
• | imposed a two-year standstill (until April 6, 2017 and subject to certain conditions) on the rights of NRZ to replace us as servicer. | |
In the event there is a future downgrade of our S&P servicer rating below our current rating of “Average,” we have also agreed to compensate NRZ, as successor to HLSS, for certain increased costs associated with its servicing advance financing facilities, including increased costs of funding, to the extent such costs are the direct result of such downgrade. The amendment provided that any such compensation, if required, shall not exceed $3.0 million for any calendar month or $36.0 million in the aggregate. In such an event, NRZ has agreed to use commercially reasonable efforts to assist us in curing any potential cost increases by obtaining amendments to the relevant financing agreements. | ||
Consistent with our strategic plan to sell a significant portion of our Agency MSRs, we have announced or completed a number of asset sales, including the following: | ||
• | On March 2, 2015, we signed a letter of intent with JPMorgan Chase & Co. for the sale of MSRs on a portfolio consisting of approximately 250,000 performing Agency loans owned by Fannie Mae with a total UPB of approximately $42.0 billion. On May 13, 2015, we signed a definitive agreement having obtained all necessary approvals. This transaction is scheduled to close on June 1, 2015. In connection with this transaction, on April 17, 2015, we entered into a letter agreement with Fannie Mae pursuant to which we will designate a portion of the expected proceeds as prepayments to secure against certain future obligations. These future obligations include repurchases, indemnifications and various fees. The total cash pre-payments are $15.4 million, including $3.2 million paid on April 27, 2015 with the remainder to be paid on June 1, 2015. Another $37.5 million of escrowed collateral will be set aside on June 1, 2015 to secure potential future obligations not covered by the prepaid amount. | |
• | On March 18, 2015, OLS and Green Tree Loan Servicing, a subsidiary of Walter Investment Management Corp. (collectively Walter), signed an agreement in principle for the sale of residential MSRs on a portfolio consisting of approximately 54,000 largely performing loans owned by Freddie Mac with a total UPB of approximately $9.2 billion. We executed a definitive agreement on April 29, 2015 and initial funding occurred on April 30, 2015. We expect that servicing will begin to transfer on or around June 16, 2015. | |
• | On March 24, 2015, we announced that OLS and Nationstar Mortgage LLC, an indirectly held, wholly owned subsidiary of Nationstar Mortgage Holdings Inc. (collectively, “Nationstar”), have agreed in principle to the sale of residential MSRs on a portfolio consisting of approximately 140,000 loans owned by Freddie Mac and Fannie Mae with a total UPB of approximately $24.9 billion. We closed on the sale of a portion of these MSRs, with a total UPB of approximately $2.7 billion, on April 30, 2015. The sale of the remaining MSRs, subject to a definitive agreement, approvals by Fannie Mae and FHFA and other customary conditions, is expected to close in June 2015. | |
• | On March 31, 2015, OLS closed on a sale agreement with Nationstar for the sale of residential MSRs on a portfolio consisting of 76,000 performing loans owned by Freddie Mac with a UPB of $9.1 billion. Servicing was successfully transferred on April 16, 2015. | |
We currently expect to receive approximately $860.0 million of proceeds from the above described transactions, subject in each case to necessary approvals and the satisfaction of closing conditions. We expect that the majority of such proceeds will be used for prepayments under our SSTL. In addition, on April 30, 2015, we announced agreements with Fannie Mae and Freddie Mac to sell portfolios of non-performing loan servicing. We expect these transactions to close over the coming months, with the first transfer having occurred on May 1, 2015. These transactions will include payments to the GSEs to assume the delinquent servicing and may, in some cases, include settlements of certain indemnification obligations. We expect these transactions to be cash flow positive as we will be reimbursed for outstanding advances. | ||
We have been, and continue to, engage in communications with the ratings agencies and key stakeholders, including the GSEs, in connection with recent and planned future actions and developments, including the uncertainties identified above. | ||
We also continue to work with our regulators, including the CFPB and state regulators and attorneys general, on enhancing our risk and compliance management systems and remediating deficiencies. We are currently unaware of any significant unresolved issues with state agencies and not aware of, nor anticipating, any material regulatory fines, penalties or settlements. We are not aware of any pending or threatened actions to suspend or revoke any state licenses. | ||
There can be no assurances that management’s recent and future actions will be successful in mitigating the above risks and uncertainties in our business. | ||
Note 1B - Basis of Presentation | ||
The accompanying unaudited consolidated financial statements have been prepared in conformity with the instructions of the Securities and Exchange Commission (SEC) to Form 10-Q and SEC Regulation S-X, Article 10, Rule 10-01 for interim financial statements. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The results of operations and other data for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2015. The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. | ||
Reclassifications | ||
Within the Other income (expense) section of the unaudited Consolidated Statement of Operations for the three months ended March 31, 2014, we reclassified Interest income from Other, net to a separate line item to conform to the current year presentation. | ||
Certain insignificant amounts in the unaudited Consolidated Statement of Cash Flows for the three months ended March 31, 2014 have been reclassified to conform to the current year presentation. These reclassifications had no impact on our consolidated cash flows from operating, investing or financing activities. | ||
Use of Estimates and Assumptions | ||
The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the related disclosures in the accompanying notes. Such estimates and assumptions include, but are not limited to, those that relate to fair value measurements, the provision for potential losses that may arise from litigation proceedings, and representation and warranty and other indemnification obligations. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ because of uncertainties associated with estimating the amounts, timing and likelihood of possible outcomes. |
Securitizations_and_Variable_I
Securitizations and Variable Interest Entities | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Transfers and Servicing [Abstract] | ||||||||
Securitizations and Variable Interest Entities | Note 2 – Securitizations and Variable Interest Entities | |||||||
We securitize, sell and service forward and reverse residential mortgage loans and regularly transfer financial assets in connection with asset-backed financing arrangements. We have aggregated these securitizations and asset-backed financing arrangements into two groups: (1) securitizations of residential mortgage loans and (2) financings of advances on loans serviced for others. | ||||||||
We have determined that the special purpose entities (SPEs) created in connection with our match funded advance financing facilities are variable interest entities (VIEs) for which we are the primary beneficiary. | ||||||||
Securitizations of Residential Mortgage Loans | ||||||||
Currently, we securitize forward and reverse residential mortgage loans involving the GSEs and Ginnie Mae and loans insured by the FHA or VA. We retain the right to service these loans and receive servicing fees based upon the securitized loan balances and certain ancillary fees, all of which are reported in Servicing and subservicing fees on the unaudited Consolidated Statements of Operations. | ||||||||
Transfers of Forward Loans | ||||||||
We sell or securitize forward loans that we originate or that we purchase from third parties, generally in the form of mortgage-backed securities guaranteed by the GSEs or Ginnie Mae. Securitization usually occurs within 30 days of loan closing or purchase. We retain the servicing rights associated with the transferred loans and receive a servicing fee for services provided. We act only as a fiduciary and do not have a variable interest in the securitization trusts. As a result, we account for these transactions as sales upon transfer. | ||||||||
We report the gain or loss on the transfer of the loans held for sale in Gain on loans held for sale, net in the unaudited Consolidated Statements of Operations along with the changes in fair value of the loans and the gain or loss on any related derivatives. We include all changes in loans held for sale and related derivative balances in operating activities in the unaudited Consolidated Statements of Cash Flows. | ||||||||
The following table presents a summary of cash flows received from and paid to securitization trusts related to transfers accounted for as sales that were outstanding during the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Proceeds received from securitizations | $ | 1,070,772 | $ | 1,534,251 | ||||
Servicing fees collected | 347 | 5,194 | ||||||
Purchases of previously transferred assets, net of claims reimbursed | 500 | — | ||||||
$ | 1,071,619 | $ | 1,539,445 | |||||
In connection with these transfers, we retained MSRs of $8.5 million and $11.6 million during the three months ended March 31, 2015 and 2014, respectively. We initially record the MSRs at fair value and subsequently account for them at amortized cost. | ||||||||
Certain obligations arise from the agreements associated with our transfers of loans. Under these agreements, we may be obligated to repurchase the loans, or otherwise indemnify or reimburse the investor or insurer for losses incurred due to material breach of contractual representations and warranties. | ||||||||
The following table presents the carrying amounts of our assets that relate to our continuing involvement with forward loans that we have transferred with servicing rights retained as well as our maximum exposure to loss including the unpaid principal balance (UPB) of the transferred loans at the dates indicated: | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
Carrying value of assets: | ||||||||
Mortgage servicing rights, at amortized cost | $ | 85,215 | $ | 82,542 | ||||
Mortgage servicing rights, at fair value | 2,656 | 2,840 | ||||||
Advances and match funded advances | 481 | 1,236 | ||||||
UPB of loans transferred (1) | 10,345,586 | 9,353,187 | ||||||
Maximum exposure to loss | $ | 10,433,938 | $ | 9,439,805 | ||||
-1 | The UPB of the loans transferred is the maximum exposure to loss under our standard representations and warranties obligations. | |||||||
At March 31, 2015 and December 31, 2014, 4.9% and 5.1%, respectively, of the transferred residential loans that we service were 60 days or more past due. During the three months ended March 31, 2015, there were no charge-offs, net of recoveries, associated with these transferred loans. | ||||||||
Transfers of Reverse Mortgages | ||||||||
We are an approved issuer of Ginnie Mae Home Equity Conversion Mortgage-Backed Securities (HMBS) that are guaranteed by Ginnie Mae. We originate Home Equity Conversion Mortgages (HECMs, or reverse mortgages) that are insured by the FHA. We then pool the loans into HMBS that we sell into the secondary market with servicing rights retained. We have determined that loan transfers in the HMBS program do not meet the definition of a participating interest because of the servicing requirements in the product that require the issuer/servicer to absorb some level of interest rate risk, cash flow timing risk and incidental credit risk. As a result, the transfers of the HECMs do not qualify for sale accounting, and therefore, we account for these transfers as financings. Under this accounting treatment, the HECMs are classified as Loans held for investment - reverse mortgages, at fair value, on our unaudited Consolidated Balance Sheets. We record the proceeds from the transfer of assets as secured borrowings (HMBS-related borrowings) in Financing liabilities and recognize no gain or loss on the transfer. Holders of participating interests in the HMBS have no recourse against the assets of Ocwen, except for standard representations and warranties and our contractual obligation to service the HECMs and the HMBS. | ||||||||
We have elected to measure the HECMs and HMBS-related borrowings at fair value. The changes in fair value of the HECMs and HMBS-related borrowings are included in Other revenues in our unaudited Consolidated Statements of Operations. Included in net fair value gains on the HECMs and related HMBS borrowings are the interest income that we expect to be collected on the HECMs and the interest expense that we expect to be paid on the HMBS-related borrowings. We report originations and collections of HECMs in investing activities in the unaudited Consolidated Statements of Cash Flows. We report net fair value gains on HECMs and the related HMBS borrowings as an adjustment to the net cash provided by or used in operating activities in the unaudited Consolidated Statements of Cash Flows. Proceeds from securitizations of HECMs and payments on HMBS-related borrowings are included in financing activities in the unaudited Consolidated Statements of Cash Flows. | ||||||||
At March 31, 2015 and December 31, 2014, we had HMBS-related borrowings of $1.7 billion and $1.4 billion and HECMs pledged as collateral to the pools of $1.8 billion and $1.6 billion, respectively. | ||||||||
Financings of Advances on Loans Serviced for Others | ||||||||
Match funded advances on loans serviced for others result from our transfers of residential loan servicing advances to SPEs in exchange for cash. We consolidate these SPEs because we have determined that Ocwen is the primary beneficiary of the SPE. These SPEs issue debt supported by collections on the transferred advances. | ||||||||
We make the transfers to these SPEs under the terms of our advance financing facility agreements. We classify the transferred advances on our unaudited Consolidated Balance Sheets as Match funded advances and the related liabilities as Match funded liabilities. The SPEs use collections of the pledged advances to repay principal and interest and to pay the expenses of the SPE. Holders of the debt issued by these entities can look only to the assets of the SPE for satisfaction of the debt and have no recourse against Ocwen. The assets and liabilities of the advance financing SPEs are comprised solely of Match funded advances, Debt service accounts, Match funded liabilities and amounts due to affiliates. Amounts due to affiliates are eliminated in consolidation in our unaudited Consolidated Balance Sheets. |
Fair_Value
Fair Value | 3 Months Ended | |||||||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||
Fair Value | Note 3 – Fair Value | |||||||||||||||||||||||||||
Fair value is estimated based on a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs to valuation techniques into three broad levels whereby the highest priority is given to Level 1 inputs and the lowest to Level 3 inputs. | ||||||||||||||||||||||||||||
Level 1: | Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. | |||||||||||||||||||||||||||
Level 2: | Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. | |||||||||||||||||||||||||||
Level 3: | Unobservable inputs for the asset or liability. | |||||||||||||||||||||||||||
We classify assets in their entirety based on the lowest level of input that is significant to the fair value measurement. | ||||||||||||||||||||||||||||
The carrying amounts and the estimated fair values of our financial instruments and certain of our nonfinancial assets measured at fair value on a recurring or non-recurring basis or disclosed, but not carried, at fair value are as follows at the dates indicated: | ||||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | |||||||||||||||||||||||||||
Level | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||
Loans held for sale: | ||||||||||||||||||||||||||||
Loans held for sale, at fair value (a) | 2 | $ | 339,508 | $ | 339,508 | $ | 401,120 | $ | 401,120 | |||||||||||||||||||
Loans held for sale, at lower of cost or fair value (b) | 3 | 68,489 | 68,489 | 87,492 | 87,492 | |||||||||||||||||||||||
Total Loans held for sale | $ | 407,997 | $ | 407,997 | $ | 488,612 | $ | 488,612 | ||||||||||||||||||||
Loans held for investment - Reverse mortgages, at fair value (a) | 3 | $ | 1,808,141 | $ | 1,808,141 | $ | 1,550,141 | $ | 1,550,141 | |||||||||||||||||||
Advances and match funded advances (c) | 3 | 3,195,505 | 3,195,505 | 3,303,356 | 3,303,356 | |||||||||||||||||||||||
Receivables, net (c) | 3 | 299,836 | 299,836 | 270,596 | 270,596 | |||||||||||||||||||||||
Mortgage-backed securities, at fair value (a) | 3 | 7,701 | 7,701 | 7,335 | 7,335 | |||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||
Match funded liabilities (c) | 3 | $ | 2,000,676 | $ | 2,000,676 | $ | 2,090,247 | $ | 2,090,247 | |||||||||||||||||||
Financing liabilities: | ||||||||||||||||||||||||||||
HMBS-related borrowings, at fair value (a) | 3 | $ | 1,702,397 | $ | 1,702,397 | $ | 1,444,252 | $ | 1,444,252 | |||||||||||||||||||
Financing liability - MSRs pledged (a) | 3 | 594,495 | 594,495 | 614,441 | 614,441 | |||||||||||||||||||||||
Other (c) | 3 | 191,715 | 172,610 | 199,948 | 189,648 | |||||||||||||||||||||||
Total Financing liabilities | $ | 2,488,607 | $ | 2,469,502 | $ | 2,258,641 | $ | 2,248,341 | ||||||||||||||||||||
Other secured borrowings: | ||||||||||||||||||||||||||||
Senior secured term loan (c) | 2 | $ | 1,196,498 | $ | 1,155,166 | $ | 1,273,219 | $ | 1,198,227 | |||||||||||||||||||
Other (c) | 3 | 407,209 | 407,209 | 460,472 | 460,472 | |||||||||||||||||||||||
Total Other secured borrowings | $ | 1,603,707 | $ | 1,562,375 | $ | 1,733,691 | $ | 1,658,699 | ||||||||||||||||||||
Senior unsecured notes (c) | 2 | $ | 350,000 | $ | 304,500 | $ | 350,000 | $ | 321,563 | |||||||||||||||||||
Derivative financial instruments assets (liabilities) (a): | ||||||||||||||||||||||||||||
Interest Rate Lock Commitments (IRLCs) | 2 | $ | 9,516 | $ | 9,516 | $ | 6,065 | $ | 6,065 | |||||||||||||||||||
Forward MBS trades | 1 | (5,249 | ) | (5,249 | ) | (2,854 | ) | (2,854 | ) | |||||||||||||||||||
Interest rate caps | 3 | 203 | 203 | 567 | 567 | |||||||||||||||||||||||
MSRs: | ||||||||||||||||||||||||||||
MSRs, at fair value (a) | 3 | $ | 897,797 | $ | 897,797 | $ | 93,901 | $ | 93,901 | |||||||||||||||||||
MSRs, at amortized cost (c) (d) | 3 | 922,854 | 1,064,134 | 1,820,091 | 2,237,703 | |||||||||||||||||||||||
Total MSRs | $ | 1,820,651 | $ | 1,961,931 | $ | 1,913,992 | $ | 2,331,604 | ||||||||||||||||||||
(a) | Measured at fair value on a recurring basis. | |||||||||||||||||||||||||||
(b) | Measured at fair value on a non-recurring basis. | |||||||||||||||||||||||||||
(c) | Disclosed, but not carried, at fair value. | |||||||||||||||||||||||||||
(d) | The balance at March 31, 2015 includes our impaired government-insured stratum of amortization method MSRs, which is measured at fair value on a non-recurring basis. The carrying value of this stratum at March 31, 2015 was $127.1 million, net of a valuation allowance of $17.8 million. | |||||||||||||||||||||||||||
The following tables present a reconciliation of the changes in fair value of Level 3 assets and liabilities that we measure at fair value on a recurring basis. | ||||||||||||||||||||||||||||
Loans Held for Investment - Reverse Mortgages | HMBS-Related Borrowings | Mortgage-Backed Securities | Financing Liability - MSRs Pledged | Derivatives | MSRs | Total | ||||||||||||||||||||||
Three months ended March 31, 2015 | ||||||||||||||||||||||||||||
Beginning balance | $ | 1,550,141 | $ | (1,444,252 | ) | $ | 7,335 | $ | (614,441 | ) | $ | 567 | $ | 93,901 | $ | (406,749 | ) | |||||||||||
Purchases, issuances, sales and settlements: | ||||||||||||||||||||||||||||
Purchases | — | — | — | — | — | — | — | |||||||||||||||||||||
Issuances | 235,271 | (238,615 | ) | — | — | — | (1,169 | ) | (4,513 | ) | ||||||||||||||||||
Transfer from MSRs, at amortized cost | — | — | — | — | — | 839,157 | 839,157 | |||||||||||||||||||||
Transfer from loans held for sale, at fair value | — | — | — | — | — | — | — | |||||||||||||||||||||
Sales | — | — | — | — | — | (917 | ) | (917 | ) | |||||||||||||||||||
Settlements (1) | (26,233 | ) | 25,985 | — | 19,946 | — | — | 19,698 | ||||||||||||||||||||
209,038 | (212,630 | ) | — | 19,946 | — | 837,071 | 853,425 | |||||||||||||||||||||
Total realized and unrealized gains and (losses) (2): | ||||||||||||||||||||||||||||
Included in earnings | 48,962 | (45,515 | ) | 366 | — | (364 | ) | (33,175 | ) | (29,726 | ) | |||||||||||||||||
Included in Other comprehensive income | — | — | — | — | — | — | — | |||||||||||||||||||||
48,962 | (45,515 | ) | 366 | — | (364 | ) | (33,175 | ) | (29,726 | ) | ||||||||||||||||||
Transfers in and / or out of Level 3 | — | — | — | — | — | — | — | |||||||||||||||||||||
Ending balance | $ | 1,808,141 | $ | (1,702,397 | ) | $ | 7,701 | $ | (594,495 | ) | $ | 203 | $ | 897,797 | $ | 416,950 | ||||||||||||
Loans Held for Investment - Reverse Mortgages | HMBS-Related Borrowings | Mortgage-Backed Securities | Financing Liability - MSRs Pledged | Derivatives | MSRs | Total | ||||||||||||||||||||||
Three months ended March 31, 2014 | ||||||||||||||||||||||||||||
Beginning balance | $ | 618,018 | $ | (615,576 | ) | $ | — | $ | (633,804 | ) | $ | 442 | $ | 116,029 | $ | (514,891 | ) | |||||||||||
Purchases, issuances, sales and settlements: | ||||||||||||||||||||||||||||
Purchases | — | — | 7,677 | — | — | — | 7,677 | |||||||||||||||||||||
Issuances | 176,658 | (226,626 | ) | — | — | 24 | — | (49,944 | ) | |||||||||||||||||||
Transfer from loans held for sale, at fair value | 110,874 | — | — | — | — | — | 110,874 | |||||||||||||||||||||
Sales | — | — | — | — | — | — | ||||||||||||||||||||||
Settlements | (14,029 | ) | 5,386 | — | (595 | ) | — | — | (9,238 | ) | ||||||||||||||||||
273,503 | (221,240 | ) | 7,677 | (595 | ) | 24 | — | 59,369 | ||||||||||||||||||||
Total realized and unrealized gains and (losses): | ||||||||||||||||||||||||||||
Included in earnings | 31,943 | (33,646 | ) | (156 | ) | — | (142 | ) | (5,203 | ) | (7,204 | ) | ||||||||||||||||
Included in Other comprehensive income | — | — | — | — | — | — | — | |||||||||||||||||||||
31,943 | (33,646 | ) | (156 | ) | — | (142 | ) | (5,203 | ) | (7,204 | ) | |||||||||||||||||
Transfers in and / or out of Level 3 | — | — | — | — | — | — | — | |||||||||||||||||||||
Ending balance | $ | 923,464 | $ | (870,462 | ) | $ | 7,521 | $ | (634,399 | ) | $ | 324 | $ | 110,826 | $ | (462,726 | ) | |||||||||||
-1 | In the event of a transfer of servicing to another party related to Rights to MSRs sold to HLSS, and now NRZ, we are required to reimburse HLSS, and now NRZ, at predetermined contractual rates for the loss of servicing revenues. Settlements for Financing liability - MSRs pledged for the three months ended March 31, 2015 includes $2.2 million of such reimbursements. | |||||||||||||||||||||||||||
-2 | Total losses attributable to derivative financial instruments still held at March 31, 2015 were $0.4 million for the three months ended March 31, 2015. | |||||||||||||||||||||||||||
The methodologies that we use and key assumptions that we make to estimate the fair value of financial instruments and other assets and liabilities measured at fair value on a recurring or non-recurring basis and those disclosed, but not carried, at fair value are described below. | ||||||||||||||||||||||||||||
Loans Held for Sale | ||||||||||||||||||||||||||||
We originate and purchase residential mortgage loans that we intend to sell to the GSEs. We also own residential mortgage loans that are not eligible to be sold to the GSEs due to delinquency or other factors. Residential forward and reverse mortgage loans that we intend to sell to the GSEs are carried at fair value as a result of a fair value election. Such loans are subject to changes in fair value due to fluctuations in interest rates from the closing date through the date of the sale of the loan into the secondary market. These loans are classified within Level 2 of the valuation hierarchy because the primary component of the price is obtained from observable values of mortgage forwards for loans of similar terms and characteristics. We have the ability to access this market, and it is the market into which conventional and government-insured mortgage loans are typically sold. | ||||||||||||||||||||||||||||
We repurchase certain loans from Ginnie Mae guaranteed securitizations in connection with loan modifications and loan resolution activity as part of our contractual obligations as the servicer of the loans. These loans are classified as loans held for sale at the lower of cost or fair value, in the case of modified loans, as we expect to redeliver (sell) the loans to new Ginnie Mae guaranteed securitizations. The fair value of these loans is estimated using published forward Ginnie Mae prices. Loans repurchased in connection with loan resolution activities are modified or otherwise remediated through loss mitigation activities or are reclassified to receivables. Because these loans are insured or guaranteed by the FHA or VA, the fair value of these loans represents the net recovery value taking into consideration the insured or guaranteed claim. | ||||||||||||||||||||||||||||
For all other loans held for sale, which we report at the lower of cost or fair value, market illiquidity has reduced the availability of observable pricing data. When we enter into an agreement to sell a loan or pool of loans to an investor at a set price, we value the loan or loans at the commitment price. We base the fair value of uncommitted loans on the expected future cash flows discounted at a rate commensurate with the risk of the estimated cash flows. | ||||||||||||||||||||||||||||
Loans Held for Investment – Reverse Mortgages | ||||||||||||||||||||||||||||
We have elected to measure these loans at fair value. For transferred reverse mortgage loans that do not qualify as sales for accounting purposes, we base the fair value on the expected future cash flows discounted over the expected life of the loans at a rate commensurate with the risk of the estimated cash flows. Significant assumptions include expected prepayment and delinquency rates and cumulative loss curves. The discount rate assumption for these assets is primarily based on an assessment of current market yields on newly originated reverse mortgage loans, expected duration of the asset and current market interest rates. | ||||||||||||||||||||||||||||
The more significant assumptions used in the March 31, 2015 valuation include: | ||||||||||||||||||||||||||||
• | Life in years ranging from 6.47 to 10.48 (weighted average of 6.96); | |||||||||||||||||||||||||||
• | Conditional repayment rate ranging from 4.81% to 53.75% (weighted average of 19.25%); and | |||||||||||||||||||||||||||
• | Discount rate of 2.80%. | |||||||||||||||||||||||||||
Significant increases or decreases in any of these assumptions in isolation could result in a significantly lower or higher fair value, respectively. The effects of changes in the assumptions used to value the loans held for investment are largely offset by the effects of changes in the assumptions used to value the HMBS-Related Borrowings that are associated with these loans. | ||||||||||||||||||||||||||||
Mortgage Servicing Rights | ||||||||||||||||||||||||||||
The significant components of the estimated future cash inflows for MSRs include servicing fees, late fees, float earnings and other ancillary fees. Significant cash outflows include the cost of servicing, the cost of financing servicing advances and compensating interest payments. | ||||||||||||||||||||||||||||
Third-party valuation experts generally utilize: (a) transactions involving instruments with similar collateral and risk profiles, adjusted as necessary based on specific characteristics of the asset or liability being valued; and/or (b) industry-standard modeling, such as a discounted cash flow model, in arriving at their estimate of fair value. The prices provided by the valuation experts reflect their observations and assumptions related to market activity, including risk premiums and liquidity adjustments. The models and related assumptions used by the valuation experts are owned and managed by them and, in many cases, the significant inputs used in the valuation techniques are not reasonably available to us. However, we have an internal understanding of the processes and assumptions used to develop the prices based on our ongoing due diligence, which includes regular discussions with the valuation experts. We believe that the procedures executed by the valuation experts, supported by our internal verification and analytical procedures, provide assurance that the prices used in our Consolidated Financial Statements comply with the accounting guidance for fair value measurements and disclosures and reflect the assumptions that a market participant would use. | ||||||||||||||||||||||||||||
We evaluate the reasonableness of our third party experts’ assumptions using historical experience adjusted for prevailing market conditions. Assumptions used in the valuation of MSRs include: | ||||||||||||||||||||||||||||
• | Mortgage prepayment speeds | • | Interest rate used for computing the cost of financing servicing advances | |||||||||||||||||||||||||
• | Cost of servicing | • | Interest rate used for computing float earnings | |||||||||||||||||||||||||
• | Discount rate | • | Compensating interest expense | |||||||||||||||||||||||||
• | Delinquency rates | • | Collection rate of other ancillary fees | |||||||||||||||||||||||||
Amortized Cost MSRs | ||||||||||||||||||||||||||||
We estimate the fair value of MSRs carried at amortized cost using a process that involves either actual sale prices obtained or the use of third-party valuation experts, supported by commercially available discounted cash flow models and analysis of current market data. To provide greater price transparency to investors, we disclose actual Ocwen sale prices for orderly transactions where available in lieu of third-party valuations. | ||||||||||||||||||||||||||||
The more significant assumptions used in the March 31, 2015 valuation include: | ||||||||||||||||||||||||||||
Weighted average prepayment speed | 12.57 | % | ||||||||||||||||||||||||||
Weighted average delinquency rate | 10.81 | % | ||||||||||||||||||||||||||
Advance financing cost | 5-year swap | |||||||||||||||||||||||||||
Interest rate for computing float earnings | 5-year swap | |||||||||||||||||||||||||||
Weighted average discount rate | 9.38 | % | ||||||||||||||||||||||||||
Weighted average cost to service (in dollars) | $ | 86 | ||||||||||||||||||||||||||
We perform an impairment analysis based on the difference between the carrying amount and fair value after grouping the underlying loans into the applicable strata. In response to the significant change in the composition of our MSR portfolio as a result of recent acquisitions, our strata are defined as conventional and government-insured. | ||||||||||||||||||||||||||||
Fair Value MSRs | ||||||||||||||||||||||||||||
MSRs carried at fair value are classified within Level 3 of the valuation hierarchy. The fair value is equal to the mid-point of the range of prices provided by third-party valuation experts, without adjustment, except in the event we have a potential or completed Ocwen sale, including transactions where we have executed letters of intent, in which case the fair value of the MSRs is carried at the estimated sale price. Fair value reflects actual Ocwen sale prices for orderly transactions where available in lieu of independent third-party valuations. Our valuation process includes discussions of bid pricing with the third-party valuation experts and presumably are contemplated along with other market-based transactions for their model validation. | ||||||||||||||||||||||||||||
A change in the valuation inputs utilized by the valuation experts might result in a significantly higher or lower fair value measurement. Changes in market interest rates tend to impact the fair value for Agency MSRs via prepayment speeds by altering the borrower refinance incentive, and for Non-Agency MSRs via a market rate indexed cost of advance funding. Other key assumptions used in the valuation of these MSRs include delinquency rates and discount rates. | ||||||||||||||||||||||||||||
The primary assumptions used in the March 31, 2015 valuation include: | ||||||||||||||||||||||||||||
Agency | Non Agency | |||||||||||||||||||||||||||
Weighted average prepayment speed | 10.47 | % | 17.28 | % | ||||||||||||||||||||||||
Weighted average delinquency rate | 0.86 | % | 30.02 | % | ||||||||||||||||||||||||
Advance financing cost | 5-year swap | 1ML plus 3.5% | ||||||||||||||||||||||||||
Interest rate for computing float earnings | 5-year swap | 1ML | ||||||||||||||||||||||||||
Weighted average discount rate | 9.01 | % | 14.95 | % | ||||||||||||||||||||||||
Weighted average cost to service (in dollars) | $ | 69 | $ | 339 | ||||||||||||||||||||||||
Advances | ||||||||||||||||||||||||||||
We value advances at their net realizable value, which generally approximates fair value, because advances have no stated maturity, are generally realized within a relatively short period of time and do not bear interest. | ||||||||||||||||||||||||||||
Receivables | ||||||||||||||||||||||||||||
The carrying value of receivables generally approximates fair value because of the relatively short period of time between their origination and realization. | ||||||||||||||||||||||||||||
Mortgage-Backed Securities | ||||||||||||||||||||||||||||
Our subordinate and residual securities are not actively traded, and therefore, we estimate the fair value of these securities based on the present value of expected future cash flows from the underlying mortgage pools. We use our best estimate of the key assumptions we believe are used by market participants. We calibrate our internally developed discounted cash flow models for trading activity when appropriate to do so in light of market liquidity levels. Key inputs include expected prepayment rates, delinquency and cumulative loss curves and discount rates commensurate with the risks. Where possible, we use observable inputs in the valuation of our securities. However, the subordinate and residual securities in which we have invested trade infrequently and therefore have few or no observable inputs and little price transparency. Additionally, during periods of market dislocation, the observability of inputs is further reduced. | ||||||||||||||||||||||||||||
Discount rates for the subordinate and residual securities are determined based upon an assessment of prevailing market conditions and prices for similar assets. We project the delinquency, loss and prepayment assumptions based on a comparison to actual historical performance curves adjusted for prevailing market conditions. | ||||||||||||||||||||||||||||
Match Funded Liabilities | ||||||||||||||||||||||||||||
For match funded liabilities that bear interest at a rate that is adjusted regularly based on a market index, the carrying value approximates fair value. For match funded liabilities that bear interest at a fixed rate, we determine fair value by discounting the future principal and interest repayments at a market rate commensurate with the risk of the estimated cash flows. We estimate principal repayments of match funded liabilities during the amortization period based on our historical advance collection rates and taking into consideration any plans to refinance the notes. At March 31, 2015 and December 31, 2014, the interest on all borrowings under match funded facilities was based on a variable rate adjusted regularly using a market index, and therefore, the carrying value approximates fair value. | ||||||||||||||||||||||||||||
Financing Liabilities | ||||||||||||||||||||||||||||
HMBS-Related Borrowings | ||||||||||||||||||||||||||||
We have elected to measure these borrowings at fair value. We recognize the proceeds from the transfer of reverse mortgages as a secured borrowing that we account for at fair value. These borrowings are not actively traded, and therefore, quoted market prices are not available. We determine fair value by discounting the future principal and interest repayments over the estimated life of the borrowing at a market rate commensurate with the risk of the estimated cash flows. Significant assumptions include prepayments, discount rate and borrower mortality rates for reverse mortgages. The discount rate assumption for these liabilities is based on an assessment of current market yields for newly issued HMBS, expected duration and current market interest rates. | ||||||||||||||||||||||||||||
The more significant assumptions used in the March 31, 2015 valuation include: | ||||||||||||||||||||||||||||
• | Life in years ranging from 4.90 to 10.48 (weighted average of 5.61); | |||||||||||||||||||||||||||
• | Conditional repayment rate ranging from 4.81% to 53.75% (weighted average of 19.25%); and | |||||||||||||||||||||||||||
• | Discount rate of 2.05%. | |||||||||||||||||||||||||||
Significant increases or decreases in any of these assumptions in isolation would result in a significantly higher or lower fair value. | ||||||||||||||||||||||||||||
MSRs Pledged | ||||||||||||||||||||||||||||
We periodically sell Rights to MSRs. Because we have retained legal title to the MSRs, the sales of Rights to MSRs are accounted for as financings. We initially establish the value of the Financing Liability - MSRs Pledged based on the price at which the Rights to MSRs are sold. Thereafter, the carrying value of the Financing Liability - MSRs pledged is adjusted to fair value at each reporting date. We determine fair value by applying the price of the underlying MSRs to the remaining principal balance related to the underlying MSRs. Since we have elected fair value for our portfolio of private-label MSRs, future fair value changes in the Financing Liability - MSRs Pledged will be largely offset by changes in the fair value of the related MSRs. | ||||||||||||||||||||||||||||
The more significant assumptions used in determination of the price of the underlying MSRs at March 31, 2015 include: | ||||||||||||||||||||||||||||
Weighted average prepayment speed | 17.83 | % | ||||||||||||||||||||||||||
Weighted average delinquency rate | 31 | % | ||||||||||||||||||||||||||
Advance financing cost | 1ML plus 3.5% | |||||||||||||||||||||||||||
Interest rate for computing float earnings | 1ML | |||||||||||||||||||||||||||
Weighted average discount rate | 15.22 | % | ||||||||||||||||||||||||||
Weighted average cost to service (in dollars) | $ | 345 | ||||||||||||||||||||||||||
Significant increases or decreases in these assumptions in isolation would result in a significantly higher or lower fair value | ||||||||||||||||||||||||||||
Secured Notes | ||||||||||||||||||||||||||||
We issued Ocwen Asset Servicing Income Series (OASIS), Series 2014-1 Notes secured by Ocwen-owned MSRs relating to Freddie Mac mortgages. We accounted for this transaction as a financing. We determine the fair value based on bid prices provided by third parties involved in the issuance and placement of the notes. | ||||||||||||||||||||||||||||
Other Secured Borrowings | ||||||||||||||||||||||||||||
The carrying value of secured borrowings that bear interest at a rate that is adjusted regularly based on a market index approximates fair value. For other secured borrowings that bear interest at a fixed rate, we determine fair value by discounting the future principal and interest repayments at a market rate commensurate with the risk of the estimated cash flows. For the SSTL, we based the fair values at March 31, 2015 and December 31, 2014 on quoted prices in a market with limited trading activity. | ||||||||||||||||||||||||||||
Senior Unsecured Notes | ||||||||||||||||||||||||||||
We base the fair value on quoted prices in a market with limited trading activity. | ||||||||||||||||||||||||||||
Derivative Financial Instruments | ||||||||||||||||||||||||||||
IRLCs represent an agreement to purchase loans from a third-party originator or an agreement to extend credit to a mortgage applicant (locked pipeline), whereby the interest rate is set prior to funding. IRLCs are classified within Level 2 of the valuation hierarchy as the primary component of the price is obtained from observable values of mortgage forwards for loans of similar terms and characteristics. Fair value amounts of IRLCs are adjusted for expected “fallout” (locked pipeline loans not expected to close) using models that consider cumulative historical fallout rates and other factors. | ||||||||||||||||||||||||||||
We enter into forward mortgage-backed securities (MBS) trades to provide an economic hedge against changes in fair value of residential forward and reverse mortgage loans held for sale that we carry at fair value. Forward MBS trades are primarily used to fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market. Forward contracts are actively traded in the market and we obtained unadjusted market quotes for these derivatives, thus they are classified within Level 1 of the valuation hierarchy. | ||||||||||||||||||||||||||||
In addition, we may use interest rate caps to minimize future interest rate exposures on variable rate debt issued on servicing advance financing facilities from increases in one-month LIBOR interest rates. The fair value for interest rate caps is based on counterparty market prices and adjusted for counterparty credit risk. |
Sales_of_Advances_and_MSRs
Sales of Advances and MSRs | 3 Months Ended |
Mar. 31, 2015 | |
Transfers and Servicing [Abstract] | |
Sales of Advances and MSRs | Note 4 — Sales of Advances and MSRs to HLSS |
In order to efficiently finance our assets and operations and to create liquidity, we periodically sell MSRs, Rights to MSRs and servicing advances to market participants, including HLSS. We typically retain the right to subservice loans when we sell MSRs and we remain the servicer on the Rights to MSRs sold to HLSS. Counterparties may also acquire advance financing SPEs and the related match funded liabilities. In connection with sales of Rights to MSRs, we retain legal ownership of the MSRs and continue to service the related mortgage loans until such time as all necessary consents are received. We are obligated to transfer legal ownership of the MSRs to NRZ, upon it obtaining all required third-party consents and licenses. | |
On April 6, 2015, HLSS MSR-EBO Acquisition, LLC, a subsidiary of NRZ, entered into a transaction to acquire substantially all of the assets of HLSS, including HLSS Holdings, LLC, and Ocwen entered into a consent to this transfer and amendment of its agreements with NRZ. NRZ, through its subsidiaries, is now the owner of the Rights to MSRs and has assumed HLSS’ rights and obligations under the associated agreements. | |
Pursuant to our agreements, HLSS and now NRZ, assumed the obligation to fund new servicing advances with respect to the Rights to MSRs. However, because we remain the servicer on the loans for which the Rights to MSRs have been sold to HLSS, in the event HLSS, and now NRZ, were to fail to fulfill its advance funding obligations, as the servicer under our servicing agreements, we would be contractually obligated to fund such advances. At March 31, 2015, HLSS had outstanding advances of approximately $5.8 billion in connection with the Rights to MSRs. On April 6, 2015, we entered into an amendment to the various purchase and sale supplement agreements with NRZ. | |
As it relates to the sale of Rights to MSRs to HLSS (together with the sale of the related servicing advances, the HLSS Transactions), if and when such transfer of legal ownership occurs, OLS will subservice the loans pursuant to a subservicing agreement, as amended, with NRZ. There were no sales to HLSS during the first quarter of either 2015 or 2014. | |
We have also, and in the future may, sell MSRs in transactions accounted for as sales. We may retain subservicing in connection with the transactions. | |
To the extent we retain legal title to the MSRs, the sales of Rights to MSRs are accounted for as financings. Upon receipt of third-party consents, we would derecognize the related MSRs. Upon derecognition, any resulting gain or loss is deferred and amortized over the expected life of the related subservicing agreement. Until derecognition, we continue to recognize the full amount of servicing revenue and amortization of the MSRs. | |
The sales of the related advances generally meet the requirements for sale accounting, and the advances are derecognized from our financial statements at the time of the sale. | |
In 2014, Ocwen sold advances related to certain FHA-insured mortgage loans to subsidiaries of HLSS, now subsidiaries of NRZ. These advance sales did not qualify for sales treatment and were accounted for as financings. |
Loans_Held_for_Sale
Loans Held for Sale | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Loans Held for Sale | Note 5 – Loans Held for Sale | |||||||
Loans Held for Sale - Fair Value | ||||||||
Loans held for sale, at fair value, represent residential mortgage loans originated or purchased and held until sold to secondary market investors, such as the GSEs or other third parties. The following table summarizes the activity in the balance during the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | 401,120 | $ | 503,753 | ||||
Originations and purchases | 922,254 | 1,416,797 | ||||||
Proceeds from sales | (990,634 | ) | (1,481,403 | ) | ||||
Transfers to loans held for investment - reverse mortgages | — | (110,874 | ) | |||||
Gain on sale of loans | 15,265 | 12,863 | ||||||
Other | (8,497 | ) | (2,908 | ) | ||||
Ending balance | $ | 339,508 | $ | 338,228 | ||||
At March 31, 2015, loans held for sale, at fair value with a UPB of $311.0 million were pledged to secure warehouse lines of credit in our Lending segment. | ||||||||
Loans Held for Sale - Lower of Cost or Fair Value | ||||||||
Loans held for sale, at lower of cost or fair value, include residential loans that we do not intend to hold to maturity. The following table summarizes the activity in the balance during the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | 87,492 | $ | 62,907 | ||||
Purchases | 113,896 | 959,756 | ||||||
Proceeds from sales | (140,948 | ) | (835,786 | ) | ||||
Principal collections | (13,863 | ) | (96,300 | ) | ||||
Transfers to accounts receivable | (16,572 | ) | (66,187 | ) | ||||
Transfers to real estate owned | (2,296 | ) | (648 | ) | ||||
Gain on sale of loans | 17,271 | 23,031 | ||||||
Decrease (increase) in valuation allowance | 19,728 | (4,163 | ) | |||||
Other | 3,781 | 2,865 | ||||||
Ending balance (1) (2) | $ | 68,489 | $ | 45,475 | ||||
-1 | The balances at March 31, 2015 and March 31, 2014 are net of valuation allowances of $29.9 million and $36.0 million, respectively. The decrease in the valuation allowance for the three months ended March 31, 2015 resulted principally from the reversal of $22.5 million of the allowance that was associated with loans that were sold to an unrelated third party in March 2015. This decrease was partly offset by an increase of $0.9 million in the allowance resulting from transfers from the liability for indemnification obligations for the initial valuation adjustment that we recognized on certain loans that we repurchased from Fannie Mae and Freddie Mac guaranteed securitizations. For the three months ended March 31, 2014 the increase in the allowance was principally the result of $5.4 million of such transfers from the liability for indemnification obligations. | |||||||
-2 | The balances at March 31, 2015 and March 31, 2014 include $43.9 million and $6.1 million, respectively, of loans that we were required to repurchase from Ginnie Mae guaranteed securitizations as part of our servicing obligations. Repurchased loans are modified or otherwise remediated through loss mitigation activities or are reclassified to receivables. | |||||||
At March 31, 2015, Loans held for sale, at lower of cost or fair value with a UPB of $33.1 million were pledged to secure a warehouse line of credit in our Servicing segment. | ||||||||
In March 2014, we purchased delinquent FHA-insured loans with a UPB of $549.4 million out of Ginnie Mae guaranteed securitizations under the terms of a conditional repurchase option whereby as servicer we have the right, but not the obligation, to repurchase delinquent loans at par plus delinquent interest (the Ginnie Mae early buy-out (EBO) program). Immediately after their purchase, we sold the loans (the Ginnie Mae EBO Loans) and related advances to HLSS Mortgage for $612.3 million ($556.6 million for the Ginnie Mae EBO Loans and $55.7 million for the related servicing advances). We recognized a gain of $7.2 million on the sale of the loans. | ||||||||
The sales of advances to HLSS Mortgage did not qualify for sales treatment and were accounted for as a financing. We refer to the purchase and sale of the Ginnie Mae EBO Loans and the sale of the related advances to HLSS Mortgage as the Ginnie Mae EBO Transactions. | ||||||||
In March 2015, we recognized a gain of $12.9 million on sales of loans with a total UPB of $42.7 million to an unrelated third party. We had repurchased these loans under the representation, warranty and indemnification provisions of our contractual obligations to the GSEs as primary servicer of the loans. | ||||||||
Gain on Loans Held for Sale, Net | ||||||||
The following table summarizes the activity in Gain on loans held for sale, net, during the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Gain on sales of loans | $ | 51,400 | $ | 54,993 | ||||
Change in fair value of IRLCs | (2,233 | ) | 986 | |||||
Change in fair value of loans held for sale | (4,008 | ) | 1,800 | |||||
Loss on economic hedge instruments | (427 | ) | (13,610 | ) | ||||
Other | (228 | ) | (182 | ) | ||||
$ | 44,504 | $ | 43,987 | |||||
Gains on loans held for sale, net include $8.5 million and $11.6 million for the three months ended March 31, 2015 and 2014, respectively, representing the value assigned to MSRs retained on transfers of forward loans. | ||||||||
Also included in Gains on loans held for sale, net are gains of $4.3 million and $22.8 million recorded during the three months ended March 31, 2015 and 2014, respectively, on sales of repurchased Ginnie Mae loans, which are carried at the lower of cost or fair value. | ||||||||
Fair value gains recognized in connection with sales of reverse mortgages into Ginnie Mae guaranteed securitizations are also included in Gains on loans held for sale, net and amounted to $25.6 million and $16.1 million for the three months ended March 31, 2015 and 2014, respectively. |
Advances
Advances | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Advances [Abstract] | ||||||||
Advances | Note 6 – Advances | |||||||
Advances, net, representing payments made on behalf of borrowers or on foreclosed properties, consisted of the following at the dates indicated: | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
Servicing: | ||||||||
Principal and interest | $ | 137,929 | $ | 128,217 | ||||
Taxes and insurance | 467,716 | 467,891 | ||||||
Foreclosures, bankruptcy and other (1) | 332,829 | 293,340 | ||||||
938,474 | 889,448 | |||||||
Corporate Items and Other | 4,064 | 4,466 | ||||||
$ | 942,538 | $ | 893,914 | |||||
-1 | The balances at March 31, 2015 and December 31, 2014 are net of an allowance for losses of $71.9 million and $70.0 million, respectively. | |||||||
The following table summarizes the activity in advances for the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | 893,914 | $ | 890,832 | ||||
Acquisitions | — | 98,875 | ||||||
Transfers to match funded advances | — | (10,156 | ) | |||||
Sales of advances | (1,765 | ) | — | |||||
New advances (collections of advances), net and other | 50,389 | (41,625 | ) | |||||
Ending balance | $ | 942,538 | $ | 937,926 | ||||
Match_Funded_Advances
Match Funded Advances | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Transfers and Servicing [Abstract] | ||||||||
Match Funded Advances | Note 7 – Match Funded Advances | |||||||
Match funded advances on residential loans we service for others are comprised of the following at the dates indicated: | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
Principal and interest | $ | 1,249,364 | $ | 1,349,048 | ||||
Taxes and insurance | 807,267 | 847,064 | ||||||
Foreclosures, bankruptcy, real estate and other | 196,336 | 213,330 | ||||||
$ | 2,252,967 | $ | 2,409,442 | |||||
The following table summarizes the activity in match funded advances for the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | 2,409,442 | $ | 2,552,383 | ||||
Acquisitions | — | 85,521 | ||||||
Transfers from advances | — | 10,156 | ||||||
New advances (collections of pledged advances), net and other | (156,475 | ) | 7,794 | |||||
Ending balance | $ | 2,252,967 | $ | 2,655,854 | ||||
Mortgage_Servicing
Mortgage Servicing | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Transfers and Servicing [Abstract] | ||||||||||||||
Mortgage Servicing | Note 8 – Mortgage Servicing | |||||||||||||
Mortgage Servicing Rights – Amortization Method | ||||||||||||||
The following table summarizes the activity in the carrying value of amortization method servicing assets for the three months ended March 31. Amortization of mortgage servicing rights is reported net of the amortization of any servicing liabilities and includes the amount of charges we recognized to increase servicing liability obligations, if any. | ||||||||||||||
2015 | 2014 | |||||||||||||
Beginning balance | $ | 1,820,091 | $ | 1,953,352 | ||||||||||
Fair value election - transfer to MSRs carried at fair value (1) | (787,142 | ) | — | |||||||||||
Additions recognized in connection with business acquisitions | — | 20,324 | ||||||||||||
Additions recognized in connection with asset acquisitions | 3,267 | 6,697 | ||||||||||||
Additions recognized on the sale of mortgage loans | 8,528 | 11,614 | ||||||||||||
Sales (2) | (65,627 | ) | — | |||||||||||
Servicing transfers and adjustments | — | (364 | ) | |||||||||||
979,117 | 1,991,623 | |||||||||||||
Amortization | (38,494 | ) | (62,094 | ) | ||||||||||
Impairment (3) | (17,769 | ) | — | |||||||||||
Ending balance | $ | 922,854 | $ | 1,929,529 | ||||||||||
Estimated fair value at end of period | $ | 1,064,134 | $ | 2,774,910 | ||||||||||
-1 | Effective January 1, 2015, we elected fair value accounting for a newly-created class of non-Agency MSRs, which were previously accounted for using the amortization method. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with this class. We recorded a cumulative-effect adjustment of $52.0 million (before deferred income taxes of $9.2 million) to retained earnings as of January 1, 2015 to reflect the excess of the fair value of these MSRs over their carrying amount. At December 31, 2014, the UPB of the non-Agency MSRs for which the fair value election was made was $195.3 billion. | |||||||||||||
-2 | On March 31, 2015, we closed on the sale of Agency MSRs on a portfolio consisting of 76,000 performing loans owned by Freddie Mac with a total UPB of $9.1 billion. We completed the transfer of the loan servicing on April 16, 2015. | |||||||||||||
-3 | We established a $17.8 million valuation allowance related to impairment on our government-insured MSRs, as the fair value for this stratum was less than its carrying value. This impairment was primarily due to the FHA reducing the mortgage insurance premium rate by 50 basis points during the quarter, which created a significantly lower interest rate for existing FHA borrowers and in turn, generated higher projected prepayment speed and shorter asset life inputs used to value these MSRs. The impairment charge is recognized in Servicing and origination expense in the unaudited Consolidated Statements of Operations. | |||||||||||||
Mortgage Servicing Rights—Fair Value Measurement Method | ||||||||||||||
This portfolio comprises servicing rights for which we elected the fair value option and includes Agency residential mortgage loans for which we previously hedged the related market risks and a new class of non-Agency residential mortgage loans for which we elected fair value as of January 1, 2015. | ||||||||||||||
The following table summarizes the activity related to fair value servicing assets for the three months ended March 31: | ||||||||||||||
2015 | 2014 | |||||||||||||
Agency | Non-Agency | Total | ||||||||||||
Beginning balance | $ | 93,901 | $ | — | $ | 93,901 | $ | 116,029 | ||||||
Fair value election - transfer from MSRs carried at amortized cost | — | 787,142 | 787,142 | — | ||||||||||
Cumulative effect of fair value election | — | 52,015 | 52,015 | |||||||||||
Sales | — | (947 | ) | (947 | ) | — | ||||||||
Servicing transfers and adjustments | — | (1,139 | ) | (1,139 | ) | — | ||||||||
Changes in fair value (1): | ||||||||||||||
Changes in valuation inputs or other assumptions | (6,110 | ) | — | (6,110 | ) | (3,155 | ) | |||||||
Realization of expected future cash flows and other changes | (3,276 | ) | (23,789 | ) | (27,065 | ) | (2,048 | ) | ||||||
Ending balance | $ | 84,515 | $ | 813,282 | $ | 897,797 | $ | 110,826 | ||||||
-1 | Changes in fair value are recognized in Servicing and origination expense in the unaudited Consolidated Statements of Operations. | |||||||||||||
Because the mortgages underlying these MSRs permit the borrowers to prepay the loans, the value of the MSRs generally tends to diminish in periods of declining interest rates (as prepayments increase) and increase in periods of rising interest rates (as prepayments decrease). The following table summarizes the estimated change in the value of the MSRs that we carry at fair value as of March 31, 2015 given hypothetical instantaneous parallel shifts in the yield curve: | ||||||||||||||
Adverse change in fair value | ||||||||||||||
10% | 20% | |||||||||||||
Weighted average prepayment speeds | $ | (40,557 | ) | $ | (101,371 | ) | ||||||||
Discount rate (option-adjusted spread) | $ | (22,770 | ) | $ | (44,842 | ) | ||||||||
The sensitivity analysis measures the potential impact on fair values based on hypothetical changes (increases and decreases) in interest rates. | ||||||||||||||
Portfolio of Assets Serviced | ||||||||||||||
The following table presents the composition of our primary servicing and subservicing portfolios by type of property serviced as measured by UPB. The servicing portfolio represents loans for which we own the MSRs while subservicing represents all other loans. The UPB of assets serviced for others are not included on our unaudited Consolidated Balance Sheets. | ||||||||||||||
Residential | Commercial | Total | ||||||||||||
UPB at March 31, 2015 | ||||||||||||||
Servicing (1) | $ | 337,125,187 | $ | — | $ | 337,125,187 | ||||||||
Subservicing | 45,088,815 | 161,887 | 45,250,702 | |||||||||||
$ | 382,214,002 | $ | 161,887 | $ | 382,375,889 | |||||||||
UPB at December 31, 2014 | ||||||||||||||
Servicing (1) | $ | 361,288,281 | $ | — | $ | 361,288,281 | ||||||||
Subservicing | 37,439,446 | 149,737 | 37,589,183 | |||||||||||
$ | 398,727,727 | $ | 149,737 | $ | 398,877,464 | |||||||||
UPB at March 31, 2014 | ||||||||||||||
Servicing (1) | $ | 391,701,237 | $ | — | $ | 391,701,237 | ||||||||
Subservicing | 57,869,359 | 318,507 | 58,187,866 | |||||||||||
$ | 449,570,596 | $ | 318,507 | $ | 449,889,103 | |||||||||
-1 | Includes primary servicing UPB of $156.3 billion, $160.8 billion and $170.8 billion at March 31, 2015, December 31, 2014 and March 31, 2014, respectively, for which the Rights to MSRs have been sold to HLSS. | |||||||||||||
Residential assets serviced includes foreclosed real estate. Residential assets serviced also includes small-balance commercial assets with a UPB of $2.1 billion, $2.3 billion and $2.5 billion at March 31, 2015, December 31, 2014 and March 31, 2014, respectively. Commercial assets consist of large-balance foreclosed real estate. | ||||||||||||||
A significant portion of the servicing agreements for our non-Agency servicing portfolio contain provisions where we could be terminated as servicer without compensation upon the failure of the serviced loans to meet certain portfolio delinquency or cumulative loss thresholds or in the event we fail to maintain required servicer ratings, among other provisions. As a result of the economic downturn of recent years, the portfolio delinquency and/or cumulative loss threshold provisions have been breached by many private-label securitizations in our non-Agency servicing portfolio. Terminations as servicer as a result of a breach of any of these provisions have been minimal. In the event we are terminated as servicer and the Rights to MSRs were sold to HLSS, now owned by NRZ, we are obligated to compensate NRZ. As a result of the transfer of servicing to another party during the three months ended March 31, 2015 related to Rights to MSRs sold to HLSS, we were required to reimburse HLSS $2.2 million for a percentage of the purchase price for the related Rights to MSRs in accordance with our agreements. | ||||||||||||||
Servicing Revenue | ||||||||||||||
The following table presents the components of servicing and subservicing fees for the three months ended March 31: | ||||||||||||||
2015 | 2014 | |||||||||||||
Loan servicing and subservicing fees: | ||||||||||||||
Servicing | $ | 320,085 | $ | 351,823 | ||||||||||
Subservicing | 30,457 | 33,725 | ||||||||||||
350,542 | 385,548 | |||||||||||||
Home Affordable Modification Program (HAMP) fees | 35,176 | 36,699 | ||||||||||||
Late charges | 24,122 | 36,835 | ||||||||||||
Loan collection fees | 9,563 | 8,294 | ||||||||||||
Custodial accounts (float earnings) | 1,896 | 1,721 | ||||||||||||
Other | 25,242 | 21,362 | ||||||||||||
$ | 446,541 | $ | 490,459 | |||||||||||
Float balances (balances in custodial accounts, which represent collections of principal and interest that we receive from borrowers, are held in escrow by an unaffiliated bank and are excluded from our balance sheet) amounted to $4.0 billion and $3.5 billion at March 31, 2015 and March 31, 2014, respectively. |
Receivables
Receivables | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Receivables | Note 9 – Receivables | |||||||
Receivables consisted of the following at the dates indicated: | ||||||||
31-Mar-15 | 31-Dec-14 | |||||||
Servicing: | ||||||||
Government-insured loan claims (1) | $ | 64,637 | $ | 52,955 | ||||
Due from custodial accounts | 45,355 | 11,627 | ||||||
Reimbursable expenses | 29,160 | 32,387 | ||||||
Other servicing receivables | 93,138 | 29,516 | ||||||
232,290 | 126,485 | |||||||
Income taxes receivable | 63,948 | 68,322 | ||||||
Due from related parties | 15,846 | 58,892 | ||||||
Other receivables (2) | 14,758 | 43,690 | ||||||
326,842 | 297,389 | |||||||
Allowance for losses (1) | (27,006 | ) | (26,793 | ) | ||||
$ | 299,836 | $ | 270,596 | |||||
-1 | The total allowance for losses at March 31, 2015 and December 31, 2014 includes $27.0 million and $26.8 million, respectively, related to receivables of our Servicing business. Allowance for losses related to defaulted FHA or VA insured loans repurchased from Ginnie Mae guaranteed securitizations (government-insured loan claims) at March 31, 2015 and December 31, 2014 were $11.8 million and $10.0 million, respectively. | |||||||
-2 | The balance at December 31, 2014 includes $28.8 million related to losses to be indemnified under the terms of the Homeward merger agreement. On March 19, 2015, we reached an agreement with the former owner of Homeward for the final settlement of all indemnification claims under the merger agreement and received $38.1 million in cash. |
Other_Assets
Other Assets | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Other Assets [Abstract] | ||||||||
Other Assets | Note 10 – Other Assets | |||||||
Other assets consisted of the following at the dates indicated: | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
Contingent loan repurchase asset (1) | $ | 283,900 | $ | 274,265 | ||||
Debt service accounts (2) | 86,437 | 91,974 | ||||||
Prepaid lender fees and debt issuance costs, net | 41,025 | 31,337 | ||||||
Real estate | 23,145 | 16,720 | ||||||
Prepaid expenses | 15,782 | 17,957 | ||||||
Prepaid income taxes | 15,274 | 16,450 | ||||||
Derivatives, at fair value | 9,545 | 6,065 | ||||||
Mortgage backed securities | 7,701 | 7,335 | ||||||
Other | 17,850 | 28,708 | ||||||
$ | 500,659 | $ | 490,811 | |||||
-1 | In connection with the Ginnie Mae EBO Transactions, our agreements provide either that: (a) we have the right, but not the obligation, to repurchase previously transferred mortgage loans under certain conditions, including the mortgage loans becoming eligible for pooling under a program sponsored by Ginnie Mae or (b) we have the obligation to repurchase previously transferred mortgage loans that have been subject to a successful trial modification before any permanent modification is made. Once these conditions are met, we have effectively regained control over the mortgage loan(s), and under GAAP, must re-recognize the loan on our consolidated balance sheets and establish a corresponding repurchase liability. With respect to those loans that we have the right, but not the obligation, to repurchase under the applicable agreement, this requirement applies regardless of whether we have any intention to repurchase the loan. We re-recognized mortgage loans in Other assets and the corresponding liability in Other liabilities. | |||||||
-2 | Under our advance funding financing facilities, we are contractually required to remit collections on pledged advances to the trustee within two days of receipt. The collected funds are not applied to reduce the related match funded debt until the payment dates specified in the indenture. The balances also include amounts that have been set aside from the proceeds of our match funded advance facilities and certain of our warehouse facilities to provide for possible shortfalls in the funds available to pay certain expenses and interest. The funds related to match funded facilities are held in interest earning accounts in the name of the SPE created in connection with the facility. |
Borrowings
Borrowings | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||
Borrowings | Note 11 – Borrowings | ||||||||||||||||||
Match Funded Liabilities | |||||||||||||||||||
Match funded liabilities are comprised of the following at the dates indicated: | |||||||||||||||||||
Borrowing Type | Interest Rate | Maturity (1) | Amortization Date (1) | Available Borrowing Capacity (2) | March 31, 2015 | December 31, 2014 | |||||||||||||
Advance Receivable Backed Notes Series 2012-ADV1 (3) | 1ML (3) + 175 bps | Jun. 2017 | Jun. 2015 | $ | 51,658 | $ | 348,342 | $ | 373,080 | ||||||||||
Advance Receivable Backed | 1ML + 300 bps | Dec. 2015 | Dec. 2014 | — | — | 494 | |||||||||||||
Note (4) | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2013-VF2, | 1ML + 167 bps (5) | Oct. 2045 | Oct. 2015 | 68,214 | 495,786 | 519,634 | |||||||||||||
Class A | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2013-VF2, | 1ML + 300 bps (6) | Oct. 2045 | Oct. 2015 | 4,584 | 31,416 | 32,919 | |||||||||||||
Class B | |||||||||||||||||||
Advance Receivables Backed Notes - Series 2014-VF3, Class A | 1ML + 175 bps (7) | Oct. 2045 | Oct. 2015 | 72,799 | 527,201 | 552,553 | |||||||||||||
Advance Receivables Backed Notes - Series 2014-VF4 | 1ML + 175 bps (8) | Oct. 2045 | Oct. 2015 | 72,799 | 527,201 | 552,553 | |||||||||||||
Advance Receivables Backed Notes, Series 2014-VF1, | Cost of Funds + 275 bps | Dec. 2045 | Dec. 2015 | 54,270 | 25,673 | 21,192 | |||||||||||||
Class A (9) | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2014-VF1, | Cost of Funds + 325 bps | Dec. 2045 | Dec. 2015 | — | 16,289 | 13,598 | |||||||||||||
Class B (9) | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2014-VF1, | Cost of Funds + 375 bps | Dec. 2045 | Dec. 2015 | — | 12,220 | 10,224 | |||||||||||||
Class C (9) | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2014-VF1, | Cost of Funds + 470 bps | Dec. 2045 | Dec. 2015 | — | 16,548 | 14,000 | |||||||||||||
Class D (9) | |||||||||||||||||||
$ | 324,324 | $ | 2,000,676 | $ | 2,090,247 | ||||||||||||||
Weighted average interest rate | 1.99 | % | 1.97 | % | |||||||||||||||
-1 | The amortization date of our advance financing facilities is the date on which the revolving period ends under each advance financing facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. The maturity date is the date on which all outstanding balances must be repaid. In two advance facilities, there are multiple notes outstanding. For each note, after the amortization date, all collections that represent the repayment of advances pledged to the facility must be applied to reduce the balance of the note outstanding, and any new advances are ineligible to be financed. | ||||||||||||||||||
-2 | Borrowing capacity is available to us provided that we have additional eligible collateral to pledge. Collateral may only be pledged to one facility. At March 31, 2015, none of the available borrowing capacity could be used based on the amount of eligible collateral that had been pledged | ||||||||||||||||||
-3 | 1-Month LIBOR (1ML) was 0.18% and 0.17% at March 31, 2015 and December 31, 2014, respectively. | ||||||||||||||||||
-4 | We voluntarily terminated this facility on January 15, 2015. | ||||||||||||||||||
-5 | The interest margin on this note is scheduled to increase to 191 bps on July 15, 2015, to 215 bps on August 15, 2015 and to 239 bps on September 15, 2015. | ||||||||||||||||||
-6 | The interest margin on this note is scheduled to increase to 343 bps on July 15, 2015, to 386 bps on August 15, 2015 and to 429 bps on September 15, 2015. | ||||||||||||||||||
-7 | The interest margin on this note is scheduled to increase to 200 bps on July 15, 2015, to 225 bps on August 15, 2015 and to 250 bps on September 15, 2015. | ||||||||||||||||||
-8 | The interest margin on this note is scheduled to increase to 200 bps on July 15, 2015, to 212 bps on August 15, 2015 and to 250 bps on September 15, 2015. | ||||||||||||||||||
-9 | Beginning April 23, 2015, the maximum borrowing under this facility will decrease by $6.3 million per month until it is reduced to $75.0 million. | ||||||||||||||||||
Financing Liabilities | |||||||||||||||||||
Financing liabilities are comprised of the following at the dates indicated: | |||||||||||||||||||
Borrowings | Collateral | Interest Rate | Maturity | March 31, 2015 | December 31, 2014 | ||||||||||||||
Servicing: | |||||||||||||||||||
Financing liability – MSRs pledged | MSRs | -1 | -1 | $ | 594,495 | $ | 614,441 | ||||||||||||
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (2) | MSRs | -2 | Feb. 2028 | 107,408 | 111,459 | ||||||||||||||
Financing Liability – Advances Pledged (3) | Advances on loans | -3 | -3 | 84,307 | 88,489 | ||||||||||||||
786,210 | 814,389 | ||||||||||||||||||
Lending: | |||||||||||||||||||
HMBS-related borrowings (4) | Loans held for investment (LHFI) | 1ML + 245 bps | -4 | 1,702,397 | 1,444,252 | ||||||||||||||
$ | 2,488,607 | $ | 2,258,641 | ||||||||||||||||
-1 | This financing liability arose in connection with the HLSS Transaction financing liabilities and has no contractual maturity. The balance of the liability is adjusted each reporting period to its fair value based on the present value of the estimated future cash flows underlying the related MSRs. | ||||||||||||||||||
-2 | OASIS noteholders are entitled to receive a monthly payment amount equal to the sum of: (a) the designated servicing fee amount (21 basis points of the UPB of the reference pool of Freddie Mac mortgages); (b) any termination payment amounts; (c) any excess refinance amounts; and (d) the note redemption amounts, each as defined in the indenture supplement for the notes. The notes have a final stated maturity of February 2028. We accounted for this transaction as a financing. Monthly amortization of the liability is estimated using the proportion of monthly projected service fees on the underlying MSRs as a percentage of lifetime projected fees, adjusted for the term of the security. | ||||||||||||||||||
-3 | Certain sales of advances in 2014 did not qualify for sales accounting treatment and were accounted for as a financing. | ||||||||||||||||||
-4 | Represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed HMBS. The beneficial interests have no maturity dates, and the borrowings mature as the related loans are repaid. | ||||||||||||||||||
Other Secured Borrowings | |||||||||||||||||||
Other secured borrowings are comprised of the following at the dates indicated: | |||||||||||||||||||
Borrowings | Collateral | Interest Rate | Maturity | Available Borrowing Capacity | March 31, 2015 | December 31, 2014 | |||||||||||||
Servicing: | |||||||||||||||||||
SSTL (1) | -1 | 1-Month Euro-dollar rate + 375 bps with a Eurodollar floor of 125 bps (1) | Feb. 2018 | $ | — | $ | 1,200,174 | $ | 1,277,250 | ||||||||||
Repurchase agreement (2) | Loans held for sale (LHFS) | 1ML + 200 - 345 bps | Jun. 2015 | 15,747 | 34,253 | 32,018 | |||||||||||||
15,747 | 1,234,427 | 1,309,268 | |||||||||||||||||
Borrowings | Collateral | Interest Rate | Maturity | Available Borrowing Capacity | March 31, 2015 | December 31, 2014 | |||||||||||||
Lending: | |||||||||||||||||||
Master repurchase agreement (3) | LHFS | 1ML + 175 bps | Jun. 2015 | — | 192,222 | 208,010 | |||||||||||||
Participation agreement (4) | LHFS | N/A | Apr. 2016 | — | 13,548 | 41,646 | |||||||||||||
Participation agreement (5) | LHFS | N/A | Apr. 2016 | — | 38,717 | 196 | |||||||||||||
Master repurchase agreement (6) | LHFS | 1ML + 175 - 275 bps | Jul. 2015 | 19,508 | 55,492 | 102,073 | |||||||||||||
Master repurchase agreement (7) | LHFI | 1ML + 275bps | Jul. 2015 | — | 39,463 | 52,678 | |||||||||||||
Mortgage warehouse agreement (8) | LHFI | 1ML + 275 bps; floor of 350 bps | May-15 | — | 33,513 | 23,851 | |||||||||||||
19,508 | 372,955 | 428,454 | |||||||||||||||||
35,255 | 1,607,382 | 1,737,722 | |||||||||||||||||
Discount (1) | — | (3,675 | ) | (4,031 | ) | ||||||||||||||
$ | 35,255 | $ | 1,603,707 | $ | 1,733,691 | ||||||||||||||
Weighted average interest rate | 4.37 | % | 4.33 | % | |||||||||||||||
-1 | On March 2, 2015, we entered into an amendment to the SSTL facility agreement. Among other things, the amendment: | ||||||||||||||||||
• | eliminates the dollar cap on the general asset sale basket and requires Ocwen to use 75% of the net cash proceeds from permitted asset sales under such general asset basket to prepay the loans under the SSTL and, subject to certain conditions, permits Ocwen to use up to 25% of such net cash proceeds to reinvest in assets used in the business of OLS and its subsidiaries within 120 days of receipt thereof (subject to an extension of up to 90 days if a binding agreement is entered into within such 120 days); and | ||||||||||||||||||
• | increases the quarterly covenant levels of the corporate leverage ratio to 3.5-to-1 for the fiscal quarter ended March 31, 2015 and thereafter. | ||||||||||||||||||
-2 | Under this repurchase agreement, the lender provides financing on a committed basis for $50.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $50.0 million. | ||||||||||||||||||
-3 | Under this repurchase agreement, the lender provides financing on a committed basis for $150.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $150.0 million. | ||||||||||||||||||
-4 | Under this participation agreement, the lender provides financing on an uncommitted basis for $50.0 million at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. On April 16, 2015, the maximum borrowing capacity was increased to $100.0 million. | ||||||||||||||||||
-5 | Under this participation agreement, the lender provides financing on an uncommitted basis for $150.0 million at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. | ||||||||||||||||||
-6 | Under this repurchase agreement, the lender provides financing on a committed basis for $75.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $75.0 million. On April 16, 2015, this facility was terminated. | ||||||||||||||||||
-7 | On April 16, 2015, the maximum borrowing capacity under this agreement was reduced to $37.5 million all of which is on a committed basis. | ||||||||||||||||||
-8 | Borrowing capacity of $60.0 million under this facility is available on an uncommitted basis at the discretion of the lender. | ||||||||||||||||||
Senior Unsecured Notes | |||||||||||||||||||
On May 12, 2014, Ocwen completed the issuance and sale of $350.0 million of its 6.625% Senior Notes due 2019 (the Senior Unsecured Notes) in a private offering. The Senior Unsecured Notes are general senior unsecured obligations of Ocwen and will mature on May 15, 2019. Interest is payable semi-annually on May 15th and November 15th. The Senior Unsecured Notes are not guaranteed by any of Ocwen’s subsidiaries. | |||||||||||||||||||
Ocwen entered into a Registration Rights Agreement under which it agreed for the benefit of the initial purchasers of the Senior Unsecured Notes to use commercially reasonable efforts to file a registration statement and to have the registration statement become effective on or prior to 270 days after the closing of the offering. Because the exchange offer was not completed on or before 270 days after the closing of the offering, additional interest accrues on the principal amount of the notes at a rate of 0.25% per annum (which rate will be increased by an additional 0.25% per annum for each subsequent 90-day period that such additional interest continues to accrue to a maximum of 1.0% per annum) until the exchange offer is completed or the shelf registration statement, if required, is declared effective. | |||||||||||||||||||
In connection with our issuance of the Senior Unsecured Notes, we incurred certain costs that we capitalized and are amortizing over the period from the date of issuance to May 15, 2019. The unamortized balance of these issuance costs was $5.5 million at March 31, 2015. | |||||||||||||||||||
Covenants | |||||||||||||||||||
Under the terms of our debt agreements, we are subject to various qualitative and quantitative covenants. Collectively, these covenants include: | |||||||||||||||||||
• | Financial covenants; | ||||||||||||||||||
• | Covenants to operate in material compliance with applicable laws; | ||||||||||||||||||
• | Restrictions on our ability to engage in various activities, including but not limited to incurring additional debt, paying dividends, repurchasing or redeeming capital stock, transferring assets or making loans, investments or acquisitions; | ||||||||||||||||||
• | Monitoring and reporting of various specified transactions or events, including specific reporting on defined events affecting collateral underlying certain debt agreements; and | ||||||||||||||||||
• | Requirements to provide audited financial statements within specified timeframes, including a requirement under our SSTL that Ocwen’s financial statements and the related audit report be unqualified as to going concern. | ||||||||||||||||||
Financial covenants in our debt agreements require that we maintain, among other things: | |||||||||||||||||||
• | a specified interest coverage ratio, which is defined under our SSTL as the ratio of trailing four quarter adjusted EBITDA to trailing four quarter interest expense (each as defined therein); | ||||||||||||||||||
• | a specified corporate leverage ratio, which is defined under our SSTL as consolidated debt to trailing four quarter adjusted EBITDA (each as defined therein); | ||||||||||||||||||
• | a specified consolidated total debt to consolidated tangible net worth ratio; | ||||||||||||||||||
• | a specified loan to value ratio, as defined under our SSTL; and | ||||||||||||||||||
• | specified levels of consolidated tangible net worth, liquidity and at the OLS level, net operating income. | ||||||||||||||||||
As of March 31, 2015, the most restrictive consolidated tangible net worth requirement was $630.0 million plus 65% of quarterly net income, without adjustment for quarterly net losses, beginning with the three months ended December 31, 2012. The required consolidated tangible net worth in connection with this agreement was $979.4 million at March 31, 2015. | |||||||||||||||||||
As a result of the covenants to which we are subject, we may be limited in the manner in which we conduct our business and may be limited in our ability to engage in favorable business activities or raise additional capital to finance future operations or satisfy future liquidity needs. In addition, breaches or events that may result in a default under our debt agreements include, among other things, noncompliance with our covenants, nonpayment of principal or interest, material misrepresentations, the occurrence of a material adverse change, insolvency, bankruptcy, certain material judgments and changes of control. Covenants and defaults of this type are commonly found in debt agreements such as ours. Certain of these covenants and defaults are open to subjective interpretation and, if our interpretation were contested by a lender, a court may ultimately be required to determine compliance or lack thereof. In addition, our debt agreements generally include cross default provisions such that a default under one agreement could trigger defaults under other agreements. If we fail to comply with our debt agreements and are unable to avoid, remedy or secure a waiver of any resulting default, we may be subject to adverse action by our lenders, including termination of further funding, acceleration of outstanding obligations, enforcement of liens against the assets securing or otherwise supporting our obligations and other legal remedies. Our lenders can waive their contractual rights in the event of a default. | |||||||||||||||||||
Under one of its advance financing agreements, OLS must maintain certain minimum servicer ratings assigned by Moody’s, S&P and Fitch Ratings. If any of these rating agencies withdraws its rating or if the assigned ratings fall below the minimum ratings established in the lending agreement, an early amortization event occurs under the lending agreement if the lender’s agent notifies the indenture trustee that an early amortization event shall occur. As a result of downgrades in our servicer ratings, the lender has the right to deliver such notice at any time. The lender has agreed not to deliver such a notice to the indenture trustee subject to ongoing monthly review. If an early amortization event occurs and is not waived by the lender, no new advances can be funded under the facility, all collections on advances funded through the facility must be used to pay interest and principal on currently outstanding borrowings under the facility, and additionally, the interest rate margin on 1-month LIBOR would increase. At March 31, 2015, we had $348.3 million of borrowings outstanding under this facility out of a maximum borrowing capacity of $400.0 million. The scheduled date to begin amortization of this facility is June 2015. As described in Note 1A — Business Environment and Other Uncertainties, we have entered into a commitment letter providing for replacement financing should the existing lender under this facility seek not to renew or extend the revolving period upon its completion in June 2015. Our lender’s obligation to fund under this commitment letter is subject to conditions precedent, some of which are outside our control. | |||||||||||||||||||
We believe that we are in compliance with all of the qualitative and quantitative covenants in our debt agreements as of the date of these financial statements. |
Other_Liabilities
Other Liabilities | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Other Liabilities Disclosure [Abstract] | ||||||||
Other Liabilities | Note 12 – Other Liabilities | |||||||
Other liabilities were comprised of the following at the dates indicated: | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
Contingent loan repurchase liability (1) | $ | 283,900 | $ | 274,265 | ||||
Accrued expenses | 135,482 | 142,592 | ||||||
Liability for indemnification obligations | 119,182 | 132,918 | ||||||
Due to related parties | 114,980 | 55,585 | ||||||
Payable to loan servicing and subservicing investors | 35,246 | 67,722 | ||||||
Liability for selected tax items | 29,161 | 28,436 | ||||||
Checks held for escheat | 16,420 | 18,513 | ||||||
Other | 87,873 | 73,503 | ||||||
$ | 822,244 | $ | 793,534 | |||||
-1 | In connection with the Ginnie Mae EBO Transactions, we have re-recognized certain loans on our consolidated balance sheets and establish a corresponding repurchase liability regardless of our intention to repurchase the loan. |
Derivative_Financial_Instrumen
Derivative Financial Instruments and Hedging Activities | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||
Derivative Financial Instruments and Hedging Activities | Note 13 – Derivative Financial Instruments and Hedging Activities | ||||||||||||||||
Because many of our current derivative agreements are not exchange-traded, we are exposed to credit loss in the event of nonperformance by the counterparty to the agreements. We control this risk through credit monitoring procedures including financial analysis, dollar limits and other monitoring procedures. The notional amount of our contracts does not represent our exposure to credit loss. | |||||||||||||||||
The following table summarizes the changes in the notional balances of our holdings of derivatives during the three months ended March 31, 2015: | |||||||||||||||||
IRLCs | Forward MBS Trades | Interest Rate Caps | Interest Rate Swaps | ||||||||||||||
Beginning notional balance | $ | 239,406 | $ | 703,725 | $ | 1,729,000 | $ | — | |||||||||
Additions | 1,288,957 | 2,481,134 | 450,000 | ||||||||||||||
Amortization | 69,773 | (102,000 | ) | — | |||||||||||||
Maturities | (964,465 | ) | (1,121,701 | ) | — | ||||||||||||
Terminations | (144,390 | ) | (1,349,218 | ) | (450,000 | ) | |||||||||||
Ending notional balance | $ | 419,508 | $ | 783,713 | $ | 1,627,000 | $ | — | |||||||||
Fair value of derivative assets (liabilities) at: | |||||||||||||||||
March 31, 2015 | $ | 9,516 | $ | (5,249 | ) | $ | 203 | $ | — | ||||||||
December 31, 2014 | $ | 6,065 | $ | (2,854 | ) | $ | 567 | $ | — | ||||||||
Maturity | Apr. 2015 - Jun. 2015 | May 2015 - June 2015 | Nov. 2016 - Oct. 2017 | N/A | |||||||||||||
-1 | As loans are originated and sold or as loan commitments expire, our forward MBS trade positions mature and are replaced by new positions based upon new loan commitments and originations and expected time to sell. | ||||||||||||||||
Foreign Currency Exchange Rate Risk Management | |||||||||||||||||
We periodically enter into foreign exchange forward contracts to hedge against the effect of changes in the value of the India Rupee on amounts payable to our India subsidiaries. Our operations in the Philippines also expose us to foreign currency exchange rate risk, but we currently consider this risk to be insignificant. | |||||||||||||||||
Interest Rate Management | |||||||||||||||||
Match Funded Liabilities | |||||||||||||||||
As required by certain of our advance financing arrangements, we have purchased interest rate caps to minimize future interest rate exposure from increases in one-month LIBOR interest rates. | |||||||||||||||||
Loans Held for Sale, at Fair Value | |||||||||||||||||
The mortgage loans held for sale that we carry at fair value are subject to interest rate and price risk from the loan funding date until the date the loan is sold into the secondary market. Generally, the fair value of a loan will decline in value when interest rates increase and will rise in value when interest rates decrease. To mitigate this risk, we enter into forward MBS trades to provide an economic hedge against those changes in fair value on mortgage loans held for sale. Forward MBS trades are primarily used to fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market. | |||||||||||||||||
Interest Rate Lock Commitments | |||||||||||||||||
A loan commitment binds us (subject to the loan approval process) to fund the loan at the specified rate, regardless of whether interest rates have changed between the commitment date and the loan funding date. As such, outstanding IRLCs are subject to interest rate risk and related price risk during the period from the date of the commitment through the loan funding date or expiration date. The borrower is not obligated to obtain the loan, thus we are subject to fallout risk related to IRLCs, which is realized if approved borrowers choose not to close on the loans within the terms of the IRLCs. Our interest rate exposure on these derivative loan commitments is hedged with freestanding derivatives such as forward contracts. We enter into forward contracts with respect to fixed and variable rate loan commitments. | |||||||||||||||||
The following summarizes our open derivative positions at March 31, 2015 and the gains (losses) on all derivatives used in each of the identified hedging programs for the year to date period then ended. None of the derivatives was designated as a hedge for accounting purposes at March 31, 2015: | |||||||||||||||||
Purpose | Expiration Date | Notional Amount | Fair Value (1) | Gains / (Losses) | Consolidated Statements of Operations Caption | ||||||||||||
Hedge the effect of changes in interest rates on interest expense on borrowings | |||||||||||||||||
Interest rate caps | |||||||||||||||||
Hedge the effect of changes in 1ML on advance funding facilities | Nov. 2016 - Oct. 2017 | $ | 1,627,000 | $ | 203 | $ | (364 | ) | Other, net | ||||||||
Interest rate risk of mortgage loans held for sale and of IRLCs | |||||||||||||||||
Forward MBS trades | May 2015 - June 2015 | 783,713 | (5,249 | ) | (427 | ) | Gain on loans held for sale, net | ||||||||||
IRLCs | April 2015 - June 2015 | 419,508 | 9,516 | (2,233 | ) | Gain on loans held for sale, net | |||||||||||
Total derivatives | $ | 4,470 | $ | (3,024 | ) | ||||||||||||
-1 | Derivatives are reported at fair value in Receivables, Other assets or in Other liabilities on our unaudited Consolidated Balance Sheets. | ||||||||||||||||
Included in AOCL at March 31, 2015 and 2014, respectively, were $8.3 million and $10.0 million of deferred unrealized losses, before taxes of $0.5 million and $0.6 million, respectively, on interest rate swaps that we designated as cash flow hedges. Changes in AOCL during the three months ended March 31 were as follows: | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Beginning balance | $ | 8,413 | $ | 10,151 | |||||||||||||
Losses on terminated hedging relationships amortized to earnings | (443 | ) | (779 | ) | |||||||||||||
Decrease in deferred taxes on accumulated losses on cash flow hedges | 25 | 171 | |||||||||||||||
Decrease in accumulated losses on cash flow hedges, net of taxes | (418 | ) | (608 | ) | |||||||||||||
Other, net of taxes | — | (1 | ) | ||||||||||||||
Ending balance | $ | 7,995 | $ | 9,542 | |||||||||||||
As of March 31, 2015, amortization of accumulated losses on cash flow hedges from AOCL to Other income (expense), net is projected to be $1.9 million during the next twelve months. To the extent we sell the MSRs to which the accumulated losses on cash flow hedges applied, a proportionate amount of the remaining unamortized accumulated losses associated with the MSRs sold will be recognized in earnings at that time. | |||||||||||||||||
Other income (expense), net, includes the following related to derivative financial instruments for the three months ended March 31: | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
Losses on economic hedges | $ | (710 | ) | $ | (141 | ) | |||||||||||
Write-off of losses in AOCL for a discontinued hedge relationship | (443 | ) | (779 | ) | |||||||||||||
$ | (1,153 | ) | $ | (920 | ) | ||||||||||||
Interest_Expense
Interest Expense | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Other Income and Expenses [Abstract] | ||||||||
Interest Expense | Note 14 – Interest Expense | |||||||
The following table presents the components of interest expense for the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Financing liabilities (1) (2) | $ | 73,824 | $ | 100,230 | ||||
Other secured borrowings | 22,916 | 21,284 | ||||||
Match funded liabilities | 14,280 | 16,318 | ||||||
6.625% Senior unsecured notes | 6,129 | — | ||||||
Other | 2,247 | 2,041 | ||||||
$ | 119,396 | $ | 139,873 | |||||
-1 | Includes interest expense related to financing liabilities recorded in connection with the HLSS Transactions as indicated in the table below. | |||||||
2015 | 2014 | |||||||
Servicing fees collected on behalf of HLSS | $ | 180,297 | $ | 189,157 | ||||
Less: Subservicing fee retained by Ocwen | 91,214 | 90,161 | ||||||
Net servicing fees remitted to HLSS | 89,083 | 98,996 | ||||||
Less: Reduction in financing liability | 17,723 | — | ||||||
Interest expense on HLSS financing liability | $ | 71,360 | $ | 98,996 | ||||
-2 | Interest expense that we expect to be paid on the HMBS-related borrowings is included with net fair value gains in Other revenues. |
Basic_and_Diluted_Earnings_per
Basic and Diluted Earnings per Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Basic and Diluted Earnings per Share | Note 15 – Basic and Diluted Earnings per Share | |||||||
Basic earnings per share excludes common stock equivalents and is calculated by dividing net income attributable to Ocwen common stockholders by the weighted average number of common shares outstanding during the year. We calculate diluted earnings per share by dividing net income attributable to Ocwen, as adjusted to add back any preferred stock dividends, by the weighted average number of common shares outstanding including the potential dilutive common shares related to outstanding stock options, restricted stock awards and preferred stock. The following is a reconciliation of the calculation of basic earnings per share to diluted earnings per share for the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Basic earnings per share: | ||||||||
Net income attributable to Ocwen common stockholders | $ | 34,355 | $ | 59,504 | ||||
Weighted average shares of common stock | 125,272,228 | 135,227,067 | ||||||
Basic earnings per share | $ | 0.27 | $ | 0.44 | ||||
Diluted earnings per share: | ||||||||
Net income attributable to Ocwen common stockholders | $ | 34,355 | $ | 59,504 | ||||
Preferred stock dividends (1) | — | 997 | ||||||
Adjusted net income attributable to Ocwen | $ | 34,355 | $ | 60,501 | ||||
Weighted average shares of common stock | 125,272,228 | 135,227,067 | ||||||
Effect of dilutive elements: | ||||||||
Preferred stock (1) | — | 1,950,298 | ||||||
Stock options | 1,725,280 | 3,908,333 | ||||||
Common stock awards | 2,154 | 3,757 | ||||||
Dilutive weighted average shares of common stock | 126,999,662 | 141,089,455 | ||||||
Diluted earnings per share | $ | 0.27 | $ | 0.43 | ||||
Stock options and common stock awards excluded from the computation of diluted earnings per share: | ||||||||
Anti-dilutive (2) | 2,010,902 | — | ||||||
Market-based (3) | 851,263 | 547,500 | ||||||
-1 | Prior to the conversion of our remaining preferred stock into common stock in July 2014, we computed the effect on diluted earnings per share using the if-converted method. For purposes of computing diluted earnings per share, we assume the conversion of the preferred stock into shares of common stock unless the effect is anti-dilutive. | |||||||
-2 | These options were anti-dilutive because their exercise price was greater than the average market price of our stock. | |||||||
-3 | Shares that are issuable upon the achievement of certain performance criteria related to Ocwen’s stock price and an annualized rate of return to investors. |
Business_Segment_Reporting
Business Segment Reporting | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||
Business Segment Reporting | Note 16 – Business Segment Reporting | |||||||||||||||||||
Our business segments reflect the internal reporting that we use to evaluate operating performance of services and to assess the allocation of our resources. A brief description of our current business segments is as follows: | ||||||||||||||||||||
Servicing. This segment is primarily comprised of our core residential servicing business. We provide residential and commercial mortgage loan servicing, special servicing and asset management services. We earn fees for providing these services to owners of the mortgage loans and foreclosed real estate. In most cases, we provide these services either because we purchased the MSRs from the owner of the mortgage, retained the MSRs on the sale of residential mortgage loans or because we entered into a subservicing or special servicing agreement with the entity that owns the MSR. Our residential servicing portfolio includes conventional, government insured and non-Agency loans. Non-Agency loans include subprime loans, which represent residential loans that generally did not qualify under GSE guidelines or have subsequently become delinquent. | ||||||||||||||||||||
Lending. The Lending segment is focused on originating and purchasing conventional and government insured residential forward and reverse mortgage loans mainly through our correspondent lending arrangements, broker relationships and directly with mortgage customers. The loans are typically sold shortly after origination into a liquid market on a servicing retained basis. | ||||||||||||||||||||
Corporate Items and Other. Corporate Items and Other includes revenues and expenses that are not directly related to other reportable segments, business activities that are individually insignificant, interest income on short-term investments of cash, interest expense on corporate debt and certain corporate expenses. Business activities not currently considered to be of continuing significance include residential subprime non-Agency loans held for sale (at lower of cost or fair value), investments in residential mortgage-backed securities, investments in unconsolidated entities and affordable housing investment activities. | ||||||||||||||||||||
We allocate interest income and expense to each business segment for funds raised or for funding of investments made, including interest earned on cash balances and short-term investments and interest incurred on corporate debt. We also allocate expenses generated by corporate support services to each business segment. | ||||||||||||||||||||
Financial information for our segments is as follows: | ||||||||||||||||||||
Servicing | Lending | Corporate Items and Other | Corporate Eliminations | Business Segments Consolidated | ||||||||||||||||
Results of Operations | ||||||||||||||||||||
Three months ended March 31, 2015 | ||||||||||||||||||||
Revenue (1) | $ | 471,125 | $ | 37,746 | $ | 1,608 | $ | (35 | ) | $ | 510,444 | |||||||||
Expenses (1) (2) | 337,911 | 23,785 | 16,697 | (35 | ) | 378,358 | ||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 1,371 | 3,596 | 608 | — | 5,575 | |||||||||||||||
Interest expense | (110,629 | ) | (2,639 | ) | (6,128 | ) | — | (119,396 | ) | |||||||||||
Other (1) | 22,766 | 1,065 | 733 | — | 24,564 | |||||||||||||||
Other income (expense), net | (86,492 | ) | 2,022 | (4,787 | ) | — | (89,257 | ) | ||||||||||||
Income (loss) before income taxes | $ | 46,722 | $ | 15,983 | $ | (19,876 | ) | $ | — | $ | 42,829 | |||||||||
Three months ended March 31, 2014 | ||||||||||||||||||||
Revenue (1) | $ | 520,823 | $ | 28,767 | $ | 1,711 | $ | (40 | ) | $ | 551,261 | |||||||||
Expenses (1) (2) | 307,933 | 31,464 | 9,837 | (40 | ) | 349,194 | ||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 439 | 4,009 | 879 | — | 5,327 | |||||||||||||||
Interest expense | (136,386 | ) | (3,451 | ) | (36 | ) | — | (139,873 | ) | |||||||||||
Other (1) | (320 | ) | 2,718 | 1,784 | — | 4,182 | ||||||||||||||
Other income (expense), net | (136,267 | ) | 3,276 | 2,627 | — | (130,364 | ) | |||||||||||||
Income (loss) before income taxes | $ | 76,623 | $ | 579 | $ | (5,499 | ) | $ | — | $ | 71,703 | |||||||||
Servicing | Lending | Corporate Items and Other | Corporate Eliminations | Business Segments Consolidated | ||||||||||||||||
Total Assets | ||||||||||||||||||||
March 31, 2015 | $ | 5,733,630 | $ | 2,165,742 | $ | 487,402 | $ | — | $ | 8,386,774 | ||||||||||
December 31, 2014 | $ | 5,881,862 | $ | 1,963,729 | $ | 421,687 | $ | — | $ | 8,267,278 | ||||||||||
March 31, 2014 | $ | 6,333,097 | $ | 1,326,114 | $ | 527,140 | $ | — | $ | 8,186,351 | ||||||||||
-1 | Intersegment billings for services rendered to other segments are recorded as revenues, as contra-expense or as other income, depending on the type of service that is rendered. | |||||||||||||||||||
-2 | Depreciation and amortization expense are as follows: | |||||||||||||||||||
Servicing | Lending | Corporate Items and Other | Business Segments Consolidated | |||||||||||||||||
For the three months ended March 31, 2015 | ||||||||||||||||||||
Depreciation expense | $ | 529 | $ | 104 | $ | 3,711 | $ | 4,344 | ||||||||||||
Amortization of mortgage servicing rights | 38,405 | 89 | — | 38,494 | ||||||||||||||||
Amortization of debt discount | 356 | — | — | 356 | ||||||||||||||||
Amortization of debt issuance costs | 3,423 | — | 332 | 3,755 | ||||||||||||||||
For the three months ended March 31, 2014 | ||||||||||||||||||||
Depreciation expense | $ | 2,820 | $ | 105 | $ | 2,615 | $ | 5,540 | ||||||||||||
Amortization of mortgage servicing rights | 61,779 | 115 | 200 | 62,094 | ||||||||||||||||
Amortization of debt discount | 330 | — | — | 330 | ||||||||||||||||
Amortization of debt issuance costs | 1,087 | — | — | 1,087 | ||||||||||||||||
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Related Party Transactions [Abstract] | ||||||||
Related Party Transactions | Note 17 – Related Party Transactions | |||||||
Relationship with Former Executive Chairman of the Board of Directors | ||||||||
Ocwen’s former Executive Chairman, William C. Erbey, also formerly served as chairman of the boards of Altisource, HLSS, Altisource Residential Corporation (Residential) and Altisource Asset Management Corporation (AAMC). As a result, he had obligations to Ocwen as well as to Altisource, HLSS, Residential and AAMC. Effective January 16, 2015, Mr. Erbey resigned as an officer and director of Ocwen. Effective on that same date, Mr. Erbey also resigned from the boards of Altisource, HLSS, Altisource Residential and AAMC. | ||||||||
Mr. Erbey’s decision to resign as a director was not due to any disagreements with Ocwen on any matter relating to its operations, policies or practices. On January 16, 2015, the Compensation Committee of the Board approved, and the Board ratified, a Retirement Agreement by and between Ocwen Financial Corporation, OMS and Mr. Erbey (the Retirement Agreement). The Compensation Committee of the Board retained an independent compensation consultant to provide advice in connection with the Retirement Agreement. | ||||||||
The Retirement Agreement provides for Mr. Erbey’s separation from Ocwen and its affiliates. The Retirement Agreement contains certain provisions in favor of Ocwen such as releases in our favor and covenants regarding confidentiality, non-competition and non-solicitation of our employees, customers, vendors, suppliers, licensors, lessors, joint venturers, associates, consultants, agents and partners. The Retirement Agreement also contains certain provisions in Mr. Erbey’s favor such as retirement payment provisions, continued medical coverage for Mr. Erbey and his spouse, provisions addressing Mr. Erbey’s options and registration rights for Mr. Erbey in certain circumstances. | ||||||||
Relationship with Altisource | ||||||||
Ocwen and OMS are parties to a Services Agreement, a Technology Products Services Agreement, an Intellectual Property Agreement and a Data Center and Disaster Recovery Services Agreement with Altisource. Under the Services Agreements, Altisource provides various business process outsourcing services, such as valuation services and property preservation and inspection services, among other things. Altisource provides certain technology products and support services under the Technology Products Services Agreements and the Data Center and Disaster Recovery Services Agreements. These agreements expire August 31, 2025. Ocwen and Altisource have also entered into a master services agreement pursuant to which Altisource provides certain loan origination services to Homeward and Liberty, and a general referral fee agreement pursuant to which Ocwen receives referral fees which are paid out the commission that would otherwise be paid to Altisource as the selling broker in connection with real estate sales services provided by Altisource. A Data Access and Services Agreement under which we agreed to make available to Altisource certain data from Ocwen’s servicing portfolio in exchange for a per asset fee was terminated on March 31, 2015. | ||||||||
Our business is currently dependent on many of the services and products provided by Altisource under long-term agreements, many of which include renewal provisions. Our servicing platform runs on an information technology system that we license from Altisource. If Altisource were to fail to fulfill its contractual obligations to us, including through a failure to provide services at the required level to maintain and support our systems, or if Altisource were to become unable to fulfill such obligations (for example, because it entered bankruptcy), our business and operations would suffer. In addition, if Altisource fails to develop and maintain its technology so as to provide us with a competitive platform, our business could suffer. | ||||||||
Certain services provided by Altisource under these agreements are charged to the borrower and/or mortgage loan investor. Accordingly, such services, while derived from our loan servicing portfolio, are not reported as expenses by Ocwen. These services include residential property valuation, residential property preservation and inspection services, title services and real estate sales. | ||||||||
We have also entered into Support Services Agreements with Altisource setting forth certain services that Altisource and Ocwen may provide to each other in such areas as human resources, corporate services, Six Sigma, quality assurance, quantitative analytics, treasury, accounting, tax matters and strategic planning. These Support Services Agreements run through October 2017 and September 2018, respectively, with automatic one-year renewals thereafter. Beginning April 1, 2015, the only services that will regularly be provided under these Support Services Agreements are corporate services such as facilities management and mailroom support services and vendor procurement for information technology and facilities. | ||||||||
Relationship with HLSS | ||||||||
Prior to the sale of substantially all of its assets on April 6, 2015, HLSS acquired Rights to MSRs and related servicing advances from us and assumed the obligation to fund new servicing advances in respect of the Rights to MSRs. The servicing fees payable under the servicing agreements underlying the Rights to MSRs were apportioned between us and HLSS as provided in our agreements with HLSS. HLSS retained a fee based on the UPB of the loans serviced, and OLS received certain fees, including a performance fee based on servicing fees actually paid less an amount calculated based on the amount of servicing advances and cost of financing those advances. After the earlier of April 30, 2020 or eight years after the closing date of the initial sale of each tranche of Rights to MSRs, the apportionment of these fees with respect to such tranche was subject to re-negotiation. On April 6, 2015, a subsidiary of NRZ entered into a transaction to acquire substantially all of the assets of HLSS, including HLSS Holdings, LLC, and Ocwen entered into a consent to this transfer and an amendment of its agreements with HLSS. Following the sale, NRZ, through its subsidiaries, is the owner of the Rights to MSRs and has assumed HLSS’ rights and obligations under all of the above referenced agreements. | ||||||||
Beginning April 7, 2017, NRZ, as successor to HLSS, has a general right to direct us to transfer servicing of the servicing agreements underlying the Rights to MSRs that we have previously sold provided that the transfer is subject to our continued right to be paid the servicing fees and other amounts payable under our agreements. An exception to the requirement that the transfer is subject to our continued right to payment under the transferred servicing agreement exists in circumstances where a termination event (as defined in our agreements with NRZ, as successor to HLSS) occurs. In these circumstances, NRZ may direct us to use commercially reasonable efforts to transfer servicing under the affected servicing agreement and, following the transfer, we would no longer be entitled to receive future servicing fee revenue with respect to the transferred servicing agreement. Regarding NRZ’s rights upon a termination event resulting from an uncured servicer rating downgrade, NRZ has agreed to a standstill until April 7, 2017 unless they determine in good faith that a trustee intends to terminate servicing under an affected servicing agreement. In these circumstances, NRZ may direct us to use commercially reasonable efforts to transfer servicing under the affected servicing agreement and, following the transfer, we would no longer be entitled to receive future servicing fee revenue. All required third party consents would need to be obtained in connection with any servicing transfer. | ||||||||
To the extent that servicing agreements underlying Rights to MSRs are terminated as a result of a termination event, NRZ is entitled to payment of an amount equal to a percentage of the purchase price for the related Rights to MSRs. | ||||||||
Prior to the sale of substantially all of its assets to NRZ, pursuant to our agreements with HLSS, HLSS had assumed the obligation to fund new servicing advances with respect to the Rights to MSRs. We were dependent upon HLSS for financing of the servicing advance obligations for MSRs where we were the servicer. HLSS, in turn, was dependent upon its advance financing facilities in order to fund a substantial portion of the servicing advances that it was contractually obligated to make pursuant to our agreements with HLSS. As of March 31, 2015, we were the servicer on Rights to MSRs pertaining to approximately $156.3 billion in UPB and the associated outstanding servicing advances as of such date were approximately $5.8 billion. | ||||||||
HLSS’ advance funding facilities had a 364-day term and the revolving periods for a significant portion of their advance funding facilities were scheduled to end in 2015. In the event of a default, HLSS’ advance facilities revolving periods would have terminated and the facilities would have begun amortization. There were no provisions under which Ocwen would have been obligated to repay the HLSS advance facilities upon an event of default by HLSS. Instead, Ocwen, as servicer, would have been immediately responsible for all new advances. Thus, as of December 31, 2014 and through the date of the asset sale, we were subject to liquidity risk in the event that HLSS’ advance financing facilities failed to perform as envisaged or HLSS was otherwise unable to meet its advance financing obligations. | ||||||||
Although we were not an obligor or guarantor under NRZ’s advance financing facilities (which have been assumed by NRZ from HLSS pursuant to the asset sale), we are a party to certain of the facility documents as the servicer of the underlying loans on which advances are being financed. A purported owner of notes issued by one of the advance financing facilities recently asserted that events of default have occurred under the indenture governing those notes based on alleged failures by us to comply with applicable laws and regulations and the terms of the servicing agreement to which the applicable servicing advances relate. While we have vigorously defended ourselves against these allegations, we have consented to an arrangement between NRZ, as successor to HLSS, and the indenture trustee for those notes that provides for a standstill for the indenture trustee to investigate the allegations of default during which the indenture trustee will not initiate a court proceeding. If the eventual outcome of this matter were to involve an event of default being declared under this advance financing facility, NRZ may not be able to perform under its agreements with us. As a result, our liquidity, financial condition and business could be materially and adversely affected. In addition, it is possible that NRZ might seek to take actions against us alleging that we bear responsibility for such outcomes, which could also materially and adversely affect us. | ||||||||
The supplements pertaining to NRZ’s variable funding notes under this advance financing facility have been amended to extend the revolving periods and increase the aggregate commitments thereunder and to clarify, among other things, that the variable noteholders will not consider a violation of law or relevant servicing agreements to constitute an event of default with respect to those notes unless they result in a material adverse effect on the collectability, timing of collection or value of the advance receivables. The amendments also provide that the variable noteholders will not consider the allegations made by the purported owner of the notes to constitute a violation of funding conditions, and have agreed to continue to fund draws on the facility including, if necessary, to refinance the outstanding term notes under the facility. In addition, if the outstanding term notes are refinanced the variable noteholders have agreed that they shall not consider the allegations made by the purported owner of the notes to constitute an event of default. | ||||||||
Ocwen and HLSS were parties to a Professional Services Agreement under which they provided each other certain professional services including valuation analysis of potential MSR acquisitions, treasury management services and other similar services, licensing and regulatory compliance support services and risk management services. No services are currently provided under this agreement. | ||||||||
On March 3, 2014, in the first Ginnie Mae EBO Transaction, Ocwen sold Ginnie Mae EBO Loans and transferred the related servicing advances to HLSS Mortgage for $612.3 million. On May 2, 2014, in connection with the second Ginnie Mae EBO Transaction, we transferred $20.2 million of advances to HLSS SEZ LP. At March 31, 2015, Ocwen serviced EBO Loans with a UPB of approximately $425.7 million for HLSS. | ||||||||
Relationship with Residential | ||||||||
On December 21, 2012, we entered into a 15-year servicing agreement with Altisource Residential, L.P., the operating partnership of Residential, pursuant to which Ocwen will service residential mortgage loans acquired by Residential and provide loan modification, assisted deed-in-lieu, assisted deed-for-lease and other loss mitigation programs. At March 31, 2015, we serviced loans with a UPB of approximately $3.2 billion under this agreement. | ||||||||
Relationship with AAMC | ||||||||
On December 31, 2013, we entered into a support services agreement with AAMC pursuant to which we will provide business development, analytical and consulting and administrative services to AAMC. The support services agreement may be terminated by either party with a month’s prior notice. | ||||||||
As a result of Mr. Erbey’s position as our Executive Chairman and as chairman of each of Altisource, HLSS, Residential and AAMC during the first sixteen days of the first quarter of 2015, combined with his share ownership during that period, we have reported transactions with these companies during the first quarter of 2015 as related party transactions. Following his retirement, effective as of January 16, 2015, Mr. Erbey has no directorial, management, oversight, consulting or any other role at Ocwen and we are expressly prohibited from providing any non-public information about Ocwen to Mr. Erbey pursuant to our settlement with the NY DFS. | ||||||||
The following table summarizes revenues and expenses related to our agreements with Altisource, HLSS (prior to the sale of its assets to NRZ), AAMC and Residential (and, as applicable, their subsidiaries) for the three months ended March 31 and net amounts receivable or payable at the dates indicated. | ||||||||
2015 | 2014 | |||||||
Revenues and Expenses: | ||||||||
Altisource: | ||||||||
Revenues | $ | 13,404 | $ | 8,499 | ||||
Expenses | 29,026 | 17,364 | ||||||
HLSS: | ||||||||
Revenues | $ | 166 | $ | 165 | ||||
Expenses | 34 | 462 | ||||||
AAMC | ||||||||
Revenues | $ | 84 | $ | 384 | ||||
Residential | ||||||||
Revenues | $ | 2,508 | $ | 2,148 | ||||
March 31, 2015 | December 31, 2014 | |||||||
Net Receivable (Payable) | ||||||||
Altisource | $ | (9,501 | ) | $ | (4,909 | ) | ||
HLSS | (89,678 | ) | 7,884 | |||||
AAMC | 46 | 232 | ||||||
Residential | — | 100 | ||||||
$ | (99,133 | ) | $ | 3,307 | ||||
Regulatory_Requirements
Regulatory Requirements | 3 Months Ended |
Mar. 31, 2015 | |
Brokers and Dealers [Abstract] | |
Regulatory Requirements | Note 18 – Regulatory Requirements |
Our business is subject to extensive regulation by federal, state and local governmental authorities, including the Consumer Financial Protection Bureau (CFPB), HUD, the SEC and various state agencies that license, audit and conduct examinations of our mortgage servicing, origination and collection activities. In addition, we operate under a number of regulatory settlements that subject us to ongoing monitoring or reporting. From time to time, we also receive requests from federal, state and local agencies for records, documents and information relating to the policies, procedures and practices of our mortgage servicing, origination and collection activities. The GSEs and their conservator, the Federal Housing Finance Authority (FHFA), Ginnie Mae, the United States Treasury Department, various investors, non-Agency securitization trustees and others also subject us to periodic reviews and audits. | |
As a result of the current regulatory environment, we have faced and expect to continue to face increased regulatory and public scrutiny as well as stricter and more comprehensive regulation of our business. We continue to work diligently to assess and understand the implications of the regulatory environment in which we operate and to meet the requirements of the changing environment in which we operate. We devote substantial resources to regulatory compliance, while, at the same time, striving to meet the needs and expectations of our customers, clients and other stakeholders. Our failure to comply with applicable federal, state and local laws, regulations and licensing requirements could lead to any of the following (i) loss of our licenses and approvals to engage in our servicing and lending businesses, (ii) governmental investigations and enforcement actions, (iii) administrative fines and penalties and litigation, (iv) civil and criminal liability, including class action lawsuits, (v) breaches of covenants and representations under our servicing, debt or other agreements, (vi) inability to raise capital or (vii) inability to execute on our business strategy. | |
We must comply with a large number of federal, state and local consumer protection laws including, among others, the Gramm-Leach-Bliley Act, the Fair Debt Collection Practices Act, the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act, the Equal Credit Opportunity Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and state foreclosure laws. These statutes apply to loan origination, debt collection, use of credit reports, safeguarding of non-public personally identifiable information about our customers, foreclosure and claims handling, investment of and interest payments on escrow balances and escrow payment features, and mandate certain disclosures and notices to borrowers. These requirements can and do change as statutes and regulations are enacted, promulgated, amended, interpreted and enforced. The recent trend among federal, state and local lawmakers and regulators has been toward increasing laws, regulations and investigative proceedings with regard to residential real estate lenders and servicers. | |
The CFPB directly affects the regulation of residential mortgage servicing in a number of ways. First, the CFPB has rule making authority with respect to many of the federal consumer protection laws applicable to mortgage servicers, including TILA and RESPA, as reflected in the new rules for servicing and origination that went into effect in 2014. Second, the CFPB has supervision, examination and enforcement authority over consumer financial products and services offered by certain non-depository institutions and large insured depository institutions. The CFPB’s jurisdiction includes those persons originating, brokering or servicing residential mortgage loans and those persons performing loan modification or foreclosure relief services in connection with such loans. Accordingly, we are subject to supervision, examination and enforcement by the CFPB. | |
We expect to continue to invest significantly in our operational platform and risk and compliance management systems in order to comply with these laws and regulations. Furthermore, there may be additional federal or state laws enacted that place additional obligations on servicers and originators of residential mortgage loans. | |
Our OLS, Homeward and Liberty subsidiaries are licensed to originate and/or service forward and reverse mortgage loans in the jurisdictions in which they operate. Our licensed entities are required to renew their licenses, typically on an annual basis, and to do so they must satisfy the license renewal requirements of each jurisdiction, which in some cases include the requirement to provide audited financial statements as well as other financial and non-financial requirements. Our licensed entities are also subject to minimum net worth requirements in connection with these licenses. These minimum net worth requirements are unique to each state and type of license. Failure to meet these minimum capital requirements or to satisfy any of the other requirements to which our licensed subsidiaries are subject could result in a variety of regulatory actions ranging from a fine, a directive requiring a certain step to be taken, a suspension or ultimately a revocation of a license, any of which could have an adverse impact on our results of operations and financial condition. The most restrictive of these requirements is based on the outstanding UPB of our owned and subserviced portfolio and was $789.6 million at March 31, 2015. We believe our licensed subsidiaries are currently in compliance with all of their capital requirements. | |
OLS, Homeward and Liberty are also parties to seller/servicer agreements and/or subject to guidelines and regulations (collectively, seller/servicer obligations) with one or more of the GSEs, HUD, FHA, VA and Ginnie Mae. These seller/servicer obligations include financial covenants that include capital requirements related to tangible net worth, as defined by the applicable agency, an obligation to provide audited consolidated financial statements within 90 days of the applicable entity’s fiscal year end as well as extensive requirements regarding servicing, selling and other matters. To the extent that these requirements are not met or waived, the applicable agency may, at its option, utilize a variety of remedies including requirements to deposit funds as security for our obligations, sanctions, suspension or even termination of approved seller/servicer status, which would prohibit future originations or securitizations of forward or reverse mortgage loans or servicing for the applicable agency. To date, none of these counterparties has communicated any material sanction, suspension or prohibition in connection with our seller/servicer obligations. We believe we were in compliance with the related net worth requirements at March 31, 2015. Our non-Agency servicing agreements also contain requirements regarding servicing practices and other matters, and a failure to comply with these requirements could have an adverse impact on our business. | |
Transfers of mortgage servicing are subject to regulation under federal consumer finance laws, including CFPB rules implementing RESPA that require servicers to, among other things, maintain policies and procedures that are reasonably designed to facilitate the transfer of accurate information and documents during mortgage servicing transfers and properly evaluate loss mitigation applications that are in process at the time of transfer. The CFPB has advised mortgage servicers that its examiners will be carefully reviewing servicers’ compliance with these and other regulations applicable to servicing transfers, and state mortgage regulators have supervisory power over any licensed institutions involved in a transaction. Accordingly, we will be required to devote time and resources to ensuring compliance and engaging with such regulators in connection with any future transfers of mortgage servicing, including in connection with our announced asset sales. | |
There are a number of foreign laws and regulations that are applicable to our operations in India and the Philippines, including acts that govern licensing, employment, safety, taxes, insurance and the laws and regulations that govern the creation, continuation and the winding up of companies as well as the relationships between shareholders, our corporate entities, the public and the government in these countries. Non-compliance with the laws and regulations of India or the Philippines could result in (i) restrictions on our operations in these counties, (ii) fines, penalties or sanctions or (iii) reputational damage. |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 19 — Commitments |
Unfunded Lending Commitments | |
We have originated floating-rate reverse mortgage loans under which the borrowers have additional borrowing capacity of $685.0 million at March 31, 2015. This additional borrowing capacity is available on a scheduled or unscheduled payment basis. We also had short-term commitments to lend $412.2 million and $12.8 million in connection with our forward and reverse interest rate lock commitments outstanding at March 31, 2015. |
Contingencies
Contingencies | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||
Contingencies | Note 20 – Contingencies | |||||||
When we become aware of a matter involving uncertainty for which we may incur a loss, we assess the likelihood of any loss. If a loss contingency is probable and the amount of the loss can be reasonably estimated, we record an accrual for the loss. In such cases, there may be an exposure to potential loss in excess of the amount accrued. Where a loss is not probable but is reasonably possible or where a loss in excess of the amount accrued is reasonably possible, we disclose an estimate of the amount of the loss or range of possible losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible loss is not material to our financial position, results of operations or cash flows. If a reasonable estimate of loss cannot be made, we do not accrue for any loss or disclose any estimate of exposure to potential loss. An assessment regarding the ultimate outcome of any such matter involves judgments about future events, actions and circumstances that are inherently uncertain. The actual outcome could differ materially. Where we have retained external legal counsel or other professional advisors, such advisors assist us in making such assessments. | ||||||||
Litigation | ||||||||
In the ordinary course of business, we are routinely a defendant in, or a party or potential party to, many threatened and pending legal proceedings, including proceedings brought on behalf of various classes of claimants and those brought derivatively on behalf of Ocwen against certain current or former officers and directors. | ||||||||
These proceedings are generally based on alleged violations of federal, state and local laws and regulations governing our mortgage servicing and lending activities, including wrongful foreclosure and eviction actions, allegations of wrongdoing in connection with lender-placed insurance arrangements, claims relating to our pre-foreclosure property preservation activities and claims related to our payment and other processing operations. In some of these proceedings, claims for substantial monetary damages are asserted against us. To address the claims in the small number of proceedings brought derivatively by purported shareholders, the independent directors of the Board have established a Special Litigation Committee to investigate the shareholders’ allegations. In our opinion, the resolution of the vast majority of these proceedings will not have a material effect on our financial condition, results of operations or cash flows. | ||||||||
In view of the inherent difficulty of predicting the outcome of any threatened or pending legal proceedings, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, we generally cannot predict what the eventual outcome of such proceedings will be, what the timing of the ultimate resolution will be, or what the eventual loss, if any, will be. | ||||||||
Where we determine that a loss contingency is probable in connection with a pending or threatened legal proceeding and the amount of our losses can be reasonably estimated, we record an accrual for the losses. Excluding expenses of internal or external legal counsel, we have accrued $16.0 million as of March 31, 2015 for losses relating to threatened and pending litigation pertaining to our mortgage servicing practices that we believe are probable and reasonably estimable based on current information regarding these matters. Where we determine that a loss is not probable but is reasonably possible or where a loss in excess of the amount accrued is reasonably possible, we disclose an estimate of the amount of the loss or range of possible losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible loss is not material to our financial position, results of operations or cash flows. It is possible that we will incur losses relating to threatened and pending litigation pertaining to our mortgage servicing practices that materially exceed the amount accrued. We cannot currently estimate the amount, if any, of reasonably possible losses above amounts that have been recorded at March 31, 2015. | ||||||||
Following our announcement on August 12, 2014 that we intended to restate our financial statements for the fiscal year ended December 31, 2013 and the quarter ended March 31, 2014, and amend our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, putative securities fraud class action lawsuits have been filed against Ocwen and certain of its officers and directors regarding such restatements and amendments. Those lawsuits have been consolidated and are pending in federal court in Florida. After Ocwen signed a Consent Order with the NYDFS on December 22, 2014, the consolidated class action complaint was amended to include allegations relating to that Consent Order and other matters. In January 2015, Ocwen was named as a defendant in a separate consolidated securities fraud class action that has been brought on behalf of a putative class of Altisource Portfolio Solutions, S.A. shareholders. Ocwen and the other defendants intend to vigorously defend against these lawsuits. Additional lawsuits may be filed and, at this time, Ocwen is unable to predict the outcome of these lawsuits, the possible loss or range of loss, if any, associated with the resolution of these lawsuits or any potential impact they may have on us or our operations. If our efforts to defend these lawsuits are not successful, our business, financial condition and results of operations could be adversely affected. | ||||||||
In several recent court actions, mortgage loan sellers against whom repurchase claims have been asserted based on alleged breaches of representations and warranties are defending on various grounds including the expiration of statutes of limitation, lack of notice and opportunity to cure, and vitiation of the obligation to repurchase as a result of foreclosure or charge-off of the loan. We have entered into tolling agreements with respect to our role as servicer for a very small number of securitizations and may enter into additional tolling agreements in the future. Other court actions have been filed against certain RMBS trustees alleging that the trustees breached their contractual and statutory duties by, among other things, failing to require the loan servicers to abide by the servicers’ obligations and failing to declare that certain alleged servicing events of default under the applicable contracts occurred. | ||||||||
Ocwen is a third-party defendant in one of these actions, is the servicer for certain securitizations involved in other such actions and is the servicer for other securitizations as to which actions have been threatened by certificate holders. We intend to vigorously defend ourselves in the lawsuit to which we have been named a party. Should Ocwen be made a party to other similar actions or should Ocwen be asked to indemnify any parties to such actions, we may need to defend allegations that we failed to service loans in accordance with applicable agreements and that such failures prejudiced the rights of repurchase claimants against loan sellers or otherwise diminished the value of the trust collateral. We believe that any such allegations would be without merit and, if necessary, would vigorously defend against them. At this time, we are unable to predict the ultimate outcome of these lawsuits, the possible loss or range of loss, if any, associated with the resolution of these lawsuits or any potential impact they may have on us or our operations. If, however, we were required to compensate claimants for losses related to the alleged loan servicing breaches, then our business, financial condition and results of operations could be adversely affected. | ||||||||
In addition, a number of RMBS trustees have received notices of default alleging material failures by servicers to comply with applicable servicing agreements. For example, certain investors claiming to hold at least 25% ownership interest in 119 RMBS trusts serviced by Ocwen have submitted to the respective trustees of those trusts a Notice of Non-Performance, alleging that we have materially breached our obligations under the servicing agreements in those trusts. The Notice further alleged that our conduct, if not timely cured, would give rise to events of default under the applicable servicing agreements, on the basis of which we could potentially be terminated as servicer for the 119 Trusts. Ocwen denies the allegations in the Notice and intends to vigorously rebut them. Since the Notice was issued, Ocwen has been directed by the trustee for two of the trusts to transfer its servicing to another loan servicing company based on ratings downgrades. There is a risk that Ocwen could be replaced as servicer on the remaining trusts at issue in the Notice, that the Trustees could take legal action on behalf of the trust certificateholders, or, under certain circumstances, that the investors who issued the Notice could seek to press their allegations against Ocwen, independent of the trustees. We are unable at this time to predict what, if any, actions the trustees will take in response to the Notice, nor can we predict at this time the potential loss or range of loss, if any, associated with the resolution of the Notice or the potential impact on our operations. If Ocwen were to be terminated as servicer, or other related legal actions were pursued against Ocwen, it could have an adverse effect on Ocwen’s business, financing activities, financial condition and results of operations. | ||||||||
Regulatory | ||||||||
We are subject to a number of ongoing federal and state regulatory examinations, inquiries, requests for information and other actions. | ||||||||
New York Department of Financial Services | ||||||||
Effective December 19, 2014, Ocwen reached a settlement with the NY DFS related to these matters and entered into a consent order (the NY Consent Order) with the NY DFS to reflect such settlement. The settlement included monetary and non-monetary provisions including the payment of a civil monetary penalty of $100.0 million and restitution in the amount of $50.0 million to certain New York borrowers. Non-monetary provisions include: the appointment of an independent Operations Monitor who will among other responsibilities, review and assess the adequacy and effectiveness of our operations, including providing periodic reporting on findings and progress, and review transactions with ASPS, HLSS, AAMC and RESI (NYDFS Related Companies); the appointment of two additional independent directors to the Board of Directors; the resignation of William C. Erbey as an officer and director, as of January 16, 2015, as well as from the boards of the NYDFS Related Companies; and restrictions on the ability and/or timing of any future MSR acquisitions which effectively prohibit any such future acquisitions until we have satisfied certain specified conditions. | ||||||||
National Mortgage Settlement | ||||||||
In February 2014, the Ocwen National Mortgage Settlement involving the CFPB and various state attorneys general and other state agencies that regulate the mortgage servicing industry (NMS Regulators) was memorialized by a consent order entered by the United States District Court for the District of Columbia. | ||||||||
We are tested on a quarterly basis on various metrics to ensure compliance with the Ocwen National Mortgage Settlement. These metrics relate to various aspects of our servicing business, and each has a proscribed error threshold. These metrics are tested by a dedicated group of Ocwen employees who do not report to the servicing business and are referred to as the Internal Review Group (IRG). The IRG tests these metrics, and reports their findings to the professional firms employed by the Office of Mortgage Settlement Oversight (OMSO). OMSO has ultimate authority to accept or reject the IRG’s findings, and OMSO reports its findings to the District Court. | ||||||||
Exceeding the metric error rate threshold for the first time does not result in a violation of the settlement, but rather it is deemed a “potential violation” which then is subject to a cure period. Any potential violation requires us to submit a corrective action plan (CAP) to OMSO for approval and review, and all testing for that metric is suspended until the CAP is completed. Following the completion of the CAP, testing on that metric resumes by the IRG and any further fails in the cure period or the quarter following that cure period would subject us to financial penalties. These penalties start at an amount of not more than $1.0 million for the first uncured violation and increase to an amount of not more than $5.0 million for the second uncured violation. It is also possible that if we are found to have caused borrower harm, we would be subject to costs to remediate that harm. In addition, in the event that there were widespread metric failures, it is possible that OMSO and/or the District Court could determine that we were generally violating the settlement and seek to impose a broader range of financial or injunctive penalties on us. | ||||||||
In December 2014, OMSO identified two issues involving Ocwen’s compliance with the Ocwen National Mortgage Settlement. The first concerned the adequacy and independence of our IRG, which is responsible for reporting on Ocwen’s compliance with the settlement. The second issue concerned the letter dating issues raised by the NY DFS. OMSO’s report identified the steps that Ocwen had taken to remediate these issues, and acknowledged Ocwen’s cooperation. | ||||||||
In May 2015, OMSO issued another compliance report following up on that of December 2014. This report detailed additional changes that Ocwen had made to its IRG and described the work performed by OMSO to retest certain metrics previously tested by the Ocwen IRG for the first quarter of 2014. OMSO’s report indicated that the various steps taken by Ocwen in connection with its IRG demonstrated “measurable improvement” since the December 2014 report. OMSO further reported that its retesting of metrics for the first quarter of 2014 revealed that it only disagreed with the Ocwen IRG’s assessment for one out of the nine metrics subject to retesting. Ocwen has not objected to the determination on that one metric and will develop a corrective action plan for that potential violation. | ||||||||
We continue to work cooperatively with OMSO on resolving these issues, and the letter dating issues are currently under a CAP. While, to date, these issues have not resulted in financial penalties, if we do not comply with the Ocwen National Mortgage Settlement, we could become subject to financial penalties or other regulatory action could be taken against us. | ||||||||
Securities and Exchange Commission | ||||||||
On April 28, 2014, we received a letter from the staff of the New York Regional Office of the SEC (the Staff) informing us that it was conducting an investigation relating to Ocwen and making a request for voluntary production of documents and information relating to the April 22, 2014 surrender of certain options to purchase our common stock by Mr. Erbey, our former Executive Chairman, including the 2007 Equity Incentive Plan and the related option grant and surrender documents. On June 12, 2014, we received a subpoena from the SEC requesting production of various documents relating to our business dealings with Altisource, HLSS, AAMC and Residential and the interests of our directors and executive officers in these companies. Following the announcement on August 12, 2014 that we intended to amend our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, we received an additional subpoena on September 11, 2014 in relation to such amendments. In addition, we received a further subpoena on November 20, 2014 requesting certain documents related to Ocwen’s agreement with Southwest Business Corporation, and related to Mr. Erbey’s approvals for specifically enumerated board actions. On February 10, 2015, we received a letter from the Staff informing us that it was conducting an investigation relating to mortgage loan servicer use of collection agents, and it made a request for the voluntary production of documents and information. We believe that the February 10, 2015 letter was also sent to other companies in the industry. We are cooperating with the Staff on these matters. | ||||||||
California Department of Business Oversight | ||||||||
Effective January 23, 2015, OLS reached an agreement with the CA DBO relating to Ocwen’s failure to produce certain information and documents during a routine licensing examination, which resulted in the CA DBO withdrawing its notice of hearing to suspend OLS’ license in California. OLS and the CA DBO entered into a Consent Order pursuant to the California Residential Mortgage Lending Act (the CA Consent Order) with the CA DBO to reflect such settlement. The CA Consent Order addresses and resolves the examination disputes between the CA DBO and OLS, and does not involve any accusation or admission of wrongdoing with regard to OLS’ servicing practices. | ||||||||
Under the terms of the CA Consent Order, OLS paid the CA DBO a penalty of $2.5 million plus costs associated with the examination. We accrued the $2.5 million penalty as of December 31, 2014. OLS also agreed to cease acquiring any additional MSRs for loans secured in California until the CA DBO is satisfied that OLS can satisfactorily respond to the requests for information and documentation made in the course of a regulatory exam. | ||||||||
In addition, the CA DBO will select an independent third-party auditor (the CA Auditor) to assess OLS’ compliance with laws and regulations impacting California borrowers for an initial term of two years, extendable at the discretion of the CA DBO. OLS will pay all reasonable and necessary costs of the CA Auditor. The CA Auditor will report periodically on its findings and progress and OLS will submit to the CA DBO a written plan to address and implement corrective measures and address any deficiencies identified by the CA Auditor. | ||||||||
General | ||||||||
In addition to the above matters, our mortgage origination and servicing businesses require one or more licenses in the various jurisdictions where properties secured by mortgages are located. Our licensed entities are required to renew their licenses, typically on an annual basis, and to do so they must satisfy the license renewal requirements of each jurisdiction, which in some cases include the requirement to provide audited financial statements. The same agencies that issue licenses to us engage in regular supervisory examinations of the licensable activities. As of April 24, 2015, we were aware of 25 pending examinations in 19 states. In addition, we are subject to supervision by the CFPB at the federal level, and it similarly has the authority to conduct regulatory examinations, in addition to its enforcement and investigatory powers. These examinations are part of our ordinary course business activities, and the mere existence of an examination is not typically indicative of anything unusual or material as to that business. In addition, we also receive information requests and other inquiries, both formal and informal in nature, from these agencies as part of their general regulatory oversight of our origination and servicing businesses. | ||||||||
We also have regular engagements with not only our state financial regulators, but also the attorneys general in the various states and the CFPB to address individual borrower complaints that they bring to our attention, or to respond to information requests and other inquiries. Many of these matters are brought to our attention as a complaint that the entity is investigating, although some are formal investigations or proceedings. | ||||||||
To the extent that an examination or other regulatory engagement reveals a failure by us to comply with applicable law, regulation or licensing requirement, or if we fail to comply with the commitments we have made with respect to the foregoing regulatory actions or if other regulatory actions of a similar or different nature are taken in the future against us, this could lead to (i) loss of our licenses and approvals to engage in our servicing and lending businesses, (ii) governmental investigations and enforcement actions, (iii) administrative fines and penalties and litigation, (iv) civil and criminal liability, including class action lawsuits, (v) breaches of covenants and representations under our servicing, debt or other agreements, (vi) inability to raise capital and (vii) inability to execute on our business strategy. Any of these occurrences could increase our operating expenses and reduce our revenues, hamper our ability to grow or otherwise materially and adversely affect our business, reputation, financial condition and results of operations. | ||||||||
Loan Put-Back and Related Contingencies | ||||||||
We have exposure to origination representation, warranty and indemnification obligations because of our lending, sales and securitization activities and our acquisitions to the extent we assume one or more of these obligations and in connection with our servicing practices. At March 31, 2015 and 2014, we had provided or assumed representation and warranty obligations in connection with $77.5 billion and $87.9 billion of UPB, respectively, covering both forward and reverse mortgage loans. At March 31, 2015, we had outstanding representation and warranty repurchase demands of $134.6 million UPB (696 loans). At March 31, 2014, the outstanding UPB of representation and warranty repurchase demands was $138.7 million (701 loans). We review each demand and monitor through resolution, primarily through rescission, loan repurchase or make-whole payment. | ||||||||
The following table presents the changes in our liability for representation and warranty obligations, compensatory fees for foreclosures that may ultimately exceed investor timelines and related indemnification obligations for the three months ended March 31: | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | 132,918 | $ | 192,716 | ||||
Provision for representation and warranty obligations | (3,975 | ) | 7,266 | |||||
New production reserves | 228 | — | ||||||
Obligations assumed in connection with MSR and servicing business acquisitions | — | 182 | ||||||
Charge-offs and other (1) | (9,989 | ) | (30,929 | ) | ||||
Ending balance | $ | 119,182 | $ | 169,235 | ||||
-1 | Includes principal and interest losses realized in connection with repurchased loans, make-whole, indemnification and fee payments and settlements net of recoveries, if any. | |||||||
We believe that it is reasonably possible that losses beyond amounts currently recorded for potential representation and warranty obligations and other claims described above could occur, and such losses could have an adverse impact on our results of operations, financial condition or cash flows. However, based on currently available information, we are unable to estimate a range of reasonably possible losses above amounts that have been recorded at March 31, 2015. |
Subsequent_Events
Subsequent Events | 3 Months Ended | |
Mar. 31, 2015 | ||
Subsequent Events [Abstract] | ||
Subsequent Events | Note 21 – Subsequent Events | |
On April 6, 2015, OLS entered into Amendment No. 2 to Master Servicing Rights Purchase Agreement and Sale Supplements (the Amendment) with HLSS Holdings, LLC (Holdings), HLSS and MSR-EBO Acquisition LLC, a wholly-owned subsidiary of NRZ (Buyer), which Amendment became effective upon the consummation and closing of the purchase by the Buyer, directly and through HLSS Advances Acquisition Corp., of substantially all of the assets of HLSS. The Amendment revised terms of (i) the Master Servicing Rights Purchase Agreement, dated as of October 1, 2012, as amended by Amendment No. 1 to Master Servicing Rights Purchase Agreement and Sale Supplements, dated as of December 26, 2012 (as so amended, the MSR Purchase Agreement) and (ii) certain sale supplements to the MSR Purchase Agreement (as heretofore amended, supplemented and modified from time to time, the Sale Supplements and, together with the MSR Purchase Agreement, the Original Agreements). In consideration of OLS’ consent to the assignment by HLSS to the Buyer of all HLSS’ right, title and interest in, to and under the Original Agreements, the Amendment, among other things: | ||
• | extended the term during which OLS is, subject to the provisions of the amended Original Agreements, entitled to be the servicer on loans for which Rights to MSRs have been sold to NRZ (along with the associated economic benefits) for two additional years or until April 30, 2020, whichever is earlier, which would depend on the sale date for the applicable Rights to MSRs (existing terms ranged from February 2018 through October 2019 prior to the Amendment); | |
• | provided that such extension will not apply with respect to any servicing agreement that, as of the date that it was scheduled to terminate under the Original Agreements, is affected by an uncured Termination Event (as defined in the Sale Supplements) due to a downgrade of OLS’ servicer rating to “Below Average” or lower by S&P or to “SQ4” or lower by Moody’s; | |
• | provided that the parties will commence negotiating in good faith for an extension of the contract term and the servicing fees payable to OLS no later than six months prior to the end of the applicable term as extended pursuant to the Amendment; and | |
• | imposed a two-year standstill (until April 6, 2017 and subject to certain conditions) on the rights of NRZ to replace OLS as servicer. | |
The Amendment also provides that OLS will sell to NRZ, on an exclusive and “as is” basis, all economic beneficial rights to the clean-up call rights OLS is entitled to pursuant to servicing agreements that underlie Rights to MSRs owned by NRZ, for a payment upon exercise of 0.50% of the UPB of all performing mortgage loans (mortgage loans that are current or 30 days or less delinquent) associated with the applicable clean up-call. | ||
In the event there is a future downgrade of OLS’ S&P servicer rating below its current rating of "Average," OLS has also agreed to compensate NRZ for certain increased costs associated with its servicing advance financing facilities, including increased costs of funding, to the extent such costs are the direct result of such downgrade. The Amendment provides that any such compensation, if required, shall not exceed $3.0 million for any calendar month or $36.0 million in the aggregate. In such an event, NRZ has agreed to use commercially reasonable efforts to assist OLS in curing any potential cost increases by obtaining amendments to the relevant financing agreements. | ||
On April 17, 2015, we entered into an amendment to the SSTL facility agreement. Effective as of April 20, 2015, the amendment, among other things: | ||
• | removed, with respect to the 2014 fiscal year, the requirement that our financial statements and the related audit report must be unqualified as to going concern; and | |
• | extended the required time period for delivery of the 2014 audited financial statements to May 29, 2015. | |
On April 30, 2015, we announced agreements with Fannie Mae and Freddie Mac to sell portfolios of non-performing loan servicing. We expect these transactions to close over the coming months, with the first transfer on May 1, 2015. These transactions will include payments to the GSEs to assume the delinquent servicing and may, in some cases, include settlements of certain indemnification obligations. We expect these transactions to be cash flow positive as we will be reimbursed for outstanding advances. |
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation |
The accompanying unaudited consolidated financial statements have been prepared in conformity with the instructions of the Securities and Exchange Commission (SEC) to Form 10-Q and SEC Regulation S-X, Article 10, Rule 10-01 for interim financial statements. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The results of operations and other data for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2015. The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. | |
Reclassifications | Reclassifications |
Within the Other income (expense) section of the unaudited Consolidated Statement of Operations for the three months ended March 31, 2014, we reclassified Interest income from Other, net to a separate line item to conform to the current year presentation. | |
Certain insignificant amounts in the unaudited Consolidated Statement of Cash Flows for the three months ended March 31, 2014 have been reclassified to conform to the current year presentation. These reclassifications had no impact on our consolidated cash flows from operating, investing or financing activities. | |
Use of Estimates and Assumptions | Use of Estimates and Assumptions |
The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the related disclosures in the accompanying notes. Such estimates and assumptions include, but are not limited to, those that relate to fair value measurements, the provision for potential losses that may arise from litigation proceedings, and representation and warranty and other indemnification obligations. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ because of uncertainties associated with estimating the amounts, timing and likelihood of possible outcomes. |
Securitizations_and_Variable_I1
Securitizations and Variable Interest Entities (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Transfers and Servicing [Abstract] | ||||||||
Schedule of Cash Flows Related to Transfers Accounted for as Sales | The following table presents a summary of cash flows received from and paid to securitization trusts related to transfers accounted for as sales that were outstanding during the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Proceeds received from securitizations | $ | 1,070,772 | $ | 1,534,251 | ||||
Servicing fees collected | 347 | 5,194 | ||||||
Purchases of previously transferred assets, net of claims reimbursed | 500 | — | ||||||
$ | 1,071,619 | $ | 1,539,445 | |||||
Schedule of Assets That Relate to Continuing Involvement with Transferred Financial Assets with Servicing Rights and Maximum Exposure to Loss Including the Unpaid Principal Balance | The following table presents the carrying amounts of our assets that relate to our continuing involvement with forward loans that we have transferred with servicing rights retained as well as our maximum exposure to loss including the unpaid principal balance (UPB) of the transferred loans at the dates indicated: | |||||||
March 31, 2015 | December 31, 2014 | |||||||
Carrying value of assets: | ||||||||
Mortgage servicing rights, at amortized cost | $ | 85,215 | $ | 82,542 | ||||
Mortgage servicing rights, at fair value | 2,656 | 2,840 | ||||||
Advances and match funded advances | 481 | 1,236 | ||||||
UPB of loans transferred (1) | 10,345,586 | 9,353,187 | ||||||
Maximum exposure to loss | $ | 10,433,938 | $ | 9,439,805 | ||||
-1 | The UPB of the loans transferred is the maximum exposure to loss under our standard representations and warranties obligations. |
Fair_Value_Tables
Fair Value (Tables) | 3 Months Ended | |||||||||||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||||||||
Schedule of Fair Value Assets and Liabilities | The carrying amounts and the estimated fair values of our financial instruments and certain of our nonfinancial assets measured at fair value on a recurring or non-recurring basis or disclosed, but not carried, at fair value are as follows at the dates indicated: | |||||||||||||||||||||||||||
March 31, 2015 | December 31, 2014 | |||||||||||||||||||||||||||
Level | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||||
Financial assets: | ||||||||||||||||||||||||||||
Loans held for sale: | ||||||||||||||||||||||||||||
Loans held for sale, at fair value (a) | 2 | $ | 339,508 | $ | 339,508 | $ | 401,120 | $ | 401,120 | |||||||||||||||||||
Loans held for sale, at lower of cost or fair value (b) | 3 | 68,489 | 68,489 | 87,492 | 87,492 | |||||||||||||||||||||||
Total Loans held for sale | $ | 407,997 | $ | 407,997 | $ | 488,612 | $ | 488,612 | ||||||||||||||||||||
Loans held for investment - Reverse mortgages, at fair value (a) | 3 | $ | 1,808,141 | $ | 1,808,141 | $ | 1,550,141 | $ | 1,550,141 | |||||||||||||||||||
Advances and match funded advances (c) | 3 | 3,195,505 | 3,195,505 | 3,303,356 | 3,303,356 | |||||||||||||||||||||||
Receivables, net (c) | 3 | 299,836 | 299,836 | 270,596 | 270,596 | |||||||||||||||||||||||
Mortgage-backed securities, at fair value (a) | 3 | 7,701 | 7,701 | 7,335 | 7,335 | |||||||||||||||||||||||
Financial liabilities: | ||||||||||||||||||||||||||||
Match funded liabilities (c) | 3 | $ | 2,000,676 | $ | 2,000,676 | $ | 2,090,247 | $ | 2,090,247 | |||||||||||||||||||
Financing liabilities: | ||||||||||||||||||||||||||||
HMBS-related borrowings, at fair value (a) | 3 | $ | 1,702,397 | $ | 1,702,397 | $ | 1,444,252 | $ | 1,444,252 | |||||||||||||||||||
Financing liability - MSRs pledged (a) | 3 | 594,495 | 594,495 | 614,441 | 614,441 | |||||||||||||||||||||||
Other (c) | 3 | 191,715 | 172,610 | 199,948 | 189,648 | |||||||||||||||||||||||
Total Financing liabilities | $ | 2,488,607 | $ | 2,469,502 | $ | 2,258,641 | $ | 2,248,341 | ||||||||||||||||||||
Other secured borrowings: | ||||||||||||||||||||||||||||
Senior secured term loan (c) | 2 | $ | 1,196,498 | $ | 1,155,166 | $ | 1,273,219 | $ | 1,198,227 | |||||||||||||||||||
Other (c) | 3 | 407,209 | 407,209 | 460,472 | 460,472 | |||||||||||||||||||||||
Total Other secured borrowings | $ | 1,603,707 | $ | 1,562,375 | $ | 1,733,691 | $ | 1,658,699 | ||||||||||||||||||||
Senior unsecured notes (c) | 2 | $ | 350,000 | $ | 304,500 | $ | 350,000 | $ | 321,563 | |||||||||||||||||||
Derivative financial instruments assets (liabilities) (a): | ||||||||||||||||||||||||||||
Interest Rate Lock Commitments (IRLCs) | 2 | $ | 9,516 | $ | 9,516 | $ | 6,065 | $ | 6,065 | |||||||||||||||||||
Forward MBS trades | 1 | (5,249 | ) | (5,249 | ) | (2,854 | ) | (2,854 | ) | |||||||||||||||||||
Interest rate caps | 3 | 203 | 203 | 567 | 567 | |||||||||||||||||||||||
MSRs: | ||||||||||||||||||||||||||||
MSRs, at fair value (a) | 3 | $ | 897,797 | $ | 897,797 | $ | 93,901 | $ | 93,901 | |||||||||||||||||||
MSRs, at amortized cost (c) (d) | 3 | 922,854 | 1,064,134 | 1,820,091 | 2,237,703 | |||||||||||||||||||||||
Total MSRs | $ | 1,820,651 | $ | 1,961,931 | $ | 1,913,992 | $ | 2,331,604 | ||||||||||||||||||||
(a) | Measured at fair value on a recurring basis. | |||||||||||||||||||||||||||
(b) | Measured at fair value on a non-recurring basis. | |||||||||||||||||||||||||||
(c) | Disclosed, but not carried, at fair value. | |||||||||||||||||||||||||||
(d) | The balance at March 31, 2015 includes our impaired government-insured stratum of amortization method MSRs, which is measured at fair value on a non-recurring basis. The carrying value of this stratum at March 31, 2015 was $127.1 million, net of a valuation allowance of $17.8 million. | |||||||||||||||||||||||||||
Schedule of Reconciliation of Level 3 Assets | The following tables present a reconciliation of the changes in fair value of Level 3 assets and liabilities that we measure at fair value on a recurring basis. | |||||||||||||||||||||||||||
Loans Held for Investment - Reverse Mortgages | HMBS-Related Borrowings | Mortgage-Backed Securities | Financing Liability - MSRs Pledged | Derivatives | MSRs | Total | ||||||||||||||||||||||
Three months ended March 31, 2015 | ||||||||||||||||||||||||||||
Beginning balance | $ | 1,550,141 | $ | (1,444,252 | ) | $ | 7,335 | $ | (614,441 | ) | $ | 567 | $ | 93,901 | $ | (406,749 | ) | |||||||||||
Purchases, issuances, sales and settlements: | ||||||||||||||||||||||||||||
Purchases | — | — | — | — | — | — | — | |||||||||||||||||||||
Issuances | 235,271 | (238,615 | ) | — | — | — | (1,169 | ) | (4,513 | ) | ||||||||||||||||||
Transfer from MSRs, at amortized cost | — | — | — | — | — | 839,157 | 839,157 | |||||||||||||||||||||
Transfer from loans held for sale, at fair value | — | — | — | — | — | — | — | |||||||||||||||||||||
Sales | — | — | — | — | — | (917 | ) | (917 | ) | |||||||||||||||||||
Settlements (1) | (26,233 | ) | 25,985 | — | 19,946 | — | — | 19,698 | ||||||||||||||||||||
209,038 | (212,630 | ) | — | 19,946 | — | 837,071 | 853,425 | |||||||||||||||||||||
Total realized and unrealized gains and (losses) (2): | ||||||||||||||||||||||||||||
Included in earnings | 48,962 | (45,515 | ) | 366 | — | (364 | ) | (33,175 | ) | (29,726 | ) | |||||||||||||||||
Included in Other comprehensive income | — | — | — | — | — | — | — | |||||||||||||||||||||
48,962 | (45,515 | ) | 366 | — | (364 | ) | (33,175 | ) | (29,726 | ) | ||||||||||||||||||
Transfers in and / or out of Level 3 | — | — | — | — | — | — | — | |||||||||||||||||||||
Ending balance | $ | 1,808,141 | $ | (1,702,397 | ) | $ | 7,701 | $ | (594,495 | ) | $ | 203 | $ | 897,797 | $ | 416,950 | ||||||||||||
Loans Held for Investment - Reverse Mortgages | HMBS-Related Borrowings | Mortgage-Backed Securities | Financing Liability - MSRs Pledged | Derivatives | MSRs | Total | ||||||||||||||||||||||
Three months ended March 31, 2014 | ||||||||||||||||||||||||||||
Beginning balance | $ | 618,018 | $ | (615,576 | ) | $ | — | $ | (633,804 | ) | $ | 442 | $ | 116,029 | $ | (514,891 | ) | |||||||||||
Purchases, issuances, sales and settlements: | ||||||||||||||||||||||||||||
Purchases | — | — | 7,677 | — | — | — | 7,677 | |||||||||||||||||||||
Issuances | 176,658 | (226,626 | ) | — | — | 24 | — | (49,944 | ) | |||||||||||||||||||
Transfer from loans held for sale, at fair value | 110,874 | — | — | — | — | — | 110,874 | |||||||||||||||||||||
Sales | — | — | — | — | — | — | ||||||||||||||||||||||
Settlements | (14,029 | ) | 5,386 | — | (595 | ) | — | — | (9,238 | ) | ||||||||||||||||||
273,503 | (221,240 | ) | 7,677 | (595 | ) | 24 | — | 59,369 | ||||||||||||||||||||
Total realized and unrealized gains and (losses): | ||||||||||||||||||||||||||||
Included in earnings | 31,943 | (33,646 | ) | (156 | ) | — | (142 | ) | (5,203 | ) | (7,204 | ) | ||||||||||||||||
Included in Other comprehensive income | — | — | — | — | — | — | — | |||||||||||||||||||||
31,943 | (33,646 | ) | (156 | ) | — | (142 | ) | (5,203 | ) | (7,204 | ) | |||||||||||||||||
Transfers in and / or out of Level 3 | — | — | — | — | — | — | — | |||||||||||||||||||||
Ending balance | $ | 923,464 | $ | (870,462 | ) | $ | 7,521 | $ | (634,399 | ) | $ | 324 | $ | 110,826 | $ | (462,726 | ) | |||||||||||
-1 | In the event of a transfer of servicing to another party related to Rights to MSRs sold to HLSS, and now NRZ, we are required to reimburse HLSS, and now NRZ, at predetermined contractual rates for the loss of servicing revenues. Settlements for Financing liability - MSRs pledged for the three months ended March 31, 2015 includes $2.2 million of such reimbursements. | |||||||||||||||||||||||||||
-2 | Total losses attributable to derivative financial instruments still held at March 31, 2015 were $0.4 million for the three months ended March 31, 2015. | |||||||||||||||||||||||||||
Mortgage Servicing Rights - Amortized Costs [Member] | ||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||||||||
Schedule of Significant Assumptions used in Valuation | The more significant assumptions used in the March 31, 2015 valuation include: | |||||||||||||||||||||||||||
Weighted average prepayment speed | 12.57 | % | ||||||||||||||||||||||||||
Weighted average delinquency rate | 10.81 | % | ||||||||||||||||||||||||||
Advance financing cost | 5-year swap | |||||||||||||||||||||||||||
Interest rate for computing float earnings | 5-year swap | |||||||||||||||||||||||||||
Weighted average discount rate | 9.38 | % | ||||||||||||||||||||||||||
Weighted average cost to service (in dollars) | $ | 86 | ||||||||||||||||||||||||||
Fair Value Mortgage Servicing Rights [Member] | ||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||||||||
Schedule of Significant Assumptions used in Valuation | The primary assumptions used in the March 31, 2015 valuation include: | |||||||||||||||||||||||||||
Agency | Non Agency | |||||||||||||||||||||||||||
Weighted average prepayment speed | 10.47 | % | 17.28 | % | ||||||||||||||||||||||||
Weighted average delinquency rate | 0.86 | % | 30.02 | % | ||||||||||||||||||||||||
Advance financing cost | 5-year swap | 1ML plus 3.5% | ||||||||||||||||||||||||||
Interest rate for computing float earnings | 5-year swap | 1ML | ||||||||||||||||||||||||||
Weighted average discount rate | 9.01 | % | 14.95 | % | ||||||||||||||||||||||||
Weighted average cost to service (in dollars) | $ | 69 | $ | 339 | ||||||||||||||||||||||||
Mortgage Servicing Rights Pledged [Member] | ||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||||||||||||||||
Schedule of Significant Assumptions used in Valuation | The more significant assumptions used in determination of the price of the underlying MSRs at March 31, 2015 include: | |||||||||||||||||||||||||||
Weighted average prepayment speed | 17.83 | % | ||||||||||||||||||||||||||
Weighted average delinquency rate | 31 | % | ||||||||||||||||||||||||||
Advance financing cost | 1ML plus 3.5% | |||||||||||||||||||||||||||
Interest rate for computing float earnings | 1ML | |||||||||||||||||||||||||||
Weighted average discount rate | 15.22 | % | ||||||||||||||||||||||||||
Weighted average cost to service (in dollars) | $ | 345 | ||||||||||||||||||||||||||
Loans_Held_for_Sale_Tables
Loans Held for Sale (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Schedule of Loans Held for Sale Fair Value | The following table summarizes the activity in the balance during the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Beginning balance | $ | 401,120 | $ | 503,753 | ||||
Originations and purchases | 922,254 | 1,416,797 | ||||||
Proceeds from sales | (990,634 | ) | (1,481,403 | ) | ||||
Transfers to loans held for investment - reverse mortgages | — | (110,874 | ) | |||||
Gain on sale of loans | 15,265 | 12,863 | ||||||
Other | (8,497 | ) | (2,908 | ) | ||||
Ending balance | $ | 339,508 | $ | 338,228 | ||||
Schedule of Loans Held for Sale at Lower Cost or Fair Value, Activity | The following table summarizes the activity in the balance during the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Beginning balance | $ | 87,492 | $ | 62,907 | ||||
Purchases | 113,896 | 959,756 | ||||||
Proceeds from sales | (140,948 | ) | (835,786 | ) | ||||
Principal collections | (13,863 | ) | (96,300 | ) | ||||
Transfers to accounts receivable | (16,572 | ) | (66,187 | ) | ||||
Transfers to real estate owned | (2,296 | ) | (648 | ) | ||||
Gain on sale of loans | 17,271 | 23,031 | ||||||
Decrease (increase) in valuation allowance | 19,728 | (4,163 | ) | |||||
Other | 3,781 | 2,865 | ||||||
Ending balance (1) (2) | $ | 68,489 | $ | 45,475 | ||||
-1 | The balances at March 31, 2015 and March 31, 2014 are net of valuation allowances of $29.9 million and $36.0 million, respectively. The decrease in the valuation allowance for the three months ended March 31, 2015 resulted principally from the reversal of $22.5 million of the allowance that was associated with loans that were sold to an unrelated third party in March 2015. This decrease was partly offset by an increase of $0.9 million in the allowance resulting from transfers from the liability for indemnification obligations for the initial valuation adjustment that we recognized on certain loans that we repurchased from Fannie Mae and Freddie Mac guaranteed securitizations. For the three months ended March 31, 2014 the increase in the allowance was principally the result of $5.4 million of such transfers from the liability for indemnification obligations. | |||||||
-2 | The balances at March 31, 2015 and March 31, 2014 include $43.9 million and $6.1 million, respectively, of loans that we were required to repurchase from Ginnie Mae guaranteed securitizations as part of our servicing obligations. Repurchased loans are modified or otherwise remediated through loss mitigation activities or are reclassified to receivables. | |||||||
Schedule of Gains on Loans Held for Sale, Net | The following table summarizes the activity in Gain on loans held for sale, net, during the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Gain on sales of loans | $ | 51,400 | $ | 54,993 | ||||
Change in fair value of IRLCs | (2,233 | ) | 986 | |||||
Change in fair value of loans held for sale | (4,008 | ) | 1,800 | |||||
Loss on economic hedge instruments | (427 | ) | (13,610 | ) | ||||
Other | (228 | ) | (182 | ) | ||||
$ | 44,504 | $ | 43,987 | |||||
Advances_Tables
Advances (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Advances [Abstract] | ||||||||
Schedule of Advances Paid on Behalf of Borrowers or on Foreclosed Properties | Advances, net, representing payments made on behalf of borrowers or on foreclosed properties, consisted of the following at the dates indicated: | |||||||
March 31, 2015 | December 31, 2014 | |||||||
Servicing: | ||||||||
Principal and interest | $ | 137,929 | $ | 128,217 | ||||
Taxes and insurance | 467,716 | 467,891 | ||||||
Foreclosures, bankruptcy and other (1) | 332,829 | 293,340 | ||||||
938,474 | 889,448 | |||||||
Corporate Items and Other | 4,064 | 4,466 | ||||||
$ | 942,538 | $ | 893,914 | |||||
-1 | The balances at March 31, 2015 and December 31, 2014 are net of an allowance for losses of $71.9 million and $70.0 million, respectively. | |||||||
Schedule of Activity in Advances | The following table summarizes the activity in advances for the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Beginning balance | $ | 893,914 | $ | 890,832 | ||||
Acquisitions | — | 98,875 | ||||||
Transfers to match funded advances | — | (10,156 | ) | |||||
Sales of advances | (1,765 | ) | — | |||||
New advances (collections of advances), net and other | 50,389 | (41,625 | ) | |||||
Ending balance | $ | 942,538 | $ | 937,926 | ||||
Match_Funded_Advances_Tables
Match Funded Advances (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Transfers and Servicing [Abstract] | ||||||||
Schedule of Match Funded Advances on Residential Loans | Match funded advances on residential loans we service for others are comprised of the following at the dates indicated: | |||||||
March 31, 2015 | December 31, 2014 | |||||||
Principal and interest | $ | 1,249,364 | $ | 1,349,048 | ||||
Taxes and insurance | 807,267 | 847,064 | ||||||
Foreclosures, bankruptcy, real estate and other | 196,336 | 213,330 | ||||||
$ | 2,252,967 | $ | 2,409,442 | |||||
Schedule of Activity In Match Funded Advances | The following table summarizes the activity in match funded advances for the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Beginning balance | $ | 2,409,442 | $ | 2,552,383 | ||||
Acquisitions | — | 85,521 | ||||||
Transfers from advances | — | 10,156 | ||||||
New advances (collections of pledged advances), net and other | (156,475 | ) | 7,794 | |||||
Ending balance | $ | 2,252,967 | $ | 2,655,854 | ||||
Mortgage_Servicing_Tables
Mortgage Servicing (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Transfers and Servicing [Abstract] | ||||||||||||||
Schedule of Activity Related to MSRs - Amortization Method | The following table summarizes the activity in the carrying value of amortization method servicing assets for the three months ended March 31. Amortization of mortgage servicing rights is reported net of the amortization of any servicing liabilities and includes the amount of charges we recognized to increase servicing liability obligations, if any. | |||||||||||||
2015 | 2014 | |||||||||||||
Beginning balance | $ | 1,820,091 | $ | 1,953,352 | ||||||||||
Fair value election - transfer to MSRs carried at fair value (1) | (787,142 | ) | — | |||||||||||
Additions recognized in connection with business acquisitions | — | 20,324 | ||||||||||||
Additions recognized in connection with asset acquisitions | 3,267 | 6,697 | ||||||||||||
Additions recognized on the sale of mortgage loans | 8,528 | 11,614 | ||||||||||||
Sales (2) | (65,627 | ) | — | |||||||||||
Servicing transfers and adjustments | — | (364 | ) | |||||||||||
979,117 | 1,991,623 | |||||||||||||
Amortization | (38,494 | ) | (62,094 | ) | ||||||||||
Impairment (3) | (17,769 | ) | — | |||||||||||
Ending balance | $ | 922,854 | $ | 1,929,529 | ||||||||||
Estimated fair value at end of period | $ | 1,064,134 | $ | 2,774,910 | ||||||||||
-1 | Effective January 1, 2015, we elected fair value accounting for a newly-created class of non-Agency MSRs, which were previously accounted for using the amortization method. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with this class. We recorded a cumulative-effect adjustment of $52.0 million (before deferred income taxes of $9.2 million) to retained earnings as of January 1, 2015 to reflect the excess of the fair value of these MSRs over their carrying amount. At December 31, 2014, the UPB of the non-Agency MSRs for which the fair value election was made was $195.3 billion. | |||||||||||||
-2 | On March 31, 2015, we closed on the sale of Agency MSRs on a portfolio consisting of 76,000 performing loans owned by Freddie Mac with a total UPB of $9.1 billion. We completed the transfer of the loan servicing on April 16, 2015. | |||||||||||||
-3 | We established a $17.8 million valuation allowance related to impairment on our government-insured MSRs, as the fair value for this stratum was less than its carrying value. This impairment was primarily due to the FHA reducing the mortgage insurance premium rate by 50 basis points during the quarter, which created a significantly lower interest rate for existing FHA borrowers and in turn, generated higher projected prepayment speed and shorter asset life inputs used to value these MSRs. The impairment charge is recognized in Servicing and origination expense in the unaudited Consolidated Statements of Operations. | |||||||||||||
Schedule of Activity Related to MSRs - Fair Value Measurement Method | The following table summarizes the activity related to fair value servicing assets for the three months ended March 31: | |||||||||||||
2015 | 2014 | |||||||||||||
Agency | Non-Agency | Total | ||||||||||||
Beginning balance | $ | 93,901 | $ | — | $ | 93,901 | $ | 116,029 | ||||||
Fair value election - transfer from MSRs carried at amortized cost | — | 787,142 | 787,142 | — | ||||||||||
Cumulative effect of fair value election | — | 52,015 | 52,015 | |||||||||||
Sales | — | (947 | ) | (947 | ) | — | ||||||||
Servicing transfers and adjustments | — | (1,139 | ) | (1,139 | ) | — | ||||||||
Changes in fair value (1): | ||||||||||||||
Changes in valuation inputs or other assumptions | (6,110 | ) | — | (6,110 | ) | (3,155 | ) | |||||||
Realization of expected future cash flows and other changes | (3,276 | ) | (23,789 | ) | (27,065 | ) | (2,048 | ) | ||||||
Ending balance | $ | 84,515 | $ | 813,282 | $ | 897,797 | $ | 110,826 | ||||||
-1 | Changes in fair value are recognized in Servicing and origination expense in the unaudited Consolidated Statements of Operations. | |||||||||||||
Schedule of Estimated Change in Fair Value of MSRs | The following table summarizes the estimated change in the value of the MSRs that we carry at fair value as of March 31, 2015 given hypothetical instantaneous parallel shifts in the yield curve: | |||||||||||||
Adverse change in fair value | ||||||||||||||
10% | 20% | |||||||||||||
Weighted average prepayment speeds | $ | (40,557 | ) | $ | (101,371 | ) | ||||||||
Discount rate (option-adjusted spread) | $ | (22,770 | ) | $ | (44,842 | ) | ||||||||
Schedule of Composition of Servicing and Subservicing Portfolios by Type of Property Serviced | The following table presents the composition of our primary servicing and subservicing portfolios by type of property serviced as measured by UPB. The servicing portfolio represents loans for which we own the MSRs while subservicing represents all other loans. The UPB of assets serviced for others are not included on our unaudited Consolidated Balance Sheets. | |||||||||||||
Residential | Commercial | Total | ||||||||||||
UPB at March 31, 2015 | ||||||||||||||
Servicing (1) | $ | 337,125,187 | $ | — | $ | 337,125,187 | ||||||||
Subservicing | 45,088,815 | 161,887 | 45,250,702 | |||||||||||
$ | 382,214,002 | $ | 161,887 | $ | 382,375,889 | |||||||||
UPB at December 31, 2014 | ||||||||||||||
Servicing (1) | $ | 361,288,281 | $ | — | $ | 361,288,281 | ||||||||
Subservicing | 37,439,446 | 149,737 | 37,589,183 | |||||||||||
$ | 398,727,727 | $ | 149,737 | $ | 398,877,464 | |||||||||
UPB at March 31, 2014 | ||||||||||||||
Servicing (1) | $ | 391,701,237 | $ | — | $ | 391,701,237 | ||||||||
Subservicing | 57,869,359 | 318,507 | 58,187,866 | |||||||||||
$ | 449,570,596 | $ | 318,507 | $ | 449,889,103 | |||||||||
-1 | Includes primary servicing UPB of $156.3 billion, $160.8 billion and $170.8 billion at March 31, 2015, December 31, 2014 and March 31, 2014, respectively, for which the Rights to MSRs have been sold to HLSS. | |||||||||||||
Schedule of Components of Servicing and Subservicing Fees | The following table presents the components of servicing and subservicing fees for the three months ended March 31: | |||||||||||||
2015 | 2014 | |||||||||||||
Loan servicing and subservicing fees: | ||||||||||||||
Servicing | $ | 320,085 | $ | 351,823 | ||||||||||
Subservicing | 30,457 | 33,725 | ||||||||||||
350,542 | 385,548 | |||||||||||||
Home Affordable Modification Program (HAMP) fees | 35,176 | 36,699 | ||||||||||||
Late charges | 24,122 | 36,835 | ||||||||||||
Loan collection fees | 9,563 | 8,294 | ||||||||||||
Custodial accounts (float earnings) | 1,896 | 1,721 | ||||||||||||
Other | 25,242 | 21,362 | ||||||||||||
$ | 446,541 | $ | 490,459 | |||||||||||
Receivables_Tables
Receivables (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Receivables [Abstract] | ||||||||
Schedule of Receivables | Receivables consisted of the following at the dates indicated: | |||||||
31-Mar-15 | 31-Dec-14 | |||||||
Servicing: | ||||||||
Government-insured loan claims (1) | $ | 64,637 | $ | 52,955 | ||||
Due from custodial accounts | 45,355 | 11,627 | ||||||
Reimbursable expenses | 29,160 | 32,387 | ||||||
Other servicing receivables | 93,138 | 29,516 | ||||||
232,290 | 126,485 | |||||||
Income taxes receivable | 63,948 | 68,322 | ||||||
Due from related parties | 15,846 | 58,892 | ||||||
Other receivables (2) | 14,758 | 43,690 | ||||||
326,842 | 297,389 | |||||||
Allowance for losses (1) | (27,006 | ) | (26,793 | ) | ||||
$ | 299,836 | $ | 270,596 | |||||
-1 | The total allowance for losses at March 31, 2015 and December 31, 2014 includes $27.0 million and $26.8 million, respectively, related to receivables of our Servicing business. Allowance for losses related to defaulted FHA or VA insured loans repurchased from Ginnie Mae guaranteed securitizations (government-insured loan claims) at March 31, 2015 and December 31, 2014 were $11.8 million and $10.0 million, respectively. | |||||||
-2 | The balance at December 31, 2014 includes $28.8 million related to losses to be indemnified under the terms of the Homeward merger agreement. On March 19, 2015, we reached an agreement with the former owner of Homeward for the final settlement of all indemnification claims under the merger agreement and received $38.1 million in cash. |
Other_Assets_Tables
Other Assets (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Other Assets [Abstract] | ||||||||
Schedule of Other Assets | Other assets consisted of the following at the dates indicated: | |||||||
March 31, 2015 | December 31, 2014 | |||||||
Contingent loan repurchase asset (1) | $ | 283,900 | $ | 274,265 | ||||
Debt service accounts (2) | 86,437 | 91,974 | ||||||
Prepaid lender fees and debt issuance costs, net | 41,025 | 31,337 | ||||||
Real estate | 23,145 | 16,720 | ||||||
Prepaid expenses | 15,782 | 17,957 | ||||||
Prepaid income taxes | 15,274 | 16,450 | ||||||
Derivatives, at fair value | 9,545 | 6,065 | ||||||
Mortgage backed securities | 7,701 | 7,335 | ||||||
Other | 17,850 | 28,708 | ||||||
$ | 500,659 | $ | 490,811 | |||||
-1 | In connection with the Ginnie Mae EBO Transactions, our agreements provide either that: (a) we have the right, but not the obligation, to repurchase previously transferred mortgage loans under certain conditions, including the mortgage loans becoming eligible for pooling under a program sponsored by Ginnie Mae or (b) we have the obligation to repurchase previously transferred mortgage loans that have been subject to a successful trial modification before any permanent modification is made. Once these conditions are met, we have effectively regained control over the mortgage loan(s), and under GAAP, must re-recognize the loan on our consolidated balance sheets and establish a corresponding repurchase liability. With respect to those loans that we have the right, but not the obligation, to repurchase under the applicable agreement, this requirement applies regardless of whether we have any intention to repurchase the loan. We re-recognized mortgage loans in Other assets and the corresponding liability in Other liabilities. | |||||||
-2 | Under our advance funding financing facilities, we are contractually required to remit collections on pledged advances to the trustee within two days of receipt. The collected funds are not applied to reduce the related match funded debt until the payment dates specified in the indenture. The balances also include amounts that have been set aside from the proceeds of our match funded advance facilities and certain of our warehouse facilities to provide for possible shortfalls in the funds available to pay certain expenses and interest. The funds related to match funded facilities are held in interest earning accounts in the name of the SPE created in connection with the facility. |
Borrowings_Tables
Borrowings (Tables) | 3 Months Ended | ||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||
Schedule of Match Funded Liabilities | Match funded liabilities are comprised of the following at the dates indicated: | ||||||||||||||||||
Borrowing Type | Interest Rate | Maturity (1) | Amortization Date (1) | Available Borrowing Capacity (2) | March 31, 2015 | December 31, 2014 | |||||||||||||
Advance Receivable Backed Notes Series 2012-ADV1 (3) | 1ML (3) + 175 bps | Jun. 2017 | Jun. 2015 | $ | 51,658 | $ | 348,342 | $ | 373,080 | ||||||||||
Advance Receivable Backed | 1ML + 300 bps | Dec. 2015 | Dec. 2014 | — | — | 494 | |||||||||||||
Note (4) | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2013-VF2, | 1ML + 167 bps (5) | Oct. 2045 | Oct. 2015 | 68,214 | 495,786 | 519,634 | |||||||||||||
Class A | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2013-VF2, | 1ML + 300 bps (6) | Oct. 2045 | Oct. 2015 | 4,584 | 31,416 | 32,919 | |||||||||||||
Class B | |||||||||||||||||||
Advance Receivables Backed Notes - Series 2014-VF3, Class A | 1ML + 175 bps (7) | Oct. 2045 | Oct. 2015 | 72,799 | 527,201 | 552,553 | |||||||||||||
Advance Receivables Backed Notes - Series 2014-VF4 | 1ML + 175 bps (8) | Oct. 2045 | Oct. 2015 | 72,799 | 527,201 | 552,553 | |||||||||||||
Advance Receivables Backed Notes, Series 2014-VF1, | Cost of Funds + 275 bps | Dec. 2045 | Dec. 2015 | 54,270 | 25,673 | 21,192 | |||||||||||||
Class A (9) | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2014-VF1, | Cost of Funds + 325 bps | Dec. 2045 | Dec. 2015 | — | 16,289 | 13,598 | |||||||||||||
Class B (9) | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2014-VF1, | Cost of Funds + 375 bps | Dec. 2045 | Dec. 2015 | — | 12,220 | 10,224 | |||||||||||||
Class C (9) | |||||||||||||||||||
Advance Receivables Backed Notes, Series 2014-VF1, | Cost of Funds + 470 bps | Dec. 2045 | Dec. 2015 | — | 16,548 | 14,000 | |||||||||||||
Class D (9) | |||||||||||||||||||
$ | 324,324 | $ | 2,000,676 | $ | 2,090,247 | ||||||||||||||
Weighted average interest rate | 1.99 | % | 1.97 | % | |||||||||||||||
-1 | The amortization date of our advance financing facilities is the date on which the revolving period ends under each advance financing facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. The maturity date is the date on which all outstanding balances must be repaid. In two advance facilities, there are multiple notes outstanding. For each note, after the amortization date, all collections that represent the repayment of advances pledged to the facility must be applied to reduce the balance of the note outstanding, and any new advances are ineligible to be financed. | ||||||||||||||||||
-2 | Borrowing capacity is available to us provided that we have additional eligible collateral to pledge. Collateral may only be pledged to one facility. At March 31, 2015, none of the available borrowing capacity could be used based on the amount of eligible collateral that had been pledged | ||||||||||||||||||
-3 | 1-Month LIBOR (1ML) was 0.18% and 0.17% at March 31, 2015 and December 31, 2014, respectively. | ||||||||||||||||||
-4 | We voluntarily terminated this facility on January 15, 2015. | ||||||||||||||||||
-5 | The interest margin on this note is scheduled to increase to 191 bps on July 15, 2015, to 215 bps on August 15, 2015 and to 239 bps on September 15, 2015. | ||||||||||||||||||
-6 | The interest margin on this note is scheduled to increase to 343 bps on July 15, 2015, to 386 bps on August 15, 2015 and to 429 bps on September 15, 2015. | ||||||||||||||||||
-7 | The interest margin on this note is scheduled to increase to 200 bps on July 15, 2015, to 225 bps on August 15, 2015 and to 250 bps on September 15, 2015. | ||||||||||||||||||
-8 | The interest margin on this note is scheduled to increase to 200 bps on July 15, 2015, to 212 bps on August 15, 2015 and to 250 bps on September 15, 2015. | ||||||||||||||||||
-9 | Beginning April 23, 2015, the maximum borrowing under this facility will decrease by $6.3 million per month until it is reduced to $75.0 million. | ||||||||||||||||||
Schedule of Financing Liabilities | Financing liabilities are comprised of the following at the dates indicated: | ||||||||||||||||||
Borrowings | Collateral | Interest Rate | Maturity | March 31, 2015 | December 31, 2014 | ||||||||||||||
Servicing: | |||||||||||||||||||
Financing liability – MSRs pledged | MSRs | -1 | -1 | $ | 594,495 | $ | 614,441 | ||||||||||||
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (2) | MSRs | -2 | Feb. 2028 | 107,408 | 111,459 | ||||||||||||||
Financing Liability – Advances Pledged (3) | Advances on loans | -3 | -3 | 84,307 | 88,489 | ||||||||||||||
786,210 | 814,389 | ||||||||||||||||||
Lending: | |||||||||||||||||||
HMBS-related borrowings (4) | Loans held for investment (LHFI) | 1ML + 245 bps | -4 | 1,702,397 | 1,444,252 | ||||||||||||||
$ | 2,488,607 | $ | 2,258,641 | ||||||||||||||||
-1 | This financing liability arose in connection with the HLSS Transaction financing liabilities and has no contractual maturity. The balance of the liability is adjusted each reporting period to its fair value based on the present value of the estimated future cash flows underlying the related MSRs. | ||||||||||||||||||
-2 | OASIS noteholders are entitled to receive a monthly payment amount equal to the sum of: (a) the designated servicing fee amount (21 basis points of the UPB of the reference pool of Freddie Mac mortgages); (b) any termination payment amounts; (c) any excess refinance amounts; and (d) the note redemption amounts, each as defined in the indenture supplement for the notes. The notes have a final stated maturity of February 2028. We accounted for this transaction as a financing. Monthly amortization of the liability is estimated using the proportion of monthly projected service fees on the underlying MSRs as a percentage of lifetime projected fees, adjusted for the term of the security. | ||||||||||||||||||
-3 | Certain sales of advances in 2014 did not qualify for sales accounting treatment and were accounted for as a financing. | ||||||||||||||||||
-4 | Represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed HMBS. The beneficial interests have no maturity dates, and the borrowings mature as the related loans are repaid. | ||||||||||||||||||
Schedule of Other Secured Borrowings | Other secured borrowings are comprised of the following at the dates indicated: | ||||||||||||||||||
Borrowings | Collateral | Interest Rate | Maturity | Available Borrowing Capacity | March 31, 2015 | December 31, 2014 | |||||||||||||
Servicing: | |||||||||||||||||||
SSTL (1) | -1 | 1-Month Euro-dollar rate + 375 bps with a Eurodollar floor of 125 bps (1) | Feb. 2018 | $ | — | $ | 1,200,174 | $ | 1,277,250 | ||||||||||
Repurchase agreement (2) | Loans held for sale (LHFS) | 1ML + 200 - 345 bps | Jun. 2015 | 15,747 | 34,253 | 32,018 | |||||||||||||
15,747 | 1,234,427 | 1,309,268 | |||||||||||||||||
Borrowings | Collateral | Interest Rate | Maturity | Available Borrowing Capacity | March 31, 2015 | December 31, 2014 | |||||||||||||
Lending: | |||||||||||||||||||
Master repurchase agreement (3) | LHFS | 1ML + 175 bps | Jun. 2015 | — | 192,222 | 208,010 | |||||||||||||
Participation agreement (4) | LHFS | N/A | Apr. 2016 | — | 13,548 | 41,646 | |||||||||||||
Participation agreement (5) | LHFS | N/A | Apr. 2016 | — | 38,717 | 196 | |||||||||||||
Master repurchase agreement (6) | LHFS | 1ML + 175 - 275 bps | Jul. 2015 | 19,508 | 55,492 | 102,073 | |||||||||||||
Master repurchase agreement (7) | LHFI | 1ML + 275bps | Jul. 2015 | — | 39,463 | 52,678 | |||||||||||||
Mortgage warehouse agreement (8) | LHFI | 1ML + 275 bps; floor of 350 bps | May-15 | — | 33,513 | 23,851 | |||||||||||||
19,508 | 372,955 | 428,454 | |||||||||||||||||
35,255 | 1,607,382 | 1,737,722 | |||||||||||||||||
Discount (1) | — | (3,675 | ) | (4,031 | ) | ||||||||||||||
$ | 35,255 | $ | 1,603,707 | $ | 1,733,691 | ||||||||||||||
Weighted average interest rate | 4.37 | % | 4.33 | % | |||||||||||||||
-1 | On March 2, 2015, we entered into an amendment to the SSTL facility agreement. Among other things, the amendment: | ||||||||||||||||||
• | eliminates the dollar cap on the general asset sale basket and requires Ocwen to use 75% of the net cash proceeds from permitted asset sales under such general asset basket to prepay the loans under the SSTL and, subject to certain conditions, permits Ocwen to use up to 25% of such net cash proceeds to reinvest in assets used in the business of OLS and its subsidiaries within 120 days of receipt thereof (subject to an extension of up to 90 days if a binding agreement is entered into within such 120 days); and | ||||||||||||||||||
• | increases the quarterly covenant levels of the corporate leverage ratio to 3.5-to-1 for the fiscal quarter ended March 31, 2015 and thereafter. | ||||||||||||||||||
-2 | Under this repurchase agreement, the lender provides financing on a committed basis for $50.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $50.0 million. | ||||||||||||||||||
-3 | Under this repurchase agreement, the lender provides financing on a committed basis for $150.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $150.0 million. | ||||||||||||||||||
-4 | Under this participation agreement, the lender provides financing on an uncommitted basis for $50.0 million at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. On April 16, 2015, the maximum borrowing capacity was increased to $100.0 million. | ||||||||||||||||||
-5 | Under this participation agreement, the lender provides financing on an uncommitted basis for $150.0 million at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. | ||||||||||||||||||
-6 | Under this repurchase agreement, the lender provides financing on a committed basis for $75.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $75.0 million. On April 16, 2015, this facility was terminated. | ||||||||||||||||||
-7 | On April 16, 2015, the maximum borrowing capacity under this agreement was reduced to $37.5 million all of which is on a committed basis. | ||||||||||||||||||
-8 | Borrowing capacity of $60.0 million under this facility is available on an uncommitted basis at the discretion of the lender. |
Other_Liabilities_Tables
Other Liabilities (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Other Liabilities Disclosure [Abstract] | ||||||||
Schedule of Other Liabilities | Other liabilities were comprised of the following at the dates indicated: | |||||||
March 31, 2015 | December 31, 2014 | |||||||
Contingent loan repurchase liability (1) | $ | 283,900 | $ | 274,265 | ||||
Accrued expenses | 135,482 | 142,592 | ||||||
Liability for indemnification obligations | 119,182 | 132,918 | ||||||
Due to related parties | 114,980 | 55,585 | ||||||
Payable to loan servicing and subservicing investors | 35,246 | 67,722 | ||||||
Liability for selected tax items | 29,161 | 28,436 | ||||||
Checks held for escheat | 16,420 | 18,513 | ||||||
Other | 87,873 | 73,503 | ||||||
$ | 822,244 | $ | 793,534 | |||||
-1 | In connection with the Ginnie Mae EBO Transactions, we have re-recognized certain loans on our consolidated balance sheets and establish a corresponding repurchase liability regardless of our intention to repurchase the loan. |
Derivative_Financial_Instrumen1
Derivative Financial Instruments and Hedging Activities (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||
Schedule of Changes in Notional Balance of Holdings of Derivatives | The following table summarizes the changes in the notional balances of our holdings of derivatives during the three months ended March 31, 2015: | ||||||||||||||||
IRLCs | Forward MBS Trades | Interest Rate Caps | Interest Rate Swaps | ||||||||||||||
Beginning notional balance | $ | 239,406 | $ | 703,725 | $ | 1,729,000 | $ | — | |||||||||
Additions | 1,288,957 | 2,481,134 | 450,000 | ||||||||||||||
Amortization | 69,773 | (102,000 | ) | — | |||||||||||||
Maturities | (964,465 | ) | (1,121,701 | ) | — | ||||||||||||
Terminations | (144,390 | ) | (1,349,218 | ) | (450,000 | ) | |||||||||||
Ending notional balance | $ | 419,508 | $ | 783,713 | $ | 1,627,000 | $ | — | |||||||||
Fair value of derivative assets (liabilities) at: | |||||||||||||||||
March 31, 2015 | $ | 9,516 | $ | (5,249 | ) | $ | 203 | $ | — | ||||||||
December 31, 2014 | $ | 6,065 | $ | (2,854 | ) | $ | 567 | $ | — | ||||||||
Maturity | Apr. 2015 - Jun. 2015 | May 2015 - June 2015 | Nov. 2016 - Oct. 2017 | N/A | |||||||||||||
-1 | As loans are originated and sold or as loan commitments expire, our forward MBS trade positions mature and are replaced by new positions based upon new loan commitments and originations and expected time to sell. | ||||||||||||||||
Schedule of Gains (Losses) on Derivatives | The following summarizes our open derivative positions at March 31, 2015 and the gains (losses) on all derivatives used in each of the identified hedging programs for the year to date period then ended. None of the derivatives was designated as a hedge for accounting purposes at March 31, 2015: | ||||||||||||||||
Purpose | Expiration Date | Notional Amount | Fair Value (1) | Gains / (Losses) | Consolidated Statements of Operations Caption | ||||||||||||
Hedge the effect of changes in interest rates on interest expense on borrowings | |||||||||||||||||
Interest rate caps | |||||||||||||||||
Hedge the effect of changes in 1ML on advance funding facilities | Nov. 2016 - Oct. 2017 | $ | 1,627,000 | $ | 203 | $ | (364 | ) | Other, net | ||||||||
Interest rate risk of mortgage loans held for sale and of IRLCs | |||||||||||||||||
Forward MBS trades | May 2015 - June 2015 | 783,713 | (5,249 | ) | (427 | ) | Gain on loans held for sale, net | ||||||||||
IRLCs | April 2015 - June 2015 | 419,508 | 9,516 | (2,233 | ) | Gain on loans held for sale, net | |||||||||||
Total derivatives | $ | 4,470 | $ | (3,024 | ) | ||||||||||||
-1 | Derivatives are reported at fair value in Receivables, Other assets or in Other liabilities on our unaudited Consolidated Balance Sheets. | ||||||||||||||||
Schedule of Changes in AOCL | Changes in AOCL during the three months ended March 31 were as follows: | ||||||||||||||||
2015 | 2014 | ||||||||||||||||
Beginning balance | $ | 8,413 | $ | 10,151 | |||||||||||||
Losses on terminated hedging relationships amortized to earnings | (443 | ) | (779 | ) | |||||||||||||
Decrease in deferred taxes on accumulated losses on cash flow hedges | 25 | 171 | |||||||||||||||
Decrease in accumulated losses on cash flow hedges, net of taxes | (418 | ) | (608 | ) | |||||||||||||
Other, net of taxes | — | (1 | ) | ||||||||||||||
Ending balance | $ | 7,995 | $ | 9,542 | |||||||||||||
Schedule of Other Income (Expense), Net Related to Derivative Financial Instruments | Other income (expense), net, includes the following related to derivative financial instruments for the three months ended March 31: | ||||||||||||||||
2015 | 2014 | ||||||||||||||||
Losses on economic hedges | $ | (710 | ) | $ | (141 | ) | |||||||||||
Write-off of losses in AOCL for a discontinued hedge relationship | (443 | ) | (779 | ) | |||||||||||||
$ | (1,153 | ) | $ | (920 | ) | ||||||||||||
Interest_Expense_Tables
Interest Expense (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Other Income and Expenses [Abstract] | ||||||||
Schedule of Components of Interest Expense | The following table presents the components of interest expense for the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Financing liabilities (1) (2) | $ | 73,824 | $ | 100,230 | ||||
Other secured borrowings | 22,916 | 21,284 | ||||||
Match funded liabilities | 14,280 | 16,318 | ||||||
6.625% Senior unsecured notes | 6,129 | — | ||||||
Other | 2,247 | 2,041 | ||||||
$ | 119,396 | $ | 139,873 | |||||
-1 | Includes interest expense related to financing liabilities recorded in connection with the HLSS Transactions as indicated in the table below. | |||||||
2015 | 2014 | |||||||
Servicing fees collected on behalf of HLSS | $ | 180,297 | $ | 189,157 | ||||
Less: Subservicing fee retained by Ocwen | 91,214 | 90,161 | ||||||
Net servicing fees remitted to HLSS | 89,083 | 98,996 | ||||||
Less: Reduction in financing liability | 17,723 | — | ||||||
Interest expense on HLSS financing liability | $ | 71,360 | $ | 98,996 | ||||
-2 | Interest expense that we expect to be paid on the HMBS-related borrowings is included with net fair value gains in Other revenues. | |||||||
Schedule of Related Party Interest Expense | ||||||||
2015 | 2014 | |||||||
Servicing fees collected on behalf of HLSS | $ | 180,297 | $ | 189,157 | ||||
Less: Subservicing fee retained by Ocwen | 91,214 | 90,161 | ||||||
Net servicing fees remitted to HLSS | 89,083 | 98,996 | ||||||
Less: Reduction in financing liability | 17,723 | — | ||||||
Interest expense on HLSS financing liability | $ | 71,360 | $ | 98,996 | ||||
Basic_and_Diluted_Earnings_per1
Basic and Diluted Earnings per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Schedule of Basic EPS to Diluted EPS | The following is a reconciliation of the calculation of basic earnings per share to diluted earnings per share for the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Basic earnings per share: | ||||||||
Net income attributable to Ocwen common stockholders | $ | 34,355 | $ | 59,504 | ||||
Weighted average shares of common stock | 125,272,228 | 135,227,067 | ||||||
Basic earnings per share | $ | 0.27 | $ | 0.44 | ||||
Diluted earnings per share: | ||||||||
Net income attributable to Ocwen common stockholders | $ | 34,355 | $ | 59,504 | ||||
Preferred stock dividends (1) | — | 997 | ||||||
Adjusted net income attributable to Ocwen | $ | 34,355 | $ | 60,501 | ||||
Weighted average shares of common stock | 125,272,228 | 135,227,067 | ||||||
Effect of dilutive elements: | ||||||||
Preferred stock (1) | — | 1,950,298 | ||||||
Stock options | 1,725,280 | 3,908,333 | ||||||
Common stock awards | 2,154 | 3,757 | ||||||
Dilutive weighted average shares of common stock | 126,999,662 | 141,089,455 | ||||||
Diluted earnings per share | $ | 0.27 | $ | 0.43 | ||||
Stock options and common stock awards excluded from the computation of diluted earnings per share: | ||||||||
Anti-dilutive (2) | 2,010,902 | — | ||||||
Market-based (3) | 851,263 | 547,500 | ||||||
-1 | Prior to the conversion of our remaining preferred stock into common stock in July 2014, we computed the effect on diluted earnings per share using the if-converted method. For purposes of computing diluted earnings per share, we assume the conversion of the preferred stock into shares of common stock unless the effect is anti-dilutive. | |||||||
-2 | These options were anti-dilutive because their exercise price was greater than the average market price of our stock. | |||||||
-3 | Shares that are issuable upon the achievement of certain performance criteria related to Ocwen’s stock price and an annualized rate of return to investors. |
Business_Segment_Reporting_Tab
Business Segment Reporting (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||
Schedule of Segment Reporting Information | Financial information for our segments is as follows: | |||||||||||||||||||
Servicing | Lending | Corporate Items and Other | Corporate Eliminations | Business Segments Consolidated | ||||||||||||||||
Results of Operations | ||||||||||||||||||||
Three months ended March 31, 2015 | ||||||||||||||||||||
Revenue (1) | $ | 471,125 | $ | 37,746 | $ | 1,608 | $ | (35 | ) | $ | 510,444 | |||||||||
Expenses (1) (2) | 337,911 | 23,785 | 16,697 | (35 | ) | 378,358 | ||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 1,371 | 3,596 | 608 | — | 5,575 | |||||||||||||||
Interest expense | (110,629 | ) | (2,639 | ) | (6,128 | ) | — | (119,396 | ) | |||||||||||
Other (1) | 22,766 | 1,065 | 733 | — | 24,564 | |||||||||||||||
Other income (expense), net | (86,492 | ) | 2,022 | (4,787 | ) | — | (89,257 | ) | ||||||||||||
Income (loss) before income taxes | $ | 46,722 | $ | 15,983 | $ | (19,876 | ) | $ | — | $ | 42,829 | |||||||||
Three months ended March 31, 2014 | ||||||||||||||||||||
Revenue (1) | $ | 520,823 | $ | 28,767 | $ | 1,711 | $ | (40 | ) | $ | 551,261 | |||||||||
Expenses (1) (2) | 307,933 | 31,464 | 9,837 | (40 | ) | 349,194 | ||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 439 | 4,009 | 879 | — | 5,327 | |||||||||||||||
Interest expense | (136,386 | ) | (3,451 | ) | (36 | ) | — | (139,873 | ) | |||||||||||
Other (1) | (320 | ) | 2,718 | 1,784 | — | 4,182 | ||||||||||||||
Other income (expense), net | (136,267 | ) | 3,276 | 2,627 | — | (130,364 | ) | |||||||||||||
Income (loss) before income taxes | $ | 76,623 | $ | 579 | $ | (5,499 | ) | $ | — | $ | 71,703 | |||||||||
Servicing | Lending | Corporate Items and Other | Corporate Eliminations | Business Segments Consolidated | ||||||||||||||||
Total Assets | ||||||||||||||||||||
March 31, 2015 | $ | 5,733,630 | $ | 2,165,742 | $ | 487,402 | $ | — | $ | 8,386,774 | ||||||||||
December 31, 2014 | $ | 5,881,862 | $ | 1,963,729 | $ | 421,687 | $ | — | $ | 8,267,278 | ||||||||||
March 31, 2014 | $ | 6,333,097 | $ | 1,326,114 | $ | 527,140 | $ | — | $ | 8,186,351 | ||||||||||
-1 | Intersegment billings for services rendered to other segments are recorded as revenues, as contra-expense or as other income, depending on the type of service that is rendered. | |||||||||||||||||||
-2 | Depreciation and amortization expense are as follows: | |||||||||||||||||||
Servicing | Lending | Corporate Items and Other | Business Segments Consolidated | |||||||||||||||||
For the three months ended March 31, 2015 | ||||||||||||||||||||
Depreciation expense | $ | 529 | $ | 104 | $ | 3,711 | $ | 4,344 | ||||||||||||
Amortization of mortgage servicing rights | 38,405 | 89 | — | 38,494 | ||||||||||||||||
Amortization of debt discount | 356 | — | — | 356 | ||||||||||||||||
Amortization of debt issuance costs | 3,423 | — | 332 | 3,755 | ||||||||||||||||
For the three months ended March 31, 2014 | ||||||||||||||||||||
Depreciation expense | $ | 2,820 | $ | 105 | $ | 2,615 | $ | 5,540 | ||||||||||||
Amortization of mortgage servicing rights | 61,779 | 115 | 200 | 62,094 | ||||||||||||||||
Amortization of debt discount | 330 | — | — | 330 | ||||||||||||||||
Amortization of debt issuance costs | 1,087 | — | — | 1,087 | ||||||||||||||||
Depreciation and Amortization [Member] | ||||||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||||||
Schedule of Segment Reporting Information | Depreciation and amortization expense are as follows: | |||||||||||||||||||
Servicing | Lending | Corporate Items and Other | Business Segments Consolidated | |||||||||||||||||
For the three months ended March 31, 2015 | ||||||||||||||||||||
Depreciation expense | $ | 529 | $ | 104 | $ | 3,711 | $ | 4,344 | ||||||||||||
Amortization of mortgage servicing rights | 38,405 | 89 | — | 38,494 | ||||||||||||||||
Amortization of debt discount | 356 | — | — | 356 | ||||||||||||||||
Amortization of debt issuance costs | 3,423 | — | 332 | 3,755 | ||||||||||||||||
For the three months ended March 31, 2014 | ||||||||||||||||||||
Depreciation expense | $ | 2,820 | $ | 105 | $ | 2,615 | $ | 5,540 | ||||||||||||
Amortization of mortgage servicing rights | 61,779 | 115 | 200 | 62,094 | ||||||||||||||||
Amortization of debt discount | 330 | — | — | 330 | ||||||||||||||||
Amortization of debt issuance costs | 1,087 | — | — | 1,087 | ||||||||||||||||
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Related Party Transactions [Abstract] | ||||||||
Schedule of Revenues and Expenses Related to Various Service Agreements | The following table summarizes revenues and expenses related to our agreements with Altisource, HLSS (prior to the sale of its assets to NRZ), AAMC and Residential (and, as applicable, their subsidiaries) for the three months ended March 31 and net amounts receivable or payable at the dates indicated. | |||||||
2015 | 2014 | |||||||
Revenues and Expenses: | ||||||||
Altisource: | ||||||||
Revenues | $ | 13,404 | $ | 8,499 | ||||
Expenses | 29,026 | 17,364 | ||||||
HLSS: | ||||||||
Revenues | $ | 166 | $ | 165 | ||||
Expenses | 34 | 462 | ||||||
AAMC | ||||||||
Revenues | $ | 84 | $ | 384 | ||||
Residential | ||||||||
Revenues | $ | 2,508 | $ | 2,148 | ||||
Schedule of Amounts Receivable or Payable | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
Net Receivable (Payable) | ||||||||
Altisource | $ | (9,501 | ) | $ | (4,909 | ) | ||
HLSS | (89,678 | ) | 7,884 | |||||
AAMC | 46 | 232 | ||||||
Residential | — | 100 | ||||||
$ | (99,133 | ) | $ | 3,307 | ||||
Contingencies_Tables
Contingencies (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||
Schedule of Indemnification Obligations | The following table presents the changes in our liability for representation and warranty obligations, compensatory fees for foreclosures that may ultimately exceed investor timelines and related indemnification obligations for the three months ended March 31: | |||||||
2015 | 2014 | |||||||
Beginning balance | $ | 132,918 | $ | 192,716 | ||||
Provision for representation and warranty obligations | (3,975 | ) | 7,266 | |||||
New production reserves | 228 | — | ||||||
Obligations assumed in connection with MSR and servicing business acquisitions | — | 182 | ||||||
Charge-offs and other (1) | (9,989 | ) | (30,929 | ) | ||||
Ending balance | $ | 119,182 | $ | 169,235 | ||||
-1 | Includes principal and interest losses realized in connection with repurchased loans, make-whole, indemnification and fee payments and settlements net of recoveries, if any. |
Description_of_Business_and_Ba2
Description of Business and Basis of Presentation - Narrative (Details) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||||||||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Mar. 02, 2015 | Mar. 18, 2015 | Mar. 31, 2015 | Mar. 24, 2015 | Apr. 30, 2015 | Apr. 06, 2015 | Apr. 27, 2015 | Apr. 23, 2015 | Apr. 17, 2015 | 11-May-15 | |
Agreement | Loan | Loan | Loan | Loan | |||||||||
Loan | |||||||||||||
Agency | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Number of days from fiscal year end that servicer is obliged to provide audited financial statements | 90 days | ||||||||||||
Number of agencies communicated material sanction, suspension or prohibition | 0 | ||||||||||||
Number of non-agency and whole loans servicing agreements | 4,100 | ||||||||||||
Number of non-agency and whole loans servicing agreements with minimum servicer ratings | 700 | ||||||||||||
Unpaid principal balance of non-agency and whole loans servicing agreements with minimum servicer ratings | $45,000,000,000 | $45,000,000,000 | |||||||||||
Number of non-agency and whole loans servicing agreements with termination rights triggered | 400 | ||||||||||||
Unpaid principal balance of non-agency and whole loans servicing agreements with termination rights triggered | 25,000,000,000 | 25,000,000,000 | |||||||||||
Percentage of non-agency and whole loans servicing agreements with termination rights triggered of servicing portfolio | 12.00% | ||||||||||||
Number of non-agency servicing agreements terminated due to downgrades in mortgage servicer rating | 4 | ||||||||||||
Percentage of servicing transferred due to downgrades in mortgage servicer rating | 0.15% | ||||||||||||
Expected proceeds from sale of mortgage servicing rights | 49,465,000 | 0 | |||||||||||
Master Repurchase And Participation Agreement [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Term of advance funding facility | 364 days | ||||||||||||
Outstanding master repurchase and participation agreements | 373,000,000 | 373,000,000 | |||||||||||
HLSS [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Unpaid principal balance of loans held for sale | 156,300,000,000 | 170,800,000,000 | 160,800,000,000 | 156,300,000,000 | |||||||||
Outstanding servicing advances | 5,800,000,000 | 5,800,000,000 | |||||||||||
Advance Funding Facility [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Term of advance funding facility | 364 days | ||||||||||||
Line of credit facility, amount outstanding | 2,000,000,000 | 2,000,000,000 | |||||||||||
Advance Funding Facility [Member] | HLSS [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Term of advance funding facility | 364 days | 364 days | |||||||||||
Ocwen Loan Servicing [Member] | JPMorgan Chase & Co [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Unpaid principal balance of loans held for sale | 42,000,000,000 | ||||||||||||
Number of performing agency loans held for sale | 250,000 | ||||||||||||
Ocwen Loan Servicing [Member] | Green Tree Loan Servicing [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Unpaid principal balance of loans held for sale | 9,200,000,000 | ||||||||||||
Number of performing agency loans held for sale | 54,000 | ||||||||||||
Ocwen Loan Servicing [Member] | Nationstar Mortgage LLC [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Unpaid principal balance of loans held for sale | 9,100,000,000 | 9,100,000,000 | 24,900,000,000 | ||||||||||
Number of performing agency loans held for sale | 76,000 | 140,000 | |||||||||||
Ocwen Loan Servicing [Member] | Advance Funding Facility [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Line of credit facility, amount outstanding | 348,300,000 | 348,300,000 | |||||||||||
Maximum borrowing capacity | 400,000,000 | 400,000,000 | |||||||||||
Subsequent Event [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Maximum borrowing capacity | 75,000,000 | ||||||||||||
Cash pre-payments to secure future obligations | 3,200,000 | 15,400,000 | |||||||||||
Escrow deposit | 37,500,000 | ||||||||||||
Expected proceeds from sale of mortgage servicing rights | 860,000,000 | ||||||||||||
Subsequent Event [Member] | NRZ [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Extended term as named servicer | 2 years | ||||||||||||
Negotiation period for extension, prior to end of contract term | 6 months | ||||||||||||
Standstill period to replace as named servicer | 2 years | ||||||||||||
Subsequent Event [Member] | Master Repurchase Agreement [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Maximum borrowing capacity | 125,000,000 | ||||||||||||
Subsequent Event [Member] | Advance Funding Facility [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Line of credit facility, amount outstanding | 500,000,000 | ||||||||||||
Maximum borrowing capacity | 1,800,000,000 | ||||||||||||
Subsequent Event [Member] | Ocwen Loan Servicing [Member] | Nationstar Mortgage LLC [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Unpaid principal balance of loans held for sale | 2,700,000,000 | ||||||||||||
Maximum [Member] | Subsequent Event [Member] | Ocwen Loan Servicing [Member] | NRZ [Member] | |||||||||||||
Description of Business and Basis of Presentation [Line Items] | |||||||||||||
Increased costs of financing to be compensated during any calendar month | 3,000,000 | ||||||||||||
Increased costs of financing to be compensated during contractual term | 36,000,000 |
Securitizations_and_Variable_I2
Securitizations and Variable Interest Entities - Narrative (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |
Servicing Assets at Fair Value [Line Items] | |||
Average period to securitization | 30 days | ||
Percentage of loan transferred through securitization 60 days or more past due | 4.90% | 5.10% | |
Charge-offs, net of recoveries associated with transferred loans | $0 | ||
Lending [Member] | HECM [Member] | |||
Servicing Assets at Fair Value [Line Items] | |||
Loans pledged as collateral | 1,800,000,000 | 1,600,000,000 | |
HMBS - Related Borrowings [Member] | |||
Servicing Assets at Fair Value [Line Items] | |||
Secured borrowings | 1,700,000,000 | 1,400,000,000 | |
Mortgage Servicing Rights - Amortized Costs [Member] | |||
Servicing Assets at Fair Value [Line Items] | |||
Acquisitions | $8,500,000 | $11,600,000 |
Securitizations_and_Variable_I3
Securitizations and Variable Interest Entities - Schedule of Cash Flows Related to Transfers Accounted for as Sales (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Transfers and Servicing [Abstract] | ||
Proceeds received from securitizations | $1,070,772 | $1,534,251 |
Servicing fees collected | 347 | 5,194 |
Purchases of previously transferred assets, net of claims reimbursed | 500 | 0 |
Cash flows received from and paid to securitization trusts | $1,071,619 | $1,539,445 |
Securitizations_and_Variable_I4
Securitizations and Variable Interest Entities - Schedule of Assets That Relate to Continuing Involvement with Transferred Financial Assets with Servicing Rights and Maximum Exposure to Loss Including the Unpaid Principal Balance (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Transfers and Servicing [Abstract] | ||||
Mortgage servicing rights, at amortized cost | $85,215 | $82,542 | ||
Mortgage servicing rights, at fair value | 2,656 | 2,840 | ||
Advances and match funded advances | 481 | 1,236 | ||
UPB of loans transferred | 10,345,586 | [1] | 9,353,187 | [1] |
Maximum exposure to loss | $10,433,938 | $9,439,805 | ||
[1] | The UPB of the loans transferred is the maximum exposure to loss under our standard representations and warranties obligations. |
Fair_Value_Schedule_of_Fair_Va
Fair Value - Schedule of Fair Value Assets and Liabilities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||||
Loans held for sale: | ||||||
Loans held for sale, at fair value | $339,508 | $401,120 | $338,228 | $503,753 | ||
Total Loans held for sale | 407,997 | 488,612 | ||||
Financing liabilities: | ||||||
HMBS-related borrowings, at fair value | 2,296,892 | 2,058,693 | ||||
MSRs: | ||||||
Mortgage servicing rights, at fair value | 897,797 | 93,901 | ||||
Total MSRs | 1,820,651 | 1,913,992 | ||||
Carrying Value [Member] | ||||||
Loans held for sale: | ||||||
Total Loans held for sale | 407,997 | 488,612 | ||||
Financing liabilities: | ||||||
Total Financing liabilities | 2,488,607 | 2,258,641 | ||||
Other secured borrowings: | ||||||
Total Other secured borrowings | 1,603,707 | 1,733,691 | ||||
MSRs: | ||||||
Total MSRs | 1,820,651 | 1,913,992 | ||||
Carrying Value [Member] | Level 1 [Member] | Forward Mortgage Backed Securities Trades [Member] | ||||||
Derivative financial instruments assets (liabilities): | ||||||
Forward MBS trades | -5,249 | [1] | -2,854 | [1] | ||
Carrying Value [Member] | Level 2 [Member] | ||||||
Loans held for sale: | ||||||
Loans held for sale, at fair value | 339,508 | [1] | 401,120 | [1] | ||
Other secured borrowings: | ||||||
Senior secured term loan | 1,196,498 | [2] | 1,273,219 | [2] | ||
Senior unsecured notes | 350,000 | [2] | 350,000 | [2] | ||
Carrying Value [Member] | Level 2 [Member] | Interest Rate Lock Commitments [Member] | ||||||
Derivative financial instruments assets (liabilities): | ||||||
Interest Rate Lock Commitments (IRLCs) | 9,516 | [1] | 6,065 | [1] | ||
Carrying Value [Member] | Level 3 [Member] | ||||||
Loans held for sale: | ||||||
Loans held for sale, at lower of cost or fair value | 68,489 | [3] | 87,492 | [3] | ||
Loans held for investment - Reverse mortgages, at fair value | 1,808,141 | [1] | 1,550,141 | [1] | ||
Advances and match funded advances | 3,195,505 | [2] | 3,303,356 | [2] | ||
Receivables, net | 299,836 | [2] | 270,596 | [2] | ||
Mortgage-backed securities, at fair value | 7,701 | [1] | 7,335 | [1] | ||
Financial liabilities: | ||||||
Match funded liabilities | 2,000,676 | [2] | 2,090,247 | [2] | ||
Financing liabilities: | ||||||
HMBS-related borrowings, at fair value | 1,702,397 | [1] | 1,444,252 | [1] | ||
Financing liability - MSRs pledged | 594,495 | [1] | 614,441 | [1] | ||
Other | 191,715 | [2] | 199,948 | [2] | ||
Other secured borrowings: | ||||||
Other | 407,209 | [2] | 460,472 | [2] | ||
MSRs: | ||||||
Mortgage servicing rights, at fair value | 897,797 | [1] | 93,901 | [1] | ||
Mortgage servicing rights, at amortized cost | 922,854 | [2],[4] | 1,820,091 | [2],[4] | ||
Carrying Value [Member] | Level 3 [Member] | Interest Rate Cap [Member] | ||||||
Derivative financial instruments assets (liabilities): | ||||||
Interest rate caps | 203 | [1] | 567 | [1] | ||
Fair Value [Member] | ||||||
Loans held for sale: | ||||||
Total Loans held for sale | 407,997 | 488,612 | ||||
Financing liabilities: | ||||||
Total Financing liabilities | 2,469,502 | 2,248,341 | ||||
Other secured borrowings: | ||||||
Total Other secured borrowings | 1,562,375 | 1,658,699 | ||||
MSRs: | ||||||
Total MSRs | 1,961,931 | 2,331,604 | ||||
Fair Value [Member] | Level 1 [Member] | Forward Mortgage Backed Securities Trades [Member] | ||||||
Derivative financial instruments assets (liabilities): | ||||||
Forward MBS trades | -5,249 | [1] | -2,854 | [1] | ||
Fair Value [Member] | Level 2 [Member] | ||||||
Loans held for sale: | ||||||
Loans held for sale, at fair value | 339,508 | [1] | 401,120 | [1] | ||
Other secured borrowings: | ||||||
Senior secured term loan | 1,155,166 | [2] | 1,198,227 | [2] | ||
Senior unsecured notes | 304,500 | [2] | 321,563 | [2] | ||
Fair Value [Member] | Level 2 [Member] | Interest Rate Lock Commitments [Member] | ||||||
Derivative financial instruments assets (liabilities): | ||||||
Interest Rate Lock Commitments (IRLCs) | 9,516 | [1] | 6,065 | [1] | ||
Fair Value [Member] | Level 3 [Member] | ||||||
Loans held for sale: | ||||||
Loans held for sale, at lower of cost or fair value | 68,489 | [3] | 87,492 | [3] | ||
Loans held for investment - Reverse mortgages, at fair value | 1,808,141 | [1] | 1,550,141 | [1] | ||
Advances and match funded advances | 3,195,505 | [2] | 3,303,356 | [2] | ||
Receivables, net | 299,836 | [2] | 270,596 | [2] | ||
Mortgage-backed securities, at fair value | 7,701 | [1] | 7,335 | [1] | ||
Financial liabilities: | ||||||
Match funded liabilities | 2,000,676 | [2] | 2,090,247 | [2] | ||
Financing liabilities: | ||||||
HMBS-related borrowings, at fair value | 1,702,397 | [1] | 1,444,252 | [1] | ||
Financing liability - MSRs pledged | 594,495 | [1] | 614,441 | [1] | ||
Other | 172,610 | [2] | 189,648 | [2] | ||
Other secured borrowings: | ||||||
Other | 407,209 | [2] | 460,472 | [2] | ||
MSRs: | ||||||
Mortgage servicing rights, at fair value | 897,797 | [1] | 93,901 | [1] | ||
Mortgage servicing rights, at amortized cost | 1,064,134 | [2],[4] | 2,237,703 | [2],[4] | ||
Fair Value [Member] | Level 3 [Member] | Interest Rate Cap [Member] | ||||||
Derivative financial instruments assets (liabilities): | ||||||
Interest rate caps | $203 | [1] | $567 | [1] | ||
[1] | Measured at fair value on a recurring basis. | |||||
[2] | Disclosed, but not carried, at fair value. | |||||
[3] | Measured at fair value on a non-recurring basis. | |||||
[4] | The balance at March 31, 2015 includes our impaired government-insured stratum of amortization method MSRs, which is measured at fair value on a non-recurring basis. The carrying value of this stratum at March 31, 2015 was $127.1 million, net of a valuation allowance of $17.8 million. |
Fair_Value_Schedule_of_Fair_Va1
Fair Value - Schedule of Fair Value Assets and Liabilities (Footnote) (Details) (Carrying Value [Member], Impaired Government Insured Stratum [Member], USD $) | Mar. 31, 2015 |
In Millions, unless otherwise specified | |
Carrying Value [Member] | Impaired Government Insured Stratum [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
MSRs, at amortized cost | $127.10 |
Valuation allowance | $17.80 |
Fair_Value_Schedule_of_Reconci
Fair Value - Schedule of Reconciliation of Level 3 Assets (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | |
Purchases, issuances, sales and settlements: | |||
Transfer from loans held for sale, at fair value | $0 | ||
Level 3 [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | -406,749 | -514,891 | |
Purchases, issuances, sales and settlements: | |||
Purchases | 0 | 7,677 | |
Issuances | -4,513 | -49,944 | |
Transfer from MSRs, at amortized cost | 839,157 | ||
Transfer from loans held for sale, at fair value | 0 | 110,874 | |
Sales | -917 | 0 | |
Settlements | 19,698 | [1] | -9,238 |
Purchases, issuances, sales and settlements, total | 853,425 | 59,369 | |
Total realized and unrealized gains and (losses): | |||
Included in earnings | -29,726 | [2] | -7,204 |
Included in Other comprehensive income | 0 | [2] | 0 |
Total realized and unrealized gains and (losses) | -29,726 | [2] | -7,204 |
Transfers in and / or out of Level 3 | 0 | 0 | |
Ending balance | 416,950 | -462,726 | |
Level 3 [Member] | Loans Held for Investment - Reverse Mortgages [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | 1,550,141 | 618,018 | |
Purchases, issuances, sales and settlements: | |||
Purchases | 0 | 0 | |
Issuances | 235,271 | 176,658 | |
Transfer from MSRs, at amortized cost | 0 | ||
Transfer from loans held for sale, at fair value | 0 | 110,874 | |
Sales | 0 | 0 | |
Settlements | -26,233 | [1] | -14,029 |
Purchases, issuances, sales and settlements, total | 209,038 | 273,503 | |
Total realized and unrealized gains and (losses): | |||
Included in earnings | 48,962 | [2] | 31,943 |
Included in Other comprehensive income | 0 | [2] | 0 |
Total realized and unrealized gains and (losses) | 48,962 | [2] | 31,943 |
Transfers in and / or out of Level 3 | 0 | 0 | |
Ending balance | 1,808,141 | 923,464 | |
Level 3 [Member] | HMBS - Related Borrowings [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | -1,444,252 | -615,576 | |
Purchases, issuances, sales and settlements: | |||
Purchases | 0 | 0 | |
Issuances | -238,615 | -226,626 | |
Transfer from MSRs, at amortized cost | 0 | ||
Transfer from loans held for sale, at fair value | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 25,985 | [1] | 5,386 |
Purchases, issuances, sales and settlements, total | -212,630 | -221,240 | |
Total realized and unrealized gains and (losses): | |||
Included in earnings | -45,515 | [2] | -33,646 |
Included in Other comprehensive income | 0 | [2] | 0 |
Total realized and unrealized gains and (losses) | -45,515 | [2] | -33,646 |
Transfers in and / or out of Level 3 | 0 | 0 | |
Ending balance | -1,702,397 | -870,462 | |
Level 3 [Member] | Mortgage-Backed Securities [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | 7,335 | 0 | |
Purchases, issuances, sales and settlements: | |||
Purchases | 0 | 7,677 | |
Issuances | 0 | 0 | |
Transfer from MSRs, at amortized cost | 0 | ||
Transfer from loans held for sale, at fair value | 0 | 0 | |
Sales | 0 | 0 | |
Settlements | 0 | [1] | 0 |
Purchases, issuances, sales and settlements, total | 0 | 7,677 | |
Total realized and unrealized gains and (losses): | |||
Included in earnings | 366 | [2] | -156 |
Included in Other comprehensive income | 0 | [2] | 0 |
Total realized and unrealized gains and (losses) | 366 | [2] | -156 |
Transfers in and / or out of Level 3 | 0 | 0 | |
Ending balance | 7,701 | 7,521 | |
Level 3 [Member] | Financing Liability - MSRs Pledged [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | -614,441 | -633,804 | |
Purchases, issuances, sales and settlements: | |||
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Transfer from MSRs, at amortized cost | 0 | ||
Transfer from loans held for sale, at fair value | 0 | ||
Sales | 0 | 0 | |
Settlements | 19,946 | [1] | -595 |
Purchases, issuances, sales and settlements, total | 19,946 | -595 | |
Total realized and unrealized gains and (losses): | |||
Included in earnings | 0 | [2] | 0 |
Included in Other comprehensive income | 0 | [2] | 0 |
Total realized and unrealized gains and (losses) | 0 | [2] | 0 |
Transfers in and / or out of Level 3 | 0 | 0 | |
Ending balance | -594,495 | -634,399 | |
Level 3 [Member] | Derivatives [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | 567 | 442 | |
Purchases, issuances, sales and settlements: | |||
Purchases | 0 | 0 | |
Issuances | 0 | 24 | |
Transfer from MSRs, at amortized cost | 0 | ||
Transfer from loans held for sale, at fair value | 0 | 0 | |
Sales | 0 | ||
Settlements | 0 | [1] | 0 |
Purchases, issuances, sales and settlements, total | 0 | 24 | |
Total realized and unrealized gains and (losses): | |||
Included in earnings | -364 | [2] | -142 |
Included in Other comprehensive income | 0 | [2] | 0 |
Total realized and unrealized gains and (losses) | -364 | [2] | -142 |
Transfers in and / or out of Level 3 | 0 | 0 | |
Ending balance | 203 | 324 | |
Level 3 [Member] | MSRs [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | 93,901 | 116,029 | |
Purchases, issuances, sales and settlements: | |||
Purchases | 0 | 0 | |
Issuances | -1,169 | 0 | |
Transfer from MSRs, at amortized cost | 839,157 | ||
Transfer from loans held for sale, at fair value | 0 | 0 | |
Sales | -917 | 0 | |
Settlements | 0 | [1] | 0 |
Purchases, issuances, sales and settlements, total | 837,071 | 0 | |
Total realized and unrealized gains and (losses): | |||
Included in earnings | -33,175 | [2] | -5,203 |
Included in Other comprehensive income | 0 | [2] | 0 |
Total realized and unrealized gains and (losses) | -33,175 | [2] | -5,203 |
Transfers in and / or out of Level 3 | 0 | ||
Ending balance | $897,797 | $110,826 | |
[1] | In the event of a transfer of servicing to another party related to Rights to MSRs sold to HLSS, and now NRZ, we are required to reimburse HLSS, and now NRZ, at predetermined contractual rates for the loss of servicing revenues. Settlements for Financing liability - MSRs pledged for the three months ended March 31, 2015 includes $2.2 million of such reimbursements. | ||
[2] | Total losses attributable to derivative financial instruments still held at March 31, 2015 were $0.4 million for the three months ended March 31, 2015. |
Fair_Value_Schedule_of_Reconci1
Fair Value - Schedule of Reconciliation of Level 3 Assets (Footnote) (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Gains (losses) attributable to derivatives | $0.40 |
NRZ [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Servicing revenue, reimbursement payable | $2.20 |
Fair_Value_Narrative_Details
Fair Value - Narrative (Details) | 3 Months Ended |
Mar. 31, 2015 | |
HMBS - Related Borrowings [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Life | 5 years 7 months 9 days |
Repayment rate | 19.25% |
Discount rate | 2.05% |
Minimum [Member] | HMBS - Related Borrowings [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Life | 4 years 10 months 26 days |
Repayment rate | 4.81% |
Maximum [Member] | HMBS - Related Borrowings [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Life | 10 years 5 months 22 days |
Repayment rate | 53.75% |
Loans Held for Investment - Reverse Mortgages [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Life | 6 years 11 months 16 days |
Repayment rate | 19.25% |
Discount rate | 2.80% |
Loans Held for Investment - Reverse Mortgages [Member] | Minimum [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Life | 6 years 5 months 18 days |
Repayment rate | 4.81% |
Loans Held for Investment - Reverse Mortgages [Member] | Maximum [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Life | 10 years 5 months 22 days |
Repayment rate | 53.75% |
Fair_Value_Schedule_of_Signifi
Fair Value - Schedule of Significant Assumptions used in Valuation (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Mortgage Servicing Rights - Amortized Costs [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Weighted average prepayment speed | 12.57% |
Weighted average delinquency rate | 10.81% |
Advance financing cost | 5 years |
Interest rate for computing float earnings | 5 years |
Weighted average discount rate | 9.38% |
Weighted average cost to service (in dollars) | 86 |
Fair Value Agency Mortgage Servicing Rights [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Weighted average prepayment speed | 10.47% |
Weighted average delinquency rate | 0.86% |
Advance financing cost | 5 years |
Interest rate for computing float earnings | 5 years |
Weighted average discount rate | 9.01% |
Weighted average cost to service (in dollars) | 69 |
Fair Value Non-Agency Mortgage Servicing Rights [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Weighted average prepayment speed | 17.28% |
Weighted average delinquency rate | 30.02% |
Weighted average discount rate | 14.95% |
Weighted average cost to service (in dollars) | 339 |
Mortgage Servicing Rights Pledged [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Weighted average prepayment speed | 17.83% |
Weighted average delinquency rate | 31.00% |
Weighted average discount rate | 15.22% |
Weighted average cost to service (in dollars) | 345 |
London Interbank Offered Rate (LIBOR) [Member] | Fair Value Non-Agency Mortgage Servicing Rights [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Fair value input, interest rate | 3.50% |
London Interbank Offered Rate (LIBOR) [Member] | Mortgage Servicing Rights Pledged [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Fair value input, interest rate | 3.50% |
Sales_of_Advances_and_MSRs_Nar
Sales of Advances and MSRs - Narrative (Details) (HLSS [Member], USD $) | Mar. 31, 2015 |
In Billions, unless otherwise specified | |
HLSS [Member] | |
Related Party Transaction [Line Items] | |
Outstanding servicing advances | $5.80 |
Loans_Held_for_Sale_Schedule_o
Loans Held for Sale - Schedule of Loans Held for Sale Fair Value (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Movement In Loans Held For Sale At Fair Value [Roll Forward] | ||
Beginning balance | $401,120 | $503,753 |
Originations and purchases | 922,254 | 1,416,797 |
Proceeds from sales | -990,634 | -1,481,403 |
Transfers to loans held for investment - reverse mortgages | 0 | -110,874 |
Gain on sale of loans | 15,265 | 12,863 |
Other | -8,497 | -2,908 |
Ending balance | $339,508 | $338,228 |
Loans_Held_for_Sale_Narrative_
Loans Held for Sale - Narrative (Details) (USD $) | 3 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 03, 2014 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Gain on loans held for sale, net | $8.50 | $11.60 | |
Unrelated Party [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Unpaid principal balance | 42.7 | ||
Gain on loans held for sale, net | 12.9 | ||
HLSS [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Proceeds from sale of loans held-for-sale | 612.3 | 612.3 | |
Gain on loans held for sale, net | 7.2 | ||
Ginnie Mae [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Gain on loans held for sale, net | 4.3 | 22.8 | |
Gain on sales of reverse mortgage loans | 25.6 | 16.1 | |
Delinquent FHA Insured Loans [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Unpaid principal balance | 549.4 | ||
FHA Buyout Loans [Member] | HLSS [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Proceeds from sale of loans held-for-sale | 556.6 | ||
Servicing Advances [Member] | HLSS [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Proceeds from sale of loans held-for-sale | 55.7 | ||
Line of Credit [Member] | Lending [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Collateral | 311 | ||
Line of Credit [Member] | Servicing [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Collateral | $33.10 |
Loans_Held_for_Sale_Schedule_o1
Loans Held for Sale - Schedule of Loans Held for Sale at Lower Cost or Fair Value, Activity (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Movement In Loans Held For Sale At Fair Value [Roll Forward] | ||||
Beginning balance | $87,492 | $62,907 | ||
Purchases | 113,896 | 959,756 | ||
Proceeds from sales | -140,948 | -835,786 | ||
Principal collections | -13,863 | -96,300 | ||
Transfers to accounts receivable | -16,572 | -66,187 | ||
Transfers to real estate owned | -2,296 | -648 | ||
Gain on sale of loans | 17,271 | 23,031 | ||
Decrease (increase) in valuation allowance | 19,728 | -4,163 | ||
Other | 3,781 | 2,865 | ||
Ending balance | $68,489 | [1],[2] | $45,475 | [1],[2] |
[1] | The balances at March 31, 2015 and March 31, 2014 include $43.9 million and $6.1 million, respectively, of loans that we were required to repurchase from Ginnie Mae guaranteed securitizations as part of our servicing obligations. Repurchased loans are modified or otherwise remediated through loss mitigation activities or are reclassified to receivables. | |||
[2] | The balances at March 31, 2015 and March 31, 2014 are net of valuation allowances of $29.9 million and $36.0 million, respectively. The decrease in the valuation allowance for the three months ended March 31, 2015 resulted principally from the reversal of $22.5 million of the allowance that was associated with loans that were sold to an unrelated third party in March 2015. This decrease was partly offset by an increase of $0.9 million in the allowance resulting from transfers from the liability for indemnification obligations for the initial valuation adjustment that we recognized on certain loans that we repurchased from Fannie Mae and Freddie Mac guaranteed securitizations. For the three months ended March 31, 2014 the increase in the allowance was principally the result of $5.4 million of such transfers from the liability for indemnification obligations. |
Loans_Held_for_Sale_Schedule_o2
Loans Held for Sale - Schedule of Loans Held for Sale at Lower Cost or Fair Value Activity (Footnote) (Details) (USD $) | 3 Months Ended | |||||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans held for sale, at lower of cost or fair value | $68,489,000 | [1],[2] | $45,475,000 | [1],[2] | $87,492,000 | $62,907,000 |
Ginnie Mae [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans held for sale, at lower of cost or fair value | 43,900,000 | 6,100,000 | ||||
Valuation Allowance for Loans Held for Sale [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Valuation allowance | 29,900,000 | 36,000,000 | ||||
Reversal of valuation allowances | 22,500,000 | |||||
Indemnification Liability Obligations [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Change in valuation allowance, adjustments | $900,000 | $5,400,000 | ||||
[1] | The balances at March 31, 2015 and March 31, 2014 include $43.9 million and $6.1 million, respectively, of loans that we were required to repurchase from Ginnie Mae guaranteed securitizations as part of our servicing obligations. Repurchased loans are modified or otherwise remediated through loss mitigation activities or are reclassified to receivables. | |||||
[2] | The balances at March 31, 2015 and March 31, 2014 are net of valuation allowances of $29.9 million and $36.0 million, respectively. The decrease in the valuation allowance for the three months ended March 31, 2015 resulted principally from the reversal of $22.5 million of the allowance that was associated with loans that were sold to an unrelated third party in March 2015. This decrease was partly offset by an increase of $0.9 million in the allowance resulting from transfers from the liability for indemnification obligations for the initial valuation adjustment that we recognized on certain loans that we repurchased from Fannie Mae and Freddie Mac guaranteed securitizations. For the three months ended March 31, 2014 the increase in the allowance was principally the result of $5.4 million of such transfers from the liability for indemnification obligations. |
Loans_Held_for_Sale_Schedule_o3
Loans Held for Sale - Schedule of Gains on Loans Held for Sale, Net (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Receivables [Abstract] | ||
Gain on sales of loans | $51,400 | $54,993 |
Change in fair value of IRLCs | -2,233 | 986 |
Change in fair value of loans held for sale | -4,008 | 1,800 |
Loss on economic hedge instruments | -427 | -13,610 |
Other | -228 | -182 |
Gain on loans held for sale, net | $44,504 | $43,987 |
Advances_Schedule_of_Advances_
Advances - Schedule of Advances Paid on Behalf of Borrowers or on Foreclosed Properties (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||||
Servicing: | ||||||
Advances | $942,538 | $893,914 | $937,926 | $890,832 | ||
Servicing, Principal and Interest [Member] | ||||||
Servicing: | ||||||
Advances | 137,929 | 128,217 | ||||
Servicing, Taxes and Insurance [Member] | ||||||
Servicing: | ||||||
Advances | 467,716 | 467,891 | ||||
Servicing, Foreclosures, Bankruptcy and Other [Member] | ||||||
Servicing: | ||||||
Advances | 332,829 | [1] | 293,340 | [1] | ||
Servicing [Member] | ||||||
Servicing: | ||||||
Advances | 938,474 | 889,448 | ||||
Corporate Items and Other [Member] | ||||||
Servicing: | ||||||
Advances | $4,064 | $4,466 | ||||
[1] | The balances at March 31, 2015 and December 31, 2014 are net of an allowance for losses of $71.9 million and $70.0 million, respectively. |
Advances_Schedule_of_Advances_1
Advances - Schedule of Advances Paid on Behalf of Borrowers or on Foreclosed Properties (Footnote) (Details) (Servicing, Foreclosures, Bankruptcy and Other [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Servicing, Foreclosures, Bankruptcy and Other [Member] | ||
Advances On Behalf of Borrowers [Line Items] | ||
Allowance for losses on advances | $71.90 | $70 |
Advances_Schedule_of_Activity_
Advances - Schedule of Activity in Advances (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Advances [Roll Forward] | ||
Beginning balance | $893,914 | $890,832 |
Acquisitions | 0 | 98,875 |
Transfers to match funded advances | 0 | -10,156 |
Sales of advances | -1,765 | 0 |
New advances (collections of advances), net and other | 50,389 | -41,625 |
Ending balance | $942,538 | $937,926 |
Match_Funded_Advances_Schedule
Match Funded Advances - Schedule of Match Funded Advances on Residential Loans (Details) (Residential Mortgage [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||||
Residential Mortgage [Member] | ||||
Match Funded Advances [Line Items] | ||||
Principal and interest | $1,249,364 | $1,349,048 | ||
Taxes and insurance | 807,267 | 847,064 | ||
Foreclosures, bankruptcy, real estate and other | 196,336 | 213,330 | ||
Match funded advances | $2,252,967 | $2,409,442 | $2,655,854 | $2,552,383 |
Match_Funded_Advances_Schedule1
Match Funded Advances - Schedule of Activity in Match Funded Advances (Details) (Residential Mortgage [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Residential Mortgage [Member] | ||
Match Funded Advances [Roll Forward] | ||
Beginning balance | $2,409,442 | $2,552,383 |
Acquisitions | 0 | 85,521 |
Transfers from advances | 0 | 10,156 |
New advances (collections of pledged advances), net and other | -156,475 | 7,794 |
Ending balance | $2,252,967 | $2,655,854 |
Mortgage_Servicing_Schedule_of
Mortgage Servicing - Schedule of Activity Related to MSRs - Amortization Method (Details) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | ||
Servicing Asset at Amortized Cost, Balance [Roll Forward] | |||||
Estimated fair value at end of period | $897,797 | $93,901 | |||
Total [Member] | |||||
Servicing Asset at Amortized Cost, Balance [Roll Forward] | |||||
Beginning balance | 1,820,091 | 1,953,352 | |||
Fair value election - transfer to MSRs carried at fair value | -787,142 | [1] | 0 | [1] | |
Additions recognized in connection with business acquisitions | 0 | 20,324 | |||
Additions recognized in connection with asset acquisitions | 3,267 | 6,697 | |||
Additions recognized on the sale of mortgage loans | 8,528 | 11,614 | |||
Sales | -65,627 | [2] | 0 | [2] | |
Servicing transfers and adjustments | 0 | -364 | |||
Servicing asset at amortized value, gross | 979,117 | 1,991,623 | |||
Amortization | -38,494 | -62,094 | |||
Impairment | -17,769 | [3] | 0 | [3] | |
Ending balance | 922,854 | 1,929,529 | |||
Estimated fair value at end of period | $1,064,134 | $2,774,910 | |||
[1] | Effective January 1, 2015, we elected fair value accounting for a newly-created class of non-Agency MSRs, which were previously accounted for using the amortization method. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with this class. We recorded a cumulative-effect adjustment of $52.0 million (before deferred income taxes of $9.2 million) to retained earnings as of January 1, 2015 to reflect the excess of the fair value of these MSRs over their carrying amount. At December 31, 2014, the UPB of the non-Agency MSRs for which the fair value election was made was $195.3 billion. | ||||
[2] | On March 31, 2015, we closed on the sale of Agency MSRs on a portfolio consisting of 76,000 performing loans owned by Freddie Mac with a total UPB of $9.1 billion. We completed the transfer of the loan servicing on April 16, 2015. | ||||
[3] | We established a $17.8 million valuation allowance related to impairment on our government-insured MSRs, as the fair value for this stratum was less than its carrying value. This impairment was primarily due to the FHA reducing the mortgage insurance premium rate by 50 basis points during the quarter, which created a significantly lower interest rate for existing FHA borrowers and in turn, generated higher projected prepayment speed and shorter asset life inputs used to value these MSRs. The impairment charge is recognized in Servicing and origination expense in the unaudited Consolidated Statements of Operations. |
Mortgage_Servicing_Schedule_of1
Mortgage Servicing - Schedule of Activity Related to MSRs - Amortization Method (Footnote) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Servicing Asset at Amortized Cost [Line Items] | ||
Decreased percentage in mortgage insurance premium rate | 0.50% | |
Non Agency Mortgage Servicing Rights [Member] | ||
Servicing Asset at Amortized Cost [Line Items] | ||
Fair value measurement of non-agency MSRs, cumulative-effect on retained earnings | $52,000,000 | |
Deferred income taxes | 9,200,000 | |
Unpaid principal balance of MSRs | 195,300,000,000 | |
Agency Mortgage Servicing Rights [Member] | ||
Servicing Asset at Amortized Cost [Line Items] | ||
Number of performing agency loans held for sale | 76,000 | |
Unpaid principal balance of loans held for sale | 9,100,000,000 | |
Government Insured Mortgage Servicing Rights [Member] | ||
Servicing Asset at Amortized Cost [Line Items] | ||
Valuation allowance | $17,800,000 |
Mortgage_Servicing_Schedule_of2
Mortgage Servicing - Schedule of Activity Related to MSRs - Fair Value Measurement Method (Details) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | ||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||||
Beginning balance | $93,901 | ||||
Changes in fair value | |||||
Ending balance | 897,797 | 93,901 | |||
Conventional [Member] | |||||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||||
Beginning balance | 93,901 | 116,029 | |||
Fair value election - transfer from MSRs carried at amortized cost | 787,142 | 0 | |||
Cumulative effect of fair value election | 52,015 | ||||
Sales | -947 | 0 | |||
Servicing transfers and adjustments | -1,139 | 0 | |||
Changes in fair value | |||||
Changes in valuation inputs or other assumptions | -6,110 | [1] | -3,155 | [1] | |
Realization of expected future cash flows and other changes | -27,065 | [1] | -2,048 | [1] | |
Ending balance | 897,797 | 110,826 | |||
Fair Value Agency Mortgage Servicing Rights [Member] | Conventional [Member] | |||||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||||
Beginning balance | 93,901 | ||||
Fair value election - transfer from MSRs carried at amortized cost | 0 | ||||
Cumulative effect of fair value election | 0 | ||||
Sales | 0 | ||||
Servicing transfers and adjustments | 0 | ||||
Changes in fair value | |||||
Changes in valuation inputs or other assumptions | -6,110 | [1] | |||
Realization of expected future cash flows and other changes | -3,276 | [1] | |||
Ending balance | 84,515 | ||||
Fair Value Non-Agency Mortgage Servicing Rights [Member] | Conventional [Member] | |||||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||||
Beginning balance | 0 | ||||
Fair value election - transfer from MSRs carried at amortized cost | 787,142 | ||||
Cumulative effect of fair value election | 52,015 | ||||
Sales | -947 | ||||
Servicing transfers and adjustments | -1,139 | ||||
Changes in fair value | |||||
Changes in valuation inputs or other assumptions | 0 | [1] | |||
Realization of expected future cash flows and other changes | -23,789 | [1] | |||
Ending balance | $813,282 | ||||
[1] | Changes in fair value are recognized in Servicing and origination expense in the unaudited Consolidated Statements of Operations. |
Mortgage_Servicing_Schedule_of3
Mortgage Servicing - Schedule of Estimated Change in Fair Value of MSRs (Details) (USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Transfers and Servicing [Abstract] | |
Weighted average prepayment speeds, 10% | ($40,557) |
Weighted average prepayment speeds, 20% | -101,371 |
Discount rate (Option-adjusted spread), 10% | -22,770 |
Discount rate (Option-adjusted spread), 20% | ($44,842) |
Mortgage_Servicing_Schedule_of4
Mortgage Servicing - Schedule of Composition of Servicing and Subservicing Portfolios by Type of Property Serviced (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |||
In Thousands, unless otherwise specified | ||||||
Residential Mortgage [Member] | ||||||
Schedule of Servicing and Subservicing Portfolio [Line Items] | ||||||
Servicing | $337,125,187 | [1] | $361,288,281 | [1] | $391,701,237 | [1] |
Subservicing | 45,088,815 | 37,439,446 | 57,869,359 | |||
Assets serviced | 382,214,002 | 398,727,727 | 449,570,596 | |||
Commercial [Member] | ||||||
Schedule of Servicing and Subservicing Portfolio [Line Items] | ||||||
Servicing | 0 | [1] | 0 | [1] | 0 | [1] |
Subservicing | 161,887 | 149,737 | 318,507 | |||
Assets serviced | 161,887 | 149,737 | 318,507 | |||
Total [Member] | ||||||
Schedule of Servicing and Subservicing Portfolio [Line Items] | ||||||
Servicing | 337,125,187 | [1] | 361,288,281 | [1] | 391,701,237 | [1] |
Subservicing | 45,250,702 | 37,589,183 | 58,187,866 | |||
Assets serviced | $382,375,889 | $398,877,464 | $449,889,103 | |||
[1] | Includes primary servicing UPB of $156.3 billion, $160.8 billion and $170.8 billion at March 31, 2015, December 31, 2014 and March 31, 2014, respectively, for which the Rights to MSRs have been sold to HLSS. |
Mortgage_Servicing_Schedule_of5
Mortgage Servicing - Schedule of Composition of Servicing and Subservicing Portfolios by Type of Property Serviced (Footnote) (Details) (HLSS [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
In Billions, unless otherwise specified | |||
HLSS [Member] | |||
Schedule of Servicing and Subservicing Portfolio [Line Items] | |||
Primary servicing UPB | $156.30 | $160.80 | $170.80 |
Mortgage_Servicing_Narrative_D
Mortgage Servicing - Narrative (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |
Servicing Asset at Amortized Cost [Line Items] | |||
Unpaid principal balance of small balance commercial loans serviced | $2,100,000,000 | $2,300,000,000 | $2,500,000,000 |
Float balances | 4,000,000,000 | 3,500,000,000 | |
HLSS [Member] | |||
Servicing Asset at Amortized Cost [Line Items] | |||
Reimbursements on account of loss of servicing revenues | $2,200,000 |
Mortgage_Servicing_Schedule_of6
Mortgage Servicing - Schedule of Components of Servicing and Subservicing Fees (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Transfers and Servicing [Abstract] | ||
Servicing | $320,085 | $351,823 |
Subservicing | 30,457 | 33,725 |
Servicing and Subservicing fees, total | 350,542 | 385,548 |
Home Affordable Modification Program (HAMP) fees | 35,176 | 36,699 |
Late charges | 24,122 | 36,835 |
Loan collection fees | 9,563 | 8,294 |
Custodial accounts (float earnings) | 1,896 | 1,721 |
Other | 25,242 | 21,362 |
Fees, total | $446,541 | $490,459 |
Receivables_Schedule_of_Receiv
Receivables - Schedule of Receivables (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Receivables [Abstract] | ||||
Government-insured loan claims | $64,637 | [1] | $52,955 | [1] |
Due from custodial accounts | 45,355 | 11,627 | ||
Reimbursable expenses | 29,160 | 32,387 | ||
Other servicing receivables | 93,138 | 29,516 | ||
Servicing receivable, total | 232,290 | 126,485 | ||
Income taxes receivable | 63,948 | 68,322 | ||
Due from related parties | 15,846 | 58,892 | ||
Other receivables | 14,758 | [2] | 43,690 | [2] |
Other receivables, gross | 326,842 | 297,389 | ||
Allowance for losses | -27,006 | [1] | -26,793 | [1] |
Receivables, total | $299,836 | $270,596 | ||
[1] | The total allowance for losses at March 31, 2015 and December 31, 2014 includes $27.0 million and $26.8 million, respectively, related to receivables of our Servicing business. Allowance for losses related to defaulted FHA or VA insured loans repurchased from Ginnie Mae guaranteed securitizations (government-insured loan claims) at March 31, 2015 and December 31, 2014 were $11.8 million and $10.0 million, respectively. | |||
[2] | The balance at December 31, 2014 includes $28.8 million related to losses to be indemnified under the terms of the Homeward merger agreement. On March 19, 2015, we reached an agreement with the former owner of Homeward for the final settlement of all indemnification claims under the merger agreement and received $38.1 million in cash. |
Receivables_Schedule_of_Receiv1
Receivables - Schedule of Receivables (Footnote) (Detail) (USD $) | 0 Months Ended | ||||
In Millions, unless otherwise specified | Mar. 19, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Servicing receivables, allowance for losses | ($27) | [1] | ($26.80) | [1] | |
Allowance for losses related to FHA or VA insured loans | 11.8 | 10 | |||
Other receivables, probable losses | 28.8 | ||||
Homeward Acquisition [Member] | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Indemnification claims received in cash | $38.10 | ||||
[1] | The total allowance for losses at March 31, 2015 and December 31, 2014 includes $27.0 million and $26.8 million, respectively, related to receivables of our Servicing business. Allowance for losses related to defaulted FHA or VA insured loans repurchased from Ginnie Mae guaranteed securitizations (government-insured loan claims) at March 31, 2015 and December 31, 2014 were $11.8 million and $10.0 million, respectively. |
Other_Assets_Schedule_of_Other
Other Assets - Schedule of Other Assets (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | ||
In Thousands, unless otherwise specified | ||||
Other Assets [Abstract] | ||||
Contingent loan repurchase asset | $283,900 | [1] | $274,265 | [1] |
Debt service accounts | 86,437 | [2] | 91,974 | [2] |
Prepaid lender fees and debt issuance costs, net | 41,025 | 31,337 | ||
Real estate | 23,145 | 16,720 | ||
Prepaid expenses | 15,782 | 17,957 | ||
Prepaid income taxes | 15,274 | 16,450 | ||
Derivatives, at fair value | 9,545 | 6,065 | ||
Mortgage backed securities | 7,701 | 7,335 | ||
Other | 17,850 | 28,708 | ||
Other assets | $500,659 | $490,811 | ||
[1] | In connection with the Ginnie Mae EBO Transactions, our agreements provide either that: (a) we have the right, but not the obligation, to repurchase previously transferred mortgage loans under certain conditions, including the mortgage loans becoming eligible for pooling under a program sponsored by Ginnie Mae or (b) we have the obligation to repurchase previously transferred mortgage loans that have been subject to a successful trial modification before any permanent modification is made. Once these conditions are met, we have effectively regained control over the mortgage loan(s), and under GAAP, must re-recognize the loan on our consolidated balance sheets and establish a corresponding repurchase liability. With respect to those loans that we have the right, but not the obligation, to repurchase under the applicable agreement, this requirement applies regardless of whether we have any intention to repurchase the loan. We re-recognized mortgage loans in Other assets and the corresponding liability in Other liabilities. | |||
[2] | Under our advance funding financing facilities, we are contractually required to remit collections on pledged advances to the trustee within two days of receipt. The collected funds are not applied to reduce the related match funded debt until the payment dates specified in the indenture. The balances also include amounts that have been set aside from the proceeds of our match funded advance facilities and certain of our warehouse facilities to provide for possible shortfalls in the funds available to pay certain expenses and interest. The funds related to match funded facilities are held in interest earning accounts in the name of the SPE created in connection with the facility. |
Other_Assets_Schedule_of_Other1
Other Assets - Schedule of Other Assets (Footnote) (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Other Assets [Abstract] | |
Period required to remit collections on pledged advances | 2 days |
Borrowings_Schedule_of_Match_F
Borrowings - Schedule of Match Funded Liabilities (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | ||
Debt Instrument [Line Items] | ||||
Match funded liabilities | $2,000,676 | $2,090,247 | ||
Weighted average interest rate | 1.99% | 1.97% | ||
Advance Receivable Backed Notes Series 2012-ADV1 [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 51,658 | [1],[2] | ||
Match funded liabilities | 348,342 | [2] | 373,080 | [2] |
Maturity date | 30-Jun-17 | [2],[3] | ||
Amortization date | Jun. 2015 | [2],[3] | ||
Advance Receivable Backed Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 0 | [1],[4] | ||
Match funded liabilities | 0 | [4] | 494 | [4] |
Maturity date | 31-Dec-15 | [3],[4] | ||
Amortization date | Dec. 2014 | [3],[4] | ||
Advance Receivables Backed Notes, Series 2013-VF2, Class A [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 68,214 | [1] | ||
Match funded liabilities | 495,786 | 519,634 | ||
Maturity date | 31-Oct-45 | [3] | ||
Amortization date | Oct. 2015 | [3] | ||
Advance Receivables Backed Notes, Series 2013-VF2, Class B [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 4,584 | [1] | ||
Match funded liabilities | 31,416 | 32,919 | ||
Maturity date | 31-Oct-45 | [3] | ||
Amortization date | Oct. 2015 | [3] | ||
Advance Receivables Backed Notes - Series 2014-VF3, Class A [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 72,799 | [1] | ||
Match funded liabilities | 527,201 | 552,553 | ||
Maturity date | 31-Oct-45 | [3] | ||
Amortization date | Oct. 2015 | [3] | ||
Advance Receivables Backed Notes - Series 2014-VF4 [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 72,799 | [1] | ||
Match funded liabilities | 527,201 | 552,553 | ||
Maturity date | 31-Oct-45 | [3] | ||
Amortization date | Oct. 2015 | [3] | ||
Advance Receivables Backed Notes, Series 2014-VF1, Class A [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 54,270 | [1],[5] | ||
Match funded liabilities | 25,673 | [5] | 21,192 | [5] |
Maturity date | 31-Dec-45 | [3],[5] | ||
Amortization date | Dec. 2015 | [3],[5] | ||
Advance Receivables Backed Notes, Series 2014-VF1, Class B [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 0 | [1],[5] | ||
Match funded liabilities | 16,289 | [5] | 13,598 | [5] |
Maturity date | 31-Dec-45 | [3],[5] | ||
Amortization date | Dec. 2015 | [3],[5] | ||
Advance Receivables Backed Notes, Series 2014-VF1, Class C [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 0 | [1],[5] | ||
Match funded liabilities | 12,220 | [5] | 10,224 | [5] |
Maturity date | 31-Dec-45 | [3],[5] | ||
Amortization date | Dec. 2015 | [3],[5] | ||
Advance Receivables Backed Notes, Series 2014-VF1, Class D [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 0 | [1],[5] | ||
Match funded liabilities | 16,548 | [5] | 14,000 | [5] |
Maturity date | 31-Dec-45 | [3],[5] | ||
Amortization date | Dec. 2015 | [3],[5] | ||
Match Funded Liabilties [Member] | ||||
Debt Instrument [Line Items] | ||||
Available borrowing capacity | 324,324 | |||
Match funded liabilities | $2,000,676 | $2,090,247 | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivable Backed Notes Series 2012-ADV1 [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.75% | [2] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivable Backed Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.00% | [4] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes, Series 2013-VF2, Class A [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.67% | [6] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes, Series 2013-VF2, Class B [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.00% | [7] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes - Series 2014-VF3, Class A [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.75% | [8] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes - Series 2014-VF4 [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.75% | [9] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes, Series 2014-VF1, Class A [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.75% | [5] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes, Series 2014-VF1, Class B [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.25% | [5] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes, Series 2014-VF1, Class C [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.75% | [5] | ||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes, Series 2014-VF1, Class D [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 4.70% | [5] | ||
[1] | Borrowing capacity is available to us provided that we have additional eligible collateral to pledge. Collateral may only be pledged to one facility. At March 31, 2015, none of the available borrowing capacity could be used based on the amount of eligible collateral that had been pledged | |||
[2] | 1-Month LIBOR (1ML) was 0.18% and 0.17% at March 31, 2015 and December 31, 2014, respectively. | |||
[3] | The amortization date of our advance financing facilities is the date on which the revolving period ends under each advance financing facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. The maturity date is the date on which all outstanding balances must be repaid. In two advance facilities, there are multiple notes outstanding. For each note, after the amortization date, all collections that represent the repayment of advances pledged to the facility must be applied to reduce the balance of the note outstanding, and any new advances are ineligible to be financed. | |||
[4] | We voluntarily terminated this facility on January 15, 2015. | |||
[5] | Beginning April 23, 2015, the maximum borrowing under this facility will decrease by $6.3 million per month until it is reduced to $75.0 million. | |||
[6] | The interest margin on this note is scheduled to increase to 191 bps on July 15, 2015, to 215 bps on August 15, 2015 and to 239 bps on September 15, 2015. | |||
[7] | The interest margin on this note is scheduled to increase to 343 bps on July 15, 2015, to 386 bps on August 15, 2015 and to 429 bps on September 15, 2015. | |||
[8] | The interest margin on this note is scheduled to increase to 200 bps on July 15, 2015, to 225 bps on August 15, 2015 and to 250 bps on September 15, 2015. | |||
[9] | The interest margin on this note is scheduled to increase to 200 bps on July 15, 2015, to 212 bps on August 15, 2015 and to 250 bps on September 15, 2015. |
Borrowings_Schedule_of_Match_F1
Borrowings - Schedule of Match Funded Liabilities (Footnote) (Details) (USD $) | 3 Months Ended | 0 Months Ended | 1 Months Ended | ||
Mar. 31, 2015 | Apr. 23, 2015 | Apr. 30, 2015 | Dec. 31, 2014 | ||
Facility | |||||
Debt Instrument [Line Items] | |||||
Number of line of advance facilities | 2 | ||||
London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate, basis for effective rate at period end | 0.18% | 0.17% | |||
Advance Receivable Backed Note [Member] | |||||
Debt Instrument [Line Items] | |||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | 0 | [1],[2] | |||
Debt facility termination date | 15-Jan-15 | ||||
Advance Receivable Backed Note [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 3.00% | [1] | |||
Advance Receivables Backed Notes, Series 2013-VF2, Class A [Member] | |||||
Debt Instrument [Line Items] | |||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | 68,214,000 | [2] | |||
Advance Receivables Backed Notes, Series 2013-VF2, Class A [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.67% | [3] | |||
Advance Receivables Backed Notes, Series 2013-VF2, Class B [Member] | |||||
Debt Instrument [Line Items] | |||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | 4,584,000 | [2] | |||
Advance Receivables Backed Notes, Series 2013-VF2, Class B [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 3.00% | [4] | |||
Advance Receivables Backed Notes - Series 2014-VF3, Class A [Member] | |||||
Debt Instrument [Line Items] | |||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | 72,799,000 | [2] | |||
Advance Receivables Backed Notes - Series 2014-VF3, Class A [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.75% | [5] | |||
Advance Receivables Backed Notes - Series 2014-VF4 [Member] | |||||
Debt Instrument [Line Items] | |||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | 72,799,000 | [2] | |||
Advance Receivables Backed Notes - Series 2014-VF4 [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.75% | [6] | |||
Subsequent Event [Member] | |||||
Debt Instrument [Line Items] | |||||
Increase (decrease) to borrowing capacity | 6,300,000 | ||||
Maximum borrowing capacity | 75,000,000 | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes, Series 2013-VF2, Class A [Member] | July 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.91% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes, Series 2013-VF2, Class A [Member] | August 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.15% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes, Series 2013-VF2, Class A [Member] | September 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.39% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes, Series 2013-VF2, Class B [Member] | July 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 3.43% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes, Series 2013-VF2, Class B [Member] | August 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 3.86% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes, Series 2013-VF2, Class B [Member] | September 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 4.29% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes - Series 2014-VF3, Class A [Member] | July 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.00% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes - Series 2014-VF3, Class A [Member] | August 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.25% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes - Series 2014-VF3, Class A [Member] | September 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.50% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes - Series 2014-VF4 [Member] | July 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.00% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes - Series 2014-VF4 [Member] | August 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.12% | ||||
Subsequent Event [Member] | Advance Receivables Backed Notes - Series 2014-VF4 [Member] | September 15, 2015 [Member] | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.50% | ||||
Residential Mortgage [Member] | |||||
Debt Instrument [Line Items] | |||||
Number of line of credit facilities for which collateral may be pledged | 1 | ||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | 0 | ||||
[1] | We voluntarily terminated this facility on January 15, 2015. | ||||
[2] | Borrowing capacity is available to us provided that we have additional eligible collateral to pledge. Collateral may only be pledged to one facility. At March 31, 2015, none of the available borrowing capacity could be used based on the amount of eligible collateral that had been pledged | ||||
[3] | The interest margin on this note is scheduled to increase to 191 bps on July 15, 2015, to 215 bps on August 15, 2015 and to 239 bps on September 15, 2015. | ||||
[4] | The interest margin on this note is scheduled to increase to 343 bps on July 15, 2015, to 386 bps on August 15, 2015 and to 429 bps on September 15, 2015. | ||||
[5] | The interest margin on this note is scheduled to increase to 200 bps on July 15, 2015, to 225 bps on August 15, 2015 and to 250 bps on September 15, 2015. | ||||
[6] | The interest margin on this note is scheduled to increase to 200 bps on July 15, 2015, to 212 bps on August 15, 2015 and to 250 bps on September 15, 2015. |
Borrowings_Schedule_of_Financi
Borrowings - Schedule of Financing Liabilities (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | ||
Debt Instrument [Line Items] | ||||
Financing liabilities | $2,488,607 | $2,258,641 | ||
Financing Liabilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Financing liabilities | 2,488,607 | 2,258,641 | ||
Servicing [Member] | Financing Liabilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Financing liabilities | 786,210 | 814,389 | ||
Servicing [Member] | Financing liability – MSRs pledged [Member] | Financing Liabilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Financing liabilities | 594,495 | [1] | 614,441 | [1] |
Servicing [Member] | Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 [Member] | Financing Liabilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Maturity date | 28-Feb-28 | |||
Financing liabilities | 107,408 | [2] | 111,459 | [2] |
Servicing [Member] | Financing Liability – Advances Pledged [Member] | Financing Liabilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Financing liabilities | 84,307 | [3] | 88,489 | [3] |
Lending [Member] | HMBS - Related Borrowings [Member] | Financing Liabilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.45% | |||
Financing liabilities | $1,702,397 | [4] | $1,444,252 | [4] |
[1] | This financing liability arose in connection with the HLSS Transaction financing liabilities and has no contractual maturity. The balance of the liability is adjusted each reporting period to its fair value based on the present value of the estimated future cash flows underlying the related MSRs. | |||
[2] | OASIS noteholders are entitled to receive a monthly payment amount equal to the sum of: (a) the designated servicing fee amount (21 basis points of the UPB of the reference pool of Freddie Mac mortgages); (b) any termination payment amounts; (c) any excess refinance amounts; and (d) the note redemption amounts, each as defined in the indenture supplement for the notes. The notes have a final stated maturity of February 2028. We accounted for this transaction as a financing. Monthly amortization of the liability is estimated using the proportion of monthly projected service fees on the underlying MSRs as a percentage of lifetime projected fees, adjusted for the term of the security. | |||
[3] | Certain sales of advances in 2014 did not qualify for sales accounting treatment and were accounted for as a financing. | |||
[4] | Represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed HMBS. The beneficial interests have no maturity dates, and the borrowings mature as the related loans are repaid. |
Borrowings_Schedule_of_Financi1
Borrowings - Schedule of Financing Liabilities (Footnote) (Details) (OASIS Series 2014-1 [Member]) | 3 Months Ended |
Mar. 31, 2015 | |
OASIS Series 2014-1 [Member] | |
Debt Instrument [Line Items] | |
Basis spread on UPB | 0.21% |
Borrowings_Schedule_of_Other_S
Borrowings - Schedule of Other Secured Borrowings (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | ||
Line of Credit Facility [Line Items] | ||||
Other secured borrowings | $2,488,607 | $2,258,641 | ||
Other Secured Borrowings [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 35,255 | |||
Discount | -3,675 | [1] | -4,031 | [1] |
Long-term Debt | 1,603,707 | 1,733,691 | ||
Weighted average interest rate | 4.37% | 4.33% | ||
Other Secured Borrowings [Member] | Total Servicing Lines Of Credit [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 35,255 | |||
Other secured borrowings | 1,607,382 | 1,737,722 | ||
Other Secured Borrowings [Member] | Servicing [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 15,747 | |||
Other secured borrowings | 1,234,427 | 1,309,268 | ||
Other Secured Borrowings [Member] | Servicing [Member] | Senior Secured Term Loan [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 0 | [1] | ||
Other secured borrowings | 1,200,174 | [1] | 1,277,250 | [1] |
Maturity date | 28-Feb-18 | [1] | ||
Other Secured Borrowings [Member] | Servicing [Member] | Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 15,747 | [2] | ||
Other secured borrowings | 34,253 | [2] | 32,018 | [2] |
Maturity date | 30-Jun-15 | [2] | ||
Other Secured Borrowings [Member] | Lending [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 19,508 | |||
Other secured borrowings | 372,955 | 428,454 | ||
Other Secured Borrowings [Member] | Lending [Member] | Master Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 0 | [3] | ||
Other secured borrowings | 192,222 | [3] | 208,010 | [3] |
Maturity date | 30-Jun-15 | [3] | ||
Other Secured Borrowings [Member] | Lending [Member] | Participation Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 0 | [4] | ||
Other secured borrowings | 13,548 | [4] | 41,646 | [4] |
Maturity date | 30-Apr-16 | [4] | ||
Other Secured Borrowings [Member] | Lending [Member] | Participation Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 0 | [5] | ||
Other secured borrowings | 38,717 | [5] | 196 | [5] |
Maturity date | 30-Apr-16 | [5] | ||
Other Secured Borrowings [Member] | Lending [Member] | Master Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 19,508 | [6] | ||
Other secured borrowings | 55,492 | [6] | 102,073 | [6] |
Maturity date | 31-Jul-15 | [6] | ||
Other Secured Borrowings [Member] | Lending [Member] | Master Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 0 | [7] | ||
Other secured borrowings | 39,463 | [7] | 52,678 | [7] |
Maturity date | 31-Jul-15 | [7] | ||
Other Secured Borrowings [Member] | Lending [Member] | Mortgage Warehouse Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Available borrowing capacity | 0 | [8] | ||
Other secured borrowings | $33,513 | [8] | $23,851 | [8] |
Maturity date | 31-May-15 | [8] | ||
Interest rate at index floor rate | 3.50% | [8] | ||
Eurodollar [Member] | Other Secured Borrowings [Member] | Servicing [Member] | Senior Secured Term Loan [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 3.75% | [1] | ||
Interest rate at index floor rate | 1.25% | [1] | ||
London Interbank Offered Rate (LIBOR) [Member] | Other Secured Borrowings [Member] | Lending [Member] | Master Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.75% | [3] | ||
London Interbank Offered Rate (LIBOR) [Member] | Other Secured Borrowings [Member] | Lending [Member] | Master Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.75% | [7] | ||
London Interbank Offered Rate (LIBOR) [Member] | Other Secured Borrowings [Member] | Lending [Member] | Mortgage Warehouse Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.75% | [8] | ||
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Other Secured Borrowings [Member] | Servicing [Member] | Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.00% | [2] | ||
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Other Secured Borrowings [Member] | Lending [Member] | Master Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.75% | [6] | ||
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Other Secured Borrowings [Member] | Servicing [Member] | Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 3.45% | [2] | ||
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Other Secured Borrowings [Member] | Lending [Member] | Master Repurchase Agreement [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.75% | [6] | ||
[1] | On March 2, 2015, we entered into an amendment to the SSTL facility agreement. Among other things, the amendment:•eliminates the dollar cap on the general asset sale basket and requires Ocwen to use 75% of the net cash proceeds from permitted asset sales under such general asset basket to prepay the loans under the SSTL and, subject to certain conditions, permits Ocwen to use up to 25% of such net cash proceeds to reinvest in assets used in the business of OLS and its subsidiaries within 120 days of receipt thereof (subject to an extension of up to 90 days if a binding agreement is entered into within such 120 days); and•increases the quarterly covenant levels of the corporate leverage ratio to 3.5-to-1 for the fiscal quarter ended March 31, 2015 and thereafter. | |||
[2] | Under this repurchase agreement, the lender provides financing on a committed basis for $50.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $50.0 million. | |||
[3] | Under this repurchase agreement, the lender provides financing on a committed basis for $150.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $150.0 million. | |||
[4] | Under this participation agreement, the lender provides financing on an uncommitted basis for $50.0 million at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. On April 16, 2015, the maximum borrowing capacity was increased to $100.0 million. | |||
[5] | Under this participation agreement, the lender provides financing on an uncommitted basis for $150.0 million at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. | |||
[6] | Under this repurchase agreement, the lender provides financing on a committed basis for $75.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $75.0 million. On April 16, 2015, this facility was terminated. | |||
[7] | On April 16, 2015, the maximum borrowing capacity under this agreement was reduced to $37.5 million all of which is on a committed basis. | |||
[8] | Borrowing capacity of $60.0 million under this facility is available on an uncommitted basis at the discretion of the lender. |
Borrowings_Schedule_of_Other_S1
Borrowings - Schedule of Other Secured Borrowings (Footnote) (Details) (USD $) | 0 Months Ended | 3 Months Ended | ||||
Mar. 02, 2015 | Mar. 31, 2015 | Apr. 23, 2015 | Apr. 17, 2015 | Apr. 16, 2015 | ||
Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $75,000,000 | |||||
Senior Secured Term Loan [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of net cash proceeds from permitted asset sales allowed to prepay loans | 75.00% | |||||
Percentage of net cash proceeds from permitted asset sales allowed to reinvest in assets of business use | 25.00% | |||||
Time period to reinvest net cash proceeds from permitted asset sales in assets of business use | 120 days | |||||
Extended time period to reinvest net cash proceeds from permitted asset sales in assets of business use | 90 days | |||||
Corporate leverage ratio | 3.5 | |||||
Repurchase Agreement [Member] | Other Secured Borrowings [Member] | Servicing [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 50,000,000 | |||||
Additional borrowing capacity | 50,000,000 | |||||
Master Repurchase Agreement [Member] | Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 125,000,000 | |||||
Master Repurchase Agreement [Member] | Other Secured Borrowings [Member] | Lending [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 150,000,000 | |||||
Additional borrowing capacity | 150,000,000 | |||||
Participation Agreement [Member] | Other Secured Borrowings [Member] | Lending [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 50,000,000 | |||||
Beneficial interest | 100.00% | |||||
Participation Agreement [Member] | Other Secured Borrowings [Member] | Lending [Member] | Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 100,000,000 | |||||
Participation Agreement [Member] | Other Secured Borrowings [Member] | Lending [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 150,000,000 | |||||
Beneficial interest | 100.00% | |||||
Master Repurchase Agreement [Member] | Other Secured Borrowings [Member] | Lending [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 75,000,000 | |||||
Additional borrowing capacity | 75,000,000 | |||||
Master Repurchase Agreement [Member] | Other Secured Borrowings [Member] | Lending [Member] | Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 37,500,000 | [1] | ||||
Mortgage Warehouse Agreement [Member] | Other Secured Borrowings [Member] | Lending [Member] | Subsequent Event [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $60,000,000 | [1] | ||||
[1] | On April 16, 2015, the maximum borrowing capacity under this agreement was reduced to $37.5 million all of which is on a committed basis. |
Borrowings_Narrative_Details
Borrowings - Narrative (Details) (USD $) | 3 Months Ended | ||||
Mar. 31, 2015 | Dec. 31, 2014 | 12-May-14 | |||
Debt Instrument [Line Items] | |||||
Transfers accounted for as secured borrowings, associated liabilities, carrying amount | $2,000,676,000 | $2,090,247,000 | |||
Advance Receivable Backed Notes Series 2012-ADV1 [Member] | |||||
Debt Instrument [Line Items] | |||||
Transfers accounted for as secured borrowings, associated liabilities, carrying amount | 348,342,000 | [1] | 373,080,000 | [1] | |
Maximum borrowing capacity | 400,000,000 | ||||
Unsecured Debt [Member] | 6.625% Senior Notes due 2019 | |||||
Debt Instrument [Line Items] | |||||
Face amount | 350,000,000 | ||||
Interest rate, stated percentage | 6.63% | ||||
Days after the closing of the offering for the registration statement to become effective (on or prior to 270 days) | 270 days | ||||
Additional interest | 0.25% | ||||
Period for additional interest accrued on non completion of exchange offer | 90 days | ||||
Unamortized debt issuance expense | 5,500,000 | ||||
Senior Secured Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Covenant compliance, consolidated tangible net worth | 630,000,000 | ||||
Covenant compliance, percent of quarterly net income | 65.00% | ||||
Covenant compliance, consolidated tangible net worth at period end | $979,400,000 | ||||
Maximum [Member] | Unsecured Debt [Member] | 6.625% Senior Notes due 2019 | |||||
Debt Instrument [Line Items] | |||||
Additional interest | 1.00% | ||||
[1] | 1-Month LIBOR (1ML) was 0.18% and 0.17% at March 31, 2015 and December 31, 2014, respectively. |
Other_Liabilities_Schedule_of_
Other Liabilities - Schedule of Other Liabilities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||||
Other Liabilities Disclosure [Abstract] | ||||||
Contingent loan repurchase liability | $283,900 | [1] | $274,265 | [1] | ||
Accrued expenses | 135,482 | 142,592 | ||||
Liability for indemnification obligations | 119,182 | 132,918 | 169,235 | 192,716 | ||
Due to related parties | 114,980 | 55,585 | ||||
Payable to loan servicing and subservicing investors | 35,246 | 67,722 | ||||
Liability for selected tax items | 29,161 | 28,436 | ||||
Checks held for escheat | 16,420 | 18,513 | ||||
Other | 87,873 | 73,503 | ||||
Total other liabilities | $822,244 | $793,534 | ||||
[1] | In connection with the Ginnie Mae EBO Transactions, we have re-recognized certain loans on our consolidated balance sheets and establish a corresponding repurchase liability regardless of our intention to repurchase the loan. |
Derivative_Financial_Instrumen2
Derivative Financial Instruments and Hedging Activities - Schedule of Changes in Notional Balance of Holdings of Derivatives (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Fair value of derivative assets (liabilities) at: | ||
Derivatives, at fair value | $9,545 | $6,065 |
Interest Rate Lock Commitments [Member] | ||
Derivative Notional Balance [Roll Forward] | ||
Beginning notional balance | 239,406 | |
Additions | 1,288,957 | |
Amortization | ||
Maturities | -964,465 | |
Terminations | -144,390 | |
Ending notional balance | 419,508 | |
Fair value of derivative assets (liabilities) at: | ||
Derivatives, at fair value | 9,516 | 6,065 |
Maturity | Apr. 2015 - Jun. 2015 | |
Forward Mortgage Backed Securities Trades [Member] | ||
Derivative Notional Balance [Roll Forward] | ||
Beginning notional balance | 703,725 | |
Additions | 2,481,134 | |
Amortization | 69,773 | |
Maturities | -1,121,701 | |
Terminations | -1,349,218 | |
Ending notional balance | 783,713 | |
Fair value of derivative assets (liabilities) at: | ||
Derivatives, at fair value | -5,249 | -2,854 |
Maturity | May 2015 - June 2015 | |
Interest Rate Cap [Member] | ||
Derivative Notional Balance [Roll Forward] | ||
Beginning notional balance | 1,729,000 | |
Additions | ||
Amortization | -102,000 | |
Maturities | ||
Terminations | ||
Ending notional balance | 1,627,000 | |
Fair value of derivative assets (liabilities) at: | ||
Derivatives, at fair value | 203 | 567 |
Maturity | Nov. 2016 - Oct. 2017 | |
Interest Rate Swap [Member] | ||
Derivative Notional Balance [Roll Forward] | ||
Beginning notional balance | 0 | |
Additions | 450,000 | |
Amortization | 0 | |
Maturities | 0 | |
Terminations | -450,000 | |
Ending notional balance | 0 | |
Fair value of derivative assets (liabilities) at: | ||
Derivatives, at fair value | $0 | $0 |
Derivative_Financial_Instrumen3
Derivative Financial Instruments and Hedging Activities - Schedule of Gains (Losses) on Derivatives (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | |
Hedge the effect of changes in interest rates on interest expense on borrowings | ||
Fair Value | $4,470 | [1] |
Gains / (Losses) | -3,024 | |
Other Net [Member] | Interest Rate Cap [Member] | ||
Hedge the effect of changes in interest rates on interest expense on borrowings | ||
Expiration Date | Nov. 2016 - Oct. 2017 | |
Fair Value | 203 | [1] |
Gains / (Losses) | -364 | |
Consolidated Statements of Operations Caption | Other, net | |
Other Net [Member] | Interest Rate Cap [Member] | Not Designated as Hedging Instrument [Member] | ||
Hedge the effect of changes in interest rates on interest expense on borrowings | ||
Notional Amount | 1,627,000 | |
Gain On Loans Held For Sale Net [Member] | Forward MBS Trades [Member] | ||
Hedge the effect of changes in interest rates on interest expense on borrowings | ||
Expiration Date | May 2015 - June 2015 | |
Fair Value | -5,249 | [1] |
Gains / (Losses) | -427 | |
Consolidated Statements of Operations Caption | Gain on loans held for sale, net | |
Gain On Loans Held For Sale Net [Member] | Forward MBS Trades [Member] | Not Designated as Hedging Instrument [Member] | ||
Hedge the effect of changes in interest rates on interest expense on borrowings | ||
Notional Amount | 783,713 | |
Gain On Loans Held For Sale Net [Member] | IRLCs [Member] | ||
Hedge the effect of changes in interest rates on interest expense on borrowings | ||
Expiration Date | April 2015 - June 2015 | |
Fair Value | 9,516 | [1] |
Gains / (Losses) | -2,233 | |
Consolidated Statements of Operations Caption | Gain on loans held for sale, net | |
Gain On Loans Held For Sale Net [Member] | IRLCs [Member] | Not Designated as Hedging Instrument [Member] | ||
Hedge the effect of changes in interest rates on interest expense on borrowings | ||
Notional Amount | $419,508 | |
[1] | Derivatives are reported at fair value in Receivables, Other assets or in Other liabilities on our unaudited Consolidated Balance Sheets. |
Derivative_Financial_Instrumen4
Derivative Financial Instruments and Hedging Activities - Narrative (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Unrealized gain (loss) on derivatives arising during period, before tax | $8.30 | $10 |
Other comprehensive income (loss), tax | 0.5 | 0.6 |
Projected amortization of unrealized losses from AOCL to earnings, coming twelve months | $1.90 |
Derivative_Financial_Instrumen5
Derivative Financial Instruments and Hedging Activities - Schedule of Changes in AOCL (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | $8,413 | |
Other, net of taxes | 0 | 1 |
Ending balance | 7,995 | |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | 8,413 | 10,151 |
Losses on terminated hedging relationships amortized to earnings | -443 | -779 |
Decrease in deferred taxes on accumulated losses on cash flow hedges | 25 | 171 |
Decrease in accumulated losses on cash flow hedges, net of taxes | -418 | -608 |
Other, net of taxes | 0 | -1 |
Ending balance | $7,995 | $9,542 |
Derivative_Financial_Instrumen6
Derivative Financial Instruments and Hedging Activities - Schedule of Other Income (Expense), Net Related to Derivative Financial Instruments (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Losses on economic hedges | ($710) | ($141) |
Write-off of losses in AOCL for a discontinued hedge relationship | -443 | -779 |
Loss on derivatives | ($1,153) | ($920) |
Interest_Expense_Schedule_of_C
Interest Expense - Schedule of Components of Interest Expense (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Debt securities: | ||||
Interest expense | $119,396 | $139,873 | ||
Financing Liabilities [Member] | ||||
Debt securities: | ||||
Interest expense | 73,824 | [1],[2] | 100,230 | [1],[2] |
Other Secured Borrowings [Member] | ||||
Debt securities: | ||||
Interest expense | 22,916 | 21,284 | ||
Match Funded Liabilties [Member] | ||||
Debt securities: | ||||
Interest expense | 14,280 | 16,318 | ||
6.625% Senior Unsecured Notes [Member] | ||||
Debt securities: | ||||
Interest expense | 6,129 | 0 | ||
Other [Member] | ||||
Debt securities: | ||||
Interest expense | $2,247 | $2,041 | ||
[1] | Includes interest expense related to financing liabilities recorded in connection with the HLSS Transactions as indicated in the table below. 2015 2014Servicing fees collected on behalf of HLSS$180,297 $189,157Less: Subservicing fee retained by Ocwen91,214 90,161Net servicing fees remitted to HLSS89,083 98,996Less: Reduction in financing liability17,723 —Interest expense on HLSS financing liability$71,360$98,996 | |||
[2] | Interest expense that we expect to be paid on the HMBS-related borrowings is included with net fair value gains in Other revenues. |
Interest_Expense_Schedule_of_R
Interest Expense - Schedule of Related Party Interest Expense (Details) (HLSS [Member], USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
HLSS [Member] | ||
Schedule of Interest Expense [Line Items] | ||
Servicing fees collected on behalf of HLSS | $180,297 | $189,157 |
Less: Subservicing fee retained by Ocwen | 91,214 | 90,161 |
Net servicing fees remitted to HLSS | 89,083 | 98,996 |
Less: Reduction in financing liability | 17,723 | 0 |
Interest expense on HLSS financing liability | $71,360 | $98,996 |
Basic_and_Diluted_Earnings_per2
Basic and Diluted Earnings per Share - Schedule of Basic EPS to Diluted EPS (Details) (USD $) | 3 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Basic earnings per share: | ||||
Net income attributable to Ocwen common stockholders | $34,355 | $59,504 | ||
Weighted average shares of common stock (in shares) | 125,272,228 | 135,227,067 | ||
Basic earnings per share (in USD per share) | $0.27 | $0.44 | ||
Diluted earnings per share: | ||||
Net income attributable to Ocwen common stockholders | 34,355 | 59,504 | ||
Preferred stock dividends | 0 | [1] | 997 | [1] |
Adjusted net income attributable to Ocwen | $34,355 | $60,501 | ||
Weighted average shares of common stock (in shares) | 125,272,228 | 135,227,067 | ||
Effect of dilutive elements: | ||||
Preferred stock (in shares) | 0 | [1] | 1,950,298 | [1] |
Stock options (in shares) | 1,725,280 | 3,908,333 | ||
Common stock awards (in shares) | 2,154 | 3,757 | ||
Dilutive weighted average shares of common stock (in shares) | 126,999,662 | 141,089,455 | ||
Diluted earnings per share (in USD per share) | $0.27 | $0.43 | ||
Stock options excluded from the computation of diluted EPS: | ||||
Anti-dilutive Securities (in shares) | 2,010,902 | [2] | 0 | [2] |
Market Based [Member] | ||||
Stock options excluded from the computation of diluted EPS: | ||||
Anti-dilutive Securities (in shares) | 851,263 | [3] | 547,500 | [3] |
[1] | Prior to the conversion of our remaining preferred stock into common stock in July 2014, we computed the effect on diluted earnings per share using the if-converted method. For purposes of computing diluted earnings per share, we assume the conversion of the preferred stock into shares of common stock unless the effect is anti-dilutive. | |||
[2] | These options were anti-dilutive because their exercise price was greater than the average market price of our stock. | |||
[3] | Shares that are issuable upon the achievement of certain performance criteria related to Ocwen’s stock price and an annualized rate of return to investors. |
Business_Segment_Reporting_Sch
Business Segment Reporting - Schedule of Segment Reporting Information (Details) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | ||
Results of Operations | |||||
Revenue | $510,444 | $551,261 | |||
Other income (expense): | |||||
Interest expense | -119,396 | -139,873 | |||
Income (loss) before income taxes | 42,829 | 71,703 | |||
Total Assets | |||||
Balance | 8,386,774 | 8,267,278 | |||
Servicing [Member] | |||||
Results of Operations | |||||
Revenue | 471,125 | [1] | 520,823 | [1] | |
Expenses | 337,911 | [1],[2] | 307,933 | [1],[2] | |
Other income (expense): | |||||
Interest income | 1,371 | 439 | |||
Interest expense | -110,629 | -136,386 | |||
Other | 22,766 | [1] | -320 | [1] | |
Other income (expense), net | -86,492 | -136,267 | |||
Income (loss) before income taxes | 46,722 | 76,623 | |||
Total Assets | |||||
Balance | 5,733,630 | 6,333,097 | 5,881,862 | ||
Lending [Member] | |||||
Results of Operations | |||||
Revenue | 37,746 | [1] | 28,767 | [1] | |
Expenses | 23,785 | [1],[2] | 31,464 | [1],[2] | |
Other income (expense): | |||||
Interest income | 3,596 | 4,009 | |||
Interest expense | -2,639 | -3,451 | |||
Other | 1,065 | [1] | 2,718 | [1] | |
Other income (expense), net | 2,022 | 3,276 | |||
Income (loss) before income taxes | 15,983 | 579 | |||
Total Assets | |||||
Balance | 2,165,742 | 1,326,114 | 1,963,729 | ||
Corporate Items and Other [Member] | |||||
Results of Operations | |||||
Revenue | 1,608 | [1] | 1,711 | [1] | |
Expenses | 16,697 | [1],[2] | 9,837 | [1],[2] | |
Other income (expense): | |||||
Interest income | 608 | 879 | |||
Interest expense | -6,128 | -36 | |||
Other | 733 | [1] | 1,784 | [1] | |
Other income (expense), net | -4,787 | 2,627 | |||
Income (loss) before income taxes | -19,876 | -5,499 | |||
Total Assets | |||||
Balance | 487,402 | 527,140 | 421,687 | ||
Corporate Eliminations [Member] | |||||
Results of Operations | |||||
Revenue | -35 | [1] | -40 | [1] | |
Expenses | -35 | [1],[2] | -40 | [1],[2] | |
Other income (expense): | |||||
Interest income | 0 | 0 | |||
Interest expense | 0 | 0 | |||
Other | 0 | [1] | 0 | [1] | |
Other income (expense), net | 0 | 0 | |||
Income (loss) before income taxes | 0 | 0 | |||
Total Assets | |||||
Balance | 0 | 0 | 0 | ||
Business Segments Consolidated [Member] | |||||
Results of Operations | |||||
Revenue | 510,444 | [1] | 551,261 | [1] | |
Expenses | 378,358 | [1],[2] | 349,194 | [1],[2] | |
Other income (expense): | |||||
Interest income | 5,575 | 5,327 | |||
Interest expense | -119,396 | -139,873 | |||
Other | 24,564 | [1] | 4,182 | [1] | |
Other income (expense), net | -89,257 | -130,364 | |||
Income (loss) before income taxes | 42,829 | 71,703 | |||
Total Assets | |||||
Balance | $8,386,774 | $8,186,351 | $8,267,278 | ||
[1] | Intersegment billings for services rendered to other segments are recorded as revenues, as contra-expense or as other income, depending on the type of service that is rendered. | ||||
[2] | Depreciation and amortization expense are as follows: Servicing Lending Corporate Items and Other Business Segments ConsolidatedFor the three months ended March 31, 2015 Depreciation expense$529 $104 $3,711 $4,344Amortization of mortgage servicing rights38,405 89 — 38,494Amortization of debt discount356 — — 356Amortization of debt issuance costs 3,423 — 332 3,755 For the three months ended March 31, 2014 Depreciation expense$2,820 $105 $2,615 $5,540Amortization of mortgage servicing rights61,779 115 200 62,094Amortization of debt discount330 — — 330Amortization of debt issuance costs 1,087 — — 1,087 |
Business_Segment_Reporting_Sch1
Business Segment Reporting - Schedule of Depreciation and Amortization by Segment (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Amortization of mortgage servicing rights | $38,494 | $62,094 |
Amortization of debt issuance costs | 3,755 | 1,087 |
Servicing [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation expense | 529 | 2,820 |
Amortization of mortgage servicing rights | 38,405 | 61,779 |
Amortization of debt discount | 356 | 330 |
Amortization of debt issuance costs | 3,423 | 1,087 |
Lending [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation expense | 104 | 105 |
Amortization of mortgage servicing rights | 89 | 115 |
Amortization of debt discount | 0 | 0 |
Amortization of debt issuance costs | 0 | 0 |
Corporate and Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation expense | 3,711 | 2,615 |
Amortization of mortgage servicing rights | 0 | 200 |
Amortization of debt discount | 0 | 0 |
Amortization of debt issuance costs | 332 | 0 |
Business Segments Consolidated [Member] | ||
Segment Reporting Information [Line Items] | ||
Depreciation expense | 4,344 | 5,540 |
Amortization of mortgage servicing rights | 38,494 | 62,094 |
Amortization of debt discount | 356 | 330 |
Amortization of debt issuance costs | $3,755 | $1,087 |
Related_Party_Transactions_Nar
Related Party Transactions - Narrative (Details) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | |
Mar. 31, 2015 | Apr. 06, 2015 | Mar. 03, 2014 | Mar. 31, 2014 | Dec. 31, 2014 | 2-May-14 | Dec. 21, 2012 | |
Advance Funding Facility [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Term of advance funding facility | 364 days | ||||||
NRZ [Member] | Subsequent Event [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Period from sale of tranche of rights to mortgage servicing rights that apportionment of fees is subject to re-negotiation | 8 years | ||||||
Altisource [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Automatic renewal term of support services agreement | 1 year | ||||||
HLSS [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Unpaid principal balance of loans held for sale | 156,300,000,000 | $170,800,000,000 | 160,800,000,000 | ||||
Outstanding servicing advances | 5,800,000,000 | ||||||
Proceeds from sale of loans held-for-sale | 612,300,000 | 612,300,000 | |||||
HLSS [Member] | Mortgage Servicing Rights [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Unpaid principal balance assets acquired | 425,700,000 | ||||||
HLSS [Member] | Servicing Advances [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Proceeds from sale of loans held-for-sale | 55,700,000 | ||||||
HLSS [Member] | Advance Funding Facility [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Term of advance funding facility | 364 days | 364 days | |||||
HLSS SEZ LP [Member] | Servicing Advances [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Proceeds from sale of loans held-for-sale | 20,200,000 | ||||||
Altisource Residential Lp [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Term of servicing agreement | 15 years | ||||||
Unpaid principal balance of loans serviced | 3,200,000,000 |
Related_Party_Transactions_Sch
Related Party Transactions - Schedule of Revenue and Expenses Related to Various Service Agreements (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Altisource [Member] | ||
Revenues and Expenses: | ||
Revenues | $13,404 | $8,499 |
Expenses | 29,026 | 17,364 |
HLSS [Member] | ||
Revenues and Expenses: | ||
Revenues | 166 | 165 |
Expenses | 34 | 462 |
AAMC [Member] | ||
Revenues and Expenses: | ||
Revenues | 84 | 384 |
Residential [Member] | ||
Revenues and Expenses: | ||
Revenues | $2,508 | $2,148 |
Related_Party_Transactions_Sch1
Related Party Transactions - Schedule of Amounts Receivable or Payable (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Net Receivable (Payable) | ||
Net Receivable (Payable) | ($99,133) | $3,307 |
Altisource [Member] | ||
Net Receivable (Payable) | ||
Net Receivable (Payable) | -9,501 | -4,909 |
HLSS [Member] | ||
Net Receivable (Payable) | ||
Net Receivable (Payable) | -89,678 | 7,884 |
AAMC [Member] | ||
Net Receivable (Payable) | ||
Net Receivable (Payable) | 46 | 232 |
Residential [Member] | ||
Net Receivable (Payable) | ||
Net Receivable (Payable) | $0 | $100 |
Regulatory_Requirements_Narrat
Regulatory Requirements - Narrative (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2015 |
Brokers and Dealers [Abstract] | |
Capital requirement, unpaid principal balance | $789.60 |
Number of days from fiscal year end that servicer is obliged to provide audited financial statements | 90 days |
Commitments_Narrative_Details
Commitments - Narrative (Details) (USD $) | Mar. 31, 2015 |
In Millions, unless otherwise specified | |
Floating Rate Reverse Mortgage Loans [Member] | |
Other Commitments [Line Items] | |
Additional borrowing capacity to borrowers | $685 |
Forward Mortgage Loan Interest Rate Lock Commitments [Member] | |
Other Commitments [Line Items] | |
Short-term commitments to lend | 412.2 |
Reverse Mortgage Loan Interest Rate Lock Commitments [Member] | |
Other Commitments [Line Items] | |
Short-term commitments to lend | $12.80 |
Contingencies_Narrative_Detail
Contingencies - Narrative (Details) (USD $) | 3 Months Ended | 0 Months Ended | 12 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Apr. 24, 2015 | Dec. 19, 2014 | Jan. 23, 2015 | Dec. 31, 2014 | |
Agreement | Loan | Examination | director | Trust | ||
Loan | State | |||||
Loss Contingencies [Line Items] | ||||||
Number of trust where servicing transferred to another loan servicer | 4 | |||||
Provided or assumed representation and warranty obligations of unpaid principal balance | $77,500,000,000 | $87,900,000,000 | ||||
Warranty repurchase demands unpaid principal balance | 134,600,000 | 138,700,000 | ||||
Warranty repurchase demands number of loans | 696 | 701 | ||||
Subsequent Event [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Number of state regulators examinations pending | 25 | |||||
Number of states in which regulators examinations pending | 19 | |||||
Mortgage Servicing Practice [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Estimate of possible loss | 16,000,000 | |||||
New York Department Of Financial Services [Member] | Unfavorable Regulatory Action [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Number of independent directors appointed after consultation with operations monitor | 2 | |||||
New York Department Of Financial Services [Member] | Unfavorable Regulatory Action, Civil Penalty [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation settlement expense | 100,000,000 | |||||
New York Department Of Financial Services [Member] | Unfavorable Regulatory Action, Restitution Paid [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation settlement expense | 50,000,000 | |||||
Office of Mortgage Settlement Oversight [Member] | First Uncured Violation [Member] | Maximum [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Financial penalties in case of uncured violations | 1,000,000 | |||||
Office of Mortgage Settlement Oversight [Member] | Second Uncured Violation [Member] | Maximum [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Financial penalties in case of uncured violations | 5,000,000 | |||||
California Department of Business Oversight [Member] | Unfavorable Regulatory Action [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Amount of penalty in consent order | 2,500,000 | |||||
Accrued penalty | 2,500,000 | |||||
Oversight monitor period | 2 years | |||||
Residential Mortgage Backed Securities [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Ownership interest in trusts | 25.00% | |||||
Number of trusts where trustees received notice of servicer non-performance | 119 | |||||
Number of trusts to terminate as servicer in case if allegations proved | 119 | |||||
Number of trust where servicing transferred to another loan servicer | 2 |
Contingencies_Schedule_of_Inde
Contingencies - Schedule of Indemnification Obligations (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Indemnification Obligations Liability [Roll Forward] | ||||
Beginning balance | $132,918 | $192,716 | ||
Provision for representation and warranty obligations | -3,975 | 7,266 | ||
New production reserves | 228 | 0 | ||
Obligations assumed in connection with MSR and servicing business acquisitions | 0 | 182 | ||
Charge-offs and other | -9,989 | [1] | -30,929 | [1] |
Ending balance | $119,182 | $169,235 | ||
[1] | Includes principal and interest losses realized in connection with repurchased loans, make-whole, indemnification and fee payments and settlements net of recoveries, if any. |
Subsequent_Events_Narrative_De
Subsequent Events - Narrative (Details) (Subsequent Event [Member], NRZ [Member], USD $) | 0 Months Ended |
Apr. 06, 2015 | |
Subsequent Event [Line Items] | |
Extended term as named servicer | 2 years |
Negotiation period for extension, prior to end of contract term | 6 months |
Standstill period to replace as named servicer | 2 years |
Ocwen Loan Servicing [Member] | |
Subsequent Event [Line Items] | |
Percentage on unpaid principal balance of performing loans received as consideration on sale of clean up call rights | 0.50% |
Ocwen Loan Servicing [Member] | Maximum [Member] | |
Subsequent Event [Line Items] | |
Increased costs of financing to be compensated during any calendar month | 3,000,000 |
Increased costs of financing to be compensated during contractual term | 36,000,000 |