Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 27, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Ocwen Financial Corporation | |
Entity Central Index Key | 873,860 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 130,859,058 |
UNAUDITED CONSOLIDATED BALANCE
UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | |
Assets | |||
Cash | $ 299,888 | $ 256,549 | |
Mortgage servicing rights ($598,147 and $679,256 carried at fair value) | 944,308 | 1,042,978 | |
Advances, net | 197,953 | 257,882 | |
Match funded assets (related to variable interest entities (VIEs)) | 1,243,899 | 1,451,964 | |
Loans held for sale ($200,438 and $284,632 carried at fair value) | 223,662 | 314,006 | |
Loans held for investment, at fair value | 4,459,760 | 3,565,716 | |
Receivables, net | 231,514 | 265,720 | |
Premises and equipment, net | 42,720 | 62,744 | |
Other assets ($19,067 and $20,007 carried at fair value)(amounts related to VIEs of $26,647 and $43,331) | 453,901 | 438,104 | |
Total assets | 8,097,605 | 7,655,663 | |
Liabilities | |||
HMBS-related borrowings, at fair value | [1] | 4,358,277 | 3,433,781 |
Other financing liabilities ($447,843 and $477,707 carried at fair value) | 536,981 | 579,031 | |
Match funded liabilities (related to VIEs) | 1,028,016 | 1,280,997 | |
Other secured borrowings, net | 544,589 | 678,543 | |
Senior notes, net | 347,201 | 346,789 | |
Other liabilities ($71 and $1,550 carried at fair value) | 693,119 | 681,239 | |
Total liabilities | 7,508,183 | 7,000,380 | |
Commitments and Contingencies (Notes 20 and 21) | |||
Ocwen Financial Corporation (Ocwen) stockholders’ equity | |||
Common stock, $.01 par value; 200,000,000 shares authorized; 130,859,058 and 123,988,160 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 1,309 | 1,240 | |
Additional paid-in capital | 544,392 | 527,001 | |
Retained earnings | 42,400 | 126,167 | |
Accumulated other comprehensive loss, net of income taxes | (1,293) | (1,450) | |
Total Ocwen stockholders’ equity | 586,808 | 652,958 | |
Non-controlling interest in subsidiaries | 2,614 | 2,325 | |
Total equity | 589,422 | 655,283 | |
Total liabilities and equity | $ 8,097,605 | $ 7,655,663 | |
[1] | 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. |
UNAUDITED CONSOLIDATED BALANCE3
UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | |
Statement of Financial Position [Abstract] | |||
Mortgage servicing rights, at fair value | $ 598,147 | $ 679,256 | |
Loans held for sale, at fair value | 200,438 | [1] | 284,632 |
Amounts related to VIEs | 26,647 | 43,331 | |
Other assets, at fair value | 19,067 | 20,007 | |
Other financing liabilities, at fair value | 447,843 | 477,707 | |
Other liabilities, at fair value | $ 71 | $ 1,550 | |
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) | 130,859,058 | 123,988,160 | |
Common stock, shares outstanding (in shares) | 130,859,058 | 123,988,160 | |
[1] | At September 30, 2017 and 2016, the balances include $6.7 million and $13.0 million, respectively, of fair value adjustments. |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Revenue | |||||
Servicing and subservicing fees | $ 233,220 | $ 302,235 | $ 761,523 | $ 906,993 | |
Gain on loans held for sale, net | 25,777 | 25,645 | 76,976 | 69,074 | |
Other | 25,645 | 31,568 | 79,307 | 87,192 | |
Total revenue | 284,642 | 359,448 | 917,806 | 1,063,259 | |
Expenses | |||||
Compensation and benefits | 90,538 | 92,942 | 272,750 | 287,613 | |
Servicing and origination | 72,524 | 63,551 | 204,947 | 249,230 | |
Professional services | 38,417 | 65,489 | 145,651 | 257,795 | |
Technology and communications | 27,929 | 25,941 | 79,530 | 85,519 | |
Occupancy and equipment | 15,340 | 16,760 | 49,569 | 62,213 | |
Amortization of mortgage servicing rights | 13,148 | (2,558) | 38,560 | 18,595 | |
Other | 15,583 | 9,553 | 39,335 | 24,388 | |
Total expenses | 273,479 | 271,678 | 830,342 | 985,353 | |
Other income (expense) | |||||
Interest income | 4,099 | 5,158 | 12,101 | 14,488 | |
Interest expense | (47,281) | (110,961) | (212,471) | (308,083) | |
Gain on sale of mortgage servicing rights, net | 6,543 | 5,661 | 7,863 | 7,689 | |
Other, net | (1,077) | 14,736 | 6,384 | 11,841 | |
Total other expense, net | (37,716) | (85,406) | (186,123) | (274,065) | |
Income (loss) before income taxes | (26,553) | 2,364 | (98,659) | (196,159) | |
Income tax benefit | (20,418) | (7,110) | (15,465) | (7,214) | |
Net income (loss) | (6,135) | 9,474 | (83,194) | (188,945) | |
Net income attributable to non-controlling interests | (117) | (83) | (289) | (373) | |
Net income (loss) attributable to Ocwen stockholders | $ (6,252) | $ 9,391 | $ (83,483) | $ (189,318) | |
Income (loss) per share attributable to Ocwen stockholders | |||||
Basic (in USD per share) | $ (0.05) | $ 0.08 | $ (0.66) | $ (1.53) | |
Diluted (in USD per share) | $ (0.05) | $ 0.08 | $ (0.66) | $ (1.53) | |
Weighted average common shares outstanding | |||||
Basic (in shares) | 128,744,152 | 123,986,987 | 125,797,777 | 123,991,343 | |
Diluted (in shares) | [1] | 128,744,152 | 124,134,507 | 125,797,777 | 123,991,343 |
[1] | For the three and nine months ended September 30, 2017 and the nine months ended September 30, 2016, we have excluded the effect of stock options and common stock awards from the computation of diluted loss per share because of the anti-dilutive effect of our reported net loss. |
UNAUDITED CONSOLIDATED STATEME5
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net income (loss) | $ (6,135) | $ 9,474 | $ (83,194) | $ (188,945) | |
Other comprehensive income, net of income taxes: | |||||
Reclassification adjustment for losses on cash flow hedges included in net income | [1] | 45 | 89 | 157 | 263 |
Total other comprehensive income, net of income taxes | 45 | 89 | 157 | 263 | |
Comprehensive income (loss) | (6,090) | 9,563 | (83,037) | (188,682) | |
Comprehensive income attributable to non-controlling interests | (117) | (83) | (289) | (373) | |
Comprehensive income (loss) attributable to Ocwen stockholders | $ (6,207) | $ 9,480 | $ (83,326) | $ (189,055) | |
[1] | These losses are reclassified to Other, net in the unaudited consolidated statements of operations. |
UNAUDITED CONSOLIDATED STATEME6
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | 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] |
Beginning Balance at Dec. 31, 2015 | $ 854,638 | $ 1,248 | $ 526,148 | $ 325,929 | $ (1,763) | $ 3,076 |
Beginning Balance (in shares) at Dec. 31, 2015 | 124,774,516 | |||||
Net income (loss) | (188,945) | (189,318) | 373 | |||
Repurchase of common stock | (5,890) | $ (10) | (5,880) | |||
Repurchase of common stock (in shares) | (991,985) | |||||
Exercise of common stock options | 442 | $ 1 | 441 | |||
Exercise of common stock options (in shares) | 69,805 | |||||
Equity-based compensation and other | 4,017 | $ 1 | 4,016 | |||
Equity-based compensation and other (in shares) | 137,618 | |||||
Capital distribution to non-controlling interest | (1,138) | (1,138) | ||||
Other comprehensive income, net of income taxes | 263 | 263 | ||||
Ending Balance at Sep. 30, 2016 | 663,387 | $ 1,240 | 524,725 | 136,611 | (1,500) | 2,311 |
Ending Balance (in shares) at Sep. 30, 2016 | 123,989,954 | |||||
Beginning Balance at Dec. 31, 2016 | $ 655,283 | $ 1,240 | 527,001 | 126,167 | (1,450) | 2,325 |
Beginning Balance (in shares) at Dec. 31, 2016 | 123,988,160 | 123,988,160 | ||||
Net income (loss) | $ (83,194) | (83,483) | 289 | |||
Issuance of common stock | 13,913 | $ 61 | 13,852 | |||
Issuance of common stock (in shares) | 6,075,510 | |||||
Cumulative effect of adoption of FASB Accounting Standards Update No. 2016-09 | 284 | (284) | ||||
Equity-based compensation and other | 3,263 | $ 8 | 3,255 | |||
Equity-based compensation and other (in shares) | 795,388 | |||||
Other comprehensive income, net of income taxes | 157 | 157 | ||||
Ending Balance at Sep. 30, 2017 | $ 589,422 | $ 1,309 | $ 544,392 | $ 42,400 | $ (1,293) | $ 2,614 |
Ending Balance (in shares) at Sep. 30, 2017 | 130,859,058 | 130,859,058 |
UNAUDITED CONSOLIDATED STATEME7
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (83,194) | $ (188,945) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Amortization of mortgage servicing rights | 38,560 | 18,595 |
Loss on valuation of mortgage servicing rights, at fair value | 78,437 | 63,609 |
Impairment charge (reversal) on mortgage servicing rights | (1,551) | 37,164 |
Gain on sale of mortgage servicing rights, net | (7,863) | (7,689) |
Realized and unrealized losses on derivative financial instruments | 364 | 2,213 |
Provision for bad debts | 57,274 | 61,191 |
Depreciation | 20,430 | 18,277 |
Loss on write-off of fixed assets | 6,834 | 0 |
Amortization of debt issuance costs | 1,979 | 10,475 |
Equity-based compensation expense | 4,489 | 4,000 |
Gain on valuation of financing liability | (27,024) | 0 |
Net gain on valuation of mortgage loans held for investment and HMBS-related borrowings | (18,637) | (22,329) |
Gain on loans held for sale, net | (39,542) | (52,206) |
Origination and purchase of loans held for sale | (3,074,725) | (4,575,264) |
Proceeds from sale and collections of loans held for sale | 3,067,522 | 4,493,887 |
Changes in assets and liabilities: | ||
Decrease in advances and match funded assets | 285,066 | 343,129 |
Decrease in receivables and other assets, net | 156,008 | 122,305 |
(Decrease) increase in other liabilities | (66,321) | 4,749 |
Other, net | 3,102 | 17,263 |
Net cash provided by operating activities | 401,208 | 350,424 |
Cash flows from investing activities | ||
Origination of loans held for investment | (961,642) | (1,185,565) |
Principal payments received on loans held for investment | 311,560 | 528,263 |
Purchase of mortgage servicing rights | (1,658) | (15,969) |
Proceeds from sale of mortgage servicing rights | 2,263 | 45,254 |
Proceeds from sale of advances | 6,119 | 74,982 |
Issuance of automotive dealer financing notes | (129,471) | 0 |
Collections of automotive dealer financing notes | 119,389 | 0 |
Additions to premises and equipment | (7,365) | (28,649) |
Other | 1,480 | 9,483 |
Net cash used in investing activities | (659,325) | (572,201) |
Cash flows from financing activities | ||
Repayment of match funded liabilities, net | (252,981) | (218,517) |
Proceeds from mortgage loan warehouse facilities and other secured borrowings | 5,810,591 | 6,632,059 |
Repayments of mortgage loan warehouse facilities and other secured borrowings | (6,016,169) | (6,834,720) |
Payment of debt issuance costs | (841) | (2,242) |
Proceeds from sale of mortgage servicing rights accounted for as a financing | 54,601 | 0 |
Proceeds from sale of reverse mortgages (HECM loans) accounted for as a financing (HMBS-related borrowings) | 981,730 | 820,438 |
Repayment of HMBS-related borrowings | (287,908) | (161,995) |
Issuance of common stock | 13,913 | 0 |
Repurchase of common stock | 0 | (5,890) |
Other | (1,480) | (1,094) |
Net cash provided by financing activities | 301,456 | 228,039 |
Net increase in cash | 43,339 | 6,262 |
Cash at beginning of year | 256,549 | 257,272 |
Cash at end of period | $ 299,888 | $ 263,534 |
Organization, Business Environm
Organization, Business Environment and Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Business Environment and Basis of Presentation | Note 1 – Organization, Business Environment 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, originates and services loans. We are headquartered in West Palm Beach, Florida with offices located throughout the United States (U.S.) and in the United States Virgin Islands (USVI) and with operations located 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 (OFSPL), 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 Administration (FHA) or Department of Veterans Affairs (VA)) forward and reverse mortgages. The GSEs or Ginnie Mae guarantee these mortgage securitizations. We had a total of approximately 8,300 employees at September 30, 2017 of which approximately 5,400 were located in India and approximately 700 were based in the Philippines. Our operations in India and the Philippines provide internal support services, principally to our loan servicing business as well as to our corporate functions. Of our foreign-based employees, nearly 80% were engaged in supporting our loan servicing operations as of September 30, 2017 . Business Environment We are facing certain challenges and uncertainties that could have significant adverse effects on our business, financial condition, liquidity and results of operations. The ability of management to appropriately address these challenges and uncertainties in a timely manner is critical to our ability to successfully operate our business. We have incurred a net loss for the nine months ended September 30, 2017 , which follows losses in each of the last three fiscal years. While these losses have eroded stockholders’ equity and weakened our financial condition, it is important to note that we generated positive operating cash flow in each of these periods. We expect our cash position to strengthen in fiscal 2017 as a result of the acceleration of proceeds we expect to receive in connection with our recent agreements with New Residential Investment Corp. (NRZ), which are discussed in additional detail in Note 8 — Rights to MSRs . As a result of the acceleration of these payments from 2018 and 2019 and before considering other strategies discussed below, it is possible the business may not generate positive operating cash flow in one or more quarters of 2018. In order to drive stronger financial performance, we have begun exploring strategic approaches to streamline our business. To that end, we are seeking to focus our operations on servicing and on portfolio recapture through our forward lending retail channel. We have also taken various strategic actions with respect to our forward lending business, as we continue to evaluate the overall mortgage lending business and marketplace. In the second quarter of 2017, we closed our forward lending correspondent channel due to low margins and began selling all of our forward lending wholesale channel originations on a servicing released basis to reduce capital consumption. We have also entered into an agreement to sell certain assets of our forward lending wholesale operation, and, upon closing of that transaction, we intend to exit the forward lending wholesale business. See Note 20 — Commitments for additional information. While these changes may limit our generation of new servicing assets in the near term, we believe that they will, over time, improve our returns and improve cash flow relative to current operations. We are also evaluating our long-term strategy with respect to our reverse lending and automotive capital services activities, which could include the sale of one or both of these businesses or certain assets of these businesses. Our business continues to be impacted by regulatory actions, regulatory settlements and the current regulatory environment. We have faced, and expect to continue to face, heightened regulatory and public scrutiny as well as stricter and more comprehensive regulation of our business. Since April 20, 2017, the CFPB, mortgage and banking regulatory agencies from 30 states and the District of Columbia and two state attorneys general have taken regulatory actions against us that alleged deficiencies in our compliance with laws and regulations relating to our servicing and lending activities. As of November 1, 2017, we have resolved these regulatory matters with 21 states and the District of Columbia while continuing to seek resolutions with the remaining nine states and the two state attorneys general. The consequences of these regulatory actions have included one rating agency downgrading our long-term corporate debt, several rating agencies putting our servicer ratings on watch and Ginnie Mae sending us a notice of violation that included a forbearance on exercising rights that has been extended until January 24, 2018. Our business, operating results and financial condition have been significantly impacted in recent periods by legal and other fees and settlement payments related to litigation and regulatory matters, including the costs of third-party monitoring firms under our regulatory settlements. Should the number or scope of regulatory actions against us increase or expand or should reasonable resolutions not be reached, our business, reputation, financial condition, liquidity and results of operations could be adversely affected. See Note 7 – Mortgage Servicing , Note 11 – Borrowings , Note 19 – Regulatory Requirements and Note 21 – Contingencies for further information. With regard to the current maturities of our borrowings, as of September 30, 2017 , we have approximately $1.0 billion of debt outstanding under facilities coming due in the next 12 months, including scheduled payments under our Senior Secured Term Loan (SSTL), certain notes under our servicing advance match funded facilities and our mortgage loan warehouse facilities. Portions of our match funded facilities and all of our mortgage loan warehouse facilities have 364 -day terms consistent with market practice. We have historically renewed these facilities on or before their expiration in the ordinary course of financing our business. We expect to renew, replace or extend all such borrowings to the extent necessary to finance our business on or prior to their respective maturities consistent with our historical experience. Our debt agreements contain various qualitative and quantitative events of default provisions that include, among other things, noncompliance with covenants, breach of representations, or the occurrence of a material adverse change. Provisions of this type are commonly found in debt agreements such as ours. Certain of these provisions 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. If a lender were to allege an event of default, whether as a result of recent events or otherwise, and we are unable to avoid, remedy or secure a waiver, we could be subject to adverse action by our lenders, including acceleration of outstanding obligations, enforcement of liens against the assets securing or otherwise supporting our obligations and other legal remedies, any of which could have a material adverse impact on us. In addition, 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 requirements, including capital requirements related to tangible net worth, as defined by the applicable agency, 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. Any of these actions could have a material adverse impact on us. To date, none of these counterparties has communicated any material sanction, suspension or prohibition in connection with our seller/servicer obligations. See Note 11 – Borrowings and Note 19 – Regulatory Requirements for additional information. 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 and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2017 . The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2016 . 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include, but are not limited to, those that relate to fair value measurements, the amortization of mortgage servicing rights, income taxes, the provision for potential losses that may arise from litigation proceedings, representation and warranty and other indemnification obligations, and our going concern evaluation. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ from those estimates and assumptions. Reclassifications As a result of our adoption on January 1, 2017 of FASB Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation: Improvements to Accounting for Employee Share-Based Payments , excess tax benefits have been classified along with other income tax cash flows as an operating activity in our unaudited consolidated statements of cash flows, rather than being separated from other income tax cash flows and classified as a financing activity. Additionally, cash paid by Ocwen when directly withholding shares for tax-withholding purposes has been classified as a financing activity in our unaudited consolidated statements of cash flows, rather than being classified as an operating activity. Certain amounts in the unaudited consolidated statement of cash flows for the nine months ended September 30, 2016 have been reclassified to conform to the current year presentation as follows: • Within the operating activities section, we reclassified Net gain on valuation of mortgage loans held for investment and HMBS-related borrowings from Other to a new separate line item. In addition, we reclassified amounts related to reverse mortgages from Gain on loans held for sale, net to Other. • Within the financing activities section, we reclassified Proceeds from exercise of stock options to Other. In addition, we reclassified Repayments of HMBS-related borrowings from Repayments of mortgage loan warehouse facilities and other secured borrowings to a new separate line item. These reclassifications had no impact on our consolidated cash flows from operating, investing or financing activities. Certain amounts in the unaudited consolidated balance sheet at December 31, 2016 have been reclassified to conform to the current year presentation as follows: • Within the total assets section, we reclassified Deferred tax assets, net to Other assets. • Within the total liabilities section, we reclassified HMBS-related borrowings from Financing liabilities to a new separate line item. Recently Adopted Accounting Standard Compensation - Stock Compensation: Improvements to Employee Shared-Based Payment Accounting (ASU 2016-09) In addition to the reclassification matters discussed above, ASU 2016-09 requires excess tax benefits associated with employee share-based payments to be recognized through the income statement, regardless of whether the benefit reduces income taxes payable in the current period. Prior to our adoption of this standard, excess tax benefits were recognized in additional paid-in capital and were not recognized until the deduction reduced income taxes payable. Additionally, concurrent with our adoption of ASU 2016-09, we made an accounting policy election to account for forfeitures when they occur, rather than estimating the number of awards that are expected to vest, as we had done prior to our adoption of this standard. Amendments requiring recognition of excess tax benefits in the income statement were adopted prospectively. Amendments related to the timing of when excess tax benefits are recognized and forfeitures were adopted using a modified retrospective transition method by means of cumulative-effect adjustments to equity as of January 1, 2017. For the timing of the recognition of excess tax benefits, the cumulative-effect adjustment was to recognize an increase in retained earnings of $5.0 million and a deferred tax asset for the same amount. However, because we have determined that our U.S. and USVI deferred tax assets are not considered to be more likely than not realizable, we established an offsetting full valuation allowance on the deferred tax asset through a reduction in retained earnings. For the change in accounting for forfeitures, we recognized a cumulative-effect adjustment through a reduction of $0.3 million in retained earnings and an increase in additional paid-in capital for the same amount. We also recognized the tax effect of this adjustment through an increase in retained earnings of $0.1 million and a deferred tax asset for the same amount. However, we also fully reserved the resulting deferred tax asset as an offsetting reduction in retained earnings. Recently Issued Accounting Standards Revenue from Contracts with Customers (ASU 2014-09) In May 2014, the FASB issued ASU 2014-09 to clarify the principles for recognizing revenue and to develop a common revenue standard. Under this standard, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should recognize revenue through the following five-step process: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 will be effective for us on January 1, 2018. An entity should apply the amendments in this ASU either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect recognized at the date of initial application. The guidance in this standard does not apply to financial instruments and other contractual rights or obligations within the scope of ASC 860, Transfers and Servicing . We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Business Combinations: Clarifying the Definition of a Business (ASU 2017-01) In January 2017, the FASB issued ASU 2017-01 to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. This standard will be effective for us on January 1, 2018. We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Receivables: Nonrefundable Fees and Other Costs (ASU 2017-08) In March 2017, the FASB issued ASU 2017-08 to amend the amortization period for certain purchased callable debt securities held at a premium. This standard shortens the amortization period for the premium to the earliest call date, rather than generally amortizing the premium as an adjustment of yield over the contractual life of the instrument, as required by current GAAP. This standard will be effective for us on January 1, 2019. We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Compensation: Stock Compensation (ASU 2017-09) In May 2017, the FASB issued ASU 2017-09 to provide clarity and reduce both diversity in practice as well as cost and complexity when applying the modification accounting guidance in FASB ASC Topic 718, Compensation -- Stock Compensation , to a change to the terms or conditions of a share-based payment award. This standard will be effective for us on January 1, 2018. We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12) In August 2017, the FASB issued ASU 2017-12 to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements, and to make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. This standard will be effective for us on January 1, 2019, with early application permitted in any interim period. We are currently evaluating the effect of adopting this standard. |
Securitizations and Variable In
Securitizations and Variable Interest Entities | 9 Months Ended |
Sep. 30, 2017 | |
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 three groups: (1) securitizations of residential mortgage loans, (2) financings of advances on loans serviced for others and (3) financings of automotive dealer financing notes. 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 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 in the unaudited consolidated statements of operations. We also sell newly originated forward and reverse residential mortgage loans to unaffiliated third parties with servicing rights released. 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. To the extent we retain the servicing rights associated with the transferred loans, we 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: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Proceeds received from securitizations $ 687,502 $ 1,511,991 $ 2,711,651 $ 3,878,461 Servicing fees collected 10,300 3,768 30,250 10,441 Purchases of previously transferred assets, net of claims reimbursed (1,234 ) (271 ) (3,958 ) (1,051 ) $ 696,568 $ 1,515,488 $ 2,737,943 $ 3,887,851 In connection with these transfers, we retained MSRs of $3.6 million and $18.6 million , and $9.8 million and $26.5 million , during the three and nine months ended September 30, 2017 and 2016 , respectively. 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 UPB of the transferred loans at the dates indicated: September 30, 2017 December 31, 2016 Carrying value of assets: Mortgage servicing rights, at amortized cost $ 98,314 $ 94,492 Mortgage servicing rights, at fair value 224 233 Advances and match funded advances 53,683 37,336 UPB of loans transferred 11,905,357 10,485,697 Maximum exposure to loss $ 12,057,578 $ 10,617,758 At September 30, 2017 and December 31, 2016 , 7.7% and 7.6% , respectively, of the transferred residential loans that we service were 60 days or more past due. 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 (HECM, or reverse mortgages) that are insured by the FHA. We pool the loans into HMBS that we sell into the secondary market with servicing rights retained or we sell the loans to third parties with servicing rights released. 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 HECM loans do not qualify for sale accounting, and therefore, we account for these transfers as financings. Under this accounting treatment, the HECM loans 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 with respect to standard representations and warranties and our contractual obligation to service the HECM loans and the HMBS. We measure the HECM loans and HMBS-related borrowings at fair value on a recurring basis. The changes in fair value of the HECM loans and HMBS-related borrowings are included in Other revenues in our unaudited consolidated statements of operations. Included in net fair value gains on the HECM loans and related HMBS borrowings are the interest income that we expect to be collected on the HECM loans and the interest expense that we expect to be paid on the HMBS-related borrowings. We report originations and collections of HECM loans in investing activities in the unaudited consolidated statements of cash flows. We report net fair value gains on HECM loans 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 HECM loans and payments on HMBS-related borrowings are included in financing activities in the unaudited consolidated statements of cash flows. At September 30, 2017 and December 31, 2016 , HMBS-related borrowings of $4.4 billion and $3.4 billion were outstanding. Loans held for investment, at fair value were $4.5 billion and $3.6 billion at September 30, 2017 and December 31, 2016 , respectively. At September 30, 2017 and December 31, 2016 , Loans held for investment included $39.2 million and $81.3 million , respectively, of originated loans which had not yet been pledged as collateral. See Note 3 – Fair Value and Note 11 – Borrowings for additional information on HMBS-related borrowings and Loans held for investment - Reverse mortgages. 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, and we refer to this debt as Match funded liabilities. 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 a component of Match funded assets 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 have recourse only to the assets of the SPE for satisfaction of the debt. 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. Financings of Automotive Dealer Financing Notes Match funded automotive dealer financing notes result from our transfers of short-term, inventory-secured loans to car dealers to an SPE in exchange for cash. We consolidate this SPE because we have determined that Ocwen is the primary beneficiary of the SPE. The SPE issues debt supported by collections on the transferred loans. We make the transfers to the SPE under the terms of our automotive capital asset receivables financing facility agreements. We classify the transferred loans on our unaudited consolidated balance sheets as a component of Match funded assets and the related liabilities as Match funded liabilities. The SPE uses collections of the pledged loans to repay principal and interest and to pay the expenses of the SPE. Holders of the debt issued by the SPE have recourse only to the assets of the SPE for satisfaction of the debt. The assets and liabilities of the automotive capital asset receivables financing SPE are comprised solely of Match funded automotive dealer financing notes, 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 | 9 Months Ended |
Sep. 30, 2017 | |
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: September 30, 2017 December 31, 2016 Level Carrying Value Fair Value Carrying Value Fair Value Financial assets: Loans held for sale: Loans held for sale, at fair value (a) 2 $ 200,438 $ 200,438 $ 284,632 $ 284,632 Loans held for sale, at lower of cost or fair value (b) 3 23,224 23,224 29,374 29,374 Total Loans held for sale $ 223,662 $ 223,662 $ 314,006 $ 314,006 Loans held for investment (a) 3 $ 4,459,760 $ 4,459,760 $ 3,565,716 $ 3,565,716 Advances (including match funded) (c) 3 1,405,816 1,405,816 1,709,846 1,709,846 Automotive dealer financing notes (including match funded) (c) 3 36,036 38,578 33,224 33,147 Receivables, net (c) 3 231,514 231,514 265,720 265,720 Mortgage-backed securities, at fair value (a) 3 9,327 9,327 8,342 8,342 U.S. Treasury notes (a) 1 1,575 1,575 2,078 2,078 Financial liabilities: Match funded liabilities (c) 3 $ 1,028,016 $ 1,023,241 $ 1,280,997 $ 1,275,059 Financing liabilities: HMBS-related borrowings, at fair value (a) 3 $ 4,358,277 $ 4,358,277 $ 3,433,781 $ 3,433,781 Financing liability - MSRs pledged, at fair value (a) 3 447,843 447,843 477,707 477,707 Other (c) 3 89,138 68,615 101,324 81,805 Total Financing liabilities $ 4,895,258 $ 4,874,735 $ 4,012,812 $ 3,993,293 Other secured borrowings: Senior secured term loan (c) (d) 2 $ 313,316 $ 322,238 $ 323,514 $ 327,674 Other (c) 3 231,273 231,273 355,029 355,029 Total Other secured borrowings $ 544,589 $ 553,511 $ 678,543 $ 682,703 Senior notes: Senior unsecured notes (c) (d) 2 $ 3,122 $ 2,997 $ 3,094 $ 3,048 Senior secured notes (c) (d) 2 344,079 340,808 $ 343,695 352,255 Total Senior notes $ 347,201 $ 343,805 $ 346,789 $ 355,303 Derivative financial instruments assets (liabilities), at fair value (a): Interest rate lock commitments 2 $ 4,969 $ 4,969 $ 6,507 $ 6,507 Forward mortgage-backed securities 1 973 973 (614 ) (614 ) Interest rate caps 3 1,839 1,839 1,836 1,836 September 30, 2017 December 31, 2016 Level Carrying Value Fair Value Carrying Value Fair Value Mortgage servicing rights: Mortgage servicing rights, at fair value (a) 3 $ 598,147 $ 598,147 $ 679,256 $ 679,256 Mortgage servicing rights, at amortized cost (c) (e) 3 346,161 424,208 363,722 467,911 Total Mortgage servicing rights $ 944,308 $ 1,022,355 $ 1,042,978 $ 1,147,167 (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 carrying values are net of unamortized debt issuance costs and discount. See Note 11 – Borrowings for additional information . (e) Balances include the impaired government-insured stratum of amortization method MSRs, which is measured at fair value on a non-recurring basis and reported net of the valuation allowance. Before applying the valuation allowance of $26.6 million , the carrying value of the impaired stratum at September 30, 2017 was $163.5 million . At December 31, 2016 , the carrying value of this stratum was $172.9 million before applying the valuation allowance of $28.2 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 September 30, 2017 Beginning balance $ 4,223,776 $ (4,061,626 ) $ 8,986 $ (441,007 ) $ 1,937 $ 625,650 $ 357,716 Purchases, issuances, sales and settlements: Purchases — — — — 655 — 655 Issuances 263,169 (317,277 ) — (54,601 ) — (715 ) (109,424 ) Sales — — — — — (311 ) (311 ) Transfers to Real estate (Other assets) 88 — — — — — 88 Settlements (1) (118,991 ) 111,677 — 19,770 (403 ) — 12,053 144,266 (205,600 ) — (34,831 ) 252 (1,026 ) (96,939 ) Total realized and unrealized gains (losses) included in earnings 91,718 (91,051 ) 341 27,995 (350 ) (26,477 ) 2,176 Transfers in and / or out of Level 3 — — — — — — — Ending balance $ 4,459,760 $ (4,358,277 ) $ 9,327 $ (447,843 ) $ 1,839 $ 598,147 $ 262,953 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-Backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Total Three months ended September 30, 2016 Beginning balance $ 3,057,564 $ (2,935,928 ) $ 9,063 $ (495,126 ) $ 200 $ 700,668 $ 336,441 Purchases, issuances, sales and settlements: Purchases — — — — 638 — 638 Issuances 509,900 (297,457 ) — — — (50 ) 212,393 Sales — — — — — (5 ) (5 ) Settlements (1) (289,428 ) 63,119 — 594 — — (225,715 ) 220,472 (234,338 ) — 594 638 (55 ) (12,689 ) Total realized and unrealized gains (losses) included in earnings 61,605 (54,344 ) (23 ) — (45 ) (4,505 ) 2,688 Transfers in and / or out of Level 3 — — — — — — — Ending balance $ 3,339,641 $ (3,224,610 ) $ 9,040 $ (494,532 ) $ 793 $ 696,108 $ 326,440 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Total Nine months ended September 30, 2017 Beginning balance $ 3,565,716 $ (3,433,781 ) $ 8,342 $ (477,707 ) $ 1,836 $ 679,256 $ 343,662 Purchases, issuances, sales and settlements: Purchases — — — — 655 — 655 Issuances 961,642 (981,730 ) — (54,601 ) — (2,131 ) (76,820 ) Sales — — — — — (541 ) (541 ) Transfers to Real estate (Other assets) (1,335 ) — — — — — (1,335 ) Settlements (1) (311,560 ) 287,908 — 52,963 (445 ) — 28,866 648,747 (693,822 ) — (1,638 ) 210 (2,672 ) (49,175 ) Total realized and unrealized gains (losses) included in earnings (2) 245,297 (230,674 ) 985 31,502 (207 ) (78,437 ) (31,534 ) Transfers in and / or out of Level 3 — — — — — — — Ending Balance $ 4,459,760 $ (4,358,277 ) $ 9,327 $ (447,843 ) $ 1,839 $ 598,147 $ 262,953 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Total Nine months ended September 30, 2016 Beginning balance $ 2,488,253 $ (2,391,362 ) $ 7,985 $ (541,704 ) $ 2,042 $ 761,190 $ 326,404 Purchases, issuances, sales and settlements: Purchases — — — — 782 — 782 Issuances 1,185,565 (820,438 ) — — — (1,325 ) 363,802 Sales — — — — — (148 ) (148 ) Settlements (1) (528,263 ) 161,995 — 47,172 (81 ) — (319,177 ) 657,302 (658,443 ) — 47,172 701 (1,473 ) 45,259 Total realized and unrealized gains (losses) included in earnings (2) 194,086 (174,805 ) 1,055 — (1,950 ) (63,609 ) (45,223 ) Transfers in and / or out of Level 3 — — — — — — — Ending balance $ 3,339,641 $ (3,224,610 ) $ 9,040 $ (494,532 ) $ 793 $ 696,108 $ 326,440 (1) Settlements for Loans held for investment - reverse mortgages consist chiefly of principal payments received, but also may include non-cash settlements of loans. (2) Total losses attributable to derivative financial instruments still held at September 30, 2017 and September 30, 2016 were $0.2 million and $0.5 million for the nine months ended September 30, 2017 and 2016 , respectively. Total losses attributable to MSRs still held at September 30, 2017 and September 30, 2016 were $78.4 million and $62.4 million for the nine months ended September 30, 2017 and 2016 , respectively. 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. 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 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 We 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 included in the valuations consisted of the following at the dates indicated: September 30, December 31, 2016 Life in years Range 6.1 to 6.9 5.5 to 8.7 Weighted average 6.4 6.1 Conditional repayment rate Range 5.7% to 53.8% 5.2% to 53.8% Weighted average 12.9 % 20.9 % Discount rate 2.7 % 3.3 % 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 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 verification and analytical procedures, provide reasonable assurance that the prices used in our unaudited 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 • Delinquency rates • Cost of servicing • Interest rate used for computing float earnings • Discount rate • Compensating interest expense • Interest rate used for computing the cost of financing servicing advances • 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 independent 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 valuations consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Weighted average prepayment speed 9.5 % 8.9 % Weighted average delinquency rate 12.0 % 11.1 % Advance financing cost 5-year swap 5-year swap Interest rate for computing float earnings 5-year swap 5-year swap Weighted average discount rate 9.2 % 8.9 % Weighted average cost to service (in dollars) $ 99 $ 108 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. 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 disclosed 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 in 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 the 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 valuations consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Agency Non-Agency Agency Non-Agency Weighted average prepayment speed 8.8 % 16.5 % 8.4 % 16.5 % Weighted average delinquency rate 0.7 % 29.7 % 1.0 % 29.3 % Advance financing cost 5-year swap 5-yr swap plus 2.75% 5-year swap 1-Month LIBOR (1ML) plus 3.5% Interest rate for computing float earnings 5-year swap 5-yr swap minus .50% 5-year swap 1ML Weighted average discount rate 9.0 % 12.6 % 9.0 % 14.9 % Weighted average cost to service (in dollars) $ 63 $ 312 $ 64 $ 307 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. Automotive Dealer Financing Notes We estimate the fair value of our automotive dealer financing notes using unobservable inputs within an internally developed cash flow model. Key inputs included projected repayments, interest and fee receipts, deferrals, delinquencies, recoveries and charge-offs of the notes within the portfolio. The projected cash flows are then discounted at a rate commensurate with the risk of the estimated cash flows to derive the fair value of the portfolio. The more significant assumptions used in the valuation consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Weighted average life in months 2.2 2.7 Average note rate 8.3 % 8.3 % Discount rate 10.0 % 10.0 % Loan loss rate 19.2 % 11.3 % Mortgage-Backed Securities (MBS) 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. Changes in the fair value of our investment in subordinate and residual securities are recognized in Other, net in the unaudited consolidated statements of operations. 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. U.S. Treasury Notes We base the fair value of U.S. Treasury notes on quoted prices in active markets to which we have access. 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 advance liabilities during the amortization period based on our historical advance collection rates and taking into consideration any plans to refinance the notes. 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 valuations consisted of the following at the dates indicated: September 30, December 31, 2016 Life in years Range 6.1 to 6.9 4.5 to 8.7 Weighted average 6.4 5.1 Conditional repayment rate Range 5.7% to 53.8% 5.2% to 53.8% Weighted average 12.9 % 20.9 % Discount rate 2.6 % 2.7 % Significant increases or decreases in any of these assumptions in isolation would result in a significantly higher or lower fair value. MSRs Pledged We have elected to measure these borrowings at fair value. We recognize the proceeds received in connection with Rights to MSRs transactions as a secured borrowing that we account for at fair value. Fair value for the portion of the borrowing attributable to the MSRs underlying the Rights to MSRs is determined using the mid-point of the range of prices provided by third-party valuation experts. Fair value for the portion of the borrowing attributable to any lump sum payments received in connection with the transfer of MSRs underlying such Rights to MSRs to the extent such transfer is accounted for as a financing is determined by discounting the relevant future cash flows that were altered through such transfer using assumptions consistent with the mid-point of the range of prices provided by third-party valuation experts for the related MSR. Since we have elected fair value for our portfolio of non-Agency MSRs, future fair value changes in the Financing Liability - MSRs Pledged will be partially offset by changes in the fair value of the related MSRs. See Note 8 — Rights to MSRs for additional information. The more significant assumptions used in determination of the prices of the underlying MSRs consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Weighted average prepayment speed 17.0 % 17.0 % Weighted average delinquency rate 30.5 % 29.8 % Advance financing cost 5-yr swap plus 2.75% 1ML plus 3.5% Interest rate for computing float earnings 5-yr swap minus .50% 1ML Weighted average discount rate 13.3 % 14.9 % Weighted average cost to service (in dollars) $ 320 $ 313 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 value on quoted prices in a market with limited trading activity. Senior Notes We base the fair value on quoted prices in a market with limited trading activity. Derivative Financial Instruments Interest rate lock commitments (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 MBS trades to provide an economic hedge against changes in the 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 obtain 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 exposure on variable rate debt issued on servicing advance financing facilities from increases in 1ML interest rates. The fair value for interest rate caps is based on counterparty market prices and adjusted for counterparty credit risk. |
Loans Held for Sale
Loans Held for Sale | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Loans Held for Sale | Note 4 – Loans Held for Sale Loans Held for Sale - Fair Value The following table summarizes the activity in the balance: Nine months ended September 30, 2017 2016 Beginning balance $ 284,632 $ 309,054 Originations and purchases 2,204,028 3,141,205 Proceeds from sales (2,310,294 ) (3,167,640 ) Principal collections (3,684 ) (10,995 ) Transfers from Loans held for sale - Lower of cost or fair value — 1,158 Gain on sale of loans 22,131 23,627 Increase in fair value of loans 1,836 990 Other 1,789 4,715 Ending balance (1) $ 200,438 $ 302,114 (1) At September 30, 2017 and 2016 , the balances include $6.7 million and $13.0 million , respectively, of fair value adjustments. At September 30, 2017 , loans held for sale, at fair value with a UPB of $190.8 million were pledged as collateral to warehouse lines of credit in our Lending segment. Loans Held for Sale - Lower of Cost or Fair Value The following table summarizes the activity in the net balance: Nine months ended September 30, 2017 2016 Beginning balance $ 29,374 $ 104,992 Purchases 870,697 1,434,059 Proceeds from sales (746,999 ) (1,295,101 ) Principal collections (6,545 ) (20,151 ) Transfers to Receivables, net (137,807 ) (199,047 ) Transfers to Real estate (Other assets) (711 ) (6,434 ) Transfers to Loans held for sale - Fair value — (1,158 ) Gain on sale of loans 8,332 18,259 Decrease in valuation allowance 1,566 4,637 Other 5,317 (2,405 ) Ending balance (1) $ 23,224 $ 37,651 (1) At September 30, 2017 and 2016 , the balances include $17.6 million and $28.1 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. The changes in the valuation allowance are as follows: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Beginning balance $ 6,491 $ 15,933 $ 10,064 $ 14,658 Provision 906 (63 ) 1,761 2,100 Transfer from Liability for indemnification obligations (Other liabilities) 1,529 601 2,416 2,306 Sales of loans (426 ) (6,450 ) (6,071 ) (8,699 ) Other (2 ) — 328 (344 ) Ending balance $ 8,498 $ 10,021 $ 8,498 $ 10,021 At September 30, 2017 , Loans held for sale, at lower of cost or fair value, with a UPB of $8.2 million were pledged as collateral to a warehouse line of credit in our Servicing segment. Gain on Loans Held for Sale, Net The following table summarizes the activity in Gain on loans held for sale, net: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 MSRs retained on transfers of forward loans $ 3,572 $ 9,826 $ 18,604 $ 25,312 Fair value gains related to transfers of reverse mortgage loans, net 15,747 32,627 37,434 16,868 Gain on sale of repurchased Ginnie Mae loans 4,577 6,917 8,332 19,879 Other gains (losses) related to loans held for sale, net 6,730 (8,663 ) 19,635 15,673 Gain on sales of loans, net 30,626 40,707 84,005 77,732 Change in fair value of IRLCs (178 ) (2,523 ) (1,605 ) 4,148 Change in fair value of loans held for sale (2,078 ) (8,226 ) 3,735 13,486 Loss on economic hedge instruments (2,420 ) (4,051 ) (8,604 ) (25,677 ) Other (173 ) (262 ) (555 ) (615 ) $ 25,777 $ 25,645 $ 76,976 $ 69,074 |
Advances
Advances | 9 Months Ended |
Sep. 30, 2017 | |
Advances [Abstract] | |
Advances | Note 5 – Advances Advances, net, which represent payments made on behalf of borrowers or on foreclosed properties, consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Principal and interest $ 16,951 $ 31,334 Taxes and insurance 137,992 170,131 Foreclosures, bankruptcy and other 77,172 94,369 232,115 295,834 Allowance for losses (34,162 ) (37,952 ) $ 197,953 $ 257,882 Advances at September 30, 2017 and December 31, 2016 include $20.6 million and $29.0 million , respectively, of previously sold advances in connection with sales of loans that did not qualify for sale accounting. The following table summarizes the activity in net advances: Nine months ended September 30, 2017 2016 Beginning balance $ 257,882 $ 444,298 Sales of advances (399 ) (24,572 ) Collections of advances, charge-offs and other, net (63,320 ) (125,701 ) Decrease (increase) in allowance for losses 3,790 (5,011 ) Ending balance $ 197,953 $ 289,014 The changes in the allowance for losses are as follows: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Beginning balance $ 20,328 $ 39,441 $ 37,952 $ 41,901 Provision (1) 13,756 (6,865 ) 17,054 581 Recoveries (Charge-offs), net and other 78 14,336 (20,844 ) 4,430 Ending balance $ 34,162 $ 46,912 $ 34,162 $ 46,912 (1) The provision for the three months ended September 30, 2017 increased in connection with re-performing government-insured loans for which certain advances are no longer recoverable. |
Match Funded Advances
Match Funded Advances | 9 Months Ended |
Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | |
Match Funded Assets | Note 6 – Match Funded Assets Match funded assets are comprised of the following at the dates indicated: September 30, 2017 December 31, 2016 Advances: Principal and interest $ 574,175 $ 711,272 Taxes and insurance 445,692 530,946 Foreclosures, bankruptcy, real estate and other 187,996 209,746 1,207,863 1,451,964 Automotive dealer financing notes (1) 36,036 — $ 1,243,899 $ 1,451,964 (1) In 2017, we entered into loan agreements under a new automotive dealer loan financing facility to which these notes are pledged. The following table summarizes the activity in match funded assets: Nine months ended September 30, 2017 2016 Advances Automotive Dealer Financing Notes Advances Beginning balance $ 1,451,964 $ — $ 1,706,768 Transfer from Other assets — 25,180 — Sales (691 ) — (7,757 ) New advances/notes (Collections of pledged assets), net (243,410 ) 10,856 (164,689 ) Ending balance $ 1,207,863 $ 36,036 $ 1,534,322 |
Mortgage Servicing
Mortgage Servicing | 9 Months Ended |
Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | |
Mortgage Servicing | Note 7 – Mortgage Servicing Mortgage Servicing Rights – Amortization Method The following table summarizes changes in the net carrying value of servicing assets that we account for using the amortization method: Nine months ended September 30, 2017 2016 Beginning balance $ 363,722 $ 377,379 Additions recognized in connection with asset acquisitions 1,658 15,968 Additions recognized on the sale of mortgage loans 18,604 26,494 Sales and other transfers (814 ) (23,521 ) 383,170 396,320 Amortization (1) (38,560 ) (18,595 ) Decrease (increase) in impairment valuation allowance (2) 1,551 (37,164 ) Ending balance $ 346,161 $ 340,561 Estimated fair value at end of period $ 424,208 $ 357,817 (1) During 2016, principally in the third quarter, we participated in HUD’s Aged Delinquent Portfolio Loan Sale (ADPLS) program, which accelerates FHA insurance claims for a population of significantly delinquent FHA loans. The expedited claim filing process allows a servicer to reduce significantly its standard claim losses on accepted loans by shortening the servicing timeline and related expenses, some of which are not reimbursed by FHA insurance. Our participation required that we recognize $23.1 million of life-to-date losses on the claims filed in the third quarter of 2016. This loss is reported in Servicing and origination expense in the unaudited consolidated statements of operations . Because the MSRs related to the loans that were assigned to HUD had negative carrying values, our recognition of the losses on the loans reduced the negative carrying value of the MSRs, thereby generating negative amortization expense for this population of MSRs. In the third quarter of 2016, this ADPLS-related negative amortization expense of $18.1 million exceeded the positive amortization expense on the remaining MSRs, generating net negative amortization for the quarter. (2) Impairment of MSRs is recognized in Servicing and origination expense in the unaudited consolidated statements of operations. See Note 3 – Fair Value for additional information regarding impairment and the valuation allowance. Mortgage Servicing Rights – Fair Value Measurement Method The following table summarizes changes in the fair value of servicing assets that we account for at fair value on a recurring basis: Nine months ended September 30, 2017 2016 Agency Non-Agency Total Agency Non-Agency Total Beginning balance $ 13,357 $ 665,899 $ 679,256 $ 15,071 $ 746,119 $ 761,190 Sales and other transfers — (2,672 ) (2,672 ) (3 ) (1,471 ) (1,474 ) Changes in fair value (1): Changes in valuation inputs or other assumptions (131 ) 2,303 2,172 (4,654 ) — (4,654 ) Realization of expected future cash flows and other changes (1,385 ) (79,224 ) (80,609 ) (1,399 ) (57,555 ) (58,954 ) Ending balance $ 11,841 $ 586,306 $ 598,147 $ 9,015 $ 687,093 $ 696,108 (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, an improving housing market or expanded product availability (as prepayments increase) and increase in periods of rising interest rates, a deteriorating housing market or reduced product availability (as prepayments decrease). The following table summarizes the estimated change in the value of the MSRs that we carry at fair value as of September 30, 2017 given hypothetical shifts in lifetime prepayments and yield assumptions: Adverse change in fair value 10% 20% Weighted average prepayment speeds $ (59,993 ) $ (121,587 ) Discount rate (option-adjusted spread) (10,383 ) (20,807 ) The sensitivity analysis measures the potential impact on fair values based on hypothetical changes, which in the case of our portfolio at September 30, 2017 are increased prepayment speeds and a decrease in the yield assumption. 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 servicing rights 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 September 30, 2017 Servicing $ 78,254,463 $ — $ 78,254,463 Subservicing 3,656,197 9,750 3,665,947 NRZ (1) 105,557,658 — 105,557,658 $ 187,468,318 $ 9,750 $ 187,478,068 UPB at December 31, 2016 Servicing $ 86,049,298 $ — $ 86,049,298 Subservicing 4,330,084 92,933 4,423,017 NRZ (1) 118,712,748 — 118,712,748 $ 209,092,130 $ 92,933 $ 209,185,063 UPB at September 30, 2016 Servicing $ 89,018,280 $ — $ 89,018,280 Subservicing 4,692,236 151,432 4,843,668 NRZ (1) 123,181,486 — 123,181,486 $ 216,892,002 $ 151,432 $ 217,043,434 (1) UPB of loans serviced for which the Rights to MSRs have been sold to NRZ, including those subserviced for which third-party consents have been received and the MSRs have been transferred to NRZ. Residential assets serviced includes foreclosed real estate. Residential assets serviced also includes small-balance commercial assets with a UPB of $1.0 billion , $1.4 billion and $1.5 billion at September 30, 2017 , December 31, 2016 and September 30, 2016 , respectively. Commercial assets consist of large-balance foreclosed real estate. During the nine months ended September 30, 2017 and 2016 , we sold MSRs with a UPB of $210.2 million and $3.6 billion , respectively. 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. As a result of the economic downturn beginning in 2007 - 2008, the portfolio delinquency and/or cumulative loss threshold provisions have been breached by many private-label securitizations in our non-Agency servicing portfolio. To date, terminations as servicer as a result of a breach of any of these provisions have been minimal. From time to time, rating agencies will assign an outlook (or a ratings watch) to the rating status of a mortgage servicer. A negative outlook is generally used to indicate that a rating “may be lowered,” while a positive outlook is generally used to indicate a rating “may be raised.” S&P’s servicer ratings outlook for Ocwen is stable in general and its outlook for master servicing is positive. Fitch Ratings changed the servicer ratings Outlook to Negative from Stable on April 25, 2017. Moody’s placed the servicer ratings on Watch for Downgrade on April 24, 2017. The Morningstar ratings were withdrawn on August 8, 2017 at the request of Ocwen. None of these three ratings has subsequently changed since these actions. Certain of our servicing agreements require that we maintain specified servicer ratings from rating agencies such as Moody’s and S&P. Of 3,325 non-Agency servicing agreements, 712 with approximately $30.8 billion of UPB as of September 30, 2017 have minimum servicer ratings criteria. As a result of our current servicer ratings, termination rights have been triggered in 172 of these non-Agency servicing agreements. This represents approximately $9.7 billion in UPB as of September 30, 2017 , or approximately 7% of our total non-Agency servicing portfolio. 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. Servicing Revenue The following table presents the components of servicing and subservicing fees: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Loan servicing and subservicing fees: Servicing $ 63,071 $ 74,105 $ 197,712 $ 229,686 Subservicing 1,760 2,989 5,877 11,436 NRZ 129,228 159,919 420,151 482,566 194,059 237,013 623,740 723,688 Late charges 14,958 15,225 47,352 51,301 Home Affordable Modification Program (HAMP) fees 6,202 32,029 37,692 88,141 Loan collection fees 5,663 6,746 17,918 20,860 Other 12,338 11,222 34,821 23,003 $ 233,220 $ 302,235 $ 761,523 $ 906,993 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 unaudited consolidated balance sheets. Float balances amounted to $2.0 billion and $2.6 billion at September 30, 2017 and September 30, 2016 , respectively. |
Rights to MSRs
Rights to MSRs | 9 Months Ended |
Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | |
Rights to MSRs | Note 8 — Rights to MSRs In 2012 and 2013, we sold Rights to MSRs with respect to certain non-Agency MSRs and the related servicing advances to Home Loan Servicing Solutions, Ltd. (HLSS), an indirect wholly-owned subsidiary of NRZ. We refer to the sale of Rights to MSRs and the related servicing advances as the NRZ/HLSS Transactions, and to the 2012 and 2013 agreements as the 2012 - 2013 Agreements. While certain underlying economics of the MSRs were transferred, legal title was retained by Ocwen, causing the Rights to MSRs transactions to be accounted for as secured financings. We continue to recognize the MSRs and related financing liability on our consolidated balance sheet as well as the full amount of servicing revenue and changes in the fair value of the MSRs and related financing liability in our consolidated statements of operations. In April 2015, Ocwen agreed, as part of an amendment to the 2012 - 2013 Agreements, to sell all economic beneficial rights to the “clean-up call rights” to which we are entitled pursuant to servicing agreements that underlie the Rights to MSRs to 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 such clean-up call. Clean-up call rights generally allow a servicer or master servicer to purchase the remaining mortgage loans and REO out of a securitization, after the stated principal balance of such mortgage loans in the securitization falls below a specified percentage (generally equal to or lower than 10% of the original balance), for a price generally equal to the outstanding balance of such mortgage loans plus interest and certain other amounts. We received $0.8 million and $5.5 million and $1.3 million and $2.4 million during the three and nine months ended September 30, 2017 and 2016 , respectively, from NRZ in connection with such clean-up calls. On July 23, 2017, we entered into a master agreement (Master Agreement), transfer agreement (Transfer Agreement) and subservicing agreement (Subservicing Agreement) (collectively, the 2017 Agreements) pursuant to which the parties agreed to undertake certain actions to facilitate the transfer of the MSRs underlying the Rights to MSRs to NRZ and under which Ocwen will subservice the MSRs for an initial term of five years (Initial Term). Upon obtaining the required third-party consents, and upon transfer of the MSRs, NRZ will pay a lump sum to us, with the amount determined in accordance with the Master Agreement as of each transfer date. In the event third-party consents are not received by July 23, 2018, or earlier if mutually agreed, any non-transferred MSRs may (i) become subject to a new mortgage servicing rights agreement to be negotiated between Ocwen and NRZ, (ii) be acquired by Ocwen or, if Ocwen does not desire or is otherwise unable to purchase, sold to a third party in accordance with the terms of the Master Agreement, or (iii) remain subject to the terms of the 2012 - 2013 Agreements. The following table provides details of activity related to Rights to MSRs transactions: Nine months ended September 30, 2017 2017 Agreements 2012 - 2013 Agreements MSR MSR UPB Carrying Value UPB Carrying Value Financing Liability (1) (2) Beginning balance $ — $ — $ 118,712,748 $ 477,707 $ (477,707 ) Transfers upon receipt of consents 15,872,374 31,253 (15,872,374 ) (31,253 ) — Receipt of lump sum payment in connection with transfer of MSRs to NRZ (3) — — — — (54,601 ) Calls (4) (134,705 ) (322 ) (1,132,497 ) (4,156 ) 4,478 Sales and other transfers — — (57,793 ) — — Changes in fair value (3): Changes in valuation inputs or other assumptions — (2,444 ) — (1,471 ) 27,024 Realization of expected future cash flows and other changes — (1,459 ) — (52,266 ) — Decrease in impairment valuation allowance — — — 13,769 — Runoff, settlements and other (217,048 ) — (11,613,047 ) 1,529 52,963 Ending balance $ 15,520,621 $ 27,028 $ 90,037,037 $ 403,859 $ (447,843 ) Advances N/A $ 2,727,107 (1) Carried at fair value in accordance with fair value election. (2) Under ASC 470-50, Debt - Modifications and Extinguishments , Ocwen is deemed to have had a significant modification and debt extinguishment in connection with the Rights to MSRs secured financing liability. Because the secured financing liability is accounted for at fair value, there was no gain or loss recognized in connection with this debt extinguishment. As permitted by ASC 825-10-25, Financial Instruments - Recognition - Fair Value Option , a significant modification of debt is an event that creates a fair value option election date. (3) The amount of the lump sum payment is based on a contractual schedule that approximates the net present value of the difference in cash flows under the 2017 Agreements versus the 2012 - 2013 Agreements, and was determined based on the weighted average characteristics, such as contractual servicing fee rates and delinquency, of the MSRs underlying the Rights to MSRs. The difference between the characteristics of the MSRs underlying the Rights to MSRs that are transferred in any period, relative to the weighted average loan characteristics used to determine the lump sum payment, will result in an increase (characteristics of transferred MSRs compare favorably to the weighted average) or decrease (characteristics of transferred MSRs compare unfavorably to the weighted average) in the fair value of the financing liability. The fair value of the portion of the financing liability recognized in connection with the September 1, 2017 transfer declined $37.6 million primarily due to the transferred MSRs having a contractual servicing fee rate of 33.4 bps as compared to the weighted average of 47.1 bps . (4) Represents the UPB and carrying value of MSRs in connection with clean-up call rights exercised by NRZ, for MSRs transferred to NRZ under the 2017 Agreements, or by Ocwen at NRZ’s direction, for MSRs underlying the 2012 - 2013 Agreements. Ocwen derecognizes the MSRs and the related financing liability upon collapse of the securitization. Income recognized in connection with clean-up calls is reported in other income in our unaudited consolidated statements of operations. The 2017 Agreements obligate NRZ to a standstill through January 23, 2019, subject to limited exceptions, on exercising rights it may otherwise have under the 2012 - 2013 Agreements to replace Ocwen as servicer of certain MSRs in the event of a termination event with respect to an affected servicing agreement underlying the MSRs resulting from a servicer rating downgrade. Under the terms of the Subservicing Agreement, in addition to a base servicing fee, Ocwen will continue to receive ancillary income, which primarily includes late fees, HAMP or other loan modification fees and Speedpay ® fees. NRZ will receive all float earnings and deferred servicing fees related to delinquent borrower payments, as well as be entitled to receive all REO-related income including REO referral commissions. At any time during the Initial Term, NRZ may terminate the Subservicing Agreement for convenience, subject to Ocwen’s right to receive a termination fee and proper notice. Following the Initial Term, NRZ may extend the term of the Subservicing Agreement for additional three -month periods by providing proper notice. Following the Initial Term, the Subservicing Agreement can be cancelled by Ocwen on an annual basis. NRZ and Ocwen have the ability to terminate the Subservicing Agreement for cause if certain conditions specified in the Subservicing Agreement occur. Under the 2012 - 2013 Agreements, the servicing fees payable under the servicing agreements underlying the Rights to MSRs are apportioned between NRZ and us. NRZ retains a fee based on the UPB of the loans serviced, and OLS receives certain fees, including a performance fee based on servicing fees actually paid less an amount calculated based on the amount of servicing advances and the cost of financing those advances. Due to the length of the Initial Term of the Subservicing Agreement, this transaction does not qualify as a sale and is accounted for as a secured financing. As consents are received and MSRs transfer to NRZ, a new liability is recognized in an amount equal to the lump sum payment Ocwen receives in connection with such transfer. Due diligence and consent-related costs are recorded in Professional services expense as incurred. Changes in the fair value of the financing liability are recognized in Interest expense. Interest expense related to financing liabilities recorded in connection with the NRZ Transactions is indicated in the table below. Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Servicing fees collected on behalf of NRZ $ 129,228 $ 159,919 $ 420,151 $ 482,566 Less: Subservicing fee retained by Ocwen 68,536 87,506 226,483 257,408 Net servicing fees remitted to NRZ 60,692 72,413 193,668 225,158 Less: Reduction (increase) in financing liability Changes in fair value 27,024 (807 ) 27,024 (1,555 ) Runoff, settlement and other 19,770 594 52,963 47,172 $ 13,898 $ 72,626 $ 113,681 $ 179,541 Interest expense for the nine months ended September 30, 2016 includes $10.5 million of fees incurred in connection with our agreement to compensate NRZ for certain increased costs associated with its servicing advance financing facilities that were the direct result of a previous downgrade of our S&P servicer rating. |
Receivables
Receivables | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Receivables | Note 9 – Receivables September 30, 2017 December 31, 2016 Servicing: Government-insured loan claims, net (1) $ 118,113 $ 133,063 Due from custodial accounts 34,423 44,761 Reimbursable expenses 31,565 29,358 Due from NRZ 11,548 21,837 Other 13,551 27,086 209,200 256,105 Income taxes receivable 38,666 61,932 Other receivables (2) 46,519 21,125 294,385 339,162 Allowance for losses (1) (62,871 ) (73,442 ) $ 231,514 $ 265,720 (1) At September 30, 2017 and December 31, 2016 , the allowance for losses 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 September 30, 2017 and December 31, 2016 were $48.7 million and $53.3 million , respectively. (2) At September 30, 2017 , the balance includes $13.0 million in connection with the recovery of prior legal settlement expenses and $14.0 million for insurance recovery in connection with accrued legal fees and settlements outstanding at September 30, 2017 . |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2017 | |
Other Assets [Abstract] | |
Other Assets | Note 10 – Other Assets September 30, 2017 December 31, 2016 Contingent loan repurchase asset (1) $ 318,954 $ 246,081 Debt service accounts 38,753 42,822 Prepaid expenses (2) 33,951 57,188 Prepaid lender fees, net 9,896 9,023 Mortgage backed securities, at fair value 9,327 8,342 Derivatives, at fair value 7,852 9,279 Prepaid income taxes 6,314 8,392 Interest-earning time deposits 5,380 6,454 Real estate 3,700 5,249 Automotive dealer financing notes, net — 33,224 Other 19,774 12,050 $ 453,901 $ 438,104 (1) With respect to previously transferred Ginnie Mae mortgage loans for which we have the right or the obligation to repurchase under the applicable agreement, we re-recognize the loans in Other assets and a corresponding liability in Other liabilities. (2) In connection with the sale of Agency MSRs in 2015, we placed $52.9 million in escrow for the payment of representation, warranty and indemnification claims associated with the underlying loans. Prepaid expenses at September 30, 2017 and December 31, 2016 includes the remaining balance of $20.2 million and $34.9 million , respectively. Automotive dealer financing notes represent short-term inventory-secured floor plan loans – provided to independent used car dealerships through our Automotive Capital Services (ACS) venture – that have not been pledged to our automotive dealer loan financing facility. The balance of the notes of $8.6 million and $37.6 million are reported net of an allowance of $8.6 million and $4.4 million at September 30, 2017 and December 31, 2016 , respectively. Changes in the allowance are as follows: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Beginning balance $ 9,586 $ 164 $ 4,371 $ 27 Provision (1,019 ) 108 4,196 245 Ending balance $ 8,567 $ 272 $ 8,567 $ 272 |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Borrowings | Note 11 – Borrowings Match Funded Liabilities September 30, 2017 December 31, 2016 Borrowing Type Maturity (1) Amorti- zation Date (1) Available Borrowing Capacity (2) Weighted Average Interest Rate (3) Balance Weighted Average Interest Rate (3) Balance Advance Financing Facilities: Advance Receivables Backed Notes - Series 2014-VF3 (4) Aug. 2047 Aug. 2017 $ — — % $ — 3.12 % $ 74,394 Advance Receivables Backed Notes - Series 2014-VF4 (4) Aug. 2048 Aug. 2018 34,366 4.27 70,634 3.12 74,394 Advance Receivables Backed Notes - Series 2015-VF5 (4) Aug. 2048 Aug. 2018 34,366 4.27 70,634 3.12 74,394 Advance Receivables Backed Notes - Series 2015-T3 (5) Nov. 2047 Nov. 2017 — — — 3.48 400,000 Advance Receivables Backed Notes - Series 2017-T1 (5) Sep. 2048 Sep. 2018 — 2.64 250,000 — — Advance Receivables Backed Notes - Series 2016-T1 (5) Aug. 2048 Aug. 2018 — 2.77 265,000 2.77 265,000 Advance Receivables Backed Notes - Series 2016-T2 (5) Aug. 2049 Aug. 2019 — 2.99 235,000 2.99 235,000 Total Ocwen Master Advance Receivables Trust (OMART) 68,732 2.29 % 891,268 3.14 % 1,123,182 Ocwen Servicer Advance Receivables Trust III (OSART III) - Advance Receivables Backed Notes, Series 2014-VF1 (6) Dec. 2047 Dec. 2017 23,134 4.41 % 51,866 4.03 % 63,093 Ocwen Freddie Advance Funding (OFAF) - Advance Receivables Backed Notes, Series 2015-VF1 (7) Jun. 2048 Jun. 2018 51,274 4.16 % 58,726 3.54 % 94,722 Total Servicing Advance Financing Facilities 143,140 2.51 % 1,001,860 3.21 % 1,280,997 Automotive Dealer Loan Financing Facility: Loan Series 2017-1 Feb. 2021 Feb. 2019 36,922 6.48 % 13,078 — % — Loan Series 2017-2 Mar. 2021 Mar. 2019 36,922 6.23 13,078 — — Total Automotive Capital Asset Receivables Trust (ACART) (8) 73,844 6.36 % 26,156 — % — $ 216,984 2.61 % $ 1,028,016 3.21 % $ 1,280,997 (1) The amortization date of our facilities is the date on which the revolving period ends under each advance 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 all of our 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 September 30, 2017 , $41.9 million of the available borrowing capacity of our advance financing notes could be used based on the amount of eligible collateral that had been pledged. (3) 1ML was 1.23% and 0.77% at September 30, 2017 and December 31, 2016 , respectively. (4) On August 11, 2017, we increased the borrowing capacity of the Series 2014-VF4 and Series 2014-VF5 variable rate notes from $70.0 million to $105.0 million . In addition, we voluntarily terminated the Series 2014-VF3 note. There is a ceiling of 125 basis points (bps) for 1ML in determining the interest rate for these notes. Rates on the individual notes are based on 1ML plus a margin of 235 to 635 bps. (5) Under the terms of the agreement, we must continue to borrow the full amount of the Series 2016-T1 and Series 2016-T2 fixed-rate term notes until the amortization date. On September 15, 2017, we terminated the Series 2015-T3 note, and we entered into the Series 2017-T1 notes. If there is insufficient collateral to support the level of borrowing, the excess cash proceeds are not distributed to Ocwen but are held by the trustee, and interest expense continues to be based on the full amount of the notes. The Series 2016-T1 and Series 2016-T2 notes have a total borrowing capacity of $500.0 million . The Series 2017-T1 notes have a borrowing capacity of $250.0 million . Rates on the individual notes range from 2.4989% to 4.4456% . (6) The maximum borrowing capacity under this facility is $75.0 million . There is a ceiling of 75 bps for 1ML in determining the interest rate for these variable rate notes. Rates on the individual notes are based on the lender’s cost of funds plus a margin of 230 to 470 bps. (7) The combined borrowing capacity of the Series 2015-VF1 Notes was $160.0 million at December 31, 2016. Rates on the individual notes are based on 1ML plus a margin of 240 to 480 bps. On June 8, 2017, we negotiated a renewal of this facility through June 7, 2018. As part of this renewal, we reduced the combined borrowing capacity of the Series 2015-VF1 Notes to $110.0 million with interest computed based on the lender’s cost of funds plus a margin of 250 to 500 bps. There is a ceiling of 300 bps for 1ML in determining the interest rate for these variable rate notes. (8) We entered into the loan agreements for the Series 2017-1 Notes on February 24, 2017 and for the Series 2017-2 Notes on March 17, 2017. The committed borrowing capacity for each of the Series 2017-1 and Series 2017-2 variable rate notes is $50.0 million . From time to time, we may request increases in the aggregate maximum borrowing capacity of the facility to $200.0 million . Rates on the Series 2017-1 notes are based on 1ML plus a margin of 500 bps and rates on the Series 2017-2 notes are based on the lender’s cost of funds plus a margin of 500 bps. Pursuant to the 2012 - 2013 Agreements, NRZ assumed the obligation to fund new servicing advances with respect to the MSRs underlying the Rights to MSRs in the NRZ/HLSS Transactions. We are dependent upon NRZ for funding the servicing advance obligations for Rights to MSRs where we are the servicer. NRZ currently uses advance financing facilities in order to fund a substantial portion of the servicing advances that they are contractually obligated to purchase pursuant to our agreements with them. As of September 30, 2017 , we were the servicer on Rights to MSRs sold to NRZ pertaining to approximately $90.0 billion in UPB and the associated outstanding servicing advances as of such date were approximately $2.7 billion . Should NRZ’s advance financing facilities fail to perform as envisaged or should NRZ otherwise be unable to meet its advance funding obligations, our liquidity, financial condition and business could be materially and adversely affected. As the servicer, we are contractually required under our servicing agreements to make the relevant servicing advances even if NRZ does not perform its contractual obligations to fund those advances. On July 23, 2017, we entered into a series of new agreements with NRZ (the 2017 Agreements) that provide for the conversion of NRZ’s existing Rights to MSRs to fully-owned MSRs. See Note 8 — Rights to MSRs for additional information. In addition, although we are not an obligor or guarantor under NRZ’s advance financing facilities, we are a party to certain of the facility documents as the servicer of the underlying loans on which advances are being financed. As the servicer, we make certain representations, warranties and covenants, including representations and warranties in connection with our sale of advances to NRZ. Financing Liabilities Borrowings Collateral Interest Rate Maturity September 30, 2017 December 31, 2016 HMBS-Related Borrowings, at fair value (1) Loans held for investment 1ML + 264 bps (1) $ 4,358,277 $ 3,433,781 Other Financing Liabilities: Financing liability – MSRs pledged, at fair value 2012 - 2013 Agreements MSRs (2) (2) 430,887 477,707 2017 Agreements MSRs (3) (3) 16,956 — 447,843 477,707 Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (4) MSRs (4) Feb. 2028 74,695 81,131 Financing liability – Advances pledged (5) Advances on loans (5) (5) 14,443 20,193 536,981 579,031 $ 4,895,258 $ 4,012,812 (1) 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. (2) This financing liability arose in connection with sales proceeds received in 2012 and 2013 as part of the Rights to MSRs transactions with NRZ/HLSS and has no contractual maturity or repayment schedule. 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. (3) This financing liability arose in connection with the lump sum payment received in September 2017 upon subsequently obtaining the required third-party consents and transfer of legal title of the MSRs related to the Rights to MSRs transactions with NRZ/HLSS in 2012 and 2013. We received a lump sum payment of $54.6 million as compensation for foregoing certain payments under the 2012 and 2013 agreements. This liability has no contractual maturity or repayment schedule. 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. See Note 3 – Fair Value and Note 8 — Rights to MSRs for additional information. (4) 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. 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. (5) Certain sales of advances did not qualify for sales accounting treatment and were accounted for as a financing. This financing liability has no contractual maturity. Other Secured Borrowings Borrowings Collateral Interest Rate Maturity Available Borrowing Capacity (1) September 30, 2017 December 31, 2016 SSTL (2) 1ML Euro-dollar rate + 500 bps with a Eurodollar floor of 100 bps Dec. 2020 $ — $ 322,438 $ 335,000 Mortgage loan warehouse facilities: Repurchase agreement (3) Loans held for sale (LHFS) 1ML + 200 - 345 bps Aug. 2018 45,516 41,984 12,370 Master repurchase agreements (4) LHFS 1ML + 200 bps; 1ML floor of 0.0% Feb. 2018 — — 173,543 Participation agreements (5) LHFS N/A Apr. 2018 — 141,800 92,739 Participation agreements (6) LHFS (reverse mortgages) 1ML + 275 bps; 1ML floor of 300 or 350 bps Nov. 2017 — 47,489 26,254 Master repurchase agreement (7) LHFS (reverse mortgages) 1ML + 275 bps; 1ML floor of 25 bps Jan. 2018 — — 50,123 45,516 231,273 355,029 $ 45,516 553,711 690,029 Unamortized debt issuance costs - SSTL (6,045 ) (7,612 ) Discount - SSTL (3,077 ) (3,874 ) $ 544,589 $ 678,543 Weighted average interest rate 5.20 % 4.56 % (1) For our mortgage loan warehouse facilities, available borrowing capacity does not consider the amount of the facility that the lender has extended on an uncommitted basis. Of the borrowing capacity extended on a committed basis, $29.3 million could be used at September 30, 2017 based on the amount of eligible collateral that had been pledged. (2) On December 5, 2016, we entered into an Amended and Restated Senior Secured Term Loan Facility Agreement that established a new SSTL with a borrowing capacity of $335.0 million and a maturity date of December 5, 2020. We may request increases to the loan amount of up to $100.0 million in total, with additional increases subject to certain limitations. We are required to make quarterly payments on the SSTL in an amount of $4.2 million , the first of which was paid on March 31, 2017. The borrowings under the SSTL are secured by a first priority security interest in substantially all of the assets of Ocwen, OLS and the other guarantors thereunder, excluding among other things, 35% of the capital stock of foreign subsidiaries, securitization assets and equity interests of securitization entities, assets securing permitted funding indebtedness and non-recourse indebtedness, REO assets, servicing agreements where an acknowledgment from the GSE has not been obtained, as well as other customary carve-outs. Borrowings bear interest, at the election of Ocwen, at a rate per annum equal to either (a) the base rate (the greatest of (i) the prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50% and (iii) the one-month Eurodollar rate (1ML)), plus a margin of 4.00% and subject to a base rate floor of 2.00% or (b) the one-month Eurodollar rate, plus a margin of 5.00% and subject to a one-month Eurodollar floor of 1.00% . To date, we have elected option (b) to determine the interest rate. (3) $87.5 million of the maximum borrowing amount of $137.5 million is available on a committed basis and the remainder is available at the discretion of the lender. Effective January 1, 2018, the committed amount shall be reduced to $50.0 million . We primarily use this facility to fund the repurchase of 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. On August 1, 2017, we entered into an amendment to lower the advance rates under this facility by 3% . (4) On August 1, 2017, we elected to voluntarily terminate these agreements. (5) Under these participation agreements, the lender provides financing for a combined total of $250.0 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 25, 2017, the term of these participation agreements was extended to April 30, 2018. (6) Under these participation agreements, the lender provides uncommitted reverse mortgage financing for a combined total of $110.0 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 October 27, 2017, we renewed one of the agreements through October 12, 2018 and increased the maximum borrowing capacity of the facility from $50.0 million to $100.0 million . (7) On August 18, 2017, we elected to voluntarily terminate the master repurchase agreement. Senior Notes September 30, 2017 December 31, 2016 6.625% Senior unsecured notes due May 15, 2019 $ 3,122 $ 3,122 8.375% Senior secured notes due November 15, 2022 346,878 346,878 350,000 $ 350,000 Unamortized debt issuance costs (2,799 ) (3,211 ) $ 347,201 $ 346,789 Senior Unsecured Notes Ocwen may redeem all or a part of the remaining Senior Unsecured Notes, upon not less than 30 nor more than 60 days’ notice, at the redemption price (expressed as percentages of principal amount) of 103.313% and 100.000% for the twelve-month periods beginning May 15, 2017 and 2018, respectively, plus accrued and unpaid interest and additional interest, if any. Senior Secured Notes The Senior Secured Notes are guaranteed by Ocwen, OMS, Homeward Residential Holdings, Inc., Homeward and ACS (the Guarantors). The Senior Secured Notes are secured by second priority liens on the assets and properties of OLS and the Guarantors that secure the first priority obligations under the SSTL, excluding certain MSRs. At any time, OLS may redeem all or a part of the Senior Secured Notes, upon not less than 30 nor more than 60 days’ notice at a specified redemption price, plus accrued and unpaid interest to the date of redemption. Prior to November 15, 2018, the Senior Secured Notes may be redeemed at a redemption price equal to 100.0% of the principal amount of the Senior Secured Notes redeemed, plus the applicable make whole premium (as defined in the indenture). On or after November 15, 2018, OLS may redeem all or a part of the Senior Secured Notes at the redemption prices (expressed as percentages of principal amount) specified in the Indenture. The redemption prices during the twelve-month periods beginning on November 15 of each year are as follows: Year Redemption Price 2018 106.281% 2019 104.188% 2020 102.094% 2021 and thereafter 100.000% At any time, on or prior to November 15, 2018, OLS may, at its option, use the net cash proceeds of one or more equity offerings (as defined in the Indenture) to redeem up to 35.0% of the principal amount of all Senior Secured Notes issued at a redemption price equal to 108.375% of the principal amount of the Senior Secured Notes redeemed plus accrued and unpaid interest to the date of redemption, provided that: (i) at least 65.0% of the principal amount of all Senior Secured Notes issued under the Indenture (including any additional Senior Secured Notes) remains outstanding immediately after any such redemption; and (ii) OLS makes such redemption not more than 120 days after the consummation of any such Equity Offering. Upon a change of control (as defined in the indenture), OLS is required to make an offer to the holders of the Senior Secured Notes to repurchase all or a portion of each holder’s Senior Secured Notes at a purchase price equal to 101.0% of the principal amount of the Senior Secured Notes purchased plus accrued and unpaid interest to the date of purchase. In connection with our issuance of the Senior Secured Notes, we incurred certain costs that we capitalized and are amortizing over the period from the date of issuance to November 15, 2022. Credit Ratings Credit ratings are intended to be an indicator of the creditworthiness of a particular company, security or obligation. On July 25, 2017, S&P affirmed our long-term corporate rating of “B-” and removed our ratings from CreditWatch with Negative implications. On July 26, 2017, Kroll Bond Rating Agency affirmed our corporate ratings at “CCC” and removed our ratings from Watch Downgrade status. On June 16, 2017, Moody’s downgraded our long-term corporate rating to “Caa1” from “B3.” On June 15, 2017, Fitch placed our ratings on Negative. It is possible that additional actions by credit rating agencies could have a material adverse impact on our liquidity and funding position, including materially changing the terms on which we may be able to borrow money. 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 of making distributions on or purchasing equity interests of Ocwen, repurchasing or redeeming capital stock or junior capital, repurchasing or redeeming subordinated debt prior to maturity, issuing preferred stock, selling or transferring assets or making loans or investments or acquisitions or other restricted payments, entering into mergers or consolidations or sales of all or substantially all of the assets of Ocwen and its subsidiaries, creating liens on assets to secure debt of OLS or any Guarantor, enter into transactions with an affiliate; • 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. Many of the restrictive covenants arising from the indenture for the Senior Secured Notes will be suspended if the Senior Secured Notes achieve an investment-grade rating from both Moody’s and S&P and if no default or event of default has occurred and is continuing. Financial covenants in our debt agreements require that we maintain, among other things: • a 40% loan to collateral value ratio, as defined under our SSTL, as of the last date of any fiscal quarter; and • specified levels of tangible net worth and liquidity at the consolidated and OLS levels. As of September 30, 2017 , the most restrictive consolidated tangible net worth requirements contained in our debt agreements were for a minimum of $1.1 billion at OLS under our match funded debt agreements and two repurchase agreements and $450.0 million at Ocwen under an automotive dealer loan financing facility. 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, nonpayment of principal or interest, noncompliance with our covenants, breach of representations, the occurrence of a material adverse change, insolvency, bankruptcy, certain material judgments and changes of control. Covenants and default provisions of this type are commonly found in debt agreements such as ours. Certain of these covenants and default provisions are open to subjective interpretation and, if our interpretation was 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. 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 | 9 Months Ended |
Sep. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Note 12 – Other Liabilities September 30, 2017 December 31, 2016 Contingent loan repurchase liability $ 318,954 $ 246,081 Due to NRZ 100,914 83,248 Other accrued expenses 80,187 80,021 Accrued legal fees and settlements 59,943 93,797 Servicing-related obligations 35,959 35,324 Liability for indemnification obligations 23,823 27,546 Checks held for escheat 19,804 16,890 Accrued interest payable 14,910 3,698 Amounts due in connection with MSR sales 13,996 39,398 Liability for uncertain tax positions (1) — 23,216 Other 24,629 32,020 $ 693,119 $ 681,239 (1) On September 15, 2017, the statute of limitation expired with respect to our remaining uncertain tax position for which a liability had previously been recorded. This liability was derecognized and recorded as an income tax benefit during the three months ended September 30, 2017. See Note 16 - Income Taxes for additional information. |
Equity (Notes)
Equity (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Equity | Note 13 – Equity As disclosed in Note 8 — Rights to MSRs , on July 23, 2017, Ocwen and certain of its subsidiaries entered into a series of agreements with NRZ related to NRZ’s Rights to MSRs. On the same date, Ocwen and NRZ entered into a share purchase agreement pursuant to which Ocwen sold NRZ 6,075,510 shares of newly-issued Ocwen common stock for $13.9 million . Ocwen received the sales proceeds from NRZ on July 24, 2017 and issued the shares. The shares have not been registered under the Securities Act of 1933 and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Act and Rule 506(b) promulgated thereunder. |
Derivative Financial Instrument
Derivative Financial Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments and Hedging Activities | Note 14 – 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 manage counterparty credit risk by entering into financial instrument transactions through national exchanges, primary dealers or approved counterparties and the use of mutual margining agreements whenever possible to limit potential exposure. We regularly evaluate the financial position and creditworthiness of our counterparties. The notional amount of our contracts does not represent our exposure to credit loss. Interest Rate Risk 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 the interest on our variable rate debt as a result of increases in the index, such as 1ML, which is used in determining the interest rate on the debt. We currently do not hedge our fixed rate debt. Loans Held for Sale, at Fair Value 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 both fixed and variable rate loan commitments. The following table summarizes derivative activity, including the derivatives used in each of our identified hedging programs: Interest Rate Risk IRLCs and Loans Held for Sale Borrowings IRLCs Forward MBS Trades Interest Rate Caps (1) Notional balance at December 31, 2016 $ 360,450 $ 609,177 $ 955,000 Additions 3,192,031 2,094,533 110,000 Amortization — — (316,667 ) Maturities (2,728,640 ) (1,340,603 ) — Terminations (617,050 ) (993,407 ) (300,000 ) Notional balance at September 30, 2017 $ 206,791 $ 369,700 $ 448,333 Maturity Oct. 2017 - Dec. 2017 Oct. 2017 - Nov. 2017 Oct. 2017 - May 2019 Fair value of derivative assets (liabilities) (2) at: September 30, 2017 $ 4,969 $ 973 $ 1,839 December 31, 2016 6,507 (614 ) 1,836 Gains (losses) on derivatives during the nine months ended: Gain on Loans Held for Sale, Net Gain on Loans Held for Sale, Net Other, Net September 30, 2017 $ (1,605 ) $ (8,604 ) $ (207 ) September 30, 2016 4,148 (25,677 ) (1,950 ) (1) Excludes commitments on two interest rate caps we entered into in August 2017 which are related to the OMART advance financing facility and which become effective in November 2017. These interest rate caps have a notional value and fair value of $23.3 million and $0.8 million at September 30, 2017, respectively. (2) Derivatives are reported at fair value in Other assets or in Other liabilities on our unaudited consolidated balance sheets. 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 originations and commitments and expected time to sell. Included in Accumulated other comprehensive loss (AOCL) at September 30, 2017 and 2016 , respectively, were $1.3 million and $1.5 million of deferred unrealized losses, before taxes of $0.1 million and $0.1 million , respectively, on interest rate swaps that we had designated as cash flow hedges. Other income (expense), net, includes the following related to derivative financial instruments: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Losses on economic hedges $ (350 ) $ (45 ) $ (207 ) $ (1,950 ) Write-off of losses in AOCL for a discontinued hedge relationship (45 ) (89 ) (157 ) (263 ) $ (395 ) $ (134 ) $ (364 ) $ (2,213 ) |
Interest Expense
Interest Expense | 9 Months Ended |
Sep. 30, 2017 | |
Other Income and Expenses [Abstract] | |
Interest Expense | Note 15 – Interest Expense The following table presents the components of interest expense: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Financing liabilities $ 15,317 $ 73,096 $ 118,579 $ 193,675 Match funded liabilities 11,981 17,349 37,499 53,656 Other secured borrowings 10,990 13,450 30,174 38,877 Senior notes 7,452 6,130 22,355 18,399 Other 1,541 936 3,864 3,476 $ 47,281 $ 110,961 $ 212,471 $ 308,083 Interest expense that we expect to be paid on the HMBS-related borrowings is included with net fair value gains in Other revenues. |
Income Taxes (Notes)
Income Taxes (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 16 - Income Taxes Our effective tax rate for the nine months ended September 30, 2017 and 2016 was 15.7% and 3.7% , respectively, on pre-tax losses of $98.7 million and $196.2 million , respectively. The increase in our effective tax rate and the income tax benefits recorded on the pre-tax losses is due primarily to the tax benefit recognized on the reversal of uncertain tax positions (including interest and penalties) due to the expiration of applicable statutes of limitation during the nine months ended September 30, 2017, as compared to additional tax expense recognized during the nine months ended September 30, 2016 related to uncertain tax positions, offset in part by a decrease in tax benefits resulting from our inability to carry back current losses that are being generated in the U.S. and USVI tax jurisdictions. A reconciliation of the beginning and ending amount of the total liability for uncertain tax positions is as follows for the nine months ended September 30: 2017 2016 Beginning balance $ 16,994 $ 32,548 Reductions for settlements (387 ) (14,420 ) Lapses in statutes of limitation (16,607 ) (524 ) Ending balance $ — $ 17,604 As of September 30, 2017 and 2016, we had $0.0 million and $17.6 million , respectively, of unrecognized tax benefits, all of which if recognized would affect the effective tax rate. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At September 30, 2017 and 2016, we had accrued interest and penalties related to unrecognized tax benefits of $0.0 million and $6.1 million , respectively. Our major jurisdiction tax years that remain subject to examination are our U.S. federal tax return for the years ended December 31, 2014 through the present, our USVI corporate tax return for the years ended December 31, 2014 through the present, and our India corporate tax returns for the years ended March 31, 2010 through the present. We currently do not have any tax returns under income tax examination in the U.S. or USVI tax jurisdictions. |
Basic and Diluted Earnings (Los
Basic and Diluted Earnings (Loss) per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings (Loss) per Share | Note 17 – Basic and Diluted Earnings (Loss) per Share Basic earnings or loss per share excludes common stock equivalents and is calculated by dividing net income or loss attributable to Ocwen common stockholders by the weighted average number of common shares outstanding during the period. We calculate diluted earnings or loss per share by dividing net income attributable to Ocwen by the weighted average number of common shares outstanding including the potential dilutive common shares related to outstanding stock options and restricted stock awards. The following is a reconciliation of the calculation of basic loss per share to diluted loss per share: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Basic loss per share Net income (loss) attributable to Ocwen stockholders $ (6,252 ) $ 9,391 $ (83,483 ) $ (189,318 ) Weighted average shares of common stock 128,744,152 123,986,987 125,797,777 123,991,343 Basic earnings (loss) per share $ (0.05 ) $ 0.08 $ (0.66 ) $ (1.53 ) Diluted loss per share (1) Net income (loss) attributable to Ocwen stockholders $ (6,252 ) $ 9,391 $ (83,483 ) $ (189,318 ) Weighted average shares of common stock 128,744,152 123,986,987 125,797,777 123,991,343 Effect of dilutive elements (1): Stock option awards — — — — Common stock awards — 147,520 — — Dilutive weighted average shares of common stock 128,744,152 124,134,507 125,797,777 123,991,343 Diluted earnings (loss) per share $ (0.05 ) $ 0.08 $ (0.66 ) $ (1.53 ) Stock options and common stock awards excluded from the computation of diluted earnings per share Anti-dilutive (2) 6,600,164 6,890,882 5,121,844 7,285,539 Market-based (3) 862,446 1,917,456 862,446 1,917,456 (1) For the three and nine months ended September 30, 2017 and the nine months ended September 30, 2016, we have excluded the effect of stock options and common stock awards from the computation of diluted loss per share because of the anti-dilutive effect of our reported net loss. (2) Stock options were anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock. (3) Shares that are issuable upon the achievement of certain market-based performance criteria related to Ocwen’s stock price. |
Business Segment Reporting
Business Segment Reporting | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Business Segment Reporting | Note 18 – 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. While our expense allocation methodology for the current period is consistent with that used in prior periods presented, during the first quarter of 2017, we moved certain functions which had been associated with corporate cost centers to our Lending and Servicing segments because these functions align more closely with those segments. As applicable, the results of operations for the three and nine months ended September 30, 2016 have been recast to conform to the current period presentation. As a result of these changes, income before income taxes for the Lending segment for the three and nine months ended September 30, 2016 decreased by $2.3 million and $7.4 million , respectively, while income before income taxes for the Servicing segment increased by the same amounts for the same periods. 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 originates and purchases conventional and government-insured residential forward and reverse mortgage loans mainly through correspondent lending arrangements, broker relationships (wholesale) and directly with mortgage customers (retail). The loans are typically sold shortly after origination into a liquid market on a servicing retained (securitization) or servicing released (sale to a third party) basis. In the second quarter of 2017, we closed our correspondent forward lending channel due to low margins and began selling all of our wholesale forward lending channel originations on a servicing released basis to reduce capital consumption. In the third quarter of 2017, we entered into an agreement to sell certain of our wholesale forward lending assets, and, upon closing of that transaction, we intend to exit the wholesale forward lending business. We continue to acquire loans through the retail forward lending channel as well as through all three channels of reverse mortgage lending. Corporate Items and Other. Corporate Items and Other includes revenues and expenses of ACS and CR Limited (CRL), our wholly-owned captive reinsurance subsidiary, and our other business activities that are individually insignificant, revenues and expenses that are not directly related to other reportable segments, interest income on short-term investments of cash, interest expense on corporate debt and certain corporate expenses. Our cash balances are included in Corporate Items and Other. ACS provides short-term inventory-secured loans to independent used car dealers to finance their inventory. We allocate a portion of interest income to each business segment, including interest earned on cash balances and short-term investments. We also allocate expenses incurred 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 September 30, 2017 Revenue $ 246,545 $ 31,935 $ 6,162 $ — $ 284,642 Expenses 218,565 38,412 16,502 — 273,479 Other income (expense): Interest income 144 2,857 1,098 — 4,099 Interest expense (28,568 ) (4,504 ) (14,209 ) — (47,281 ) Gain on sale of mortgage servicing rights, net 6,543 — — — 6,543 Other (418 ) 555 (1,214 ) — (1,077 ) Other expense, net (22,299 ) (1,092 ) (14,325 ) — (37,716 ) Income (loss) before income taxes $ 5,681 $ (7,569 ) $ (24,665 ) $ — $ (26,553 ) Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated Three months ended September 30, 2016 Revenue $ 319,080 $ 30,696 $ 9,672 $ — $ 359,448 Expenses 202,156 30,013 39,509 — 271,678 Other income (expense): Interest income 59 3,990 1,109 — 5,158 Interest expense (101,138 ) (3,684 ) (6,139 ) — (110,961 ) Gain on sale of mortgage servicing rights, net 5,661 — — — 5,661 Other 13,943 322 471 — 14,736 Other income (expense), net (81,475 ) 628 (4,559 ) — (85,406 ) Income (loss) before income taxes $ 35,449 $ 1,311 $ (34,396 ) $ — $ 2,364 Nine months ended September 30, 2017 Revenue $ 802,347 $ 95,457 $ 20,002 $ — $ 917,806 Expenses 637,406 100,628 92,308 — 830,342 Other income (expense): Interest income 406 8,612 3,083 — 12,101 Interest expense (159,822 ) (11,171 ) (41,478 ) — (212,471 ) Gain on sale of mortgage servicing rights, net 7,863 — — — 7,863 Other 4,642 658 1,084 — 6,384 Other expense, net (146,911 ) (1,901 ) (37,311 ) — (186,123 ) Income (loss) before income taxes $ 18,030 $ (7,072 ) $ (109,617 ) $ — $ (98,659 ) Nine months ended September 30, 2016 Revenue $ 951,727 $ 89,255 $ 22,277 $ — $ 1,063,259 Expenses 734,326 85,471 165,556 — 985,353 Other income (expense): Interest income (102 ) 11,805 2,785 — 14,488 Interest expense (278,808 ) (10,829 ) (18,446 ) — (308,083 ) Gain on sale of mortgage servicing rights, net 7,689 — — — 7,689 Other 11,406 982 (547 ) — 11,841 Other income (expense), net (259,815 ) 1,958 (16,208 ) — (274,065 ) Income (loss) before income taxes $ (42,414 ) $ 5,742 $ (159,487 ) $ — $ (196,159 ) Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated Total Assets September 30, 2017 $ 2,905,817 $ 4,679,641 $ 512,147 $ — $ 8,097,605 December 31, 2016 $ 3,312,371 $ 3,863,862 $ 479,430 $ — $ 7,655,663 September 30, 2016 $ 3,455,613 $ 3,662,339 $ 467,498 $ — $ 7,585,450 Servicing Lending Corporate Items and Other Business Segments Consolidated Depreciation and Amortization Expense Three months ended September 30, 2017 Depreciation expense $ 1,525 $ 57 $ 5,408 $ 6,990 Amortization of mortgage servicing rights 13,081 67 — 13,148 Amortization of debt discount — — 258 258 Amortization of debt issuance costs — — 644 644 Three months ended September 30, 2016 Depreciation expense $ 2,730 $ 48 $ 3,651 $ 6,429 Amortization of mortgage servicing rights (2,634 ) 76 — (2,558 ) Amortization of debt discount 240 — — 240 Amortization of debt issuance costs 3,645 — 332 3,977 Nine months ended September 30, 2017 Depreciation expense $ 4,393 $ 162 $ 15,875 $ 20,430 Amortization of mortgage servicing rights 38,351 209 — 38,560 Amortization of debt discount — — 797 797 Amortization of debt issuance costs — — 1,979 1,979 Nine months ended September 30, 2016 Depreciation expense $ 5,068 $ 184 $ 13,025 $ 18,277 Amortization of mortgage servicing rights 18,360 235 — 18,595 Amortization of debt discount 623 — — 623 Amortization of debt issuance costs 9,466 — 1,009 10,475 |
Regulatory Requirements
Regulatory Requirements | 9 Months Ended |
Sep. 30, 2017 | |
Brokers and Dealers [Abstract] | |
Regulatory Requirements | Note 19 – Regulatory Requirements Our business is subject to extensive regulation by federal, state and local governmental authorities, including the CFPB, HUD, the SEC and various state agencies that license, audit and conduct examinations of our servicing and lending 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 (including requests in the form of subpoenas and civil investigative demands) from federal, state and local agencies for records, documents and information relating to our servicing and lending 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. In the current regulatory environment, we have faced and expect to continue to face heightened regulatory and public scrutiny as an organization as well as stricter and more comprehensive regulation of the entire mortgage sector. 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 (i) administrative fines and penalties and litigation, (ii) loss of our licenses and approvals to engage in our servicing and lending businesses, (iii) governmental investigations and enforcement actions (iv) civil and criminal liability, including class action lawsuits and actions to recover incentive and other payments made by governmental entities, (v) breaches of covenants and representations under our servicing, debt or other agreements, (vi) damage to our reputation, (vii) inability to raise capital or otherwise fund our operations and (viii) inability to execute on our business strategy. In addition to amounts paid to resolve regulatory matters, we could incur costs to comply with the terms of such resolutions, including the costs of third-party firms to monitor our compliance with such resolutions. We have recognized $177.5 million in such third-party monitoring costs from January 1, 2014 through September 30, 2017 in connection with the 2013 Ocwen National Mortgage Settlement, our 2014 settlement with the New York Department of Financial Services (NY DFS) and our 2015 settlement with the California Department of Business Oversight (CA DBO). We must comply with a large number of federal, state and local consumer protection and other laws and regulations, including, among others, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), the Telephone Consumer Protection Act, 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 Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act, the Fair Credit Reporting Act and the Equal Credit Opportunity Act, as well as individual state licensing and foreclosure laws, individual state and local laws relating to registration of vacant or foreclosed properties, and federal and local bankruptcy rules. These laws and regulations apply to many facets of our business, including loan origination, default servicing and collections, 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 fees assessed on borrowers, and they mandate certain disclosures and notices to borrowers. These requirements can and do change as laws and regulations are enacted, promulgated, amended, interpreted and enforced, including through CFPB interpretive bulletins and other regulatory pronouncements. In addition, the actions of legislative bodies and regulatory agencies relating to a particular matter or business practice may or may not be coordinated or consistent. As a result, ensuring ongoing compliance with applicable legal and regulatory requirements can be challenging. The recent trend among federal, state and local legislative bodies and regulatory agencies has been toward increasing laws, regulations, investigative proceedings and enforcement actions with regard to residential real estate lenders and servicers. Ocwen has various subsidiaries, including OLS, Homeward and Liberty, that are licensed to originate and/or service forward and reverse mortgage loans in those jurisdictions in which they operate and which require licensing. 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 generally include financial requirements such as providing audited financial statements and satisfying minimum net worth requirements and non-financial requirements such as satisfactory completion of examinations relating to the licensee’s compliance with applicable laws and regulations. Failure to satisfy any of the requirements to which our licensed entities 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 a material adverse impact on our business, reputation, results of operations and financial condition. The minimum net worth requirements to which our licensed entities are subject are unique to each state and type of license. We believe our licensed entities were in compliance with all of their minimum net worth requirements at September 30, 2017 . OLS, Homeward and Liberty are also subject to seller/servicer obligations under agreements with one or more of the GSEs, HUD, FHA, VA and Ginnie Mae. These seller/servicer obligations include financial requirements, including capital requirements related to tangible net worth, as defined by the applicable agency, 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. Any of these actions could have a material adverse impact on us. 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 September 30, 2017 . Our non-Agency servicing agreements also contain requirements regarding servicing practices and other matters, and a failure to comply with these requirements could have a material adverse impact on our business. See Note 20 — Commitments for additional information relating to our recent interactions with Ginnie Mae as a result of the state regulatory actions discussed in that note. The most restrictive of the various net worth requirements referenced above is based on the total assets of OLS, and the required net worth was $394.3 million at September 30, 2017 . There are a number of foreign laws and regulations that are applicable to our operations outside of the U.S., including laws and regulations that govern licensing, employment, safety, taxes and insurance and 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 these laws and regulations could result in adverse actions against us, including (i) restrictions on our operations in these counties, (ii) fines, penalties or sanctions or (iii) reputational damage. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2017 | |
Other Commitments [Abstract] | |
Commitments | Note 20 — Commitments Unfunded Lending Commitments We have originated floating-rate reverse mortgage loans under which the borrowers have additional borrowing capacity of $1.4 billion at September 30, 2017 . This additional borrowing capacity is available on a scheduled or unscheduled payment basis. We also had short-term commitments to lend $189.5 million and $17.3 million in connection with our forward and reverse mortgage loan interest rate lock commitments, respectively, outstanding at September 30, 2017 . We finance originated and purchased forward and reverse mortgage loans with repurchase and participation agreements, commonly referred to as warehouse lines. Long Term Contracts Our business is currently dependent on many of the services and products provided by Altisource Portfolio Solutions, S.A. (Altisource) under long-term agreements, many of which include renewal provisions. Each of 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 of the commission that would otherwise be paid to Altisource as the selling broker in connection with real estate sales services provided by Altisource. Our servicing system runs on an information technology system that we license from Altisource pursuant to a statement of work under the Technology Products Services Agreements. 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, 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. We are currently in the process of transitioning to a new servicing system and have entered into agreements with certain subsidiaries of Black Knight, Inc. (Black Knight) pursuant to which we plan to transition to Black Knight’s LoanSphere MSP ® (MSP) servicing system. Ocwen currently anticipates a twenty-four month implementation timeline for its transition onto the MSP servicing system. Based on substantive discussions with Altisource prior to entering into our agreements with Black Knight, Ocwen plans to negotiate mutually acceptable agreements that provide for Ocwen’s transition to the MSP servicing system and the termination of the statement of work for the use of the REALServicing system. 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-related services. Similar to other vendors, in the event that Altisource’s activities do not comply with the applicable servicing criteria, we could be exposed to liability as the servicer and it could negatively impact our relationships with our servicing clients, borrowers or regulators, among others. Wholesale Forward Lending We have decided to exit the forward lending wholesale business, and have agreed to sell certain assets related to this business. These assets consist primarily of furniture, fixtures and equipment located at our Westborough, Massachusetts facility and meet the requisite accounting criteria for classification as held-for-sale at September 30, 2017. The buyer is expected to assume a facilities lease and to offer positions to certain Ocwen employees in the business. We have recognized a loss of $6.8 million related to the divestiture in our third quarter 2017 results which is reported in Other expenses in our unaudited consolidated statements of operations. This loss is primarily related to our write-off of the capitalized balance of software developed internally for the forward lending wholesale business. Additionally, we estimate that $1.0 million to $2.0 million of severance expense will be incurred. The closing of the transaction is expected to occur in the fourth quarter, subject to customary closing conditions. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Loss Contingency [Abstract] | |
Contingencies | Note 21 – 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 even if the potential loss could be material and adverse to our business, reputation, financial condition and results of operations. 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 advisers, such advisers assist us in making such assessments. Litigation In the ordinary course of business, we are a defendant in, or a party or potential party to, many threatened and pending legal proceedings, including proceedings brought by regulatory agencies (discussed further under “Regulatory” below), those brought on behalf of various classes of claimants, and those brought derivatively on behalf of Ocwen against certain current or former officers and directors or others. The majority of these proceedings are 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, claims relating to our written and telephonic communications with our borrowers such as claims under the Telephone Consumer Protection Act, claims related to our payment, escrow and other processing operations, claims relating to fees imposed on borrowers relating to payment processing, payment facilitation, or payment convenience, and claims regarding certifications of our legal compliance related to our participation in certain government programs. In some of these proceedings, claims for substantial monetary damages are asserted against us. 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. Any material adverse resolution could materially and adversely affect our business, reputation, financial condition and results of operations. Where we determine that a loss contingency is probable in connection with a pending or threatened legal proceeding and the amount of our loss can be reasonably estimated, we record an accrual for the loss. Excluding expenses of internal or external legal counsel, we have accrued $31.9 million as of September 30, 2017 for losses relating to threatened and pending litigation 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 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 September 30, 2017 . We have previously disclosed several securities fraud class action lawsuits filed against Ocwen and certain of its officers and directors that contain allegations in connection with the restatements of our 2013 and first quarter 2014 financial statements and our December 2014 Consent Order with the NY DFS, among other matters. Those lawsuits have been consolidated and are pending in the United States District Court for the Southern District of Florida in the matter captioned In re Ocwen Financial Corporation Securities Litigation , 9:14-cv-81057-WPD (S.D. Fla.) (such consolidated lawsuit, the Securities Class Action). In July 2017, following a mediated settlement process resulting in all parties' acceptance of the mediator's recommendation for settlement, we reached an agreement in principle to settle this matter. Subject to final approval by the court, the settlement will include an aggregate cash payment by Ocwen to the plaintiffs of $49.0 million (of which Ocwen expects to recover $14.0 million from insurance proceeds), and an issuance to the plaintiffs of an aggregate of 2,500,000 shares of Ocwen's common stock. Under certain circumstances related to the price of Ocwen's common stock over the five trading days prior to court approval of the settlement, the amount of shares issuable could be increased so that the aggregate number of shares issued has a total value of $7.0 million . However, in no event will Ocwen be required to issue more than 4% of the number of shares of its common stock outstanding as of the date of court approval. Further, in lieu of issuing shares, Ocwen may elect to pay the plaintiffs $7.0 million in cash. Attorneys' fees for the plaintiffs will be paid from the amounts described above. We paid the $49.0 million cash portion of the settlement in July 2017 and have a remaining accrual of $7.0 million recorded as of September 30, 2017 in connection with this settlement. We cannot currently estimate the amount, if any, of reasonably possible loss above such accrual. The $7.0 million is included within the $31.9 million litigation accrual referenced above. Recoveries from insurance will reduce our aggregate exposure for this matter and have been recorded as a reduction of Professional services expense in the unaudited consolidated statements of operations. While Ocwen believes that it has sound legal and factual defenses, Ocwen agreed to this settlement in principle in order to avoid the uncertain outcome of litigation and the additional expense and demands on the time of its senior management that a trial would involve. Following written submissions to the court, in August 2017, the presiding judge preliminarily approved the settlement. There can be no assurance that the settlement will be finally approved by the court. In the event the settlement is not finally approved, the litigation would continue and we would vigorously defend the allegations made against Ocwen. If our efforts to defend against such claims were not successful, our business, financial condition, liquidity and results of operations could be materially and adversely affected. In January 2016, Ocwen was named as a defendant in a separate “opt-out” securities fraud action brought on behalf of certain putative shareholders of Ocwen based on similar allegations to those contained in the securities fraud class action lawsuit described above. See Broadway Gate Master Fund, Ltd. et al. v. Ocwen Financial Corporation et al., 9:16-cv-80056-WPD (S.D. Fla.) . Dispositive motions are pending in this lawsuit, and trial is set to commence on November 27, 2017. Additional lawsuits may be filed against us in relation to these matters. At this time, Ocwen is unable to predict the outcome of this existing “opt-out” lawsuit or any additional lawsuits that may be filed, the possible loss or range of loss, if any, associated with the resolution of such lawsuits or the potential impact such lawsuits may have on us or our operations. Ocwen and the other defendants intend to vigorously defend against such lawsuits. If our efforts to defend these lawsuits are not successful, our business, financial condition, liquidity and results of operations could be materially and adversely affected. As a result of the federal and state regulatory actions described below under “Regulatory”, and the impact on our stock price, several putative securities fraud class action lawsuits have been filed against Ocwen and certain of its officers that contain allegations in connection with Ocwen’s statements concerning its efforts to satisfy the evolving regulatory environment, and the resources it devoted to regulatory compliance, among other matters. Additional lawsuits may be filed against us in relation to these matters. At this time, Ocwen is unable to predict the outcome of these existing lawsuits or any additional lawsuits that may be filed, the possible loss or range of loss, if any, associated with the resolution of such lawsuits or the potential impact such lawsuits may have on us or our operations. Ocwen and the other defendants intend to vigorously defend against such lawsuits. If our efforts to defend these lawsuits are not successful, our business, financial condition, liquidity and results of operations could be materially and adversely affected. Ocwen has been named in putative class actions and individual actions related to its compliance with the Telephone Consumer Protection Act. Generally, plaintiffs in these actions allege that Ocwen knowingly and willfully violated the Telephone Consumer Protection Act by using an automated telephone dialing system to call class members’ cell phones without their consent. On July 28, 2017, Ocwen entered into an agreement in principle to resolve two such putative class actions, which have been consolidated in the United States District Court for the Northern District of Illinois. See Snyder v. Ocwen Loan Servicing, LLC, 1:14-cv-08461-MFK (N.D. Ill.); Beecroft v. Ocwen Loan Servicing, LLC, 1:16-cv-08677-MFK (N.D. Ill.) . Subject to final approval by the court, the settlement will include the establishment of a settlement fund to be distributed to impacted borrowers that submit claims for settlement benefits pursuant to a claims administration process. Our accrual with respect to this matter is included in the $31.9 million litigation accrual referenced above. We cannot currently estimate the amount, if any, of reasonably possible loss above the amount accrued. While Ocwen believes that it has sound legal and factual defenses, Ocwen agreed to this settlement in principle in order to avoid the uncertain outcome of litigation and the additional expense and demands on the time of its senior management that such litigation would involve. The court has preliminarily approved the settlement but there can be no assurance that it will finally approve the settlement. In the event the settlement is not finally approved, the litigation would continue, and we would vigorously defend the allegations made against Ocwen. Additional lawsuits may be filed against us in relation to these matters. At this time, Ocwen is unable to predict the outcome of these existing lawsuits or any additional lawsuits that may be filed, the possible loss or range of loss, if any, associated with the resolution of such lawsuits or the potential impact such lawsuits may have on us or our operations. Ocwen intends to vigorously defend against these lawsuits. If our efforts to defend these lawsuits are not successful, our business, financial condition liquidity and results of operations could be materially and adversely affected. On February 17, 2017, OFC, OLS and Homeward signed an agreement with two qui tam relators to settle previously disclosed litigation matters relating to claims under the False Claims Act (the Fisher Cases). The settlement agreement, which was subsequently approved by the United States, contained no admission of liability or wrongdoing by Ocwen and provided for the payment of $15.0 million to the United States and $15.0 million for the private citizens’ attorneys’ fees and costs. We paid the settlement amount in April 2017. 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 small number of securitizations relating to our performance under the servicing agreements for those 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 party in certain 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 lawsuits 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 ourselves against 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. 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, liquidity, 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. Although Ocwen has not yet been sued by an RMBS trustee in response to a notice of default, there is a risk that Ocwen could be replaced as servicer as a result of said notices, that the trustees could take legal action on behalf of the trust certificateholders, or, under certain circumstances, that the RMBS investors who issue notices of default could seek to press their allegations against Ocwen, independent of the trustees. At present, one such group of affiliated RMBS investors sought to direct one trustee to bring suit against Ocwen. The trustee declined to bring suit, and the RMBS investors instead brought suit against Ocwen directly. The court dismissed the RMBS investors’ suit without prejudice on October 4, 2017, and the investors have subsequently filed an amended complaint. Ocwen intends to defend itself vigorously. We are unable at this time to predict what, if any, actions any trustee will take in response to a notice of default, nor can we predict at this time the potential loss or range of loss, if any, associated with the resolution of any notices of default 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, cease and desist orders, consent orders, inquiries, subpoenas, civil investigative demands, requests for information and other actions. Where we determine that a loss contingency is probable in connection with a regulatory matter and the amount of our loss can be reasonably estimated, we record an accrual for the loss. 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 regulatory matters that materially exceed any accrued amount. Predicting the outcome of any regulatory matter is inherently difficult and we generally cannot predict the eventual outcome of any regulatory matter or the eventual loss, if any, associated with the outcome. CFPB On April 20, 2017, the CFPB filed a lawsuit in the federal district court for the Southern District of Florida against Ocwen, OMS and OLS alleging violations of federal consumer financial laws relating to our servicing business dating back to 2014. The CFPB’s claims include allegations regarding (1) the adequacy of Ocwen’s servicing system and integrity of Ocwen’s mortgage servicing data, (2) Ocwen’s foreclosure practices and (3) various purported servicer errors with respect to borrower escrow accounts, hazard insurance policies, timely cancellation of private mortgage insurance, handling of customer complaints, and marketing of optional products. The CFPB alleges violations of unfair, deceptive acts or abusive practices, as well as violations of specific laws or regulations. The CFPB does not claim specific monetary damages, although it does seek consumer relief, disgorgement of allegedly improper gains, and civil money penalties. We believe we have factual and legal defenses to the CFPB’s allegations and are vigorously defending ourselves. Prior to the CFPB instituting legal proceedings, we had been engaged with the CFPB in efforts to resolve the matter. We recorded $12.5 million as of December 31, 2016 as a result of these discussions. If we are successful in defending ourselves against the CFPB, it is possible that our losses could be less than $12.5 million . It is also possible that we could incur losses that materially exceed the amount accrued, and the resolution of the matters raised by the CFPB could have a material adverse impact on our business, reputation, financial condition, liquidity and results of operations. We cannot currently estimate the amount, if any, of reasonably possible loss above amounts previously accrued. State Licensing, State Attorneys General and Other Matters 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 generally include financial requirements such as providing audited financial statements or satisfying minimum net worth requirements and non-financial requirements such as satisfactorily completing examinations as to the licensee’s compliance with applicable laws and regulations. Failure to satisfy any of the requirements to which our licensed entities 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 a material adverse impact on our results of operations and financial condition. In addition, we receive information requests and other inquiries, both formal and informal in nature, from our state financial regulators as part of their general regulatory oversight of our servicing and lending businesses. We also regularly engage with state attorneys general and the CFPB and, on occasion, we engage with other federal agencies, including the Department of Justice and various inspectors general on various matters, including responding to information requests and other inquiries. Many of our regulatory engagements arise from a complaint that the entity is investigating, although some are formal investigations or proceedings. The GSEs (and their conservator, FHFA), HUD, FHA, VA, Ginnie Mae, the United States Treasury Department, and others also subject us to periodic reviews and audits. We have in the past resolved, and may in the future resolve, matters via consent orders or payment of monetary amounts to settle issues identified in connection with examinations or regulatory or other oversight activities, and such resolutions could have material and adverse effects on our business, reputation, operations, results of operations and financial condition. On April 20, 2017 and shortly thereafter, mortgage and banking regulatory agencies from 30 states and the District of Columbia issued orders against OLS and certain other Ocwen companies that alleged deficiencies in our compliance with laws and regulations relating to our servicing and lending activities. In general, the orders were styled as “cease and desist orders,” and we use that term to refer to all of the orders for ease of reference; we also include the District of Columbia as a state when we reference states below for ease of reference. All of the cease and desist orders were applicable to OLS, but additional Ocwen entities were named in some orders, including Ocwen Financial Corporation, OMS, Homeward and Liberty. While each cease and desist order was different, the orders generally prohibited a range of actions, including (1) acquiring new MSRs ( 17 states), (2) originating or acquiring new mortgage loans, where we would be the servicer ( 13 states), (3) originating or acquiring new mortgage loans ( 4 states) and (4) conducting foreclosure activities ( 2 states), among others. In addition, in July 2017, and in connection with the cease and desist orders, we received a subpoena from one state seeking information relating to lender placed insurance activities, consumer complaints and certain other matters, with which we have cooperated. Following the issuance of the orders, we reached agreements with certain regulatory agencies to obtain delays in the enforcement of certain terms or exceptions to certain terms contained in the cease and desist orders. Additionally, we revised our operations based on the terms of the orders while we sought to negotiate resolutions. We have entered into agreements with 19 states plus the District of Columbia to resolve these regulatory actions. These agreements generally contain the following key terms (the Multi-State Common Settlement Terms): • Ocwen will not acquire any new residential mortgage servicing rights until April 30, 2018. • Ocwen will develop a plan of action and milestones regarding its transition from the servicing system we currently use, REALServicing ® , to an alternate servicing system and, with certain exceptions, will not board any new loans onto the REALServicing system. • In the event that Ocwen chooses to merge with or acquire an unaffiliated company or its assets in order to effectuate a transfer of loans from the REALServicing system, Ocwen must give the applicable regulatory agency prior notice to the signing of any final agreement and the opportunity to object. If no objection is received, the provisions of the first bullet point above shall not prohibit the transaction, or limit the transfer of loans from the REALServicing system onto the merged or acquired company’s alternate servicing system. In the event that an unaffiliated company merges with or acquires Ocwen or Ocwen’s assets, the provisions of the first bullet point above shall not prohibit the transaction, or limit the transfer of loans from the REALServicing system onto the merging or acquiring company’s alternate servicing system. • Ocwen will engage a third-party auditor to perform an analysis with respect to our compliance with certain federal and state laws relating to escrow by testing approximately 9,000 loan files relating to residential real property in various states, and Ocwen must develop corrective action plans for any errors that are identified by the third-party auditor. • Ocwen will develop and submit for review a plan to enhance our consumer complaint handling processes. • Ocwen will provide financial condition reporting on a confidential basis as part of each state’s supervisory framework through September 2020. In addition to the terms described above, Ocwen has agreed with the Texas regulatory agency on certain additional communications with and for Texas borrowers, as well as certain review and reporting obligations. We also entered into an agreement to resolve the regulatory action brought by Tennessee on separate terms that addressed concerns generally related to financial reporting and two additional states have either withdrawn or allowed their respective cease and desist orders to expire. As of November 1, 2017, the total number of jurisdictions where we have reached a resolution is 22 . These agreements are generally documented as consent orders or consent agreements that resolve the specific cease and desist or other order brought by the applicable regulatory agency and contain the specific terms agreed with each agency, which in certain instances include certain state specific reporting or other requirements. In all of the above-described agreements, Ocwen neither admitted nor denied liability. None of the agreements contain any monetary fines or penalties, although we will incur costs complying with the terms of these settlements, including in connection with the escrow analysis and transition to a new servicing system. In addition, in the event errors were to be uncovered during the escrow analysis, we could incur costs remedying such errors or other actions could be taken against by regulators or others. We continue to seek timely resolutions with the remaining nine state regulatory agencies. If Ocwen is successful in reaching such resolutions, they may contain some or all of the Multi-State Common Settlement Terms and may also contain additional terms, including potentially monetary fines or penalties or additional restrictions on our business. There can be no assurance that Ocwen will be able to reach resolutions with the remaining regulatory agencies. It is possible that the outcome of the remaining regulatory actions, whether through negotiated settlements or other resolutions, could be materially adverse to our business, reputation, financial condition, liquidity and results of operations. We cannot currently estimate the amount, if any, of reasonably possible loss related to these matters. Certain of the state regulators’ cease and desist orders reference a confidential supervisory memorandum of understanding (MOU) that we entered into with the Multistate Mortgage Committee (MMC), a multistate coalition of various mortgage banking regulators, and six states relating to a servicing examination from 2013 to 2015. The MOU contained various provisions relating to servicing practices and safety and soundness aspects of the regulatory review, as a step toward closing the 2013-2015 examination. There were no monetary or other penalties under the MOU. Ocwen responded to the MOU items, and continues to provide certain reports and other information pursuant to the MOU. In April 2017, and concurrent with the issuance of the cease and desist orders and the filing of the CFPB lawsuit discussed above, two state attorneys general took actions against us relating to our servicing practices. The Florida Attorney General filed a lawsuit in the federal district court for the Southern District of Florida against Ocwen, OMS and OLS alleging violations of federal and state consumer financial laws relating to our servicing business. These claims are similar to the claims made by the CFPB. The Florida Attorney General’s lawsuit seeks injunctive and equitable relief, costs, and civil money penalties in excess of $10,000 per confirmed violation of the applicable statute. As previously disclosed, the Massachusetts Attorney General had sent us a civil investigative demand requesting information relating to various aspects of our servicing practices, including lender-placed insurance and property preservation fees. Subsequently, the Massachusetts Attorney General filed a lawsuit against OLS in the Superior Court for the Commonwealth of Massachusetts alleging violations of state consumer financial laws relating to our servicing business, including with respect to our activities relating to lender-placed insurance and property preservation fees. The Massachusetts Attorney General’s lawsuit seeks injunctive and equitable relief, costs, and civil money penalties of $5,000 per confirmed violation of the applicable statute. While we endeavor to negotiate appropriate resolutions in these two matters, we are vigorously defending ourselves, as we believe we have valid defenses to the claims made in both lawsuits. The outcome of these two lawsuits, whether through negotiated settlements, court rulings or otherwise, could potentially involve monetary fines or penalties or additional restrictions on our business and could be materially adverse to our business, reputation, financial condition, liquidity and results of operations. We cannot currently estimate the amount, if any, of reasonably possible loss related to these matters. On occasion, we engage with agencies of the federal government on various matters. For example, OLS received a letter from the Department of Justice, Civil Rights Division, notifying OLS that the Department of Justice had initiated a general investigation into OLS’s policies and procedures to determine whether violations of the Servicemembers Civil Relief Act by OLS might exist. The letter stated that at this point, the investigation is preliminary in nature and the Department of Justice has not made any determination as to whether OLS violated the act. In addition, Ocwen is one of three defendants in an administrative complaint pending with HUD brought by a non-profit organization alleging discrimination in the manner in which the company maintains REO properties in minority communities. We believe the allegations to be without merit and intend to vigorously defend ourselves against these allegations. In April 2017, Ocwen received a subpoena from the Office of Inspector General of HUD requesting the production of documentation related to lender-placed insurance arrangements with a mortgage insurer and the amounts paid for such insurance. We understand that other servicers in the industry have received similar subpoenas. In May 2016, Ocwen received a subpoena from the Office of Inspector General of HUD requesting the production of documentation related to HECM loans originated by Liberty. We understand that other lenders in the industry have received similar subpoenas. In July 2017, we received a letter from Ginnie Mae in which Ginnie Mae informed us that the state regulators’ cease and desist orders discussed above create a material change in Ocwen’s business status under Chapter 3 of the Ginnie Mae MBS Guide, and Ginnie Mae has accordingly declared an event of default under Guaranty Agreements between Ocwen and Ginnie Mae. In the letter, Ginnie Mae notified Ocwen that it will forbear from immediately exercising any rights relating to this matter for a period of 90 days from the date of the letter. During such forbearance period, Ginnie Mae has asked Ocwen to provide certain information regarding the cease and desist orders and certain information regarding Ocwen’s business plan, financial results and operations. Ginnie Mae stated that it reserves the right to make additional requests of Ocwen and to restrict or terminate Ocwen’s participation in the Ginnie Mae mortgage-backed securities program. Based on our conversations with Ginnie Mae, we understand that Ginnie Mae views this as a violation with a prescribed remedy and that the purpose of the notice is to provide for a period of resolution. We have provided and intend to continue to provide information to Ginnie Mae as we s |
Organization, Business Enviro29
Organization, Business Environment and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
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 and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2017 . The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2016 . |
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include, but are not limited to, those that relate to fair value measurements, the amortization of mortgage servicing rights, income taxes, the provision for potential losses that may arise from litigation proceedings, representation and warranty and other indemnification obligations, and our going concern evaluation. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ from those estimates and assumptions. |
Reclassifications | Reclassifications As a result of our adoption on January 1, 2017 of FASB Accounting Standards Update (ASU) 2016-09, Compensation - Stock Compensation: Improvements to Accounting for Employee Share-Based Payments , excess tax benefits have been classified along with other income tax cash flows as an operating activity in our unaudited consolidated statements of cash flows, rather than being separated from other income tax cash flows and classified as a financing activity. Additionally, cash paid by Ocwen when directly withholding shares for tax-withholding purposes has been classified as a financing activity in our unaudited consolidated statements of cash flows, rather than being classified as an operating activity. Certain amounts in the unaudited consolidated statement of cash flows for the nine months ended September 30, 2016 have been reclassified to conform to the current year presentation as follows: • Within the operating activities section, we reclassified Net gain on valuation of mortgage loans held for investment and HMBS-related borrowings from Other to a new separate line item. In addition, we reclassified amounts related to reverse mortgages from Gain on loans held for sale, net to Other. • Within the financing activities section, we reclassified Proceeds from exercise of stock options to Other. In addition, we reclassified Repayments of HMBS-related borrowings from Repayments of mortgage loan warehouse facilities and other secured borrowings to a new separate line item. These reclassifications had no impact on our consolidated cash flows from operating, investing or financing activities. Certain amounts in the unaudited consolidated balance sheet at December 31, 2016 have been reclassified to conform to the current year presentation as follows: • Within the total assets section, we reclassified Deferred tax assets, net to Other assets. • Within the total liabilities section, we reclassified HMBS-related borrowings from Financing liabilities to a new separate line item. |
Recently Adopted And Issued Accounting Standards | Recently Adopted Accounting Standard Compensation - Stock Compensation: Improvements to Employee Shared-Based Payment Accounting (ASU 2016-09) In addition to the reclassification matters discussed above, ASU 2016-09 requires excess tax benefits associated with employee share-based payments to be recognized through the income statement, regardless of whether the benefit reduces income taxes payable in the current period. Prior to our adoption of this standard, excess tax benefits were recognized in additional paid-in capital and were not recognized until the deduction reduced income taxes payable. Additionally, concurrent with our adoption of ASU 2016-09, we made an accounting policy election to account for forfeitures when they occur, rather than estimating the number of awards that are expected to vest, as we had done prior to our adoption of this standard. Amendments requiring recognition of excess tax benefits in the income statement were adopted prospectively. Amendments related to the timing of when excess tax benefits are recognized and forfeitures were adopted using a modified retrospective transition method by means of cumulative-effect adjustments to equity as of January 1, 2017. For the timing of the recognition of excess tax benefits, the cumulative-effect adjustment was to recognize an increase in retained earnings of $5.0 million and a deferred tax asset for the same amount. However, because we have determined that our U.S. and USVI deferred tax assets are not considered to be more likely than not realizable, we established an offsetting full valuation allowance on the deferred tax asset through a reduction in retained earnings. For the change in accounting for forfeitures, we recognized a cumulative-effect adjustment through a reduction of $0.3 million in retained earnings and an increase in additional paid-in capital for the same amount. We also recognized the tax effect of this adjustment through an increase in retained earnings of $0.1 million and a deferred tax asset for the same amount. However, we also fully reserved the resulting deferred tax asset as an offsetting reduction in retained earnings. Recently Issued Accounting Standards Revenue from Contracts with Customers (ASU 2014-09) In May 2014, the FASB issued ASU 2014-09 to clarify the principles for recognizing revenue and to develop a common revenue standard. Under this standard, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should recognize revenue through the following five-step process: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 will be effective for us on January 1, 2018. An entity should apply the amendments in this ASU either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect recognized at the date of initial application. The guidance in this standard does not apply to financial instruments and other contractual rights or obligations within the scope of ASC 860, Transfers and Servicing . We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Business Combinations: Clarifying the Definition of a Business (ASU 2017-01) In January 2017, the FASB issued ASU 2017-01 to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. This standard will be effective for us on January 1, 2018. We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Receivables: Nonrefundable Fees and Other Costs (ASU 2017-08) In March 2017, the FASB issued ASU 2017-08 to amend the amortization period for certain purchased callable debt securities held at a premium. This standard shortens the amortization period for the premium to the earliest call date, rather than generally amortizing the premium as an adjustment of yield over the contractual life of the instrument, as required by current GAAP. This standard will be effective for us on January 1, 2019. We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Compensation: Stock Compensation (ASU 2017-09) In May 2017, the FASB issued ASU 2017-09 to provide clarity and reduce both diversity in practice as well as cost and complexity when applying the modification accounting guidance in FASB ASC Topic 718, Compensation -- Stock Compensation , to a change to the terms or conditions of a share-based payment award. This standard will be effective for us on January 1, 2018. We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12) In August 2017, the FASB issued ASU 2017-12 to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements, and to make certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. This standard will be effective for us on January 1, 2019, with early application permitted in any interim period. We are currently evaluating the effect of adopting this standard. |
Securitizations and Variable 30
Securitizations and Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Proceeds received from securitizations $ 687,502 $ 1,511,991 $ 2,711,651 $ 3,878,461 Servicing fees collected 10,300 3,768 30,250 10,441 Purchases of previously transferred assets, net of claims reimbursed (1,234 ) (271 ) (3,958 ) (1,051 ) $ 696,568 $ 1,515,488 $ 2,737,943 $ 3,887,851 |
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 UPB of the transferred loans at the dates indicated: September 30, 2017 December 31, 2016 Carrying value of assets: Mortgage servicing rights, at amortized cost $ 98,314 $ 94,492 Mortgage servicing rights, at fair value 224 233 Advances and match funded advances 53,683 37,336 UPB of loans transferred 11,905,357 10,485,697 Maximum exposure to loss $ 12,057,578 $ 10,617,758 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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: September 30, 2017 December 31, 2016 Level Carrying Value Fair Value Carrying Value Fair Value Financial assets: Loans held for sale: Loans held for sale, at fair value (a) 2 $ 200,438 $ 200,438 $ 284,632 $ 284,632 Loans held for sale, at lower of cost or fair value (b) 3 23,224 23,224 29,374 29,374 Total Loans held for sale $ 223,662 $ 223,662 $ 314,006 $ 314,006 Loans held for investment (a) 3 $ 4,459,760 $ 4,459,760 $ 3,565,716 $ 3,565,716 Advances (including match funded) (c) 3 1,405,816 1,405,816 1,709,846 1,709,846 Automotive dealer financing notes (including match funded) (c) 3 36,036 38,578 33,224 33,147 Receivables, net (c) 3 231,514 231,514 265,720 265,720 Mortgage-backed securities, at fair value (a) 3 9,327 9,327 8,342 8,342 U.S. Treasury notes (a) 1 1,575 1,575 2,078 2,078 Financial liabilities: Match funded liabilities (c) 3 $ 1,028,016 $ 1,023,241 $ 1,280,997 $ 1,275,059 Financing liabilities: HMBS-related borrowings, at fair value (a) 3 $ 4,358,277 $ 4,358,277 $ 3,433,781 $ 3,433,781 Financing liability - MSRs pledged, at fair value (a) 3 447,843 447,843 477,707 477,707 Other (c) 3 89,138 68,615 101,324 81,805 Total Financing liabilities $ 4,895,258 $ 4,874,735 $ 4,012,812 $ 3,993,293 Other secured borrowings: Senior secured term loan (c) (d) 2 $ 313,316 $ 322,238 $ 323,514 $ 327,674 Other (c) 3 231,273 231,273 355,029 355,029 Total Other secured borrowings $ 544,589 $ 553,511 $ 678,543 $ 682,703 Senior notes: Senior unsecured notes (c) (d) 2 $ 3,122 $ 2,997 $ 3,094 $ 3,048 Senior secured notes (c) (d) 2 344,079 340,808 $ 343,695 352,255 Total Senior notes $ 347,201 $ 343,805 $ 346,789 $ 355,303 Derivative financial instruments assets (liabilities), at fair value (a): Interest rate lock commitments 2 $ 4,969 $ 4,969 $ 6,507 $ 6,507 Forward mortgage-backed securities 1 973 973 (614 ) (614 ) Interest rate caps 3 1,839 1,839 1,836 1,836 September 30, 2017 December 31, 2016 Level Carrying Value Fair Value Carrying Value Fair Value Mortgage servicing rights: Mortgage servicing rights, at fair value (a) 3 $ 598,147 $ 598,147 $ 679,256 $ 679,256 Mortgage servicing rights, at amortized cost (c) (e) 3 346,161 424,208 363,722 467,911 Total Mortgage servicing rights $ 944,308 $ 1,022,355 $ 1,042,978 $ 1,147,167 (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 carrying values are net of unamortized debt issuance costs and discount. See Note 11 – Borrowings for additional information . (e) Balances include the impaired government-insured stratum of amortization method MSRs, which is measured at fair value on a non-recurring basis and reported net of the valuation allowance. Before applying the valuation allowance of $26.6 million , the carrying value of the impaired stratum at September 30, 2017 was $163.5 million . At December 31, 2016 , the carrying value of this stratum was $172.9 million before applying the valuation allowance of $28.2 million . |
Schedule of Reconciliation of Changes in Fair Value of Level 3 Assets and Liabilities | 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 September 30, 2017 Beginning balance $ 4,223,776 $ (4,061,626 ) $ 8,986 $ (441,007 ) $ 1,937 $ 625,650 $ 357,716 Purchases, issuances, sales and settlements: Purchases — — — — 655 — 655 Issuances 263,169 (317,277 ) — (54,601 ) — (715 ) (109,424 ) Sales — — — — — (311 ) (311 ) Transfers to Real estate (Other assets) 88 — — — — — 88 Settlements (1) (118,991 ) 111,677 — 19,770 (403 ) — 12,053 144,266 (205,600 ) — (34,831 ) 252 (1,026 ) (96,939 ) Total realized and unrealized gains (losses) included in earnings 91,718 (91,051 ) 341 27,995 (350 ) (26,477 ) 2,176 Transfers in and / or out of Level 3 — — — — — — — Ending balance $ 4,459,760 $ (4,358,277 ) $ 9,327 $ (447,843 ) $ 1,839 $ 598,147 $ 262,953 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-Backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Total Three months ended September 30, 2016 Beginning balance $ 3,057,564 $ (2,935,928 ) $ 9,063 $ (495,126 ) $ 200 $ 700,668 $ 336,441 Purchases, issuances, sales and settlements: Purchases — — — — 638 — 638 Issuances 509,900 (297,457 ) — — — (50 ) 212,393 Sales — — — — — (5 ) (5 ) Settlements (1) (289,428 ) 63,119 — 594 — — (225,715 ) 220,472 (234,338 ) — 594 638 (55 ) (12,689 ) Total realized and unrealized gains (losses) included in earnings 61,605 (54,344 ) (23 ) — (45 ) (4,505 ) 2,688 Transfers in and / or out of Level 3 — — — — — — — Ending balance $ 3,339,641 $ (3,224,610 ) $ 9,040 $ (494,532 ) $ 793 $ 696,108 $ 326,440 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Total Nine months ended September 30, 2017 Beginning balance $ 3,565,716 $ (3,433,781 ) $ 8,342 $ (477,707 ) $ 1,836 $ 679,256 $ 343,662 Purchases, issuances, sales and settlements: Purchases — — — — 655 — 655 Issuances 961,642 (981,730 ) — (54,601 ) — (2,131 ) (76,820 ) Sales — — — — — (541 ) (541 ) Transfers to Real estate (Other assets) (1,335 ) — — — — — (1,335 ) Settlements (1) (311,560 ) 287,908 — 52,963 (445 ) — 28,866 648,747 (693,822 ) — (1,638 ) 210 (2,672 ) (49,175 ) Total realized and unrealized gains (losses) included in earnings (2) 245,297 (230,674 ) 985 31,502 (207 ) (78,437 ) (31,534 ) Transfers in and / or out of Level 3 — — — — — — — Ending Balance $ 4,459,760 $ (4,358,277 ) $ 9,327 $ (447,843 ) $ 1,839 $ 598,147 $ 262,953 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Total Nine months ended September 30, 2016 Beginning balance $ 2,488,253 $ (2,391,362 ) $ 7,985 $ (541,704 ) $ 2,042 $ 761,190 $ 326,404 Purchases, issuances, sales and settlements: Purchases — — — — 782 — 782 Issuances 1,185,565 (820,438 ) — — — (1,325 ) 363,802 Sales — — — — — (148 ) (148 ) Settlements (1) (528,263 ) 161,995 — 47,172 (81 ) — (319,177 ) 657,302 (658,443 ) — 47,172 701 (1,473 ) 45,259 Total realized and unrealized gains (losses) included in earnings (2) 194,086 (174,805 ) 1,055 — (1,950 ) (63,609 ) (45,223 ) Transfers in and / or out of Level 3 — — — — — — — Ending balance $ 3,339,641 $ (3,224,610 ) $ 9,040 $ (494,532 ) $ 793 $ 696,108 $ 326,440 (1) Settlements for Loans held for investment - reverse mortgages consist chiefly of principal payments received, but also may include non-cash settlements of loans. (2) Total losses attributable to derivative financial instruments still held at September 30, 2017 and September 30, 2016 were $0.2 million and $0.5 million for the nine months ended September 30, 2017 and 2016 , respectively. Total losses attributable to MSRs still held at September 30, 2017 and September 30, 2016 were $78.4 million and $62.4 million for the nine months ended September 30, 2017 and 2016 , respectively. |
Loans Held for Investment [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 included in the valuations consisted of the following at the dates indicated: September 30, December 31, 2016 Life in years Range 6.1 to 6.9 5.5 to 8.7 Weighted average 6.4 6.1 Conditional repayment rate Range 5.7% to 53.8% 5.2% to 53.8% Weighted average 12.9 % 20.9 % Discount rate 2.7 % 3.3 % |
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 valuations consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Weighted average prepayment speed 9.5 % 8.9 % Weighted average delinquency rate 12.0 % 11.1 % Advance financing cost 5-year swap 5-year swap Interest rate for computing float earnings 5-year swap 5-year swap Weighted average discount rate 9.2 % 8.9 % Weighted average cost to service (in dollars) $ 99 $ 108 |
Mortgage Servicing Rights - Fair Value [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 valuations consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Agency Non-Agency Agency Non-Agency Weighted average prepayment speed 8.8 % 16.5 % 8.4 % 16.5 % Weighted average delinquency rate 0.7 % 29.7 % 1.0 % 29.3 % Advance financing cost 5-year swap 5-yr swap plus 2.75% 5-year swap 1-Month LIBOR (1ML) plus 3.5% Interest rate for computing float earnings 5-year swap 5-yr swap minus .50% 5-year swap 1ML Weighted average discount rate 9.0 % 12.6 % 9.0 % 14.9 % Weighted average cost to service (in dollars) $ 63 $ 312 $ 64 $ 307 |
Automotive Dealer Financing Notes [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 valuation consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Weighted average life in months 2.2 2.7 Average note rate 8.3 % 8.3 % Discount rate 10.0 % 10.0 % Loan loss rate 19.2 % 11.3 % |
HMBS - Related Borrowings [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 valuations consisted of the following at the dates indicated: September 30, December 31, 2016 Life in years Range 6.1 to 6.9 4.5 to 8.7 Weighted average 6.4 5.1 Conditional repayment rate Range 5.7% to 53.8% 5.2% to 53.8% Weighted average 12.9 % 20.9 % Discount rate 2.6 % 2.7 % |
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 prices of the underlying MSRs consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Weighted average prepayment speed 17.0 % 17.0 % Weighted average delinquency rate 30.5 % 29.8 % Advance financing cost 5-yr swap plus 2.75% 1ML plus 3.5% Interest rate for computing float earnings 5-yr swap minus .50% 1ML Weighted average discount rate 13.3 % 14.9 % Weighted average cost to service (in dollars) $ 320 $ 313 |
Loans Held for Sale (Tables)
Loans Held for Sale (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of Loans Held for Sale Fair Value | The following table summarizes the activity in the balance: Nine months ended September 30, 2017 2016 Beginning balance $ 284,632 $ 309,054 Originations and purchases 2,204,028 3,141,205 Proceeds from sales (2,310,294 ) (3,167,640 ) Principal collections (3,684 ) (10,995 ) Transfers from Loans held for sale - Lower of cost or fair value — 1,158 Gain on sale of loans 22,131 23,627 Increase in fair value of loans 1,836 990 Other 1,789 4,715 Ending balance (1) $ 200,438 $ 302,114 (1) At September 30, 2017 and 2016 , the balances include $6.7 million and $13.0 million , respectively, of fair value adjustments. |
Schedule of Loans Held for Sale at Lower Cost or Fair Value, Activity | The following table summarizes the activity in the net balance: Nine months ended September 30, 2017 2016 Beginning balance $ 29,374 $ 104,992 Purchases 870,697 1,434,059 Proceeds from sales (746,999 ) (1,295,101 ) Principal collections (6,545 ) (20,151 ) Transfers to Receivables, net (137,807 ) (199,047 ) Transfers to Real estate (Other assets) (711 ) (6,434 ) Transfers to Loans held for sale - Fair value — (1,158 ) Gain on sale of loans 8,332 18,259 Decrease in valuation allowance 1,566 4,637 Other 5,317 (2,405 ) Ending balance (1) $ 23,224 $ 37,651 (1) At September 30, 2017 and 2016 , the balances include $17.6 million and $28.1 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: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 MSRs retained on transfers of forward loans $ 3,572 $ 9,826 $ 18,604 $ 25,312 Fair value gains related to transfers of reverse mortgage loans, net 15,747 32,627 37,434 16,868 Gain on sale of repurchased Ginnie Mae loans 4,577 6,917 8,332 19,879 Other gains (losses) related to loans held for sale, net 6,730 (8,663 ) 19,635 15,673 Gain on sales of loans, net 30,626 40,707 84,005 77,732 Change in fair value of IRLCs (178 ) (2,523 ) (1,605 ) 4,148 Change in fair value of loans held for sale (2,078 ) (8,226 ) 3,735 13,486 Loss on economic hedge instruments (2,420 ) (4,051 ) (8,604 ) (25,677 ) Other (173 ) (262 ) (555 ) (615 ) $ 25,777 $ 25,645 $ 76,976 $ 69,074 |
Valuation Allowance for Loans Held for Sale [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of Changes in Valuation Allowance | The changes in the valuation allowance are as follows: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Beginning balance $ 6,491 $ 15,933 $ 10,064 $ 14,658 Provision 906 (63 ) 1,761 2,100 Transfer from Liability for indemnification obligations (Other liabilities) 1,529 601 2,416 2,306 Sales of loans (426 ) (6,450 ) (6,071 ) (8,699 ) Other (2 ) — 328 (344 ) Ending balance $ 8,498 $ 10,021 $ 8,498 $ 10,021 |
Advances (Tables)
Advances (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Advances [Abstract] | |
Schedule of Advances Paid on Behalf of Borrowers or on Foreclosed Properties | Advances, net, which represent payments made on behalf of borrowers or on foreclosed properties, consisted of the following at the dates indicated: September 30, 2017 December 31, 2016 Principal and interest $ 16,951 $ 31,334 Taxes and insurance 137,992 170,131 Foreclosures, bankruptcy and other 77,172 94,369 232,115 295,834 Allowance for losses (34,162 ) (37,952 ) $ 197,953 $ 257,882 |
Schedule of Activity in Advances | The following table summarizes the activity in net advances: Nine months ended September 30, 2017 2016 Beginning balance $ 257,882 $ 444,298 Sales of advances (399 ) (24,572 ) Collections of advances, charge-offs and other, net (63,320 ) (125,701 ) Decrease (increase) in allowance for losses 3,790 (5,011 ) Ending balance $ 197,953 $ 289,014 |
Schedule of Change in Allowance for Losses | The changes in the allowance for losses are as follows: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Beginning balance $ 20,328 $ 39,441 $ 37,952 $ 41,901 Provision (1) 13,756 (6,865 ) 17,054 581 Recoveries (Charge-offs), net and other 78 14,336 (20,844 ) 4,430 Ending balance $ 34,162 $ 46,912 $ 34,162 $ 46,912 (1) The provision for the three months ended September 30, 2017 increased in connection with re-performing government-insured loans for which certain advances are no longer recoverable. |
Match Funded Advances (Tables)
Match Funded Advances (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | |
Schedule of Match Funded Assets | Match funded assets are comprised of the following at the dates indicated: September 30, 2017 December 31, 2016 Advances: Principal and interest $ 574,175 $ 711,272 Taxes and insurance 445,692 530,946 Foreclosures, bankruptcy, real estate and other 187,996 209,746 1,207,863 1,451,964 Automotive dealer financing notes (1) 36,036 — $ 1,243,899 $ 1,451,964 (1) In 2017, we entered into loan agreements under a new automotive dealer loan financing facility to which these notes are pledged. |
Schedule of Activity In Match Funded Assets | The following table summarizes the activity in match funded assets: Nine months ended September 30, 2017 2016 Advances Automotive Dealer Financing Notes Advances Beginning balance $ 1,451,964 $ — $ 1,706,768 Transfer from Other assets — 25,180 — Sales (691 ) — (7,757 ) New advances/notes (Collections of pledged assets), net (243,410 ) 10,856 (164,689 ) Ending balance $ 1,207,863 $ 36,036 $ 1,534,322 |
Mortgage Servicing (Tables)
Mortgage Servicing (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | |
Schedule of Activity Related to MSRs - Amortization Method | The following table summarizes changes in the net carrying value of servicing assets that we account for using the amortization method: Nine months ended September 30, 2017 2016 Beginning balance $ 363,722 $ 377,379 Additions recognized in connection with asset acquisitions 1,658 15,968 Additions recognized on the sale of mortgage loans 18,604 26,494 Sales and other transfers (814 ) (23,521 ) 383,170 396,320 Amortization (1) (38,560 ) (18,595 ) Decrease (increase) in impairment valuation allowance (2) 1,551 (37,164 ) Ending balance $ 346,161 $ 340,561 Estimated fair value at end of period $ 424,208 $ 357,817 (1) During 2016, principally in the third quarter, we participated in HUD’s Aged Delinquent Portfolio Loan Sale (ADPLS) program, which accelerates FHA insurance claims for a population of significantly delinquent FHA loans. The expedited claim filing process allows a servicer to reduce significantly its standard claim losses on accepted loans by shortening the servicing timeline and related expenses, some of which are not reimbursed by FHA insurance. Our participation required that we recognize $23.1 million of life-to-date losses on the claims filed in the third quarter of 2016. This loss is reported in Servicing and origination expense in the unaudited consolidated statements of operations . Because the MSRs related to the loans that were assigned to HUD had negative carrying values, our recognition of the losses on the loans reduced the negative carrying value of the MSRs, thereby generating negative amortization expense for this population of MSRs. In the third quarter of 2016, this ADPLS-related negative amortization expense of $18.1 million exceeded the positive amortization expense on the remaining MSRs, generating net negative amortization for the quarter. (2) Impairment of MSRs is recognized in Servicing and origination expense in the unaudited consolidated statements of operations. See Note 3 – Fair Value for additional information regarding impairment and the valuation allowance. |
Schedule of Activity Related to MSRs - Fair Value Measurement Method | The following table summarizes changes in the fair value of servicing assets that we account for at fair value on a recurring basis: Nine months ended September 30, 2017 2016 Agency Non-Agency Total Agency Non-Agency Total Beginning balance $ 13,357 $ 665,899 $ 679,256 $ 15,071 $ 746,119 $ 761,190 Sales and other transfers — (2,672 ) (2,672 ) (3 ) (1,471 ) (1,474 ) Changes in fair value (1): Changes in valuation inputs or other assumptions (131 ) 2,303 2,172 (4,654 ) — (4,654 ) Realization of expected future cash flows and other changes (1,385 ) (79,224 ) (80,609 ) (1,399 ) (57,555 ) (58,954 ) Ending balance $ 11,841 $ 586,306 $ 598,147 $ 9,015 $ 687,093 $ 696,108 (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 September 30, 2017 given hypothetical shifts in lifetime prepayments and yield assumptions: Adverse change in fair value 10% 20% Weighted average prepayment speeds $ (59,993 ) $ (121,587 ) Discount rate (option-adjusted spread) (10,383 ) (20,807 ) |
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 servicing rights 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 September 30, 2017 Servicing $ 78,254,463 $ — $ 78,254,463 Subservicing 3,656,197 9,750 3,665,947 NRZ (1) 105,557,658 — 105,557,658 $ 187,468,318 $ 9,750 $ 187,478,068 UPB at December 31, 2016 Servicing $ 86,049,298 $ — $ 86,049,298 Subservicing 4,330,084 92,933 4,423,017 NRZ (1) 118,712,748 — 118,712,748 $ 209,092,130 $ 92,933 $ 209,185,063 UPB at September 30, 2016 Servicing $ 89,018,280 $ — $ 89,018,280 Subservicing 4,692,236 151,432 4,843,668 NRZ (1) 123,181,486 — 123,181,486 $ 216,892,002 $ 151,432 $ 217,043,434 (1) UPB of loans serviced for which the Rights to MSRs have been sold to NRZ, including those subserviced for which third-party consents have been received and the MSRs have been transferred to NRZ. |
Schedule of Components of Servicing and Subservicing Fees | The following table presents the components of servicing and subservicing fees: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Loan servicing and subservicing fees: Servicing $ 63,071 $ 74,105 $ 197,712 $ 229,686 Subservicing 1,760 2,989 5,877 11,436 NRZ 129,228 159,919 420,151 482,566 194,059 237,013 623,740 723,688 Late charges 14,958 15,225 47,352 51,301 Home Affordable Modification Program (HAMP) fees 6,202 32,029 37,692 88,141 Loan collection fees 5,663 6,746 17,918 20,860 Other 12,338 11,222 34,821 23,003 $ 233,220 $ 302,235 $ 761,523 $ 906,993 |
Rights to MSRs (Tables)
Rights to MSRs (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | |
Schedule of Activity Related to Rights to Mortgage Servicing Rights | The following table provides details of activity related to Rights to MSRs transactions: Nine months ended September 30, 2017 2017 Agreements 2012 - 2013 Agreements MSR MSR UPB Carrying Value UPB Carrying Value Financing Liability (1) (2) Beginning balance $ — $ — $ 118,712,748 $ 477,707 $ (477,707 ) Transfers upon receipt of consents 15,872,374 31,253 (15,872,374 ) (31,253 ) — Receipt of lump sum payment in connection with transfer of MSRs to NRZ (3) — — — — (54,601 ) Calls (4) (134,705 ) (322 ) (1,132,497 ) (4,156 ) 4,478 Sales and other transfers — — (57,793 ) — — Changes in fair value (3): Changes in valuation inputs or other assumptions — (2,444 ) — (1,471 ) 27,024 Realization of expected future cash flows and other changes — (1,459 ) — (52,266 ) — Decrease in impairment valuation allowance — — — 13,769 — Runoff, settlements and other (217,048 ) — (11,613,047 ) 1,529 52,963 Ending balance $ 15,520,621 $ 27,028 $ 90,037,037 $ 403,859 $ (447,843 ) Advances N/A $ 2,727,107 (1) Carried at fair value in accordance with fair value election. (2) Under ASC 470-50, Debt - Modifications and Extinguishments , Ocwen is deemed to have had a significant modification and debt extinguishment in connection with the Rights to MSRs secured financing liability. Because the secured financing liability is accounted for at fair value, there was no gain or loss recognized in connection with this debt extinguishment. As permitted by ASC 825-10-25, Financial Instruments - Recognition - Fair Value Option , a significant modification of debt is an event that creates a fair value option election date. (3) The amount of the lump sum payment is based on a contractual schedule that approximates the net present value of the difference in cash flows under the 2017 Agreements versus the 2012 - 2013 Agreements, and was determined based on the weighted average characteristics, such as contractual servicing fee rates and delinquency, of the MSRs underlying the Rights to MSRs. The difference between the characteristics of the MSRs underlying the Rights to MSRs that are transferred in any period, relative to the weighted average loan characteristics used to determine the lump sum payment, will result in an increase (characteristics of transferred MSRs compare favorably to the weighted average) or decrease (characteristics of transferred MSRs compare unfavorably to the weighted average) in the fair value of the financing liability. The fair value of the portion of the financing liability recognized in connection with the September 1, 2017 transfer declined $37.6 million primarily due to the transferred MSRs having a contractual servicing fee rate of 33.4 bps as compared to the weighted average of 47.1 bps . (4) Represents the UPB and carrying value of MSRs in connection with clean-up call rights exercised by NRZ, for MSRs transferred to NRZ under the 2017 Agreements, or by Ocwen at NRZ’s direction, for MSRs underlying the 2012 - 2013 Agreements. Ocwen derecognizes the MSRs and the related financing liability upon collapse of the securitization. Income recognized in connection with clean-up calls is reported in other income in our unaudited consolidated statements of operations. |
Schedule of Components of Interest Expense | Interest expense related to financing liabilities recorded in connection with the NRZ Transactions is indicated in the table below. Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Servicing fees collected on behalf of NRZ $ 129,228 $ 159,919 $ 420,151 $ 482,566 Less: Subservicing fee retained by Ocwen 68,536 87,506 226,483 257,408 Net servicing fees remitted to NRZ 60,692 72,413 193,668 225,158 Less: Reduction (increase) in financing liability Changes in fair value 27,024 (807 ) 27,024 (1,555 ) Runoff, settlement and other 19,770 594 52,963 47,172 $ 13,898 $ 72,626 $ 113,681 $ 179,541 The following table presents the components of interest expense: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Financing liabilities $ 15,317 $ 73,096 $ 118,579 $ 193,675 Match funded liabilities 11,981 17,349 37,499 53,656 Other secured borrowings 10,990 13,450 30,174 38,877 Senior notes 7,452 6,130 22,355 18,399 Other 1,541 936 3,864 3,476 $ 47,281 $ 110,961 $ 212,471 $ 308,083 |
Receivables (Tables)
Receivables (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Schedule of Receivables | September 30, 2017 December 31, 2016 Servicing: Government-insured loan claims, net (1) $ 118,113 $ 133,063 Due from custodial accounts 34,423 44,761 Reimbursable expenses 31,565 29,358 Due from NRZ 11,548 21,837 Other 13,551 27,086 209,200 256,105 Income taxes receivable 38,666 61,932 Other receivables (2) 46,519 21,125 294,385 339,162 Allowance for losses (1) (62,871 ) (73,442 ) $ 231,514 $ 265,720 (1) At September 30, 2017 and December 31, 2016 , the allowance for losses 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 September 30, 2017 and December 31, 2016 were $48.7 million and $53.3 million , respectively. (2) At September 30, 2017 , the balance includes $13.0 million in connection with the recovery of prior legal settlement expenses and $14.0 million for insurance recovery in connection with accrued legal fees and settlements outstanding at September 30, 2017 . |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Assets [Line Items] | |
Schedule of Other Assets | September 30, 2017 December 31, 2016 Contingent loan repurchase asset (1) $ 318,954 $ 246,081 Debt service accounts 38,753 42,822 Prepaid expenses (2) 33,951 57,188 Prepaid lender fees, net 9,896 9,023 Mortgage backed securities, at fair value 9,327 8,342 Derivatives, at fair value 7,852 9,279 Prepaid income taxes 6,314 8,392 Interest-earning time deposits 5,380 6,454 Real estate 3,700 5,249 Automotive dealer financing notes, net — 33,224 Other 19,774 12,050 $ 453,901 $ 438,104 (1) With respect to previously transferred Ginnie Mae mortgage loans for which we have the right or the obligation to repurchase under the applicable agreement, we re-recognize the loans in Other assets and a corresponding liability in Other liabilities. (2) In connection with the sale of Agency MSRs in 2015, we placed $52.9 million in escrow for the payment of representation, warranty and indemnification claims associated with the underlying loans. Prepaid expenses at September 30, 2017 and December 31, 2016 includes the remaining balance of $20.2 million and $34.9 million , respectively. |
Automotive Dealer Financing Notes [Member] | |
Other Assets [Line Items] | |
Schedule of Changes in allowance of Automotive Dealer Financing Notes | Changes in the allowance are as follows: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Beginning balance $ 9,586 $ 164 $ 4,371 $ 27 Provision (1,019 ) 108 4,196 245 Ending balance $ 8,567 $ 272 $ 8,567 $ 272 |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Match Funded Liabilities | September 30, 2017 December 31, 2016 Borrowing Type Maturity (1) Amorti- zation Date (1) Available Borrowing Capacity (2) Weighted Average Interest Rate (3) Balance Weighted Average Interest Rate (3) Balance Advance Financing Facilities: Advance Receivables Backed Notes - Series 2014-VF3 (4) Aug. 2047 Aug. 2017 $ — — % $ — 3.12 % $ 74,394 Advance Receivables Backed Notes - Series 2014-VF4 (4) Aug. 2048 Aug. 2018 34,366 4.27 70,634 3.12 74,394 Advance Receivables Backed Notes - Series 2015-VF5 (4) Aug. 2048 Aug. 2018 34,366 4.27 70,634 3.12 74,394 Advance Receivables Backed Notes - Series 2015-T3 (5) Nov. 2047 Nov. 2017 — — — 3.48 400,000 Advance Receivables Backed Notes - Series 2017-T1 (5) Sep. 2048 Sep. 2018 — 2.64 250,000 — — Advance Receivables Backed Notes - Series 2016-T1 (5) Aug. 2048 Aug. 2018 — 2.77 265,000 2.77 265,000 Advance Receivables Backed Notes - Series 2016-T2 (5) Aug. 2049 Aug. 2019 — 2.99 235,000 2.99 235,000 Total Ocwen Master Advance Receivables Trust (OMART) 68,732 2.29 % 891,268 3.14 % 1,123,182 Ocwen Servicer Advance Receivables Trust III (OSART III) - Advance Receivables Backed Notes, Series 2014-VF1 (6) Dec. 2047 Dec. 2017 23,134 4.41 % 51,866 4.03 % 63,093 Ocwen Freddie Advance Funding (OFAF) - Advance Receivables Backed Notes, Series 2015-VF1 (7) Jun. 2048 Jun. 2018 51,274 4.16 % 58,726 3.54 % 94,722 Total Servicing Advance Financing Facilities 143,140 2.51 % 1,001,860 3.21 % 1,280,997 Automotive Dealer Loan Financing Facility: Loan Series 2017-1 Feb. 2021 Feb. 2019 36,922 6.48 % 13,078 — % — Loan Series 2017-2 Mar. 2021 Mar. 2019 36,922 6.23 13,078 — — Total Automotive Capital Asset Receivables Trust (ACART) (8) 73,844 6.36 % 26,156 — % — $ 216,984 2.61 % $ 1,028,016 3.21 % $ 1,280,997 (1) The amortization date of our facilities is the date on which the revolving period ends under each advance 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 all of our 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 September 30, 2017 , $41.9 million of the available borrowing capacity of our advance financing notes could be used based on the amount of eligible collateral that had been pledged. (3) 1ML was 1.23% and 0.77% at September 30, 2017 and December 31, 2016 , respectively. (4) On August 11, 2017, we increased the borrowing capacity of the Series 2014-VF4 and Series 2014-VF5 variable rate notes from $70.0 million to $105.0 million . In addition, we voluntarily terminated the Series 2014-VF3 note. There is a ceiling of 125 basis points (bps) for 1ML in determining the interest rate for these notes. Rates on the individual notes are based on 1ML plus a margin of 235 to 635 bps. (5) Under the terms of the agreement, we must continue to borrow the full amount of the Series 2016-T1 and Series 2016-T2 fixed-rate term notes until the amortization date. On September 15, 2017, we terminated the Series 2015-T3 note, and we entered into the Series 2017-T1 notes. If there is insufficient collateral to support the level of borrowing, the excess cash proceeds are not distributed to Ocwen but are held by the trustee, and interest expense continues to be based on the full amount of the notes. The Series 2016-T1 and Series 2016-T2 notes have a total borrowing capacity of $500.0 million . The Series 2017-T1 notes have a borrowing capacity of $250.0 million . Rates on the individual notes range from 2.4989% to 4.4456% . (6) The maximum borrowing capacity under this facility is $75.0 million . There is a ceiling of 75 bps for 1ML in determining the interest rate for these variable rate notes. Rates on the individual notes are based on the lender’s cost of funds plus a margin of 230 to 470 bps. (7) The combined borrowing capacity of the Series 2015-VF1 Notes was $160.0 million at December 31, 2016. Rates on the individual notes are based on 1ML plus a margin of 240 to 480 bps. On June 8, 2017, we negotiated a renewal of this facility through June 7, 2018. As part of this renewal, we reduced the combined borrowing capacity of the Series 2015-VF1 Notes to $110.0 million with interest computed based on the lender’s cost of funds plus a margin of 250 to 500 bps. There is a ceiling of 300 bps for 1ML in determining the interest rate for these variable rate notes. (8) We entered into the loan agreements for the Series 2017-1 Notes on February 24, 2017 and for the Series 2017-2 Notes on March 17, 2017. The committed borrowing capacity for each of the Series 2017-1 and Series 2017-2 variable rate notes is $50.0 million . From time to time, we may request increases in the aggregate maximum borrowing capacity of the facility to $200.0 million . Rates on the Series 2017-1 notes are based on 1ML plus a margin of 500 bps and rates on the Series 2017-2 notes are based on the lender’s cost of funds plus a margin of 500 bps. |
Schedule of Financing Liabilities | Borrowings Collateral Interest Rate Maturity September 30, 2017 December 31, 2016 HMBS-Related Borrowings, at fair value (1) Loans held for investment 1ML + 264 bps (1) $ 4,358,277 $ 3,433,781 Other Financing Liabilities: Financing liability – MSRs pledged, at fair value 2012 - 2013 Agreements MSRs (2) (2) 430,887 477,707 2017 Agreements MSRs (3) (3) 16,956 — 447,843 477,707 Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (4) MSRs (4) Feb. 2028 74,695 81,131 Financing liability – Advances pledged (5) Advances on loans (5) (5) 14,443 20,193 536,981 579,031 $ 4,895,258 $ 4,012,812 (1) 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. (2) This financing liability arose in connection with sales proceeds received in 2012 and 2013 as part of the Rights to MSRs transactions with NRZ/HLSS and has no contractual maturity or repayment schedule. 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. (3) This financing liability arose in connection with the lump sum payment received in September 2017 upon subsequently obtaining the required third-party consents and transfer of legal title of the MSRs related to the Rights to MSRs transactions with NRZ/HLSS in 2012 and 2013. We received a lump sum payment of $54.6 million as compensation for foregoing certain payments under the 2012 and 2013 agreements. This liability has no contractual maturity or repayment schedule. 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. See Note 3 – Fair Value and Note 8 — Rights to MSRs for additional information. (4) 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. 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. (5) Certain sales of advances did not qualify for sales accounting treatment and were accounted for as a financing. This financing liability has no contractual maturity. |
Schedule of Other Secured Borrowings | Borrowings Collateral Interest Rate Maturity Available Borrowing Capacity (1) September 30, 2017 December 31, 2016 SSTL (2) 1ML Euro-dollar rate + 500 bps with a Eurodollar floor of 100 bps Dec. 2020 $ — $ 322,438 $ 335,000 Mortgage loan warehouse facilities: Repurchase agreement (3) Loans held for sale (LHFS) 1ML + 200 - 345 bps Aug. 2018 45,516 41,984 12,370 Master repurchase agreements (4) LHFS 1ML + 200 bps; 1ML floor of 0.0% Feb. 2018 — — 173,543 Participation agreements (5) LHFS N/A Apr. 2018 — 141,800 92,739 Participation agreements (6) LHFS (reverse mortgages) 1ML + 275 bps; 1ML floor of 300 or 350 bps Nov. 2017 — 47,489 26,254 Master repurchase agreement (7) LHFS (reverse mortgages) 1ML + 275 bps; 1ML floor of 25 bps Jan. 2018 — — 50,123 45,516 231,273 355,029 $ 45,516 553,711 690,029 Unamortized debt issuance costs - SSTL (6,045 ) (7,612 ) Discount - SSTL (3,077 ) (3,874 ) $ 544,589 $ 678,543 Weighted average interest rate 5.20 % 4.56 % (1) For our mortgage loan warehouse facilities, available borrowing capacity does not consider the amount of the facility that the lender has extended on an uncommitted basis. Of the borrowing capacity extended on a committed basis, $29.3 million could be used at September 30, 2017 based on the amount of eligible collateral that had been pledged. (2) On December 5, 2016, we entered into an Amended and Restated Senior Secured Term Loan Facility Agreement that established a new SSTL with a borrowing capacity of $335.0 million and a maturity date of December 5, 2020. We may request increases to the loan amount of up to $100.0 million in total, with additional increases subject to certain limitations. We are required to make quarterly payments on the SSTL in an amount of $4.2 million , the first of which was paid on March 31, 2017. The borrowings under the SSTL are secured by a first priority security interest in substantially all of the assets of Ocwen, OLS and the other guarantors thereunder, excluding among other things, 35% of the capital stock of foreign subsidiaries, securitization assets and equity interests of securitization entities, assets securing permitted funding indebtedness and non-recourse indebtedness, REO assets, servicing agreements where an acknowledgment from the GSE has not been obtained, as well as other customary carve-outs. Borrowings bear interest, at the election of Ocwen, at a rate per annum equal to either (a) the base rate (the greatest of (i) the prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50% and (iii) the one-month Eurodollar rate (1ML)), plus a margin of 4.00% and subject to a base rate floor of 2.00% or (b) the one-month Eurodollar rate, plus a margin of 5.00% and subject to a one-month Eurodollar floor of 1.00% . To date, we have elected option (b) to determine the interest rate. (3) $87.5 million of the maximum borrowing amount of $137.5 million is available on a committed basis and the remainder is available at the discretion of the lender. Effective January 1, 2018, the committed amount shall be reduced to $50.0 million . We primarily use this facility to fund the repurchase of 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. On August 1, 2017, we entered into an amendment to lower the advance rates under this facility by 3% . (4) On August 1, 2017, we elected to voluntarily terminate these agreements. (5) Under these participation agreements, the lender provides financing for a combined total of $250.0 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 25, 2017, the term of these participation agreements was extended to April 30, 2018. (6) Under these participation agreements, the lender provides uncommitted reverse mortgage financing for a combined total of $110.0 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 October 27, 2017, we renewed one of the agreements through October 12, 2018 and increased the maximum borrowing capacity of the facility from $50.0 million to $100.0 million . (7) On August 18, 2017, we elected to voluntarily terminate the master repurchase agreement. |
Schedule of Senior Notes | Senior Notes September 30, 2017 December 31, 2016 6.625% Senior unsecured notes due May 15, 2019 $ 3,122 $ 3,122 8.375% Senior secured notes due November 15, 2022 346,878 346,878 350,000 $ 350,000 Unamortized debt issuance costs (2,799 ) (3,211 ) $ 347,201 $ 346,789 |
Schedule of Redemption Prices | The redemption prices during the twelve-month periods beginning on November 15 of each year are as follows: Year Redemption Price 2018 106.281% 2019 104.188% 2020 102.094% 2021 and thereafter 100.000% |
Other Liabilities (Tables)
Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Liabilities | September 30, 2017 December 31, 2016 Contingent loan repurchase liability $ 318,954 $ 246,081 Due to NRZ 100,914 83,248 Other accrued expenses 80,187 80,021 Accrued legal fees and settlements 59,943 93,797 Servicing-related obligations 35,959 35,324 Liability for indemnification obligations 23,823 27,546 Checks held for escheat 19,804 16,890 Accrued interest payable 14,910 3,698 Amounts due in connection with MSR sales 13,996 39,398 Liability for uncertain tax positions (1) — 23,216 Other 24,629 32,020 $ 693,119 $ 681,239 (1) On September 15, 2017, the statute of limitation expired with respect to our remaining uncertain tax position for which a liability had previously been recorded. This liability was derecognized and recorded as an income tax benefit during the three months ended September 30, 2017. See Note 16 - Income Taxes for additional information. |
Derivative Financial Instrume41
Derivative Financial Instruments and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Activity | The following table summarizes derivative activity, including the derivatives used in each of our identified hedging programs: Interest Rate Risk IRLCs and Loans Held for Sale Borrowings IRLCs Forward MBS Trades Interest Rate Caps (1) Notional balance at December 31, 2016 $ 360,450 $ 609,177 $ 955,000 Additions 3,192,031 2,094,533 110,000 Amortization — — (316,667 ) Maturities (2,728,640 ) (1,340,603 ) — Terminations (617,050 ) (993,407 ) (300,000 ) Notional balance at September 30, 2017 $ 206,791 $ 369,700 $ 448,333 Maturity Oct. 2017 - Dec. 2017 Oct. 2017 - Nov. 2017 Oct. 2017 - May 2019 Fair value of derivative assets (liabilities) (2) at: September 30, 2017 $ 4,969 $ 973 $ 1,839 December 31, 2016 6,507 (614 ) 1,836 Gains (losses) on derivatives during the nine months ended: Gain on Loans Held for Sale, Net Gain on Loans Held for Sale, Net Other, Net September 30, 2017 $ (1,605 ) $ (8,604 ) $ (207 ) September 30, 2016 4,148 (25,677 ) (1,950 ) |
Schedule of Other Income (Expense), Net Related to Derivative Financial Instruments | Other income (expense), net, includes the following related to derivative financial instruments: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Losses on economic hedges $ (350 ) $ (45 ) $ (207 ) $ (1,950 ) Write-off of losses in AOCL for a discontinued hedge relationship (45 ) (89 ) (157 ) (263 ) $ (395 ) $ (134 ) $ (364 ) $ (2,213 ) |
Interest Expense (Tables)
Interest Expense (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Other Income and Expenses [Abstract] | |
Schedule of Components of Interest Expense | Interest expense related to financing liabilities recorded in connection with the NRZ Transactions is indicated in the table below. Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Servicing fees collected on behalf of NRZ $ 129,228 $ 159,919 $ 420,151 $ 482,566 Less: Subservicing fee retained by Ocwen 68,536 87,506 226,483 257,408 Net servicing fees remitted to NRZ 60,692 72,413 193,668 225,158 Less: Reduction (increase) in financing liability Changes in fair value 27,024 (807 ) 27,024 (1,555 ) Runoff, settlement and other 19,770 594 52,963 47,172 $ 13,898 $ 72,626 $ 113,681 $ 179,541 The following table presents the components of interest expense: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Financing liabilities $ 15,317 $ 73,096 $ 118,579 $ 193,675 Match funded liabilities 11,981 17,349 37,499 53,656 Other secured borrowings 10,990 13,450 30,174 38,877 Senior notes 7,452 6,130 22,355 18,399 Other 1,541 936 3,864 3,476 $ 47,281 $ 110,961 $ 212,471 $ 308,083 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of Liability for Uncertain Tax Positions | A reconciliation of the beginning and ending amount of the total liability for uncertain tax positions is as follows for the nine months ended September 30: 2017 2016 Beginning balance $ 16,994 $ 32,548 Reductions for settlements (387 ) (14,420 ) Lapses in statutes of limitation (16,607 ) (524 ) Ending balance $ — $ 17,604 |
Basic and Diluted Earnings (L44
Basic and Diluted Earnings (Loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Calculation of Basic Loss per Share to Diluted Loss per Share | The following is a reconciliation of the calculation of basic loss per share to diluted loss per share: Periods ended September 30, Three Months Nine Months 2017 2016 2017 2016 Basic loss per share Net income (loss) attributable to Ocwen stockholders $ (6,252 ) $ 9,391 $ (83,483 ) $ (189,318 ) Weighted average shares of common stock 128,744,152 123,986,987 125,797,777 123,991,343 Basic earnings (loss) per share $ (0.05 ) $ 0.08 $ (0.66 ) $ (1.53 ) Diluted loss per share (1) Net income (loss) attributable to Ocwen stockholders $ (6,252 ) $ 9,391 $ (83,483 ) $ (189,318 ) Weighted average shares of common stock 128,744,152 123,986,987 125,797,777 123,991,343 Effect of dilutive elements (1): Stock option awards — — — — Common stock awards — 147,520 — — Dilutive weighted average shares of common stock 128,744,152 124,134,507 125,797,777 123,991,343 Diluted earnings (loss) per share $ (0.05 ) $ 0.08 $ (0.66 ) $ (1.53 ) Stock options and common stock awards excluded from the computation of diluted earnings per share Anti-dilutive (2) 6,600,164 6,890,882 5,121,844 7,285,539 Market-based (3) 862,446 1,917,456 862,446 1,917,456 (1) For the three and nine months ended September 30, 2017 and the nine months ended September 30, 2016, we have excluded the effect of stock options and common stock awards from the computation of diluted loss per share because of the anti-dilutive effect of our reported net loss. (2) Stock options were anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock. (3) Shares that are issuable upon the achievement of certain market-based performance criteria related to Ocwen’s stock price. |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 September 30, 2017 Revenue $ 246,545 $ 31,935 $ 6,162 $ — $ 284,642 Expenses 218,565 38,412 16,502 — 273,479 Other income (expense): Interest income 144 2,857 1,098 — 4,099 Interest expense (28,568 ) (4,504 ) (14,209 ) — (47,281 ) Gain on sale of mortgage servicing rights, net 6,543 — — — 6,543 Other (418 ) 555 (1,214 ) — (1,077 ) Other expense, net (22,299 ) (1,092 ) (14,325 ) — (37,716 ) Income (loss) before income taxes $ 5,681 $ (7,569 ) $ (24,665 ) $ — $ (26,553 ) Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated Three months ended September 30, 2016 Revenue $ 319,080 $ 30,696 $ 9,672 $ — $ 359,448 Expenses 202,156 30,013 39,509 — 271,678 Other income (expense): Interest income 59 3,990 1,109 — 5,158 Interest expense (101,138 ) (3,684 ) (6,139 ) — (110,961 ) Gain on sale of mortgage servicing rights, net 5,661 — — — 5,661 Other 13,943 322 471 — 14,736 Other income (expense), net (81,475 ) 628 (4,559 ) — (85,406 ) Income (loss) before income taxes $ 35,449 $ 1,311 $ (34,396 ) $ — $ 2,364 Nine months ended September 30, 2017 Revenue $ 802,347 $ 95,457 $ 20,002 $ — $ 917,806 Expenses 637,406 100,628 92,308 — 830,342 Other income (expense): Interest income 406 8,612 3,083 — 12,101 Interest expense (159,822 ) (11,171 ) (41,478 ) — (212,471 ) Gain on sale of mortgage servicing rights, net 7,863 — — — 7,863 Other 4,642 658 1,084 — 6,384 Other expense, net (146,911 ) (1,901 ) (37,311 ) — (186,123 ) Income (loss) before income taxes $ 18,030 $ (7,072 ) $ (109,617 ) $ — $ (98,659 ) Nine months ended September 30, 2016 Revenue $ 951,727 $ 89,255 $ 22,277 $ — $ 1,063,259 Expenses 734,326 85,471 165,556 — 985,353 Other income (expense): Interest income (102 ) 11,805 2,785 — 14,488 Interest expense (278,808 ) (10,829 ) (18,446 ) — (308,083 ) Gain on sale of mortgage servicing rights, net 7,689 — — — 7,689 Other 11,406 982 (547 ) — 11,841 Other income (expense), net (259,815 ) 1,958 (16,208 ) — (274,065 ) Income (loss) before income taxes $ (42,414 ) $ 5,742 $ (159,487 ) $ — $ (196,159 ) Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated Total Assets September 30, 2017 $ 2,905,817 $ 4,679,641 $ 512,147 $ — $ 8,097,605 December 31, 2016 $ 3,312,371 $ 3,863,862 $ 479,430 $ — $ 7,655,663 September 30, 2016 $ 3,455,613 $ 3,662,339 $ 467,498 $ — $ 7,585,450 Servicing Lending Corporate Items and Other Business Segments Consolidated Depreciation and Amortization Expense Three months ended September 30, 2017 Depreciation expense $ 1,525 $ 57 $ 5,408 $ 6,990 Amortization of mortgage servicing rights 13,081 67 — 13,148 Amortization of debt discount — — 258 258 Amortization of debt issuance costs — — 644 644 Three months ended September 30, 2016 Depreciation expense $ 2,730 $ 48 $ 3,651 $ 6,429 Amortization of mortgage servicing rights (2,634 ) 76 — (2,558 ) Amortization of debt discount 240 — — 240 Amortization of debt issuance costs 3,645 — 332 3,977 Nine months ended September 30, 2017 Depreciation expense $ 4,393 $ 162 $ 15,875 $ 20,430 Amortization of mortgage servicing rights 38,351 209 — 38,560 Amortization of debt discount — — 797 797 Amortization of debt issuance costs — — 1,979 1,979 Nine months ended September 30, 2016 Depreciation expense $ 5,068 $ 184 $ 13,025 $ 18,277 Amortization of mortgage servicing rights 18,360 235 — 18,595 Amortization of debt discount 623 — — 623 Amortization of debt issuance costs 9,466 — 1,009 10,475 |
Depreciation and Amortization [Member] | |
Segment Reporting Information [Line Items] | |
Schedule of Segment Reporting Information | Servicing Lending Corporate Items and Other Business Segments Consolidated Depreciation and Amortization Expense Three months ended September 30, 2017 Depreciation expense $ 1,525 $ 57 $ 5,408 $ 6,990 Amortization of mortgage servicing rights 13,081 67 — 13,148 Amortization of debt discount — — 258 258 Amortization of debt issuance costs — — 644 644 Three months ended September 30, 2016 Depreciation expense $ 2,730 $ 48 $ 3,651 $ 6,429 Amortization of mortgage servicing rights (2,634 ) 76 — (2,558 ) Amortization of debt discount 240 — — 240 Amortization of debt issuance costs 3,645 — 332 3,977 Nine months ended September 30, 2017 Depreciation expense $ 4,393 $ 162 $ 15,875 $ 20,430 Amortization of mortgage servicing rights 38,351 209 — 38,560 Amortization of debt discount — — 797 797 Amortization of debt issuance costs — — 1,979 1,979 Nine months ended September 30, 2016 Depreciation expense $ 5,068 $ 184 $ 13,025 $ 18,277 Amortization of mortgage servicing rights 18,360 235 — 18,595 Amortization of debt discount 623 — — 623 Amortization of debt issuance costs 9,466 — 1,009 10,475 |
Contingencies (Tables)
Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Loss Contingency [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 similar indemnification obligations: Nine months ended September 30, 2017 2016 Beginning balance $ 24,285 $ 36,615 Provision for representation and warranty obligations (3,285 ) (2,403 ) New production reserves 554 615 Payments made in connection with sales of MSRs — (1,320 ) Charge-offs and other (1) (3,036 ) (6,396 ) Ending balance $ 18,518 $ 27,111 (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. |
Organization, Business Enviro47
Organization, Business Environment and Basis of Presentation - Narrative (Details) $ in Millions | Nov. 01, 2017States | Apr. 20, 2017StatesState | Sep. 30, 2017USD ($)EmployeeStates |
Description of Business and Basis of Presentation [Line Items] | |||
Total number of employees | Employee | 8,343 | ||
Percentage of foreign based employees engaged in supporting loan servicing operations | 80.00% | ||
Number of states charging with regulatory action | States | 30 | ||
Number of state attorneys general charging with regulatory action | State | 2 | ||
Number of states where regulatory actions were resolved | States | 19 | ||
Current maturities of borrowings in next 12 months | $ | $ 1,000 | ||
Debt instrument, term | 364 days | ||
Cumulative-effect adjustment, recognition of excess tax benefits | $ | $ 5 | ||
Cumulative-effect adjustment, change in accounting for forfeitures | $ | 0.3 | ||
Cumulative-effect adjustment, change in accounting for forfeitures, tax | $ | $ 0.1 | ||
Subsequent Event [Member] | |||
Description of Business and Basis of Presentation [Line Items] | |||
Number of states where regulatory actions were resolved | States | 21 | ||
Number of states where company is continuing to seek resolutions on regulatory actions | States | 9 | ||
INDIA | |||
Description of Business and Basis of Presentation [Line Items] | |||
Total number of employees | Employee | 5,371 | ||
PHILIPPINES | |||
Description of Business and Basis of Presentation [Line Items] | |||
Total number of employees | Employee | 679 |
Securitizations and Variable 48
Securitizations and Variable Interest Entities - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | ||
Transfers and Servicing [Abstract] | ||||||
Average period to securitization | 30 days | |||||
MSRs retained | $ 3,600 | $ 9,800 | $ 18,600 | $ 26,500 | ||
Percentage of loan transferred through securitization 60 days or more past due | 7.70% | 7.60% | ||||
HMBS-related borrowings | [1] | 4,358,277 | $ 4,358,277 | $ 3,433,781 | ||
Loans held for investment, at fair value | 4,500,000 | 4,500,000 | 3,600,000 | |||
Loans held for investment, not pledged as collateral | $ 39,200 | $ 39,200 | $ 81,300 | |||
[1] | 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. |
Securitizations and Variable 49
Securitizations and Variable Interest Entities - Schedule of Cash Flows Related to Transfers Accounted for as Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Disclosure of Transfer of Securitizations or Asset-backed Financing Financial Assets Accounted for as Sale [Abstract] | ||||
Proceeds received from securitizations | $ 687,502 | $ 1,511,991 | $ 2,711,651 | $ 3,878,461 |
Servicing fees collected | 10,300 | 3,768 | 30,250 | 10,441 |
Purchases of previously transferred assets, net of claims reimbursed | (1,234) | (271) | (3,958) | (1,051) |
Cash flows received from and paid to securitization trusts | $ 696,568 | $ 1,515,488 | $ 2,737,943 | $ 3,887,851 |
Securitizations and Variable 50
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 ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
UPB of loans transferred | $ 11,905,357 | $ 10,485,697 |
Maximum exposure to loss | 12,057,578 | 10,617,758 |
Mortgage Servicing Rights - Amortized Costs [Member] | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | 98,314 | 94,492 |
Mortgage Servicing Rights - Fair Value [Member] | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | 224 | 233 |
Advances And Match Funded Advances [Member] | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | $ 53,683 | $ 37,336 |
Fair Value - Schedule of Fair V
Fair Value - Schedule of Fair Value Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | [1] | Dec. 31, 2015 | |||
Loans held for sale: | |||||||||
Loans held for sale, at fair value | $ 200,438 | [1] | $ 284,632 | $ 302,114 | $ 309,054 | ||||
Loans held for investment | 4,500,000 | 3,600,000 | |||||||
Financial liabilities: | |||||||||
Match funded liabilities | 1,028,016 | 1,280,997 | |||||||
Financing liabilities: | |||||||||
HMBS-related borrowings, at fair value | [2] | 4,358,277 | 3,433,781 | ||||||
Total Financing liabilities | 4,895,258 | 4,012,812 | |||||||
Other secured borrowings: | |||||||||
Total Other secured borrowings | 544,589 | 678,543 | |||||||
Senior Notes [Abstract] | |||||||||
Senior notes, net | 347,201 | 346,789 | |||||||
Mortgage servicing rights: | |||||||||
Mortgage servicing rights, at fair value | 598,147 | 679,256 | $ 696,108 | $ 761,190 | |||||
Total Mortgage servicing rights | 944,308 | 1,042,978 | |||||||
Carrying Value [Member] | |||||||||
Loans held for sale: | |||||||||
Total Loans held for sale | 223,662 | 314,006 | |||||||
Financing liabilities: | |||||||||
Total Financing liabilities | 4,895,258 | 4,012,812 | |||||||
Other secured borrowings: | |||||||||
Total Other secured borrowings | 544,589 | 678,543 | |||||||
Senior Notes [Abstract] | |||||||||
Senior notes, net | 347,201 | 346,789 | |||||||
Mortgage servicing rights: | |||||||||
Total Mortgage servicing rights | 944,308 | 1,042,978 | |||||||
Fair Value [Member] | |||||||||
Loans held for sale: | |||||||||
Total Loans held for sale | 223,662 | 314,006 | |||||||
Financing liabilities: | |||||||||
Total Financing liabilities | 4,874,735 | 3,993,293 | |||||||
Other secured borrowings: | |||||||||
Total Other secured borrowings | 553,511 | 682,703 | |||||||
Senior Notes [Abstract] | |||||||||
Senior notes, net | 343,805 | 355,303 | |||||||
Mortgage servicing rights: | |||||||||
Total Mortgage servicing rights | 1,022,355 | 1,147,167 | |||||||
Level 2 [Member] | Carrying Value [Member] | |||||||||
Loans held for sale: | |||||||||
Loans held for sale, at fair value | [3] | 200,438 | 284,632 | ||||||
Other secured borrowings: | |||||||||
Senior secured term loan | [4],[5] | 313,316 | 323,514 | ||||||
Senior Notes [Abstract] | |||||||||
Senior unsecured notes | [4],[5] | 3,122 | 3,094 | ||||||
Senior secured notes | [4],[5] | 344,079 | 343,695 | ||||||
Derivative financial instruments assets (liabilities): | |||||||||
Interest rate lock commitments | [3] | 4,969 | 6,507 | ||||||
Level 2 [Member] | Fair Value [Member] | |||||||||
Loans held for sale: | |||||||||
Loans held for sale, at fair value | [3] | 200,438 | 284,632 | ||||||
Other secured borrowings: | |||||||||
Senior secured term loan | [4],[5] | 322,238 | 327,674 | ||||||
Senior Notes [Abstract] | |||||||||
Senior unsecured notes | [4],[5] | 2,997 | 3,048 | ||||||
Senior secured notes | [4],[5] | 340,808 | 352,255 | ||||||
Derivative financial instruments assets (liabilities): | |||||||||
Interest rate lock commitments | [3] | 4,969 | 6,507 | ||||||
Level 3 [Member] | Carrying Value [Member] | |||||||||
Loans held for sale: | |||||||||
Loans held for sale, at lower of cost or fair value | [6] | 23,224 | 29,374 | ||||||
Loans held for investment | [3] | 4,459,760 | 3,565,716 | ||||||
Advances (including match funded) | [4] | 1,405,816 | 1,709,846 | ||||||
Automotive dealer financing notes (including match funded) | [4] | 36,036 | 33,224 | ||||||
Receivables, net | [4] | 231,514 | 265,720 | ||||||
Mortgage-backed securities, at fair value | [3] | 9,327 | 8,342 | ||||||
Financial liabilities: | |||||||||
Match funded liabilities | [4] | 1,028,016 | 1,280,997 | ||||||
Financing liabilities: | |||||||||
HMBS-related borrowings, at fair value | [3] | 4,358,277 | 3,433,781 | ||||||
Financing liability - MSRs pledged, at fair value | [3] | 447,843 | 477,707 | ||||||
Other | [4] | 89,138 | 101,324 | ||||||
Other secured borrowings: | |||||||||
Other | [4] | 231,273 | 355,029 | ||||||
Derivative financial instruments assets (liabilities): | |||||||||
Interest rate caps | [3] | 1,839 | 1,836 | ||||||
Mortgage servicing rights: | |||||||||
Mortgage servicing rights, at fair value | [3] | 598,147 | 679,256 | ||||||
Mortgage servicing rights, at amortized cost | [4],[7] | 346,161 | 363,722 | ||||||
Level 3 [Member] | Fair Value [Member] | |||||||||
Loans held for sale: | |||||||||
Loans held for sale, at lower of cost or fair value | [6] | 23,224 | 29,374 | ||||||
Loans held for investment | [3] | 4,459,760 | 3,565,716 | ||||||
Advances (including match funded) | [4] | 1,405,816 | 1,709,846 | ||||||
Automotive dealer financing notes (including match funded) | [4] | 38,578 | 33,147 | ||||||
Receivables, net | [4] | 231,514 | 265,720 | ||||||
Mortgage-backed securities, at fair value | [3] | 9,327 | 8,342 | ||||||
Financial liabilities: | |||||||||
Match funded liabilities | [4] | 1,023,241 | 1,275,059 | ||||||
Financing liabilities: | |||||||||
HMBS-related borrowings, at fair value | [3] | 4,358,277 | 3,433,781 | ||||||
Financing liability - MSRs pledged, at fair value | [3] | 447,843 | 477,707 | ||||||
Other | [4] | 68,615 | 81,805 | ||||||
Other secured borrowings: | |||||||||
Other | [4] | 231,273 | 355,029 | ||||||
Derivative financial instruments assets (liabilities): | |||||||||
Interest rate caps | [3] | 1,839 | 1,836 | ||||||
Mortgage servicing rights: | |||||||||
Mortgage servicing rights, at fair value | [3] | 598,147 | 679,256 | ||||||
Mortgage servicing rights, at amortized cost | [4],[7] | 424,208 | 467,911 | ||||||
Level 1 [Member] | Carrying Value [Member] | |||||||||
Loans held for sale: | |||||||||
U.S. Treasury notes | 1,575 | 2,078 | [3] | ||||||
Derivative financial instruments assets (liabilities): | |||||||||
Forward mortgage-backed securities | [3] | 973 | (614) | ||||||
Level 1 [Member] | Fair Value [Member] | |||||||||
Loans held for sale: | |||||||||
U.S. Treasury notes | [3] | 1,575 | 2,078 | ||||||
Derivative financial instruments assets (liabilities): | |||||||||
Forward mortgage-backed securities | [3] | $ 973 | $ (614) | ||||||
[1] | At September 30, 2017 and 2016, the balances include $6.7 million and $13.0 million, respectively, of fair value adjustments. | ||||||||
[2] | 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. | ||||||||
[3] | Measured at fair value on a recurring basis. | ||||||||
[4] | Disclosed, but not carried, at fair value. | ||||||||
[5] | The carrying values are net of unamortized debt issuance costs and discount. See Note 11 – Borrowings for additional information. | ||||||||
[6] | Measured at fair value on a non-recurring basis. | ||||||||
[7] | Balances include the impaired government-insured stratum of amortization method MSRs, which is measured at fair value on a non-recurring basis and reported net of the valuation allowance. Before applying the valuation allowance of $26.6 million, the carrying value of the impaired stratum at September 30, 2017 was $163.5 million. At December 31, 2016, the carrying value of this stratum was $172.9 million before applying the valuation allowance of $28.2 million. |
Fair Value - Schedule of Fair52
Fair Value - Schedule of Fair Value Assets and Liabilities (Footnote) (Details) - Impaired Government Insured Stratum [Member] - Carrying Value [Member] - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Valuation allowance | $ 26.6 | $ 28.2 |
MSRs, at amortized cost | $ 163.5 | $ 172.9 |
Fair Value - Schedule of Reconc
Fair Value - Schedule of Reconciliation of Changes in Fair Value of Level 3 Assets and Liabilities (Details) - Level 3 [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||
Beginning balance | $ 357,716 | $ 336,441 | $ 343,662 | $ 326,404 | ||||
Purchases, issuances, sales and settlements: | ||||||||
Purchases | 655 | 638 | 655 | 782 | ||||
Issuances | (109,424) | 212,393 | (76,820) | 363,802 | ||||
Sales | (311) | (5) | (541) | (148) | ||||
Transfers to Real estate (Other assets) | 88 | (1,335) | ||||||
Settlements | [1] | 12,053 | (225,715) | 28,866 | (319,177) | |||
Purchases, issuances, sales and settlements, total | (96,939) | (12,689) | (49,175) | 45,259 | ||||
Total realized and unrealized gains and (losses): | ||||||||
Total realized and unrealized gains (losses) included in earnings | 2,176 | 2,688 | (31,534) | [2] | (45,223) | [2] | ||
Transfers in and / or out of Level 3 | 0 | [2] | 0 | 0 | 0 | |||
Ending balance | 262,953 | 326,440 | 262,953 | 326,440 | ||||
Loans Held for Investment [Member] | ||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||
Beginning balance | 4,223,776 | 3,057,564 | 3,565,716 | 2,488,253 | ||||
Purchases, issuances, sales and settlements: | ||||||||
Purchases | 0 | 0 | 0 | 0 | ||||
Issuances | 263,169 | 509,900 | 961,642 | 1,185,565 | ||||
Sales | 0 | 0 | 0 | 0 | ||||
Transfers to Real estate (Other assets) | 88 | (1,335) | ||||||
Settlements | [1] | (118,991) | (289,428) | (311,560) | (528,263) | |||
Purchases, issuances, sales and settlements, total | 144,266 | 220,472 | 648,747 | 657,302 | ||||
Total realized and unrealized gains and (losses): | ||||||||
Total realized and unrealized gains (losses) included in earnings | 91,718 | 61,605 | 245,297 | [2] | 194,086 | [2] | ||
Transfers in and / or out of Level 3 | 0 | [2] | 0 | 0 | 0 | |||
Ending balance | 4,459,760 | 3,339,641 | 4,459,760 | 3,339,641 | ||||
HMBS - Related Borrowings [Member] | ||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||
Beginning balance | (4,061,626) | (2,935,928) | (3,433,781) | (2,391,362) | ||||
Purchases, issuances, sales and settlements: | ||||||||
Purchases | 0 | 0 | 0 | 0 | ||||
Issuances | (317,277) | (297,457) | (981,730) | (820,438) | ||||
Sales | 0 | 0 | 0 | 0 | ||||
Transfers to Real estate (Other assets) | 0 | 0 | ||||||
Settlements | [1] | 111,677 | 63,119 | 287,908 | 161,995 | |||
Purchases, issuances, sales and settlements, total | (205,600) | (234,338) | (693,822) | (658,443) | ||||
Total realized and unrealized gains and (losses): | ||||||||
Total realized and unrealized gains (losses) included in earnings | (91,051) | (54,344) | (230,674) | [2] | (174,805) | [2] | ||
Transfers in and / or out of Level 3 | 0 | 0 | 0 | 0 | ||||
Ending balance | (4,358,277) | (3,224,610) | (4,358,277) | (3,224,610) | ||||
Mortgage-Backed Securities [Member] | ||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||
Beginning balance | 8,986 | 9,063 | 8,342 | 7,985 | ||||
Purchases, issuances, sales and settlements: | ||||||||
Purchases | 0 | 0 | 0 | 0 | ||||
Issuances | 0 | 0 | 0 | 0 | ||||
Sales | 0 | 0 | 0 | 0 | ||||
Transfers to Real estate (Other assets) | 0 | 0 | ||||||
Settlements | [1] | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements, total | 0 | 0 | 0 | 0 | ||||
Total realized and unrealized gains and (losses): | ||||||||
Total realized and unrealized gains (losses) included in earnings | 341 | (23) | 985 | [2] | 1,055 | [2] | ||
Transfers in and / or out of Level 3 | 0 | [2] | 0 | 0 | 0 | |||
Ending balance | 9,327 | 9,040 | 9,327 | 9,040 | ||||
Financing Liability - MSRs Pledged [Member] | ||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||
Beginning balance | (441,007) | (495,126) | (477,707) | (541,704) | ||||
Purchases, issuances, sales and settlements: | ||||||||
Purchases | 0 | 0 | 0 | 0 | ||||
Issuances | (54,601) | 0 | (54,601) | 0 | ||||
Sales | 0 | 0 | 0 | 0 | ||||
Transfers to Real estate (Other assets) | 0 | 0 | ||||||
Settlements | [1] | 19,770 | 594 | 52,963 | 47,172 | |||
Purchases, issuances, sales and settlements, total | (34,831) | 594 | (1,638) | 47,172 | ||||
Total realized and unrealized gains and (losses): | ||||||||
Total realized and unrealized gains (losses) included in earnings | 27,995 | 0 | 31,502 | [2] | 0 | [2] | ||
Transfers in and / or out of Level 3 | 0 | [2] | 0 | 0 | 0 | |||
Ending balance | (447,843) | (494,532) | (447,843) | (494,532) | ||||
Derivatives [Member] | ||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||
Beginning balance | 1,937 | 200 | 1,836 | 2,042 | ||||
Purchases, issuances, sales and settlements: | ||||||||
Purchases | 655 | 638 | 655 | 782 | ||||
Issuances | 0 | 0 | 0 | 0 | ||||
Sales | 0 | 0 | 0 | 0 | ||||
Transfers to Real estate (Other assets) | 0 | 0 | ||||||
Settlements | [1] | (403) | 0 | (445) | (81) | |||
Purchases, issuances, sales and settlements, total | 252 | 638 | 210 | 701 | ||||
Total realized and unrealized gains and (losses): | ||||||||
Total realized and unrealized gains (losses) included in earnings | (350) | (45) | (207) | [2] | (1,950) | [2] | ||
Transfers in and / or out of Level 3 | 0 | [2] | 0 | 0 | 0 | |||
Ending balance | 1,839 | 793 | 1,839 | 793 | ||||
MSRs [Member] | ||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||
Beginning balance | 625,650 | 700,668 | 679,256 | 761,190 | ||||
Purchases, issuances, sales and settlements: | ||||||||
Purchases | 0 | 0 | 0 | 0 | ||||
Issuances | (715) | (50) | (2,131) | (1,325) | ||||
Sales | (311) | (5) | (541) | (148) | ||||
Transfers to Real estate (Other assets) | 0 | 0 | ||||||
Settlements | [1] | 0 | 0 | 0 | 0 | |||
Purchases, issuances, sales and settlements, total | (1,026) | (55) | (2,672) | (1,473) | ||||
Total realized and unrealized gains and (losses): | ||||||||
Total realized and unrealized gains (losses) included in earnings | (26,477) | (4,505) | (78,437) | [2] | (63,609) | [2] | ||
Transfers in and / or out of Level 3 | 0 | [2] | 0 | 0 | 0 | |||
Ending balance | $ 598,147 | $ 696,108 | $ 598,147 | $ 696,108 | ||||
[1] | Settlements for Loans held for investment - reverse mortgages consist chiefly of principal payments received, but also may include non-cash settlements of loans. | |||||||
[2] | Total losses attributable to derivative financial instruments still held at September 30, 2017 and September 30, 2016 were $0.2 million and $0.5 million for the nine months ended September 30, 2017 and 2016, respectively. Total losses attributable to MSRs still held at September 30, 2017 and September 30, 2016 were $78.4 million and $62.4 million for the nine months ended September 30, 2017 and 2016, respectively. |
Fair Value - Schedule of Reco54
Fair Value - Schedule of Reconciliation of Changes in Fair Value of Level 3 Assets and Liabilities (Footnote) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | ||
Gain (loss) attributable to derivative financial instruments | $ (0.2) | $ (0.5) |
Losses attributable to MSRs still held | $ (78.4) | $ (62.4) |
Fair Value - Schedule of Signif
Fair Value - Schedule of Significant Assumptions used in Valuation (Details) - $ / loan | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Loans Held for Investment [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Life | 6 years 4 months 24 days | 6 years 1 month 6 days |
Weighted average prepayment speed | 12.90% | 20.90% |
Weighted average discount rate | 2.70% | 3.30% |
Loans Held for Investment [Member] | Minimum [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Life | 6 years 1 month 6 days | 5 years 6 months |
Weighted average prepayment speed | 5.70% | 5.20% |
Loans Held for Investment [Member] | Maximum [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Life | 6 years 10 months 24 days | 8 years 8 months 12 days |
Weighted average prepayment speed | 53.80% | 53.80% |
Mortgage Servicing Rights - Amortized Costs [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Weighted average prepayment speed | 9.50% | 8.90% |
Weighted average delinquency rate | 12.00% | 11.10% |
Advance financing cost | 5 years | 5 years |
Interest rate for computing float earnings | 5 years | 5 years |
Weighted average discount rate | 9.20% | 8.90% |
Weighted average cost to service (in dollars) | 99 | 108 |
Fair Value Agency Mortgage Servicing Rights [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Weighted average prepayment speed | 8.80% | 8.40% |
Weighted average delinquency rate | 0.70% | 1.00% |
Advance financing cost | 5 years | 5 years |
Interest rate for computing float earnings | 5 years | 5 years |
Weighted average discount rate | 9.00% | 9.00% |
Weighted average cost to service (in dollars) | 63 | 64 |
Fair Value Non-Agency Mortgage Servicing Rights [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Weighted average prepayment speed | 16.50% | 16.50% |
Weighted average delinquency rate | 29.70% | 29.30% |
Fair value inputs financing costs float earnings, basis spread | 0.50% | |
Fair value input, interest rate | 2.75% | 3.50% |
Weighted average discount rate | 12.60% | 14.90% |
Weighted average cost to service (in dollars) | 312 | 307 |
HMBS - Related Borrowings [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Life | 6 years 4 months 24 days | 5 years 1 month 6 days |
Weighted average prepayment speed | 12.90% | 20.90% |
Weighted average discount rate | 2.60% | 2.70% |
HMBS - Related Borrowings [Member] | Minimum [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Life | 6 years 1 month 6 days | 4 years 6 months |
Weighted average prepayment speed | 5.70% | 5.20% |
HMBS - Related Borrowings [Member] | Maximum [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Life | 6 years 10 months 24 days | 8 years 8 months 12 days |
Weighted average prepayment speed | 53.80% | 53.80% |
Mortgage Servicing Rights Pledged [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Weighted average prepayment speed | 17.00% | 17.00% |
Weighted average delinquency rate | 30.50% | 29.80% |
Fair value inputs financing costs float earnings, basis spread | 0.50% | |
Fair value input, interest rate | 2.75% | 3.50% |
Weighted average discount rate | 13.30% | 14.90% |
Weighted average cost to service (in dollars) | 320 | 313 |
Automotive Dealer Financing Notes [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Life | 2 months 21 days | 3 months 7 days |
Weighted average discount rate | 10.00% | 10.00% |
Fair value inputs average note rate | 8.30% | 8.30% |
Fair value inputs loan loss rate | 19.20% | 11.30% |
London Interbank Offered Rate (LIBOR) [Member] | Fair Value Non-Agency Mortgage Servicing Rights [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Interest rate for computing float earnings | 5 years | 1 month |
London Interbank Offered Rate (LIBOR) [Member] | Mortgage Servicing Rights Pledged [Member] | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Interest rate for computing float earnings | 5 years | 1 month |
Loans Held for Sale - Schedule
Loans Held for Sale - Schedule of Loans Held for Sale Fair Value (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Movement In Loans Held For Sale At Fair Value [Roll Forward] | |||
Beginning balance | $ 284,632 | $ 309,054 | |
Originations and purchases | 2,204,028 | 3,141,205 | |
Proceeds from sales | (2,310,294) | (3,167,640) | |
Principal collections | (3,684) | (10,995) | |
Transfers from Loans held for sale - Lower of cost or fair value | 0 | 1,158 | |
Gain on sale of loans | 22,131 | 23,627 | |
Increase in fair value of loans | 1,836 | 990 | |
Other | 1,789 | $ 4,715 | |
Ending balance | [1] | $ 200,438 | |
[1] | At September 30, 2017 and 2016, the balances include $6.7 million and $13.0 million, respectively, of fair value adjustments. |
Loans Held for Sale - Schedul57
Loans Held for Sale - Schedule of Loans Held for Sale Fair Value (Footnote) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Receivables [Abstract] | ||
Increase (decrease) in fair value of loans held for sale | $ 6.7 | $ 13 |
Loans Held for Sale - Narrative
Loans Held for Sale - Narrative (Details) - Line of Credit [Member] $ in Millions | Sep. 30, 2017USD ($) |
Lending [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Collateral | $ 190.8 |
Servicing [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Collateral | $ 8.2 |
Loans Held for Sale - Schedul59
Loans Held for Sale - Schedule of Loans Held for Sale at Lower Cost or Fair Value, Activity (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Movement In Loans Held For Sale At Fair Value [Roll Forward] | |||
Beginning balance | $ 29,374 | $ 104,992 | |
Purchases | 870,697 | 1,434,059 | |
Proceeds from sales | (746,999) | (1,295,101) | |
Principal collections | (6,545) | (20,151) | |
Transfers to Receivables, net | (137,807) | (199,047) | |
Transfers to Real estate (Other assets) | (711) | (6,434) | |
Transfers to Loans held for sale - Fair value | 0 | (1,158) | |
Gain on sale of loans | 8,332 | 18,259 | |
Decrease in valuation allowance | 1,566 | 4,637 | |
Other | 5,317 | (2,405) | |
Ending balance | [1] | $ 23,224 | $ 37,651 |
[1] | At September 30, 2017 and 2016, the balances include $17.6 million and $28.1 million, respectively, of loans that we were required to repurchase from Ginnie Mae guaranteed securitizations as part of our servicing obligations. Repurchased loans are modified or otherwise remediated through loss mitigation activities or are reclassified to receivables. |
Loans Held for Sale - Schedul60
Loans Held for Sale - Schedule of Loans Held for Sale at Lower Cost or Fair Value Activity (Footnote) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2016 |
Ginnie Mae Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans repurchase obligation | $ 17.6 | $ 28.1 |
Loans Held for Sale Schedule of
Loans Held for Sale Schedule of Changes in Valuation Allowance (Details) - Valuation Allowance for Loans Held for Sale [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Beginning balance | $ 6,491 | $ 15,933 | $ 10,064 | $ 14,658 |
Provision | 906 | (63) | 1,761 | 2,100 |
Transfer from Liability for indemnification obligations (Other liabilities) | 1,529 | 601 | 2,416 | 2,306 |
Sales of loans | (426) | (6,450) | (6,071) | (8,699) |
Other | (2) | 0 | 328 | (344) |
Ending balance | $ 8,498 | $ 10,021 | $ 8,498 | $ 10,021 |
Loans Held for Sale - Schedul62
Loans Held for Sale - Schedule of Gains on Loans Held for Sale, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | $ 30,626 | $ 40,707 | $ 84,005 | $ 77,732 |
Change in fair value of IRLCs | (178) | (2,523) | (1,605) | 4,148 |
Change in fair value of loans held for sale | (2,078) | (8,226) | 3,735 | 13,486 |
Loss on economic hedge instruments | (2,420) | (4,051) | (8,604) | (25,677) |
Other | (173) | (262) | (555) | (615) |
Gain on loans held for sale, net | 25,777 | 25,645 | 76,976 | 69,074 |
MSRs Retained on Transfers of Forward Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | 3,572 | 9,826 | 18,604 | 25,312 |
Fair Value Gains Related to Transfers of Reverse Mortgage Loans, Net [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | 15,747 | 32,627 | 37,434 | 16,868 |
Gain on Sale of Repurchased Ginnie Mae Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | 4,577 | 6,917 | 8,332 | 19,879 |
Other Gains (Losses) Related to Loans Held for Sale, Net [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | $ 6,730 | $ (8,663) | $ 19,635 | $ 15,673 |
Advances - Schedule of Advances
Advances - Schedule of Advances Paid on Behalf of Borrowers or on Foreclosed Properties (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Advances On Behalf of Borrowers [Line Items] | ||||||
Advances, gross | $ 232,115 | $ 295,834 | ||||
Allowance for losses | (34,162) | $ (20,328) | (37,952) | $ (46,912) | $ (39,441) | $ (41,901) |
Advances, net | 197,953 | 257,882 | ||||
Principal and Interest [Member] | ||||||
Advances On Behalf of Borrowers [Line Items] | ||||||
Advances, gross | 16,951 | 31,334 | ||||
Taxes and Insurance [Member] | ||||||
Advances On Behalf of Borrowers [Line Items] | ||||||
Advances, gross | 137,992 | 170,131 | ||||
Foreclosures, Bankruptcy and Other [Member] | ||||||
Advances On Behalf of Borrowers [Line Items] | ||||||
Advances, gross | $ 77,172 | $ 94,369 |
Advances - Narrative (Details)
Advances - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Advances [Abstract] | ||
Sold advances | $ 20.6 | $ 29 |
Advances - Schedule of Activity
Advances - Schedule of Activity in Advances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Advances [Roll Forward] | ||
Beginning balance | $ 257,882 | $ 444,298 |
Sales of advances | (399) | (24,572) |
Collections of advances, charge-offs and other, net | (63,320) | (125,701) |
Decrease (increase) in allowance for losses | 3,790 | (5,011) |
Ending balance | $ 197,953 | $ 289,014 |
Advances Schedule of Changes in
Advances Schedule of Changes in Allowance for Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Advances [Abstract] | |||||
Beginning balance | $ 20,328 | $ 39,441 | $ 37,952 | $ 41,901 | |
Provision (1) | [1] | 13,756 | (6,865) | 17,054 | 581 |
Recoveries (Charge-offs), net and other | 78 | 14,336 | (20,844) | 4,430 | |
Ending balance | $ 34,162 | $ 46,912 | $ 34,162 | $ 46,912 | |
[1] | The provision for the three months ended September 30, 2017 increased in connection with re-performing government-insured loans for which certain advances are no longer recoverable. |
Match Funded Advances - Schedul
Match Funded Advances - Schedule of Match Funded Advances on Residential Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Match Funded Assets [Line Items] | |||||
Match funded assets | $ 1,243,899 | $ 1,451,964 | |||
Automotive Dealer Financing Notes [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | [1] | 36,036 | 0 | ||
Residential Mortgage [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | 1,207,863 | 1,451,964 | $ 1,534,322 | $ 1,706,768 | |
Residential Mortgage [Member] | Principal and Interest [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | 574,175 | 711,272 | |||
Residential Mortgage [Member] | Taxes and Insurance [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | 445,692 | 530,946 | |||
Residential Mortgage [Member] | Foreclosures Bankruptcy And Other [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | $ 187,996 | $ 209,746 | |||
[1] | In 2017, we entered into loan agreements under a new automotive dealer loan financing facility to which these notes are pledged. |
Match Funded Advances - Sched68
Match Funded Advances - Schedule of Activity in Match Funded Advances (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Match Funded Assets [Line Items] | |||
Beginning balance | $ 1,451,964 | ||
Ending balance | 1,243,899 | ||
Automotive Dealer Financing Notes [Member] | |||
Match Funded Assets [Line Items] | |||
Beginning balance | [1] | 0 | |
Transfer from Other assets | 25,180 | ||
New advances/notes (Collections of pledged assets), net | 10,856 | ||
Ending balance | [1] | 36,036 | |
Residential Mortgage [Member] | |||
Match Funded Assets [Line Items] | |||
Beginning balance | 1,451,964 | $ 1,706,768 | |
Sales | (691) | (7,757) | |
New advances/notes (Collections of pledged assets), net | (243,410) | (164,689) | |
Ending balance | $ 1,207,863 | $ 1,534,322 | |
[1] | In 2017, we entered into loan agreements under a new automotive dealer loan financing facility to which these notes are pledged. |
Mortgage Servicing - Schedule o
Mortgage Servicing - Schedule of Activity Related to MSRs - Amortization Method (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Servicing Asset at Amortized Cost, Balance [Roll Forward] | |||||
Estimated fair value at end of period | $ 598,147 | $ 696,108 | $ 679,256 | $ 761,190 | |
Mortgage Servicing Rights - Amortized Costs [Member] | |||||
Servicing Asset at Amortized Cost, Balance [Roll Forward] | |||||
Beginning balance, MSRs | 363,722 | 377,379 | |||
Additions recognized in connection with asset acquisitions | 1,658 | 15,968 | |||
Additions recognized on the sale of mortgage loans | 18,604 | 26,494 | |||
Sales and other transfers | (814) | (23,521) | |||
Servicing asset at amortized value, gross | 383,170 | 396,320 | |||
Amortization | [1] | (38,560) | (18,595) | ||
Decrease (increase) in impairment valuation allowance | [2] | 1,551 | (37,164) | ||
Ending balance, MSRs | 346,161 | 340,561 | |||
Estimated fair value at end of period | $ 424,208 | $ 357,817 | |||
[1] | During 2016, principally in the third quarter, we participated in HUD’s Aged Delinquent Portfolio Loan Sale (ADPLS) program, which accelerates FHA insurance claims for a population of significantly delinquent FHA loans. The expedited claim filing process allows a servicer to reduce significantly its standard claim losses on accepted loans by shortening the servicing timeline and related expenses, some of which are not reimbursed by FHA insurance. Our participation required that we recognize $23.1 million of life-to-date losses on the claims filed in the third quarter of 2016. This loss is reported in Servicing and origination expense in the unaudited consolidated statements of operations. Because the MSRs related to the loans that were assigned to HUD had negative carrying values, our recognition of the losses on the loans reduced the negative carrying value of the MSRs, thereby generating negative amortization expense for this population of MSRs. In the third quarter of 2016, this ADPLS-related negative amortization expense of $18.1 million exceeded the positive amortization expense on the remaining MSRs, generating net negative amortization for the quarter. | ||||
[2] | Impairment of MSRs is recognized in Servicing and origination expense in the unaudited consolidated statements of operations. See Note 3 – Fair Value for additional information regarding impairment and the valuation allowance. |
Mortgage Servicing - Schedule70
Mortgage Servicing - Schedule of Activity Related to MSRs - Amortization Method (Footnote) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Servicing Asset at Amortized Cost [Line Items] | ||||
Losses on claims filed | $ 23,100 | |||
Amortization of mortgage servicing rights | $ 13,148 | (2,558) | $ 38,560 | $ 18,595 |
Aged Delinquent Portfolio Loans [Member] | ||||
Servicing Asset at Amortized Cost [Line Items] | ||||
Amortization of mortgage servicing rights | $ 18,100 |
Mortgage Servicing - Schedule71
Mortgage Servicing - Schedule of Activity Related to MSRs - Fair Value Measurement Method (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||
Beginning balance | $ 679,256 | $ 761,190 | |
Sales and other transfers | (2,672) | (1,474) | |
Changes in fair value: | |||
Changes in valuation inputs or other assumptions | [1] | 2,172 | (4,654) |
Realization of expected future cash flows and other changes | [1] | (80,609) | (58,954) |
Ending balance | 598,147 | 696,108 | |
Fair Value Agency Mortgage Servicing Rights [Member] | |||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||
Beginning balance | 13,357 | 15,071 | |
Sales and other transfers | 0 | (3) | |
Changes in fair value: | |||
Changes in valuation inputs or other assumptions | [1] | (131) | (4,654) |
Realization of expected future cash flows and other changes | [1] | (1,385) | (1,399) |
Ending balance | 11,841 | 9,015 | |
Fair Value Non-Agency Mortgage Servicing Rights [Member] | |||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||
Beginning balance | 665,899 | 746,119 | |
Sales and other transfers | (2,672) | (1,471) | |
Changes in fair value: | |||
Changes in valuation inputs or other assumptions | [1] | 2,303 | 0 |
Realization of expected future cash flows and other changes | [1] | (79,224) | (57,555) |
Ending balance | $ 586,306 | $ 687,093 | |
[1] | Changes in fair value are recognized in Servicing and origination expense in the unaudited consolidated statements of operations. |
Mortgage Servicing - Schedule72
Mortgage Servicing - Schedule of Estimated Change in Fair Value of MSRs (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Transfers and Servicing [Abstract] | |
Weighted average prepayment speeds, 10% | $ (59,993) |
Weighted average prepayment speeds, 20% | (121,587) |
Discount rate (Option-adjusted spread), 10% | (10,383) |
Discount rate (Option-adjusted spread), 20% | $ (20,807) |
Mortgage Servicing - Schedule73
Mortgage Servicing - Schedule of Composition of Servicing and Subservicing Portfolios by Type of Property Serviced (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | |
Schedule of Servicing and Subservicing Portfolio [Line Items] | ||||
Servicing | $ 78,254,463 | $ 86,049,298 | $ 89,018,280 | |
Subservicing | 3,665,947 | 4,423,017 | 4,843,668 | |
NRZ | [1] | 105,557,658 | 118,712,748 | 123,181,486 |
Assets serviced | 187,478,068 | 209,185,063 | 217,043,434 | |
Residential [Member] | ||||
Schedule of Servicing and Subservicing Portfolio [Line Items] | ||||
Servicing | 78,254,463 | 86,049,298 | 89,018,280 | |
Subservicing | 3,656,197 | 4,330,084 | 4,692,236 | |
NRZ | [1] | 105,557,658 | 118,712,748 | 123,181,486 |
Assets serviced | 187,468,318 | 209,092,130 | 216,892,002 | |
Commercial [Member] | ||||
Schedule of Servicing and Subservicing Portfolio [Line Items] | ||||
Servicing | 0 | 0 | 0 | |
Subservicing | 9,750 | 92,933 | 151,432 | |
NRZ | [1] | 0 | 0 | 0 |
Assets serviced | $ 9,750 | $ 92,933 | $ 151,432 | |
[1] | UPB of loans serviced for which the Rights to MSRs have been sold to NRZ, including those subserviced for which third-party consents have been received and the MSRs have been transferred to NRZ. |
Mortgage Servicing - Narrative
Mortgage Servicing - Narrative (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017USD ($)Agreement | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Transfers and Servicing [Abstract] | |||
Unpaid principal balance of small balance commercial loans serviced | $ 1,000 | $ 1,500 | $ 1,400 |
Mortgage Loans on Real Estate, Cost of Mortgages Sold | $ 210.2 | 3,600 | |
Number of non-agency and whole loans servicing agreements | Agreement | 3,325 | ||
Number of non-agency and whole loans servicing agreements with minimum servicer ratings | Agreement | 712 | ||
Unpaid principal balance of non-agency and whole loans servicing agreements with minimum servicer ratings | $ 30,800 | ||
Number of non-agency and whole loans servicing agreements with termination rights triggered | Agreement | 172 | ||
Unpaid principal balance of non-agency and whole loans servicing agreements with termination rights triggered | $ 9,700 | ||
Percentage of non-agency and whole loans servicing agreements with termination rights triggered of servicing portfolio | 7.00% | ||
Float balances | $ 2,000 | $ 2,600 |
Mortgage Servicing - Schedule75
Mortgage Servicing - Schedule of Components of Servicing and Subservicing Fees (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Transfers and Servicing [Abstract] | ||||
Servicing | $ 63,071 | $ 74,105 | $ 197,712 | $ 229,686 |
Subservicing | 1,760 | 2,989 | 5,877 | 11,436 |
NRZ | 129,228 | 159,919 | 420,151 | 482,566 |
Servicing and Subservicing fees, total | 194,059 | 237,013 | 623,740 | 723,688 |
Late charges | 14,958 | 15,225 | 47,352 | 51,301 |
Home Affordable Modification Program (HAMP) fees | 6,202 | 32,029 | 37,692 | 88,141 |
Loan collection fees | 5,663 | 6,746 | 17,918 | 20,860 |
Other | 12,338 | 11,222 | 34,821 | 23,003 |
Fees, total | $ 233,220 | $ 302,235 | $ 761,523 | $ 906,993 |
Rights to MSRs - Narrative (Det
Rights to MSRs - Narrative (Details) - USD ($) $ in Thousands | Jul. 23, 2017 | Apr. 30, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Servicing Assets at Fair Value [Line Items] | ||||||
Proceeds from execution of clean-up calls | $ 1,300 | $ 2,400 | ||||
Gain on valuation of financing liability | $ 27,024 | 0 | ||||
NRZ [Member] | ||||||
Servicing Assets at Fair Value [Line Items] | ||||||
Threshold percentage to initiate clean-up call rights | 10.00% | |||||
Percentage on UPB of performing loans received as consideration on sale of clean up call rights | 0.50% | |||||
Proceeds from execution of clean-up calls | $ 800 | $ 5,500 | ||||
Initial term to subservice mortgage servicing rights | 5 years | |||||
Term of extended subservicing agreement following initial term | 3 months | |||||
Gain on valuation of financing liability | $ 27,024 | $ (807) | $ 37,645 | (1,555) | ||
Compensatory fee payable | $ 10,500 |
Rights to MSRs - Schedule of Ac
Rights to MSRs - Schedule of Activity Related to Rights to Mortgage Servicing Rights (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Servicing Assets at Fair Value [Line Items] | |||
Beginning balance, Financing Liability | [1],[2] | $ (477,707) | |
Receipt of lump sum payment in connection with transfer of MSRs to NRZ | [1],[2],[3] | (54,601) | |
Calls, Financing Liability | [1],[2],[4] | 4,478 | |
Sales and other transfers, MSRs | (2,672) | $ (1,474) | |
Changes in valuation inputs or other assumptions | [5] | 2,172 | (4,654) |
Changes in valuation inputs or other assumptions, Financing liabilities | [1],[2] | 27,024 | |
Realization of expected future cash flows and other changes | [5] | (80,609) | $ (58,954) |
Realization of expected future cash flows and other changes, Financing liabilities | [1],[2] | 0 | |
Runoff, settlements and other, Financing Liability | [1],[2] | 52,963 | |
Ending balance, Financing Liability | [1],[2] | (447,843) | |
2012 - 2013 Agreements [Member] | |||
Servicing Assets at Fair Value [Line Items] | |||
Advances | 2,727,107 | ||
UPB [Member] | 2017 Agreements [Member] | |||
Servicing Assets at Fair Value [Line Items] | |||
Beginning balance, UPB | 0 | ||
Transfers upon receipt of consents, UPB | 15,872,374 | ||
Calls, UPB | [4] | (134,705) | |
Sales and other transfers, UPB | 0 | ||
Runoff, settlements and other, UPB | (217,048) | ||
Ending balance, UPB | 15,520,621 | ||
UPB [Member] | 2012 - 2013 Agreements [Member] | |||
Servicing Assets at Fair Value [Line Items] | |||
Beginning balance, UPB | 118,712,748 | ||
Transfers upon receipt of consents, UPB | (15,872,374) | ||
Calls, UPB | [4] | (1,132,497) | |
Sales and other transfers, UPB | (57,793) | ||
Runoff, settlements and other, UPB | (11,613,047) | ||
Ending balance, UPB | 90,037,037 | ||
Carrying Value [Member] | 2017 Agreements [Member] | |||
Servicing Assets at Fair Value [Line Items] | |||
Beginning balance, MSRs | 0 | ||
Transfers upon receipt of consents, MSRs | 31,253 | ||
Calls, MSRs | [4] | (322) | |
Sales and other transfers, MSRs | 0 | ||
Changes in valuation inputs or other assumptions | [3] | (2,444) | |
Realization of expected future cash flows and other changes | [3] | (1,459) | |
Runoff, settlements and other, MSRs | 0 | ||
Ending balance, MSRs | 27,028 | ||
Carrying Value [Member] | 2012 - 2013 Agreements [Member] | |||
Servicing Assets at Fair Value [Line Items] | |||
Beginning balance, MSRs | 477,707 | ||
Transfers upon receipt of consents, MSRs | (31,253) | ||
Calls, MSRs | [4] | (4,156) | |
Sales and other transfers, MSRs | 0 | ||
Changes in valuation inputs or other assumptions | [3] | (1,471) | |
Realization of expected future cash flows and other changes | [3] | (52,266) | |
Decrease in impairment valuation allowance | 13,769 | ||
Runoff, settlements and other, MSRs | 1,529 | ||
Ending balance, MSRs | $ 403,859 | ||
[1] | Carried at fair value in accordance with fair value election. | ||
[2] | Under ASC 470-50, Debt - Modifications and Extinguishments, Ocwen is deemed to have had a significant modification and debt extinguishment in connection with the Rights to MSRs secured financing liability. Because the secured financing liability is accounted for at fair value, there was no gain or loss recognized in connection with this debt extinguishment. As permitted by ASC 825-10-25, Financial Instruments - Recognition - Fair Value Option, a significant modification of debt is an event that creates a fair value option election date. | ||
[3] | The amount of the lump sum payment is based on a contractual schedule that approximates the net present value of the difference in cash flows under the 2017 Agreements versus the 2012 - 2013 Agreements, and was determined based on the weighted average characteristics, such as contractual servicing fee rates and delinquency, of the MSRs underlying the Rights to MSRs. The difference between the characteristics of the MSRs underlying the Rights to MSRs that are transferred in any period, relative to the weighted average loan characteristics used to determine the lump sum payment, will result in an increase (characteristics of transferred MSRs compare favorably to the weighted average) or decrease (characteristics of transferred MSRs compare unfavorably to the weighted average) in the fair value of the financing liability. The fair value of the portion of the financing liability recognized in connection with the September 1, 2017 transfer declined $37.6 million primarily due to the transferred MSRs having a contractual servicing fee rate of 33.4 bps as compared to the weighted average of 47.1 bps. | ||
[4] | Represents the UPB and carrying value of MSRs in connection with clean-up call rights exercised by NRZ, for MSRs transferred to NRZ under the 2017 Agreements, or by Ocwen at NRZ’s direction, for MSRs underlying the 2012 - 2013 Agreements. Ocwen derecognizes the MSRs and the related financing liability upon collapse of the securitization. Income recognized in connection with clean-up calls is reported in other income in our unaudited consolidated statements of operations. | ||
[5] | Changes in fair value are recognized in Servicing and origination expense in the unaudited consolidated statements of operations. |
Rights to MSRs - Schedule of 78
Rights to MSRs - Schedule of Activity Related to Rights to Mortgage Servicing Rights (Footnote) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Servicing Assets at Fair Value [Line Items] | ||||
Gain on valuation of financing liability | $ 27,024 | $ 0 | ||
Contractual servicing fee rate of transferred MSRs | 0.334% | |||
Weighted average contractual servicing fee rates | 0.471% | |||
NRZ [Member] | ||||
Servicing Assets at Fair Value [Line Items] | ||||
Gain on valuation of financing liability | $ 27,024 | $ (807) | $ 37,645 | $ (1,555) |
Rights to MSRs - Schedule of In
Rights to MSRs - Schedule of Interest Related to Financial Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Servicing Liabilities at Fair Value [Line Items] | ||||
Changes in fair value | $ 27,024 | $ 0 | ||
NRZ [Member] | ||||
Servicing Liabilities at Fair Value [Line Items] | ||||
Servicing fees collected on behalf of NRZ | $ 129,228 | |||
Less: Subservicing fee retained by Ocwen | 68,536 | |||
Net servicing fees remitted to NRZ | 60,692 | $ 72,413 | 193,668 | 225,158 |
Changes in fair value | 27,024 | (807) | 37,645 | (1,555) |
Runoff, settlement and other | 19,770 | 594 | 52,963 | 47,172 |
Interest expense on NRZ/HLSS financing liability | $ 13,898 | $ 72,626 | $ 113,681 | $ 179,541 |
Receivables - Schedule of Recei
Receivables - Schedule of Receivables (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | |
Receivables [Abstract] | |||
Government-insured loan claims, net | [1] | $ 118,113 | $ 133,063 |
Due from custodial accounts | 34,423 | 44,761 | |
Reimbursable expenses | 31,565 | 29,358 | |
Due from NRZ | 11,548 | 21,837 | |
Other | 13,551 | 27,086 | |
Servicing receivable, total | 209,200 | 256,105 | |
Income taxes receivable | 38,666 | 61,932 | |
Other receivables | [2] | 46,519 | 21,125 |
Other receivables, gross | 294,385 | 339,162 | |
Allowance for losses | [1] | (62,871) | (73,442) |
Receivables, net | $ 231,514 | $ 265,720 | |
[1] | At September 30, 2017 and December 31, 2016, the allowance for losses 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 September 30, 2017 and December 31, 2016 were $48.7 million and $53.3 million, respectively. | ||
[2] | At September 30, 2017, the balance includes $13.0 million in connection with the recovery of prior legal settlement expenses and $14.0 million for insurance recovery in connection with accrued legal fees and settlements outstanding at September 30, 2017. |
Receivables - Schedule of Rec81
Receivables - Schedule of Receivables (Footnote) (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Servicing receivables, allowance for losses | $ 48.7 | $ 53.3 |
Recovery of prior legal settlement expenses | 13 | |
Insurance recoveries | $ 14 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | |
Other Assets [Abstract] | |||
Contingent loan repurchase asset | [1] | $ 318,954 | $ 246,081 |
Debt service accounts | 38,753 | 42,822 | |
Prepaid expenses | [2] | 33,951 | 57,188 |
Prepaid lender fees, net | 9,896 | 9,023 | |
Mortgage backed securities, at fair value | 9,327 | 8,342 | |
Derivatives, at fair value | 7,852 | 9,279 | |
Prepaid income taxes | 6,314 | 8,392 | |
Interest-earning time deposits | 5,380 | 6,454 | |
Real estate | 3,700 | 5,249 | |
Automotive dealer financing notes, net | 0 | 33,224 | |
Other | 19,774 | 12,050 | |
Other assets | $ 453,901 | $ 438,104 | |
[1] | With respect to previously transferred Ginnie Mae mortgage loans for which we have the right or the obligation to repurchase under the applicable agreement, we re-recognize the loans in Other assets and a corresponding liability in Other liabilities. | ||
[2] | In connection with the sale of Agency MSRs in 2015, we placed $52.9 million in escrow for the payment of representation, warranty and indemnification claims associated with the underlying loans. Prepaid expenses at September 30, 2017 and December 31, 2016 includes the remaining balance of $20.2 million and $34.9 million, respectively. |
Other Assets - Schedule of Ot83
Other Assets - Schedule of Other Assets (Footnote) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Other Assets [Abstract] | |||
Escrow deposit | $ 52.9 | ||
Other prepaid expense | $ 20.2 | $ 34.9 |
Other Assets - Narrative (Detai
Other Assets - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Other Assets [Abstract] | ||
Automotive dealer financing notes, gross | $ 8.6 | $ 37.6 |
Allowance for financing notes | $ 8.6 | $ 4.4 |
Other Assets - Schedule of Chan
Other Assets - Schedule of Changes in allowance of Automotive Dealer Financing Notes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Beginning balance | $ 4,400 | |||
Ending balance | $ 8,600 | 8,600 | ||
Automotive Dealer Financing Notes [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Beginning balance | 9,586 | $ 164 | 4,371 | $ 27 |
Provision | (1,019) | 108 | 4,196 | 245 |
Ending balance | $ 8,567 | $ 272 | $ 8,567 | $ 272 |
Borrowings - Schedule of Match
Borrowings - Schedule of Match Funded Liabilities (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | ||
Debt Instrument [Line Items] | |||
Available borrowing capacity | $ 41,900,000 | ||
Match funded liabilities (related to VIEs) | 1,028,016,000 | $ 1,280,997,000 | |
Advance Financing Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1] | $ 143,140,000 | |
Weighted average interest rate | [2] | 2.51% | 3.21% |
Match funded liabilities (related to VIEs) | $ 1,001,860,000 | $ 1,280,997,000 | |
Match Funded Liabilties [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1] | $ 216,984,000 | |
Weighted average interest rate | [2] | 2.61% | 3.21% |
Match funded liabilities (related to VIEs) | $ 1,028,016,000 | $ 1,280,997,000 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1] | $ 68,732,000 | |
Weighted average interest rate | [2] | 2.29% | 3.14% |
Match funded liabilities (related to VIEs) | $ 891,268,000 | $ 1,123,182,000 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2014-VF3 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[3] | $ 0 | |
Weighted average interest rate | [2],[3] | 0.00% | 3.12% |
Match funded liabilities (related to VIEs) | [3] | $ 0 | $ 74,394,000 |
Maturity date | [3],[4] | Aug. 31, 2047 | |
Amortization date | [3],[4] | Aug. 31, 2017 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2014-VF4 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[3] | $ 34,366,000 | |
Weighted average interest rate | [2],[3] | 4.27% | 3.12% |
Match funded liabilities (related to VIEs) | [3] | $ 70,634,000 | $ 74,394,000 |
Maturity date | [3],[4] | Aug. 31, 2048 | |
Amortization date | [3],[4] | Aug. 31, 2018 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2015-VF5 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[3] | $ 34,366,000 | |
Weighted average interest rate | [2],[3] | 4.27% | 3.12% |
Match funded liabilities (related to VIEs) | [3] | $ 70,634,000 | $ 74,394,000 |
Maturity date | [3],[4] | Aug. 31, 2048 | |
Amortization date | [3],[4] | Aug. 31, 2018 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2015-T3 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[5] | $ 0 | |
Weighted average interest rate | [2],[5] | 0.00% | 3.48% |
Match funded liabilities (related to VIEs) | [5] | $ 0 | $ 400,000,000 |
Maturity date | [4],[5] | Nov. 30, 2047 | |
Amortization date | [4],[5] | Nov. 30, 2017 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2017-T1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[5] | $ 0 | |
Weighted average interest rate | [2],[5] | 2.64% | 0.00% |
Match funded liabilities (related to VIEs) | [5] | $ 250,000,000 | $ 0 |
Maturity date | [4],[5] | Sep. 30, 2048 | |
Amortization date | [4],[5] | Sep. 30, 2018 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2016-T1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[5] | $ 0 | |
Weighted average interest rate | [2],[5] | 2.77% | 2.77% |
Match funded liabilities (related to VIEs) | [5] | $ 265,000,000 | $ 265,000,000 |
Maturity date | [4],[5] | Aug. 31, 2048 | |
Amortization date | [4],[5] | Aug. 31, 2018 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2016-T2 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[5] | $ 0 | |
Weighted average interest rate | [2],[5] | 2.99% | 2.99% |
Match funded liabilities (related to VIEs) | [5] | $ 235,000,000 | $ 235,000,000 |
Maturity date | [4],[5] | Aug. 31, 2049 | |
Amortization date | [4],[5] | Aug. 31, 2019 | |
Total Ocwen Servicer Advance Receivables Trust III (OSARTIII) [Member] | Advance Receivables Backed Notes, Series 2014-VF1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[6] | $ 23,134,000 | |
Weighted average interest rate | [2],[6] | 4.41% | 4.03% |
Match funded liabilities (related to VIEs) | [6] | $ 51,866,000 | $ 63,093,000 |
Maturity date | [4],[6] | Dec. 31, 2047 | |
Amortization date | [4],[6] | Dec. 31, 2017 | |
Total Ocwen Freddie Advance Funding Facility (OFAF) [Member] | Advance Receivables Backed Notes, Series 2015-VF1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[7] | $ 51,274,000 | |
Weighted average interest rate | [2],[7] | 4.16% | 3.54% |
Match funded liabilities (related to VIEs) | [7] | $ 58,726,000 | $ 94,722,000 |
Maturity date | [4],[7] | Jun. 30, 2048 | |
Amortization date | [4],[7] | Jun. 30, 2018 | |
Total Automotive Capital Asset Receivables Trust [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[8] | $ 73,844,000 | |
Weighted average interest rate | [2],[8] | 6.36% | 0.00% |
Match funded liabilities (related to VIEs) | [8] | $ 26,156,000 | $ 0 |
Total Automotive Capital Asset Receivables Trust [Member] | Loan Series 2017-1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[8] | $ 36,922,000 | |
Weighted average interest rate | [2],[8] | 6.48% | 0.00% |
Match funded liabilities (related to VIEs) | [8] | $ 13,078,000 | $ 0 |
Maturity date | [4],[8] | Feb. 28, 2021 | |
Amortization date | [4],[8] | Feb. 28, 2019 | |
Total Automotive Capital Asset Receivables Trust [Member] | Loan Series 2017-2 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[8] | $ 36,922,000 | |
Weighted average interest rate | [2],[8] | 6.23% | 0.00% |
Match funded liabilities (related to VIEs) | [8] | $ 13,078,000 | $ 0 |
Maturity date | [4],[8] | Mar. 31, 2021 | |
Amortization date | [4],[8] | Mar. 31, 2019 | |
[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 September 30, 2017, $41.9 million of the available borrowing capacity of our advance financing notes could be used based on the amount of eligible collateral that had been pledged. | ||
[2] | 1ML was 1.23% and 0.77% at September 30, 2017 and December 31, 2016, respectively. | ||
[3] | On August 11, 2017, we increased the borrowing capacity of the Series 2014-VF4 and Series 2014-VF5 variable rate notes from $70.0 million to $105.0 million. In addition, we voluntarily terminated the Series 2014-VF3 note. There is a ceiling of 125 basis points (bps) for 1ML in determining the interest rate for these notes. Rates on the individual notes are based on 1ML plus a margin of 235 to 635 bps. | ||
[4] | The amortization date of our facilities is the date on which the revolving period ends under each advance 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 all of our 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. | ||
[5] | Under the terms of the agreement, we must continue to borrow the full amount of the Series 2016-T1 and Series 2016-T2 fixed-rate term notes until the amortization date. On September 15, 2017, we terminated the Series 2015-T3 note, and we entered into the Series 2017-T1 notes. If there is insufficient collateral to support the level of borrowing, the excess cash proceeds are not distributed to Ocwen but are held by the trustee, and interest expense continues to be based on the full amount of the notes. The Series 2016-T1 and Series 2016-T2 notes have a total borrowing capacity of $500.0 million. The Series 2017-T1 notes have a borrowing capacity of $250.0 million. Rates on the individual notes range from 2.4989% to 4.4456%. | ||
[6] | The maximum borrowing capacity under this facility is $75.0 million. There is a ceiling of 75 bps for 1ML in determining the interest rate for these variable rate notes. Rates on the individual notes are based on the lender’s cost of funds plus a margin of 230 to 470 bps. | ||
[7] | The combined borrowing capacity of the Series 2015-VF1 Notes was $160.0 million at December 31, 2016. Rates on the individual notes are based on 1ML plus a margin of 240 to 480 bps. On June 8, 2017, we negotiated a renewal of this facility through June 7, 2018. As part of this renewal, we reduced the combined borrowing capacity of the Series 2015-VF1 Notes to $110.0 million with interest computed based on the lender’s cost of funds plus a margin of 250 to 500 bps. There is a ceiling of 300 bps for 1ML in determining the interest rate for these variable rate notes. | ||
[8] | We entered into the loan agreements for the Series 2017-1 Notes on February 24, 2017 and for the Series 2017-2 Notes on March 17, 2017. The committed borrowing capacity for each of the Series 2017-1 and Series 2017-2 variable rate notes is $50.0 million. From time to time, we may request increases in the aggregate maximum borrowing capacity of the facility to $200.0 million. Rates on the Series 2017-1 notes are based on 1ML plus a margin of 500 bps and rates on the Series 2017-2 notes are based on the lender’s cost of funds plus a margin of 500 bps. |
Borrowings - Schedule of Matc87
Borrowings - Schedule of Match Funded Liabilities (Footnote) (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | ||
Debt Instrument [Line Items] | |||
Restructuring fee received in connection with transfer of MSRs | [1],[2],[3] | $ 54,601,000 | |
Available borrowing capacity that could be used based on amount of eligible collateral pledged | 41,900,000 | ||
Series 2016 Term Notes [Member] | |||
Debt Instrument [Line Items] | |||
Total borrowing capacity | 500,000,000 | ||
Series 2015 Term Notes [Member] | |||
Debt Instrument [Line Items] | |||
Total borrowing capacity | $ 250,000,000 | ||
Series 2015 Term Notes [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 2.4989% | ||
Series 2015 Term Notes [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 4.4456% | ||
Advance Receivables Backed Notes, Series 2015-VF1 [Member] | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 110,000,000 | $ 160,000,000 | |
Total Ocwen Servicer Advance Receivables Trust III (OSARTIII) [Member] | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 75,000,000 | ||
Total Ocwen Servicer Advance Receivables Trust III (OSARTIII) [Member] | Advance Receivables Backed Notes, Series 2014-VF1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [4],[5] | $ 23,134,000 | |
Debt instrument, interest rate | [5],[6] | 4.41% | 4.03% |
Total Ocwen Servicer Advance Receivables Trust III (OSARTIII) [Member] | Advance Receivables Backed Notes, Series 2014-VF1 [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.30% | ||
Total Ocwen Servicer Advance Receivables Trust III (OSARTIII) [Member] | Advance Receivables Backed Notes, Series 2014-VF1 [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 4.70% | ||
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [4] | $ 68,732,000 | |
Debt instrument, interest rate | [6] | 2.29% | 3.14% |
Maximum borrowing capacity | $ 105,000,000 | $ 70,000,000 | |
Total Ocwen Freddie Advance Funding Facility (OFAF) [Member] | Advance Receivables Backed Notes, Series 2015-VF1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [4],[7] | $ 51,274,000 | |
Debt instrument, interest rate | [6],[7] | 4.16% | 3.54% |
Total Ocwen Freddie Advance Funding Facility (OFAF) [Member] | Advance Receivables Backed Notes, Series 2015-VF1 [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 2.50% | ||
Total Ocwen Freddie Advance Funding Facility (OFAF) [Member] | Advance Receivables Backed Notes, Series 2015-VF1 [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 5.00% | ||
Total Automotive Capital Asset Receivables Trust [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [4],[8] | $ 73,844,000 | |
Debt instrument, interest rate | [6],[8] | 6.36% | 0.00% |
Maximum borrowing capacity | $ 200,000,000 | ||
Total Automotive Capital Asset Receivables Trust [Member] | Loan Series 2017-1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [4],[8] | $ 36,922,000 | |
Debt instrument, interest rate | [6],[8] | 6.48% | 0.00% |
Maximum borrowing capacity | $ 50,000,000 | ||
Total Automotive Capital Asset Receivables Trust [Member] | Loan Series 2017-2 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [4],[8] | $ 36,922,000 | |
Debt instrument, interest rate | [6],[8] | 6.23% | 0.00% |
Maximum borrowing capacity | $ 50,000,000 | ||
Basis spread on variable rate | 5.00% | ||
London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate | 1.23% | 0.77167% | |
Basis spread on variable rate | [9] | 2.64% | |
London Interbank Offered Rate (LIBOR) [Member] | Total Ocwen Servicer Advance Receivables Trust III (OSARTIII) [Member] | |||
Debt Instrument [Line Items] | |||
Ceiling percentage of 1ML in determining interest rate | 0.75% | ||
London Interbank Offered Rate (LIBOR) [Member] | Total Ocwen Master Advance Receivables Trust (OMART) [Member] | |||
Debt Instrument [Line Items] | |||
Ceiling percentage of 1ML in determining interest rate | 1.25% | ||
London Interbank Offered Rate (LIBOR) [Member] | Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.35% | ||
London Interbank Offered Rate (LIBOR) [Member] | Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 6.35% | ||
London Interbank Offered Rate (LIBOR) [Member] | Total Ocwen Freddie Advance Funding Facility (OFAF) [Member] | |||
Debt Instrument [Line Items] | |||
Ceiling percentage of 1ML in determining interest rate | 3.00% | ||
London Interbank Offered Rate (LIBOR) [Member] | Total Ocwen Freddie Advance Funding Facility (OFAF) [Member] | Advance Receivables Backed Notes, Series 2015-VF1 [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.40% | ||
London Interbank Offered Rate (LIBOR) [Member] | Total Ocwen Freddie Advance Funding Facility (OFAF) [Member] | Advance Receivables Backed Notes, Series 2015-VF1 [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 4.80% | ||
London Interbank Offered Rate (LIBOR) [Member] | Total Automotive Capital Asset Receivables Trust [Member] | Loan Series 2017-1 [Member] | |||
Debt Instrument [Line Items] | |||
Ceiling percentage of 1ML in determining interest rate | 5.00% | ||
[1] | Carried at fair value in accordance with fair value election. | ||
[2] | The amount of the lump sum payment is based on a contractual schedule that approximates the net present value of the difference in cash flows under the 2017 Agreements versus the 2012 - 2013 Agreements, and was determined based on the weighted average characteristics, such as contractual servicing fee rates and delinquency, of the MSRs underlying the Rights to MSRs. The difference between the characteristics of the MSRs underlying the Rights to MSRs that are transferred in any period, relative to the weighted average loan characteristics used to determine the lump sum payment, will result in an increase (characteristics of transferred MSRs compare favorably to the weighted average) or decrease (characteristics of transferred MSRs compare unfavorably to the weighted average) in the fair value of the financing liability. The fair value of the portion of the financing liability recognized in connection with the September 1, 2017 transfer declined $37.6 million primarily due to the transferred MSRs having a contractual servicing fee rate of 33.4 bps as compared to the weighted average of 47.1 bps. | ||
[3] | Under ASC 470-50, Debt - Modifications and Extinguishments, Ocwen is deemed to have had a significant modification and debt extinguishment in connection with the Rights to MSRs secured financing liability. Because the secured financing liability is accounted for at fair value, there was no gain or loss recognized in connection with this debt extinguishment. As permitted by ASC 825-10-25, Financial Instruments - Recognition - Fair Value Option, a significant modification of debt is an event that creates a fair value option election date. | ||
[4] | Borrowing capacity is available to us provided that we have additional eligible collateral to pledge. Collateral may only be pledged to one facility. At September 30, 2017, $41.9 million of the available borrowing capacity of our advance financing notes could be used based on the amount of eligible collateral that had been pledged. | ||
[5] | The maximum borrowing capacity under this facility is $75.0 million. There is a ceiling of 75 bps for 1ML in determining the interest rate for these variable rate notes. Rates on the individual notes are based on the lender’s cost of funds plus a margin of 230 to 470 bps. | ||
[6] | 1ML was 1.23% and 0.77% at September 30, 2017 and December 31, 2016, respectively. | ||
[7] | The combined borrowing capacity of the Series 2015-VF1 Notes was $160.0 million at December 31, 2016. Rates on the individual notes are based on 1ML plus a margin of 240 to 480 bps. On June 8, 2017, we negotiated a renewal of this facility through June 7, 2018. As part of this renewal, we reduced the combined borrowing capacity of the Series 2015-VF1 Notes to $110.0 million with interest computed based on the lender’s cost of funds plus a margin of 250 to 500 bps. There is a ceiling of 300 bps for 1ML in determining the interest rate for these variable rate notes. | ||
[8] | We entered into the loan agreements for the Series 2017-1 Notes on February 24, 2017 and for the Series 2017-2 Notes on March 17, 2017. The committed borrowing capacity for each of the Series 2017-1 and Series 2017-2 variable rate notes is $50.0 million. From time to time, we may request increases in the aggregate maximum borrowing capacity of the facility to $200.0 million. Rates on the Series 2017-1 notes are based on 1ML plus a margin of 500 bps and rates on the Series 2017-2 notes are based on the lender’s cost of funds plus a margin of 500 bps. | ||
[9] | Represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed HMBS. The beneficial interests have no maturity dates, and the borrowings mature as the related loans are repaid. |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Percentage of loan to value | 40.00% | |
NRZ [Member] | ||
Debt Instrument [Line Items] | ||
UPB of rights to MSRs sold | $ 90,000,000 | |
Outstanding servicing advances | 2,700,000 | |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs | $ 2,799 | $ 3,211 |
Senior Notes [Member] | 8.375% Senior Secured Notes Due In 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Maximum percentage available for redemption using net cash proceeds of one or more Equity Offerings as defined in Indenture | 35.00% | |
Percentage of principal amount, redemption price | 108.375% | |
Percentage of principal amount to remain outstanding after redemption requirement | 65.00% | |
Maximum period for redemption after consummation of equity offering | 120 days | |
Percentage of principal amount, repurchase price | 101.00% | |
Servicing [Member] | ||
Debt Instrument [Line Items] | ||
Covenant compliance, consolidated tangible net worth at period end | $ 1,100,000 | |
Lending [Member] | ||
Debt Instrument [Line Items] | ||
Covenant compliance, consolidated tangible net worth at period end | $ 450,000 | |
On or After May 15, 2017 [Member] | Unsecured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price | 103.313% | |
May 15, 2018 [Member] | Unsecured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price | 100.00% | |
Minimum [Member] | On or After May 15, 2017 [Member] | Unsecured Debt [Member] | 6.625 Senior Notes, Due 2019 [Member] | ||
Debt Instrument [Line Items] | ||
Redemption period, notice | 30 days | |
Minimum [Member] | On or Before November 15, 2018 [Member] | Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Redemption period, notice | 30 days | |
Maximum [Member] | On or After May 15, 2017 [Member] | Unsecured Debt [Member] | 6.625 Senior Notes, Due 2019 [Member] | ||
Debt Instrument [Line Items] | ||
Redemption period, notice | 60 days | |
Maximum [Member] | On or Before November 15, 2018 [Member] | Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Redemption period, notice | 60 days | |
Maximum [Member] | On or Before November 15, 2018 [Member] | Senior Notes [Member] | 8.375% Senior Secured Notes Due In 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Redemption price | 100.00% |
Borrowings - Schedule of Financ
Borrowings - Schedule of Financing Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | ||
Debt Instrument [Line Items] | |||
HMBS-related borrowings | [1] | $ 4,358,277 | $ 3,433,781 |
Other financing liabilities | 536,981 | 579,031 | |
Total Financing liabilities | 4,895,258 | 4,012,812 | |
Financing liability – MSRs pledged [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | 447,843 | 477,707 | |
Financing liability – MSRs pledged [Member] | 2012 - 2013 Agreements [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | [2] | 430,887 | 477,707 |
Financing liability – MSRs pledged [Member] | 2017 Agreements [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | [3] | $ 16,956 | 0 |
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | [3] | Feb. 28, 2028 | |
Other financing liabilities | [4] | $ 74,695 | 81,131 |
Financing Liability – Advances Pledged [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | [5] | $ 14,443 | $ 20,193 |
London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | [1] | 2.64% | |
[1] | 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. | ||
[2] | This financing liability arose in connection with sales proceeds received in 2012 and 2013 as part of the Rights to MSRs transactions with NRZ/HLSS and has no contractual maturity or repayment schedule. 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. | ||
[3] | This financing liability arose in connection with the lump sum payment received in September 2017 upon subsequently obtaining the required third-party consents and transfer of legal title of the MSRs related to the Rights to MSRs transactions with NRZ/HLSS in 2012 and 2013. We received a lump sum payment of $54.6 million as compensation for foregoing certain payments under the 2012 and 2013 agreements. This liability has no contractual maturity or repayment schedule. 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. See Note 3 – Fair Value and Note 8 — Rights to MSRs for additional information. | ||
[4] | 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. 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. | ||
[5] | Certain sales of advances did not qualify for sales accounting treatment and were accounted for as a financing. This financing liability has no contractual maturity. |
Borrowings - Schedule of Fina90
Borrowings - Schedule of Financing Liabilities (Footnote) (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($) | ||
Debt Instrument [Line Items] | ||
Receipt of lump sum payment in connection with transfer of MSRs to NRZ | $ (54,601) | [1],[2],[3] |
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 [Member] | ||
Debt Instrument [Line Items] | ||
Basis spread on UPB | 0.21% | |
[1] | Carried at fair value in accordance with fair value election. | |
[2] | The amount of the lump sum payment is based on a contractual schedule that approximates the net present value of the difference in cash flows under the 2017 Agreements versus the 2012 - 2013 Agreements, and was determined based on the weighted average characteristics, such as contractual servicing fee rates and delinquency, of the MSRs underlying the Rights to MSRs. The difference between the characteristics of the MSRs underlying the Rights to MSRs that are transferred in any period, relative to the weighted average loan characteristics used to determine the lump sum payment, will result in an increase (characteristics of transferred MSRs compare favorably to the weighted average) or decrease (characteristics of transferred MSRs compare unfavorably to the weighted average) in the fair value of the financing liability. The fair value of the portion of the financing liability recognized in connection with the September 1, 2017 transfer declined $37.6 million primarily due to the transferred MSRs having a contractual servicing fee rate of 33.4 bps as compared to the weighted average of 47.1 bps. | |
[3] | Under ASC 470-50, Debt - Modifications and Extinguishments, Ocwen is deemed to have had a significant modification and debt extinguishment in connection with the Rights to MSRs secured financing liability. Because the secured financing liability is accounted for at fair value, there was no gain or loss recognized in connection with this debt extinguishment. As permitted by ASC 825-10-25, Financial Instruments - Recognition - Fair Value Option, a significant modification of debt is an event that creates a fair value option election date. |
Borrowings - Schedule of Other
Borrowings - Schedule of Other Secured Borrowings (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | ||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | $ 41,900,000 | ||
Other secured borrowings | 4,895,258,000 | $ 4,012,812,000 | |
Repurchase Agreements [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | $ 87,500,000 | ||
London Interbank Offered Rate (LIBOR) [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [1] | 2.64% | |
Secured Debt [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2] | $ 45,516,000 | |
Other secured borrowings | 231,273,000 | 355,029,000 | |
Unamortized debt issuance costs - SSTL | (6,045,000) | (7,612,000) | |
Discount - SSTL | (3,077,000) | (3,874,000) | |
Long-term Debt | $ 544,589,000 | $ 678,543,000 | |
Weighted average interest rate | 5.20% | 4.56% | |
Secured Debt [Member] | Senior Secured Term Loan [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[3] | $ 0 | |
Other secured borrowings | [3] | $ 322,438,000 | $ 335,000,000 |
Maturity date | [3] | Dec. 31, 2020 | |
Secured Debt [Member] | Repurchase Agreements [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[4] | $ 45,516,000 | |
Other secured borrowings | [4] | $ 41,984,000 | 12,370,000 |
Maturity date | [4] | Aug. 31, 2018 | |
Secured Debt [Member] | Master Repurchase Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[5] | $ 0 | |
Other secured borrowings | [5] | $ 0 | 173,543,000 |
Maturity date | [5] | Feb. 28, 2018 | |
Secured Debt [Member] | Participation Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[6] | $ 0 | |
Other secured borrowings | [6] | $ 141,800,000 | 92,739,000 |
Maturity date | [6] | Apr. 30, 2018 | |
Secured Debt [Member] | Participation Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[7] | $ 0 | |
Other secured borrowings | [7] | $ 47,489,000 | 26,254,000 |
Maturity date | [7] | Nov. 30, 2017 | |
Secured Debt [Member] | Master Repurchase Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[8] | $ 0 | |
Other secured borrowings | [8] | $ 0 | 50,123,000 |
Maturity date | [8] | Jan. 31, 2018 | |
Interest rate at index floor rate | [8] | 0.25% | |
Secured Debt [Member] | Total Servicing Lines Of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2] | $ 45,516,000 | |
Other secured borrowings | $ 553,711,000 | 690,029,000 | |
Secured Debt [Member] | London Interbank Offered Rate (LIBOR) [Member] | Master Repurchase Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [5] | 2.00% | |
Secured Debt [Member] | London Interbank Offered Rate (LIBOR) [Member] | Master Repurchase Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [8] | 2.75% | |
Secured Debt [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Repurchase Agreements [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [4] | 2.00% | |
Secured Debt [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Participation Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [7] | 2.75% | |
Secured Debt [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Repurchase Agreements [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [4] | 3.45% | |
Ocwen Loan Servicing [Member] | Secured Debt [Member] | London Interbank Offered Rate (LIBOR) [Member] | Participation Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate at index floor rate | [7] | 3.00% | |
Liberty Home Equity Solutions, Inc. [Member] | Secured Debt [Member] | London Interbank Offered Rate (LIBOR) [Member] | Participation Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate at index floor rate | [7] | 3.50% | |
Senior Notes [Member] | |||
Line of Credit Facility [Line Items] | |||
Unamortized debt issuance costs - SSTL | $ (2,799,000) | (3,211,000) | |
Long-term Debt | $ 347,201,000 | $ 346,789,000 | |
Senior Notes [Member] | Secured Debt [Member] | Eurodollar [Member] | Senior Secured Term Loan [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [3] | 5.00% | |
Interest rate at index floor rate | [3] | 1.00% | |
[1] | 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. | ||
[2] | For our mortgage loan warehouse facilities, available borrowing capacity does not consider the amount of the facility that the lender has extended on an uncommitted basis. Of the borrowing capacity extended on a committed basis, $29.3 million could be used at September 30, 2017 based on the amount of eligible collateral that had been pledged. | ||
[3] | On December 5, 2016, we entered into an Amended and Restated Senior Secured Term Loan Facility Agreement that established a new SSTL with a borrowing capacity of $335.0 million and a maturity date of December 5, 2020. We may request increases to the loan amount of up to $100.0 million in total, with additional increases subject to certain limitations. We are required to make quarterly payments on the SSTL in an amount of $4.2 million, the first of which was paid on March 31, 2017.The borrowings under the SSTL are secured by a first priority security interest in substantially all of the assets of Ocwen, OLS and the other guarantors thereunder, excluding among other things, 35% of the capital stock of foreign subsidiaries, securitization assets and equity interests of securitization entities, assets securing permitted funding indebtedness and non-recourse indebtedness, REO assets, servicing agreements where an acknowledgment from the GSE has not been obtained, as well as other customary carve-outs.Borrowings bear interest, at the election of Ocwen, at a rate per annum equal to either (a) the base rate (the greatest of (i) the prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50% and (iii) the one-month Eurodollar rate (1ML)), plus a margin of 4.00% and subject to a base rate floor of 2.00% or (b) the one-month Eurodollar rate, plus a margin of 5.00% and subject to a one-month Eurodollar floor of 1.00%. To date, we have elected option (b) to determine the interest rate. | ||
[4] | $87.5 million of the maximum borrowing amount of $137.5 million is available on a committed basis and the remainder is available at the discretion of the lender. Effective January 1, 2018, the committed amount shall be reduced to $50.0 million. We primarily use this facility to fund the repurchase of 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. On August 1, 2017, we entered into an amendment to lower the advance rates under this facility by 3%. | ||
[5] | On August 1, 2017, we elected to voluntarily terminate these agreements. | ||
[6] | Under these participation agreements, the lender provides financing for a combined total of $250.0 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 25, 2017, the term of these participation agreements was extended to April 30, 2018. | ||
[7] | Under these participation agreements, the lender provides uncommitted reverse mortgage financing for a combined total of $110.0 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 October 27, 2017, we renewed one of the agreements through October 12, 2018 and increased the maximum borrowing capacity of the facility from $50.0 million to $100.0 million. | ||
[8] | On August 18, 2017, we elected to voluntarily terminate the master repurchase agreement. |
Borrowings - Schedule of Othe92
Borrowings - Schedule of Other Secured Borrowings (Footnote) (Details) - USD ($) | Aug. 01, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Oct. 27, 2017 | Dec. 05, 2016 | |
Debt Instrument [Line Items] | |||||||
Available borrowing capacity | $ 41,900,000 | $ 41,900,000 | |||||
Percentage of equity interest in foreign subsidiaries pledged as security to secured debt | 35.00% | ||||||
Mortgage Warehouse Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Available borrowing capacity | 29,300,000 | $ 29,300,000 | |||||
Amended Senior Secured Term Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Periodic prepayment of SSTL | 4,200,000 | ||||||
Maximum borrowing capacity | $ 335,000,000 | ||||||
Face amount | $ 100,000,000 | ||||||
Repurchase Agreements [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Available borrowing capacity | 87,500,000 | 87,500,000 | |||||
Maximum borrowing capacity | 137,500,000 | $ 137,500,000 | |||||
Percentage decrease in advance rates | 3.00% | ||||||
London Interbank Offered Rate (LIBOR) [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | [1] | 2.64% | |||||
Secured Debt [Member] | Lending [Member] | Mortgage Warehouse Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | 110,000,000 | $ 110,000,000 | |||||
Secured Debt [Member] | Lending [Member] | Participation Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | 250,000,000 | $ 250,000,000 | |||||
Beneficial interest | 100.00% | ||||||
Secured Debt [Member] | Senior Secured Term Loan Option One [Member] | Federal Funds Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.50% | ||||||
Secured Debt [Member] | Senior Secured Term Loan Option One [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 4.00% | ||||||
Secured Debt [Member] | Senior Secured Term Loan Option One [Member] | Base Rate [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 2.00% | ||||||
Secured Debt [Member] | Senior Secured Term Loan Option Two [Member] | Eurodollar [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 5.00% | ||||||
Secured Debt [Member] | Senior Secured Term Loan Option Two [Member] | Eurodollar Floor [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1.00% | ||||||
Warehouse Agreement Borrowings [Member] | Participation Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 50,000,000 | $ 50,000,000 | |||||
Beneficial interest | 100.00% | ||||||
Warehouse Agreement Borrowings [Member] | Participation Agreement [Member] | Subsequent Event [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 100,000,000 | ||||||
Scenario, Forecast [Member] | Repurchase Agreements [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Available borrowing capacity | $ 50,000,000 | ||||||
[1] | 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 Senior N
Borrowings Schedule of Senior Notes (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Senior notes | $ 347,201 | $ 346,789 |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes | 350,000 | 350,000 |
Unamortized debt issuance costs | (2,799) | (3,211) |
Long-term Debt | 347,201 | 346,789 |
Senior Notes [Member] | 6.625 Senior Notes, Due 2019 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes | 3,122 | 3,122 |
Senior Notes [Member] | 8.375% Senior Secured Notes Due In 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 346,878 | $ 346,878 |
Borrowings Schedule of Redempti
Borrowings Schedule of Redemption Prices (Details) - Secured Debt [Member] | 9 Months Ended |
Sep. 30, 2017 | |
2018 [Member] | |
Debt Instrument [Line Items] | |
Redemption price | 106.281% |
2019 [Member] | |
Debt Instrument [Line Items] | |
Redemption price | 104.188% |
2020 [Member] | |
Debt Instrument [Line Items] | |
Redemption price | 102.094% |
2021 and Thereafter [Member] | |
Debt Instrument [Line Items] | |
Redemption price | 100.00% |
Other Liabilities - Schedule of
Other Liabilities - Schedule of Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | |
Other Liabilities Disclosure [Abstract] | |||
Contingent loan repurchase liability | $ 318,954 | $ 246,081 | |
Due to NRZ | 100,914 | 83,248 | |
Other accrued expenses | 80,187 | 80,021 | |
Accrued legal fees and settlements | 59,943 | 93,797 | |
Servicing-related obligations | 35,959 | 35,324 | |
Liability for indemnification obligations | 23,823 | 27,546 | |
Checks held for escheat | 19,804 | 16,890 | |
Accrued interest payable | 14,910 | 3,698 | |
Amounts due in connection with MSR sales | 13,996 | 39,398 | |
Liability for uncertain tax positions | [1] | 0 | 23,216 |
Other | 24,629 | 32,020 | |
Total other liabilities | $ 693,119 | $ 681,239 | |
[1] | On September 15, 2017, the statute of limitation expired with respect to our remaining uncertain tax position for which a liability had previously been recorded. This liability was derecognized and recorded as an income tax benefit during the three months ended September 30, 2017. See Note 16 - Income Taxes for additional information. |
Equity (Details)
Equity (Details) - USD ($) $ in Thousands | Jul. 23, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Subsidiary, Sale of Stock [Line Items] | ||||
Common stock, shares, issued | 130,859,058 | 123,988,160 | ||
Proceeds from issuance of common stock | $ 13,913 | $ 0 | ||
NRZ [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Common stock, shares, issued | 6,075,510 | |||
Proceeds from issuance of common stock | $ 13,900 |
Derivative Financial Instrume97
Derivative Financial Instruments and Hedging Activities - Summary of Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | ||
Fair value of derivative assets (liabilities) (2) at: | ||||||
Derivatives, at fair value | $ 7,852 | $ 7,852 | $ 9,279 | |||
Gains (losses) on derivatives during the nine months ended: | ||||||
Losses on economic hedges | (350) | $ (45) | (207) | $ (1,950) | ||
Gains (losses) on derivatives | (395) | $ (134) | (364) | (2,213) | ||
Interest Rate Lock Commitments [Member] | ||||||
Derivative Notional Balance | ||||||
Notional balance at December 31, 2016 | 360,450 | |||||
Additions | 3,192,031 | |||||
Amortization | 0 | |||||
Maturities | (2,728,640) | |||||
Terminations | (617,050) | |||||
Notional balance at September 30, 2017 | 206,791 | $ 206,791 | ||||
Maturity | Oct. 2017 - Dec. 2017 | |||||
Fair value of derivative assets (liabilities) (2) at: | ||||||
Derivatives, at fair value | [1] | 4,969 | $ 4,969 | 6,507 | ||
Gains (losses) on derivatives during the nine months ended: | ||||||
Gains (losses) on derivatives | (1,605) | 4,148 | ||||
Forward MBS Trades [Member] | ||||||
Derivative Notional Balance | ||||||
Notional balance at December 31, 2016 | 609,177 | |||||
Additions | 2,094,533 | |||||
Amortization | 0 | |||||
Maturities | (1,340,603) | |||||
Terminations | (993,407) | |||||
Notional balance at September 30, 2017 | 369,700 | $ 369,700 | ||||
Maturity | Oct. 2017 - Nov. 2017 | |||||
Fair value of derivative assets (liabilities) (2) at: | ||||||
Derivatives, at fair value | [1] | 973 | $ 973 | (614) | ||
Gains (losses) on derivatives during the nine months ended: | ||||||
Gains (losses) on derivatives | (8,604) | $ (25,677) | ||||
Interest Rate Caps [Member] | ||||||
Derivative Notional Balance | ||||||
Notional balance at December 31, 2016 | [2] | 955,000 | ||||
Additions | [2] | 110,000 | ||||
Amortization | [2] | (316,667) | ||||
Maturities | [2] | 0 | ||||
Terminations | [2] | (300,000) | ||||
Notional balance at September 30, 2017 | [2] | 448,333 | $ 448,333 | |||
Maturity | Oct. 2017 - May 2019 | |||||
Fair value of derivative assets (liabilities) (2) at: | ||||||
Derivatives, at fair value | [1] | $ 1,839 | $ 1,839 | $ 1,836 | ||
[1] | Derivatives are reported at fair value in Other assets or in Other liabilities on our unaudited consolidated balance sheets. | |||||
[2] | Excludes commitments on two interest rate caps we entered into in August 2017 which are related to the OMART advance financing facility and which become effective in November 2017. These interest rate caps have a notional value and fair value of $23.3 million and $0.8 million at September 30, 2017, respectively. |
Derivative Financial Instrume98
Derivative Financial Instruments and Hedging Activities - Summary of Derivatives (Footnote) (Details) - Interest Rate Caps [Member] - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | |
Derivative [Line Items] | |||
Notional Amount | [1] | $ 448,333 | $ 955,000 |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | |||
Derivative [Line Items] | |||
Notional Amount | 23,300 | ||
Fair value of interest rate caps | $ 800 | ||
[1] | Excludes commitments on two interest rate caps we entered into in August 2017 which are related to the OMART advance financing facility and which become effective in November 2017. These interest rate caps have a notional value and fair value of $23.3 million and $0.8 million at September 30, 2017, respectively. |
Derivative Financial Instrume99
Derivative Financial Instruments and Hedging Activities - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Unrealized loss on derivatives arising during period, before tax | $ 1.3 | $ 1.5 |
Other comprehensive income (loss), tax | $ 0.1 | $ 0.1 |
Derivative Financial Instrum100
Derivative Financial Instruments and Hedging Activities - Schedule of Other Income (Expense), Net Related to Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Losses on economic hedges | $ (350) | $ (45) | $ (207) | $ (1,950) |
Write-off of losses in AOCL for a discontinued hedge relationship | (45) | (89) | (157) | (263) |
Gains (losses) on derivatives | $ (395) | $ (134) | $ (364) | $ (2,213) |
Interest Expense - Schedule of
Interest Expense - Schedule of Components of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Debt securities: | ||||
Interest expense | $ 47,281 | $ 110,961 | $ 212,471 | $ 308,083 |
Financing Liabilities [Member] | ||||
Debt securities: | ||||
Interest expense | 15,317 | 73,096 | 118,579 | 193,675 |
Match Funded Liabilties [Member] | ||||
Debt securities: | ||||
Interest expense | 11,981 | 17,349 | 37,499 | 53,656 |
Other Secured Borrowings [Member] | ||||
Debt securities: | ||||
Interest expense | 10,990 | 13,450 | 30,174 | 38,877 |
Senior Notes [Member] | ||||
Debt securities: | ||||
Interest expense | 7,452 | 6,130 | 22,355 | 18,399 |
Other [Member] | ||||
Debt securities: | ||||
Interest expense | $ 1,541 | $ 936 | $ 3,864 | $ 3,476 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Liability for Uncertain Tax Positions (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Beginning balance | $ 16,994 | $ 32,548 |
Reductions for settlements | 387 | 14,420 |
Lapses in statutes of limitation | 16,607 | 524 |
Ending balance | $ 0 | $ 17,604 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||||||
Effective tax rate on pre-tax losses | 15.70% | 3.70% | ||||
Pre tax losses | $ (26,553) | $ 2,364 | $ (98,659) | $ (196,159) | ||
Unrecognized tax benefits | 0 | 17,604 | 0 | 17,604 | $ 16,994 | $ 32,548 |
Accrued interest and penalties related to unrecognized tax benefits | $ 0 | $ 6,100 | $ 0 | $ 6,100 |
Basic and Diluted Earnings (104
Basic and Diluted Earnings (Loss) per Share - Schedule of Reconciliation of Calculation of Basic Earnings per Share to Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Basic loss per share | |||||
Net loss attributable to Ocwen stockholders | [1] | $ (6,252) | $ 9,391 | $ (83,483) | $ (189,318) |
Weighted average shares of common stock | 128,744,152 | 123,986,987 | 125,797,777 | 123,991,343 | |
Basic earnings (loss) per share (in USD per share) | $ (0.05) | $ 0.08 | $ (0.66) | $ (1.53) | |
Diluted loss per share: | |||||
Net loss attributable to Ocwen stockholders | [1] | $ (6,252) | $ 9,391 | $ (83,483) | $ (189,318) |
Weighted average shares of common stock | 128,744,152 | 123,986,987 | 125,797,777 | 123,991,343 | |
Effect of dilutive elements: | |||||
Stock options awards (in shares) | [1] | 0 | 0 | 0 | 0 |
Common stock awards (in shares) | [1] | 0 | 147,520 | 0 | 0 |
Dilutive weighted average shares of common stock (in shares) | [1] | 128,744,152 | 124,134,507 | 125,797,777 | 123,991,343 |
Diluted earnings (loss) per share (in USD per share) | $ (0.05) | $ 0.08 | $ (0.66) | $ (1.53) | |
Stock options and common stock awards excluded from the computation of diluted earnings per share | |||||
Anti-dilutive Securities (in shares) | [2] | 6,600,164 | 6,890,882 | 5,121,844 | 7,285,539 |
Market Based [Member] | |||||
Stock options and common stock awards excluded from the computation of diluted earnings per share | |||||
Anti-dilutive Securities (in shares) | [3] | 862,446 | 1,917,456 | 862,446 | 1,917,456 |
[1] | For the three and nine months ended September 30, 2017 and the nine months ended September 30, 2016, we have excluded the effect of stock options and common stock awards from the computation of diluted loss per share because of the anti-dilutive effect of our reported net loss. | ||||
[2] | Stock options were anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock. | ||||
[3] | Shares that are issuable upon the achievement of certain market-based performance criteria related to Ocwen’s stock price. |
Business Segment Reporting - N
Business Segment Reporting - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Lending [Member] | ||
Segment Reporting Information [Line Items] | ||
Decrease in income before income taxes | $ (2.3) | $ (7.4) |
Business Segment Reporting - Sc
Business Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Results of Operations | |||||
Revenue | $ 284,642 | $ 359,448 | $ 917,806 | $ 1,063,259 | |
Expenses | 273,479 | 271,678 | 830,342 | 985,353 | |
Other income (expense): | |||||
Interest income | 4,099 | 5,158 | 12,101 | 14,488 | |
Interest expense | (47,281) | (110,961) | (212,471) | (308,083) | |
Gain on sale of mortgage servicing rights, net | 6,543 | 5,661 | 7,863 | 7,689 | |
Other | (1,077) | 14,736 | 6,384 | 11,841 | |
Total other expense, net | (37,716) | (85,406) | (186,123) | (274,065) | |
Income (loss) before income taxes | (26,553) | 2,364 | (98,659) | (196,159) | |
Total Assets | |||||
Balance | 8,097,605 | 7,585,450 | 8,097,605 | 7,585,450 | $ 7,655,663 |
Operating Segments [Member] | Servicing [Member] | |||||
Results of Operations | |||||
Revenue | 246,545 | 319,080 | 802,347 | 951,727 | |
Expenses | 218,565 | 202,156 | 637,406 | 734,326 | |
Other income (expense): | |||||
Interest income | 144 | 59 | 406 | (102) | |
Interest expense | (28,568) | (101,138) | (159,822) | (278,808) | |
Gain on sale of mortgage servicing rights, net | 6,543 | 5,661 | 7,863 | 7,689 | |
Other | (418) | 13,943 | 4,642 | 11,406 | |
Total other expense, net | (22,299) | (81,475) | (146,911) | (259,815) | |
Income (loss) before income taxes | 5,681 | 35,449 | 18,030 | (42,414) | |
Total Assets | |||||
Balance | 2,905,817 | 3,455,613 | 2,905,817 | 3,455,613 | 3,312,371 |
Operating Segments [Member] | Lending [Member] | |||||
Results of Operations | |||||
Revenue | 31,935 | 30,696 | 95,457 | 89,255 | |
Expenses | 38,412 | 30,013 | 100,628 | 85,471 | |
Other income (expense): | |||||
Interest income | 2,857 | 3,990 | 8,612 | 11,805 | |
Interest expense | (4,504) | (3,684) | (11,171) | (10,829) | |
Gain on sale of mortgage servicing rights, net | 0 | 0 | 0 | 0 | |
Other | 555 | 322 | 658 | 982 | |
Total other expense, net | (1,092) | 628 | (1,901) | 1,958 | |
Income (loss) before income taxes | (7,569) | 1,311 | (7,072) | 5,742 | |
Total Assets | |||||
Balance | 4,679,641 | 3,662,339 | 4,679,641 | 3,662,339 | 3,863,862 |
Operating Segments [Member] | Corporate Items and Other [Member] | |||||
Results of Operations | |||||
Revenue | 6,162 | 9,672 | 20,002 | 22,277 | |
Expenses | 16,502 | 39,509 | 92,308 | 165,556 | |
Other income (expense): | |||||
Interest income | 1,098 | 1,109 | 3,083 | 2,785 | |
Interest expense | (14,209) | (6,139) | (41,478) | (18,446) | |
Gain on sale of mortgage servicing rights, net | 0 | 0 | 0 | 0 | |
Other | (1,214) | 471 | 1,084 | (547) | |
Total other expense, net | (14,325) | (4,559) | (37,311) | (16,208) | |
Income (loss) before income taxes | (24,665) | (34,396) | (109,617) | (159,487) | |
Total Assets | |||||
Balance | 512,147 | 467,498 | 512,147 | 467,498 | 479,430 |
Corporate Eliminations [Member] | |||||
Results of Operations | |||||
Revenue | 0 | 0 | 0 | 0 | |
Expenses | 0 | 0 | 0 | 0 | |
Other income (expense): | |||||
Interest income | 0 | 0 | 0 | 0 | |
Interest expense | 0 | 0 | 0 | 0 | |
Gain on sale of mortgage servicing rights, net | 0 | 0 | 0 | 0 | |
Other | 0 | 0 | 0 | 0 | |
Total other expense, net | 0 | 0 | 0 | 0 | |
Income (loss) before income taxes | 0 | 0 | 0 | 0 | |
Total Assets | |||||
Balance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Business Segment Reporting -107
Business Segment Reporting - Schedule of Depreciation and Amortization by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Depreciation expense | $ 6,990 | $ 6,429 | $ 20,430 | $ 18,277 |
Amortization of mortgage servicing rights | 13,148 | (2,558) | 38,560 | 18,595 |
Amortization of debt discount | 258 | 240 | 797 | 623 |
Amortization of debt issuance costs | 644 | 3,977 | 1,979 | 10,475 |
Servicing [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation expense | 1,525 | 2,730 | 4,393 | 5,068 |
Amortization of mortgage servicing rights | 13,081 | (2,634) | 38,351 | 18,360 |
Amortization of debt discount | 0 | 240 | 0 | 623 |
Amortization of debt issuance costs | 0 | 3,645 | 0 | 9,466 |
Lending [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation expense | 57 | 48 | 162 | 184 |
Amortization of mortgage servicing rights | 67 | 76 | 209 | 235 |
Amortization of debt discount | 0 | 0 | 0 | 0 |
Amortization of debt issuance costs | 0 | 0 | 0 | 0 |
Corporate Items and Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation expense | 5,408 | 3,651 | 15,875 | 13,025 |
Amortization of mortgage servicing rights | 0 | 0 | 0 | 0 |
Amortization of debt discount | 258 | 0 | 797 | 0 |
Amortization of debt issuance costs | $ 644 | $ 332 | $ 1,979 | $ 1,009 |
Regulatory Requirements - Narra
Regulatory Requirements - Narrative (Details) $ in Millions | 45 Months Ended |
Sep. 30, 2017USD ($) | |
Brokers and Dealers [Abstract] | |
Third party monitoring costs related to regulatory matters and resolutions | $ 177.5 |
Net worth requirement | $ 394.3 |
Commitments - Narrative (Detail
Commitments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2017 | Sep. 30, 2017 | |
Other Commitments [Line Items] | ||
Loss on divestiture | $ 6.8 | |
Floating Rate Reverse Mortgage Loans [Member] | ||
Other Commitments [Line Items] | ||
Additional borrowing capacity to borrowers | 1,400 | |
Forward Mortgage Loan Interest Rate Lock Commitments [Member] | ||
Other Commitments [Line Items] | ||
Short-term commitments to lend | 189.5 | |
Reverse Mortgage Loan Interest Rate Lock Commitments [Member] | ||
Other Commitments [Line Items] | ||
Short-term commitments to lend | $ 17.3 | |
Minimum [Member] | Scenario, Forecast [Member] | ||
Other Commitments [Line Items] | ||
Severance Costs | $ 1 | |
Maximum [Member] | Scenario, Forecast [Member] | ||
Other Commitments [Line Items] | ||
Severance Costs | $ 2 |
Contingencies - Narrative (Deta
Contingencies - Narrative (Details) | Nov. 01, 2017States | Jul. 31, 2017 | Jul. 19, 2017USD ($)shares | Apr. 28, 2017USD ($) | Apr. 20, 2017USD ($)StatesState | Feb. 17, 2017USD ($) | Sep. 30, 2017USD ($)Loan | Sep. 30, 2017USD ($)StatesLoan | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($)Loan |
Loss Contingencies [Line Items] | |||||||||||
Accrued penalty | $ 31,900,000 | $ 31,900,000 | |||||||||
Number of state attorneys general charging with regulatory action | State | 2 | ||||||||||
Expected insurance recoveries | $ 14,000,000 | $ 14,000,000 | |||||||||
Number of states charging with regulatory action | States | 30 | ||||||||||
Number of states where acquiring new mortgage servicing rights are prohibited | States | 17 | ||||||||||
Number of states where originating or acquiring new mortgage loans where we would be servicer are prohibited | States | 13 | ||||||||||
Number of states where originating or acquiring new mortgage loans are prohibited | States | 4 | ||||||||||
Number of states where conducting foreclosure activities are prohibited | States | 2 | ||||||||||
Number of states where regulatory actions were resolved | States | 19 | ||||||||||
Number of loan files to be tested relating to escrow on residential real property | Loan | 9,000 | ||||||||||
Warranty repurchase demands unpaid principal balance | $ 40,200,000 | $ 40,200,000 | $ 59,300,000 | ||||||||
Warranty repurchase demands number of loans | Loan | 213 | 213 | 272 | ||||||||
Subsequent Event [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Number of states where regulatory actions were resolved | States | 21 | ||||||||||
Number of jurisdictions where regulatory actions were resolved | States | 22 | ||||||||||
Number of states where company is continuing to seek resolutions on regulatory actions | States | 9 | ||||||||||
Number of states either withdrawn or allowed their cease and desist orders to expire | States | 2 | ||||||||||
Putative Securities Fraud Class Action Lawsuits and Consent Order with New York State Department of Financial Services [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Accrued penalty | $ 7,000,000 | $ 7,000,000 | |||||||||
Expected insurance recoveries | $ 14,000,000 | ||||||||||
Issuance of common stock to plaintiffs, shares | shares | 2,500,000 | ||||||||||
Issuance of common stock to plaintiffs, value | $ 7,000,000 | ||||||||||
Litigation settlement amount | $ 49,000,000 | ||||||||||
Fisher Cases [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Litigation settlement amount | $ 15,000,000 | ||||||||||
Litigation settlement expense | $ 15,000,000 | ||||||||||
Consumer Financial Protection Bureau [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Accrued penalty | $ 12,500,000 | ||||||||||
Multistate Mortgage Committee [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Accrued penalty | $ 0 | $ 0 | |||||||||
Number of states who are part of confidential supervisory memorandum of understanding | States | 6 | ||||||||||
Florida Attorney General [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Injunctive and equitable relief, costs, and civil money penalties sought | $ 10,000 | ||||||||||
Massachusetts Attorney General [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Injunctive and equitable relief, costs, and civil money penalties sought | $ 5,000 | ||||||||||
Ginnie Mae [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Forbearance period for exercising rights on guaranty agreements | 90 days | ||||||||||
Office of Mortgage Settlement Oversight [Member] | First Uncured Violation [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Civil penalty | $ 1,000,000 | ||||||||||
Maximum [Member] | Putative Securities Fraud Class Action Lawsuits and Consent Order with New York State Department of Financial Services [Member] | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Percentage of stock issued on outstanding common stock | 4.00% |
Contingencies - Schedule of Ind
Contingencies - Schedule of Indemnification Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Indemnification Obligations Liability [Roll Forward] | |||
Beginning balance | $ 24,285 | $ 36,615 | |
Provision for representation and warranty obligations | (3,285) | (2,403) | |
New production reserves | 554 | 615 | |
Payments made in connection with sales of MSRs | 0 | (1,320) | |
Charge-offs and other | [1] | (3,036) | (6,396) |
Ending balance | $ 18,518 | $ 27,111 | |
[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. |