Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
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, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 133,912,425 |
UNAUDITED CONSOLIDATED BALANCE
UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Assets | |||
Cash | $ 254,843 | $ 259,655 | |
Mortgage servicing rights ($999,282 and $671,962 carried at fair value) | 999,282 | 1,008,844 | |
Advances, net | 166,024 | 211,793 | |
Match funded assets (related to variable interest entities (VIEs)) | 935,080 | 1,177,357 | |
Loans held for sale ($145,417 and $214,262 carried at fair value) | 217,436 | 238,358 | |
Loans held for investment, at fair value (amounts related to VIEs of $28,373 and $0) | 5,307,560 | 4,715,831 | |
Receivables, net | 155,937 | 199,529 | |
Premises and equipment, net | 25,873 | 37,006 | |
Other assets ($7,826 and $8,900 carried at fair value)(amounts related to VIEs of $19,954 and $27,359) | 399,002 | 554,791 | |
Total assets | 8,461,037 | 8,403,164 | |
Liabilities | |||
HMBS-related borrowings, at fair value | [1] | 5,184,227 | 4,601,556 |
Match funded liabilities (related to VIEs) | 714,246 | 998,618 | |
Other financing liabilities ($646,842 and $508,291 carried at fair value)(amounts related to VIEs of $26,643 and $0) | 719,319 | 593,518 | |
Other secured borrowings, net | 345,425 | 545,850 | |
Senior notes, net | 347,749 | 347,338 | |
Other liabilities ($2,567 and $635 carried at fair value) | 589,327 | 769,410 | |
Total liabilities | 7,900,293 | 7,856,290 | |
Commitments and Contingencies (Notes 19 and 20) | |||
Ocwen Financial Corporation (Ocwen) stockholders’ equity | |||
Common stock, $.01 par value; 200,000,000 shares authorized; 133,912,425 and 131,484,058 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 1,339 | 1,315 | |
Additional paid-in capital | 553,443 | 547,057 | |
Retained earnings (accumulated deficit) | 5,909 | (2,083) | |
Accumulated other comprehensive loss, net of income taxes | (1,135) | (1,249) | |
Total Ocwen stockholders’ equity | 559,556 | 545,040 | |
Non-controlling interest in subsidiaries | 1,188 | 1,834 | |
Total equity | 560,744 | 546,874 | |
Total liabilities and equity | $ 8,461,037 | $ 8,403,164 | |
[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 BALANC_2
UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Mortgage servicing rights, at fair value | $ 999,282 | $ 671,962 | |
Loans held for sale, at fair value | 145,417 | [1] | 214,262 |
Loans held for investment, at fair value | 5,307,560 | 4,715,831 | |
Amounts related to VIEs, assets | 19,954 | 27,359 | |
Other assets, at fair value | 7,826 | 8,900 | |
Other financing liabilities | 719,319 | 593,518 | |
Financing liabilities, at fair value | 646,842 | 508,291 | |
Other liabilities, at fair value | $ 2,567 | $ 635 | |
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) | 133,912,425 | 131,484,058 | |
Common stock, shares outstanding (in shares) | 133,912,425 | 131,484,058 | |
Residential Mortgage-Backed Securitization Trusts [Member] | |||
Mortgage servicing rights, at fair value | $ 200 | ||
Loans held for investment, at fair value | 28,373 | $ 0 | |
Other financing liabilities | $ 26,643 | $ 0 | |
[1] | At September 30, 2018 and 2017, the balances include $(6.5) million and $6.7 million, respectively, of fair value adjustments. |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||||
Revenue | |||||||
Servicing and subservicing fees | $ 213,730 | $ 233,220 | $ 658,095 | $ 761,523 | |||
Gain on loans held for sale, net | 16,942 | 25,777 | 61,135 | 76,976 | |||
Other | 7,606 | 25,645 | 32,886 | 79,307 | |||
Total revenue | 238,278 | 284,642 | 752,116 | 917,806 | |||
Expenses | |||||||
Compensation and benefits | 63,307 | 90,538 | 211,220 | 272,750 | |||
Professional services | 40,662 | 38,417 | 110,821 | 145,651 | |||
MSR valuation adjustments, net | 41,448 | 33,426 | 91,695 | 115,446 | |||
Servicing and origination | 31,758 | 52,246 | 91,452 | 128,061 | |||
Technology and communications | 20,597 | 27,929 | 67,306 | 79,530 | |||
Occupancy and equipment | 11,896 | 15,340 | 37,369 | 49,569 | |||
Other | 7,858 | 15,583 | 19,814 | 39,335 | |||
Total expenses | 217,526 | [1] | 273,479 | 629,677 | [1] | 830,342 | |
Other income (expense) | |||||||
Interest income | 3,963 | 4,099 | 10,018 | 12,101 | |||
Interest expense | (61,288) | (47,281) | (189,601) | (212,471) | |||
Gain (loss) on sale of mortgage servicing rights, net | (733) | 6,543 | 303 | 7,863 | |||
Other, net | (2,967) | (1,077) | (6,872) | 6,384 | |||
Total other expense, net | (61,025) | (37,716) | (186,152) | (186,123) | |||
Loss before income taxes | (40,273) | (26,553) | (63,713) | (98,659) | |||
Income tax expense (benefit) | 845 | (20,418) | 4,541 | (15,465) | |||
Net loss | (41,118) | (6,135) | (68,254) | (83,194) | |||
Net income attributable to non-controlling interests | (29) | (117) | (176) | (289) | |||
Net loss attributable to Ocwen stockholders | $ (41,147) | $ (6,252) | $ (68,430) | $ (83,483) | |||
Loss per share attributable to Ocwen stockholders | |||||||
Basic (in USD per share) | $ (0.31) | $ (0.05) | $ (0.51) | $ (0.66) | |||
Diluted (in USD per share) | $ (0.31) | $ (0.05) | $ (0.51) | $ (0.66) | |||
Weighted average common shares outstanding | |||||||
Basic (in shares) | 133,912,425 | 128,744,152 | 133,632,905 | 125,797,777 | |||
Diluted (in shares) | [2] | 133,912,425 | 128,744,152 | 133,632,905 | 125,797,777 | ||
[1] | Expenses in the Corporate Items and Other segment for the nine months ended September 30, 2018 includes $7.5 million of severance expense attributable to headcount reductions in connection with our strategic initiatives to exit the ACS business and the forward lending correspondent and wholesale channels, as well as our overall efforts to reduce costs. | ||||||
[2] | Stock options were anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock. |
UNAUDITED CONSOLIDATED STATEM_2
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net loss | $ (41,118) | $ (6,135) | $ (68,254) | $ (83,194) | |
Other comprehensive income, net of income taxes: | |||||
Reclassification adjustment for losses on cash flow hedges included in net income | [1] | 36 | 45 | 114 | 157 |
Total other comprehensive income, net of income taxes | 36 | 45 | 114 | 157 | |
Comprehensive loss | (41,082) | (6,090) | (68,140) | (83,037) | |
Comprehensive income attributable to non-controlling interests | (29) | (117) | (176) | (289) | |
Comprehensive loss attributable to Ocwen stockholders | $ (41,111) | $ (6,207) | $ (68,316) | $ (83,326) | |
[1] | These losses are reclassified to Other, net in the unaudited consolidated statements of operations. |
UNAUDITED CONSOLIDATED STATEM_3
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Accumulated Other Comprehensive Income (Loss), Net of Taxes [Member] | Non-controlling Interest in Subsidiaries [Member] |
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 | |||||
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 | |||||
Beginning Balance at Dec. 31, 2017 | $ 546,874 | $ 1,315 | 547,057 | (2,083) | (1,249) | 1,834 |
Beginning Balance (in shares) at Dec. 31, 2017 | 131,484,058 | 131,484,058 | ||||
Net income (loss) | $ (68,254) | (68,430) | 176 | |||
Issuance of common stock | 5,719 | $ 19 | 5,700 | |||
Issuance of common stock (in shares) | 1,875,000 | |||||
Cumulative effect of fair value election - Mortgage servicing rights | 82,043 | 82,043 | ||||
Cumulative effect of adoption of FASB Accounting Standards Update No. 2016-16 | (5,621) | (5,621) | ||||
Capital distribution to non-controlling interest | (822) | (822) | ||||
Equity-based compensation and other | 691 | $ 5 | 686 | |||
Equity-based compensation and other (in shares) | 553,367 | |||||
Other comprehensive income, net of income taxes | 114 | 114 | ||||
Ending Balance at Sep. 30, 2018 | $ 560,744 | $ 1,339 | $ 553,443 | $ 5,909 | $ (1,135) | $ 1,188 |
Ending Balance (in shares) at Sep. 30, 2018 | 133,912,425 | 133,912,425 |
UNAUDITED CONSOLIDATED STATEM_4
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Cash flows from operating activities | |||
Net loss | $ (68,254) | $ (83,194) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
MSR valuation adjustments, net | 91,695 | 115,446 | |
Gain on sale of mortgage servicing rights, net | (303) | (7,863) | |
Provision for bad debts | 40,269 | 57,274 | |
Depreciation | 18,199 | 20,430 | |
Loss on write-off of fixed assets | 0 | 6,834 | |
Amortization of debt issuance costs | 2,261 | 1,979 | |
Equity-based compensation expense | 1,244 | 4,489 | |
Gain on valuation of financing liability | (11,323) | (27,024) | |
Net gain on valuation of mortgage loans held for investment and HMBS-related borrowings | (8,057) | (18,637) | |
Gain on loans held for sale, net | (24,265) | (39,542) | |
Origination and purchase of loans held for sale | (1,234,830) | (3,074,725) | |
Proceeds from sale and collections of loans held for sale | 1,154,526 | 3,067,522 | |
Changes in assets and liabilities: | |||
Decrease in advances and match funded assets | 243,831 | 285,066 | |
Decrease in receivables and other assets, net | 126,829 | 160,169 | |
Decrease in other liabilities | (46,767) | (66,321) | |
Other, net | 6,478 | 3,466 | |
Net cash provided by operating activities | 291,533 | 405,369 | |
Cash flows from investing activities | |||
Origination of loans held for investment | (711,035) | (961,642) | |
Principal payments received on loans held for investment | 296,800 | 311,560 | |
Purchase of mortgage servicing rights | (2,729) | (1,658) | |
Proceeds from sale of mortgage servicing rights | 6,138 | 2,263 | |
Proceeds from sale of advances | 7,882 | 6,119 | |
Issuance of automotive dealer financing notes | (19,642) | (129,471) | |
Collections of automotive dealer financing notes | 52,598 | 119,389 | |
Additions to premises and equipment | (7,326) | (7,365) | |
Other, net | 5,446 | 1,480 | |
Net cash used in investing activities | (371,868) | (659,325) | |
Cash flows from financing activities | |||
Repayment of match funded liabilities, net | (284,372) | (252,981) | |
Proceeds from mortgage loan warehouse facilities and other secured borrowings | 2,211,606 | 5,810,591 | |
Repayments of mortgage loan warehouse facilities and other secured borrowings | (2,585,286) | (6,016,169) | |
Proceeds from sale of mortgage servicing rights accounted for as a financing | 279,586 | 54,601 | |
Proceeds from sale of reverse mortgages (HECM loans) accounted for as a financing (HMBS-related borrowings) | 728,745 | 981,730 | |
Repayment of HMBS-related borrowings | (290,338) | (287,908) | |
Issuance of common stock | 0 | 13,913 | |
Capital distribution to non-controlling interest | (822) | 0 | |
Other, net | (991) | (2,321) | |
Net cash provided by financing activities | 58,128 | 301,456 | |
Net increase (decrease) in cash and restricted cash | (22,207) | 47,500 | |
Cash and restricted cash at beginning of year | 302,560 | 302,398 | |
Cash and restricted cash at end of period | 280,353 | 349,898 | |
Supplemental non-cash investing and financing activities | |||
Loans held for investment, at fair value | 28,373 | 0 | |
Other financing liabilities | 26,643 | 0 | |
Issuance of common stock in connection with litigation settlement | [1] | $ 5,719 | $ 0 |
[1] | In January 2018, Ocwen issued 1,875,000 shares of common stock in connection with a previously approved securities litigation settlement. |
UNAUDITED CONSOLIDATED STATEM_5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Cash Flows [Abstract] | ||||
Cash | $ 254,843 | $ 259,655 | $ 299,888 | |
Restricted cash and equivalents included in Other assets: | ||||
Debt service accounts | 22,454 | 33,726 | 38,753 | |
Other restricted cash | 3,056 | 9,179 | 11,257 | |
Total cash and restricted cash reported in the statements of cash flows | $ 280,353 | $ 302,560 | $ 349,898 | $ 302,398 |
Organization, Business Environm
Organization, Business Environment and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
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 servicing activities on behalf of other servicers (subservicing), the largest being New Residential Investment Corp. (NRZ), and investors (primary and master servicing), 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 a subservicer or primary servicer, we may be required to make advances for certain property tax and insurance premium payments, default and property maintenance payments and principal and interest payments on behalf of delinquent borrowers to mortgage loan investors before recovering them from borrowers. Most, but not all, of our subservicing agreements provide for us to be reimbursed for any such advances by the owner of the servicing rights. Advances made by us as primary servicer are recovered from the borrower or the mortgage loan investor. 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, 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 mortgages. The GSEs or Ginnie Mae guarantee these mortgage securitizations. We originate Home Equity Conversion Mortgages (HECM, or reverse mortgages) that are insured by the FHA and are an approved issuer of Home Equity Conversion Mortgage-Backed Securities (HMBS) that are guaranteed by Ginnie Mae. We had a total of approximately 6,400 employees at September 30, 2018 of which approximately 4,300 were located in India and approximately 500 were based in the Philippines. Our operations in India and the Philippines primarily provide internal support services, principally to our loan servicing business and our corporate functions. Of our foreign-based employees, more than 80% were engaged in supporting our loan servicing operations as of September 30, 2018 . 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 operate our business successfully. Losses in prior years have significantly eroded stockholders’ equity and weakened our financial condition. In order to drive stronger financial performance, we are focusing our operations on mortgage servicing, on forward lending, primarily servicing portfolio recapture, and on our reverse mortgage business. We have significantly strengthened our cash position during 2018 through the receipt of a lump-sum fee payment of $279.6 million from NRZ in January 2018 in connection with our rights to mortgage servicing rights agreements. See Note 8 — Rights to MSRs for further information. On October 4, 2018, we acquired PHH Corporation (PHH). We believe this acquisition will enable the following key strategic and financial benefits: • Accelerate our transition to the Black Knight Financial Services, Inc. (Black Knight) LoanSphere MSP® servicing platform (Black Knight MSP); • Reduce fixed costs, on a combined basis, through reductions in corporate overhead and other costs; • Improve economies of scale; and, • Provide a foundation to enable the combined servicing platform to resume new business and growth activities to offset portfolio runoff. The approval of the New York Department of Financial Services (NY DFS) for the acquisition imposed certain post-closing requirements on Ocwen, including certain reporting obligations and certain record retention and other requirements relating to the planned transfer of New York loans onto the Black Knight MSP servicing platform as well as certain requirements with respect to the management of PHH Mortgage Corporation, a licensed subsidiary of PHH. In addition, the NY DFS modified its restriction on Ocwen’s ability to acquire MSRs to allow certain acquisitions of MSRs that are boarded onto the Black Knight MSP servicing platform subject to annual portfolio growth limitations until such time as the NY DFS determines that all loans have been successfully migrated to the Black Knight MSP servicing platform and that Ocwen has developed a satisfactory infrastructure to board sizeable portfolios of MSRs. See Note 18 – Regulatory Requirements and Note 21 – Subsequent Events for additional information regarding the acquisition of PHH. Now that we have consummated our acquisition of PHH, if we can execute on five key initiatives, we believe we will drive stronger financial performance. First, we must successfully execute on the integration of PHH’s business with ours, including a smooth transition onto the Black Knight MSP servicing platform. Second, we must re-engineer our cost structure to go beyond eliminating redundant costs through the integration process. Third, we must fulfill our regulatory commitments and resolve our remaining legal and regulatory matters on satisfactory terms. Fourth, we must replenish our servicing portfolio through expanding our lending business and permissible MSR acquisitions that are prudent and well-executed with appropriate financial return targets. Finally, we must ensure that we continue to manage our balance sheet to provide a solid platform for executing on our growth and other initiatives. Our business, operating results and financial condition have been significantly impacted in recent periods by regulatory actions against us and by significant litigation matters. Should the number or scope of regulatory or legal actions against us increase or expand or should we be unable to reach reasonable resolutions in existing regulatory and legal matters, our business, reputation, financial condition, liquidity and results of operations could be materially and adversely affected, even if we are successful in our ongoing efforts to drive stronger financial performance. See Note 18 – Regulatory Requirements and Note 20 – Contingencies for further information. Regarding the current maturities of our borrowings, as of September 30, 2018 we have approximately $520.4 million of debt outstanding under facilities coming due in the next 12 months. 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. If a lender were to allege an event of default and we are unable to avoid, remedy or secure a waiver of such alleged default, we could be subject to adverse actions by our lenders that 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. To the extent these requirements are not met or waived, the applicable agency may, at its option, utilize a variety of remedies including requirements to provide certain information or take actions at the direction of the applicable agency, 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. See Note 11 – Borrowings , Note 18 – Regulatory Requirements and Note 20 – Contingencies for further 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, 2018 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2018 . The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 . 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, income taxes, the provision for potential losses that may arise from litigation proceedings, 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 Within the expenses section of the unaudited statement of operations for the three and nine months ended September 30, 2017 , we reclassified impairment charges and fair value gains and losses on mortgage servicing rights (MSRs), both previously included in the Servicing and origination line item, and Amortization of MSRs to a new line item titled MSR valuation adjustments, net. As a result of our adoption on January 1, 2018 of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash , debt service accounts and other restricted cash which are included in Other assets on the consolidated balance sheets have been classified as Cash and restricted cash in our consolidated statements of cash flows. Our revision of the unaudited consolidated statement of cash flows for the nine months ended September 30, 2017 to conform to the new standard resulted in an increase in net cash provided by operating activities of $4.2 million (Decrease in receivables and other assets, net line item is higher as revised). Certain amounts in the unaudited consolidated statement of cash flows for the nine months ended September 30, 2017 have been reclassified to conform to the current year presentation as follows: • Within the operating activities section, we reclassified Amortization of MSRs, Loss on valuation of MSRs, at fair value, and Impairment of MSRs to a new line item (MSR valuation adjustments, net). In addition, we reclassified Realized and unrealized gains on derivative financial instruments to Other, net. • Within the financing activities section, we reclassified Payment of debt issuance costs to Other, net. These reclassifications had no impact on our consolidated cash flows from operating, investing or financing activities. Recently Adopted Accounting Standards Revenue from Contracts with Customers (Accounting Standards Update (ASU) 2014-09) This ASU clarifies the principles for recognizing revenue and creates a common revenue standard. Under this ASU, an entity will 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 will recognize revenue through a five-step process. The guidance in this standard does not apply to financial instruments and other contractual rights or obligations within the scope of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 860, Transfers and Servicing , among other ASC topics . As a result, our adoption of this standard on a modified retrospective basis on January 1, 2018 did not have a material impact on our consolidated financial statements. Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) This ASU provides users with more useful information regarding the recognition, measurement, presentation, and disclosure of financial instruments and also improves the accounting model to better meet the requirements of today’s complex economic environment. Most changes in this ASU require the same information, but some changes revise the geography of that information on the financial statements. Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15) This ASU clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows under FASB ASC Topic 230, Statement of Cash Flows (ASC 230). Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16) This ASU requires an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. Previously, recognition of current and deferred income taxes for an intra-entity transfer was prohibited until the asset had been sold to an outside party. We adopted this standard on a modified retrospective basis on January 1, 2018 by recording a cumulative-effect reduction of $5.6 million to retained earnings. Statement of Cash Flows: Restricted Cash (ASU 2016-18) This ASU clarifies how changes in restricted cash are classified and presented in the statement of cash flows under ASC 230. This standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. The amendments in this update have been applied using a retrospective transition method to each period presented. We have revised the unaudited consolidated statement of cash flows for the nine months ended September 30, 2017 to conform to the new standard. Business Combinations: Clarifying the Definition of a Business (ASU 2017-01) This ASU clarifies 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. Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. Compensation: Stock Compensation (ASU 2017-09) This ASU reduces 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. Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. Financial Instruments: Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10) (ASU 2018-03) This ASU provides clarification of areas in ASU 2016-01 by improving the measurement and reporting of certain financial assets and liabilities. Our adoption of this standard on July 1, 2018 did not have a material impact on our consolidated financial statements. Income Taxes: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (ASU 2018-05) This ASU adds various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act (Tax Act) in the period of enactment. We adopted the now codified guidance in SAB 118 as of December 31, 2017 and continue to rely on the guidance in these interim financial statements. Accounting Standards Issued but Not Yet Adopted Leases (ASU 2016-02) This ASU will require a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months, regardless of whether the lease is classified as a finance or operating lease. Additional disclosures of the amount, timing and uncertainty of cash flows arising from leases will be required. In July 2018, the FASB amended this guidance by issuing ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842): Targeted Improvements which provides clarification and further guidance on areas identified as potential implementation issues, as well as providing for an additional optional transition method to allow initial application of the new leasing guidance at the adoption date and recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. These standards will be effective for us on January 1, 2019, with early application permitted. At adoption, we expect to apply the new transition method provided for in ASU 2018-11. While we are continuing to evaluate the effects that this guidance will have on our financial statements, we have determined it will result in the recognition of certain operating leases as right-of-use assets and lease liabilities in the consolidated balance sheet, but we do not anticipate that the impact will be material. Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13) This ASU will require timelier recording of credit losses on loans and other financial instruments. This standard aligns the accounting with the economics of lending by requiring banks and other lending institutions to immediately record the full amount of credit losses that are expected in their loan portfolios. The new guidance requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This standard requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. Additionally, the new guidance amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. This standard will be effective for us on January 1, 2020, with early application permitted. We are currently evaluating the effect of adopting this standard. Receivables: Nonrefundable Fees and Other Costs (ASU 2017-08) This ASU amends 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. 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. Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02) This ASU provides entities with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. 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. Codification Improvements (ASU 2018-09) This ASU amends multiple codification Topics. The transition and effective date guidance is based on the facts and circumstances of each amendment. While some of the amendments in this ASU do not require transition guidance and were effective upon issuance of this ASU, many of the amendments in this ASU have transition guidance with an effective date of January 1, 2019. We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) This ASU modifies the disclosure requirements on fair value measurements in FASB ASC Topic 820, Fair Value Measurement. The main provisions in this update include removal of the following disclosure requirements from this ASC: 1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, 2) the policy for timing of transfers between levels and 3) the valuation processes for Level 3 fair value measurements. This standard adds disclosure requirements to report the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and for certain unobservable inputs an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. This standard will be effective for us on January 1, 2020, with early application permitted on any removed or modified disclosures and to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption, and to allow a delayed adoption of the additional disclosures until the effective date. We are currently evaluating the effect of adopting this standard. Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15) This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this ASU. The amendments in this ASU require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this ASU require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments in this ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of operations as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. This standard will be effective for us on January 1, 2020, with early adoption permitted, including adoption in any interim period. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the effect of adopting this standard. SEC Simplifies and Updates Disclosure Requirements (US 2018-21) In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , to eliminate, modify, or integrate into other SEC requirements certain disclosure rules. The amendments eliminate the following: • Redundant and duplicative requirements, which require substantially similar disclosures as GAAP, IFRS, or other SEC disclosure requirements; • Overlapping requirements, which are related to, but not the same as GAAP, IFRS, or other SEC disclosure requirements - including the elimination of the ratio of earnings to fixed charges; • Outdated requirements, which have become obsolete as a result of the passage of time or changes in the regulatory, business, or technological environment; and • Superseded requirements, which are inconsistent with recent legislation, more recently updated SEC disclosure requirements, or more recently updated GAAP. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule will become effective on November 5, 2018. We are currently evaluating the impact on our consolidated financial statements. |
Securitizations and Variable In
Securitizations and Variable Interest Entities | 9 Months Ended |
Sep. 30, 2018 | |
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 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. From time to time, we may acquire beneficial interests issued in connection with mortgage-backed securitizations where we may also be the master and or primary servicer. These beneficial interests consist of subordinate and residual interests acquired from third-parties in market transactions. We consolidate the VIE when we conclude we are the primary beneficiary. Securitizations of Residential Mortgage Loans We securitize forward and reverse residential mortgage loans involving the GSEs and loans insured by the FHA or VA through Ginnie Mae. To the extent we retain the right to service these loans, we 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. Transfers of Forward Loans We sell or securitize forward loans that we originate or purchased from third parties, generally in the form of mortgage-backed securities guaranteed by the GSEs or Ginnie Mae. Securitization typically occurs within 30 days of loan closing or purchase. 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. 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: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Proceeds received from securitizations $ 282,507 $ 687,502 $ 998,204 $ 2,711,651 Servicing fees collected 9,808 10,300 30,233 30,250 Purchases of previously transferred assets, net of claims reimbursed (1,507 ) (1,234 ) (4,336 ) (3,958 ) $ 290,808 $ 696,568 $ 1,024,101 $ 2,737,943 In connection with these transfers, we retained MSRs of $1.4 million and $5.9 million , and $3.6 million and $18.6 million , during the three and nine months ended September 30, 2018 and 2017 , respectively, which are reported in Gain on loans held for sale, net in the unaudited consolidated statements of operations. See Note 4 – Loans Held for Sale for additional information regarding gains or losses on the transfer of loans held for sale. Certain obligations arise from the agreements associated with our transfers of loans. Under these agreements, we may be obligated to repurchase the loans, or otherwise indemnify or reimburse the investor or insurer for losses incurred due to material breach of contractual representations and warranties. The following table presents the carrying amounts of our assets that relate to our continuing involvement with forward loans that we have transferred with servicing rights retained as well as our maximum exposure to loss including the unpaid principal balance (UPB) of the transferred loans: September 30, 2018 December 31, 2017 Carrying value of assets MSRs, at fair value $ 111,586 $ 227 MSRs, at amortized cost — 97,832 Advances and match funded advances 61,500 57,636 UPB of loans transferred 11,118,533 12,077,635 Maximum exposure to loss $ 11,291,619 $ 12,233,330 At September 30, 2018 and December 31, 2017 , 7.4% and 8.9% , respectively, of the transferred residential loans that we service were 60 days or more past due. Transfers of Reverse Mortgages We pool HECM 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, at fair value, on our unaudited consolidated balance sheets. 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. At September 30, 2018 and December 31, 2017 , Loans held for investment included $78.1 million and $83.8 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. Financings of Advances Match funded advances 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 transfers to these SPEs in accordance with the terms of our advance financing facility agreements. Debt service accounts require us to remit collections on pledged advances to the trustee within two days of receipt. Collected funds that are not applied to reduce the related match funded debt until the payment dates specified in the indenture are classified as debt service accounts within Other assets in our consolidated balance sheets. The balances also include amounts that have been set aside from the proceeds of our match funded advance facilities to provide for possible shortfalls in the funds available to pay certain expenses and interest, as well as amounts set aside as required by our warehouse facilities as security for our obligations under the related agreements. The funds are held in interest earning accounts and those amounts related to match funded facilities are held in the name of the SPE created in connection with the facility. 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. Mortgage-Backed Securitizations We have concluded we are the primary beneficiary of certain residential mortgage-backed securitizations as a result of beneficial interests consisting of residual securities, which expose us to the expected losses and residual returns of the trust, and our role as master servicer, where we have the ability to direct the activities that most significantly impact the performance of the trust. The table below presents the carrying value and classification of the assets and liabilities of two consolidated mortgage-backed securitization trusts included in our unaudited consolidated balance sheet at September 30, 2018 as a result of residual securities issued by the trust that we acquired during the third quarter of 2018. Loans held for investment, at fair value - Restricted for securitization investors $ 28,373 Financing liability - Owed to securitization investors, at fair value 26,643 Upon consolidation of the securitization trusts, we elected to apply the measurement alternative to ASC Topic 820, Fair Value Measurement for collateralized financing entities. The measurement alternative requires a reporting entity to use the more observable of the fair value of the financial assets or the financial liabilities to measure both the financial assets and the financial liabilities of the entity. We determined that the fair value of the loans held by the trusts is more observable than the fair value of the debt certificates issued by the trusts. Through the application of the measurement alternative, the fair value of the financial liabilities of the trusts are measured as the difference between the fair value of the financial assets and the fair value of our investment in the residual securities of the trusts. Holders of the debt issued by these entities have recourse only to the assets of the SPE for satisfaction of the debt and have no recourse against the assets of Ocwen. Similarly, the general creditors of Ocwen have no claim on the assets of the trusts. Our exposure to loss as a result of our continuing involvement is limited to the carrying values of our investments in the residual securities of the trusts, our MSRs and related advances. At September 30, 2018 , MSRs of $0.2 million and our $1.7 million investment in the residual securities of the trusts were eliminated in consolidation. Advances outstanding at September 30, 2018 were $1.2 million . Financings of Automotive Dealer Financing Notes Match funded automotive dealer financing notes resulted from our transfers of short-term, inventory-secured loans to car dealers to an SPE in exchange for cash. We consolidated this SPE because we determined that Ocwen is the primary beneficiary of the SPE. In January 2018, we decided to exit the independent used car dealer floor plan lending business conducted through Automotive Capital Services, Inc. (ACS). We made transfers to the SPE in accordance with the terms of the automotive capital asset receivables financing facility agreement, which we terminated in January 2018 in connection with our decision to exit the business. We classified the transferred loans on our consolidated balance sheets as a component of Match funded assets and the related liabilities as Match funded liabilities. Holders of the debt issued by the SPE had recourse only to the assets of the SPE for satisfaction of the debt. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2018 | |
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: September 30, 2018 December 31, 2017 Level Carrying Value Fair Value Carrying Value Fair Value Financial assets Loans held for sale Loans held for sale, at fair value (a) 2 $ 145,417 $ 145,417 $ 214,262 $ 214,262 Loans held for sale, at lower of cost or fair value (b) 3 72,019 72,019 24,096 24,096 Total Loans held for sale 217,436 217,436 238,358 238,358 September 30, 2018 December 31, 2017 Level Carrying Value Fair Value Carrying Value Fair Value Loans held for investment, at fair value Loans held for investment - Reverse mortgages (a) 3 5,279,187 5,279,187 4,715,831 4,715,831 Loans held for investment - Restricted for securitization investors (a) 3 28,373 28,373 — — Total loans held for investment 5,307,560 5,307,560 4,715,831 4,715,831 Advances (including match funded) (c) 3 1,101,104 1,101,104 1,356,393 1,356,393 Automotive dealer financing notes (including match funded) (c) 3 — — 32,757 32,590 Receivables, net (c) 3 155,937 155,937 199,529 199,529 Mortgage-backed securities, at fair value (a) 3 1,670 1,670 1,592 1,592 U.S. Treasury notes (a) 1 1,059 1,059 1,567 1,567 Financial liabilities: Match funded liabilities (c) 3 $ 714,246 $ 710,303 $ 998,618 $ 992,698 Financing liabilities: HMBS-related borrowings, at fair value (a) 3 5,184,227 5,184,227 4,601,556 4,601,556 Financing liability - MSRs pledged, at fair value (a) 3 620,199 620,199 508,291 508,291 Financing liability - Owed to securitization investors, at fair value (a) 3 26,643 26,643 — — Other (c) 3 72,477 57,984 85,227 65,202 Total Financing liabilities $ 5,903,546 $ 5,889,053 $ 5,195,074 $ 5,175,049 Other secured borrowings: Senior secured term loan (c) (d) 2 230,295 236,866 290,068 299,741 Other (c) 3 115,130 115,130 255,782 255,782 Total Other secured borrowings 345,425 351,996 545,850 555,523 Senior notes: Senior unsecured notes (c) (d) 2 3,122 3,090 3,122 2,872 Senior secured notes (c) (d) 2 344,627 352,071 344,216 355,550 Total Senior notes 347,749 355,161 347,338 358,422 Derivative financial instrument assets (liabilities), at fair value (a) Interest rate lock commitments 2 2,816 2,816 3,283 3,283 Forward mortgage-backed securities 1 (1,873 ) (1,873 ) (545 ) (545 ) Interest rate caps 3 1,211 1,211 2,056 2,056 Mortgage servicing rights Mortgage servicing rights, at fair value (a) 3 $ 999,282 $ 999,282 $ 671,962 $ 671,962 Mortgage servicing rights, at amortized cost (c) (e) 3 — — 336,882 418,745 Total Mortgage servicing rights $ 999,282 $ 999,282 $ 1,008,844 $ 1,090,707 (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) Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. The balance at December 31, 2017 includes the impaired government-insured stratum of amortization method MSRs, which was measured at fair value on a non-recurring basis and reported net of the valuation allowance. At December 31, 2017, the carrying value of this stratum was $158.0 million before applying the valuation allowance of $24.8 million . The following tables present a reconciliation of the changes in fair value of Level 3 assets and liabilities that we measure at fair value on a recurring basis: Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Loans Held for Inv. - Restricted for Securitiza- tion Investors Financing Liability - Owed to Securit - ization Investors Mortgage-Backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Three months ended September 30, 2018 Beginning balance $ 5,143,758 $ (5,040,983 ) $ — $ — $ 1,732 $ (672,619 ) $ 1,657 $ 1,043,995 Purchases, issuances, sales and settlements Purchases — — — — — — — 2,924 Issuances 223,563 (229,169 ) — — — — — 1,930 Consolidation of mortgage-backed securitization trusts — — 28,373 (26,643 ) — — — — Sales — — — — — — — (8,119 ) Settlements (110,584 ) 108,790 — — — 49,620 — — Transfers (to) from: Loans held for sale, at fair value (253 ) — — — — — — — Other assets (170 ) — — — — — — — Receivables, net (20 ) — — — — — — — 112,536 (120,379 ) 28,373 (26,643 ) — 49,620 — (3,265 ) Total realized and unrealized gains (losses) included in earnings Change in fair value 22,893 (22,865 ) — — (62 ) 2,681 (446 ) (41,448 ) Calls and other — — — — — 119 — — 22,893 (22,865 ) — — (62 ) 2,800 (446 ) (41,448 ) Transfers in and / or out of Level 3 — — — — — — — — Ending balance $ 5,279,187 $ (5,184,227 ) $ 28,373 $ (26,643 ) $ 1,670 $ (620,199 ) $ 1,211 $ 999,282 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-Backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Three months ended September 30, 2017 Beginning balance $ 4,223,776 $ (4,061,626 ) $ 8,986 $ (441,007 ) $ 1,937 $ 625,650 Purchases, issuances, sales and settlements Purchases — — — — 655 — Issuances 263,169 (317,277 ) — (54,601 ) — (715 ) Sales — — — — — (311 ) Settlements (118,991 ) 111,677 — 19,770 (403 ) — Transfers (to) from: Other assets 88 — — — — — 144,266 (205,600 ) — (34,831 ) 252 (1,026 ) Total realized and unrealized gains (losses) included in earnings Change in fair value 91,718 (91,051 ) 341 27,024 (350 ) (26,477 ) Calls and other — — — 971 — — 91,718 (91,051 ) 341 27,995 (350 ) (26,477 ) Transfers in and / or out of Level 3 — — — — — — Ending balance $ 4,459,760 $ (4,358,277 ) $ 9,327 $ (447,843 ) $ 1,839 $ 598,147 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Loans Held for Inv. - Restricted for Securitiza- Financing Liability - Owed to Securiti- Mortgage-backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Nine months ended September 30, 2018 Beginning balance $ 4,715,831 $ (4,601,556 ) $ — $ — $ 1,592 $ (508,291 ) $ 2,056 $ 671,962 Purchases, issuances, sales and settlements Purchases — — — — — — 95 8,809 Issuances 711,035 (728,745 ) — — — (279,586 ) — (445 ) Consolidation of mortgage-backed securitization trusts — — 28,373 (26,643 ) — — — — Sales — — — — — — — (8,274 ) Settlements (296,800 ) 290,338 — — — 154,129 (371 ) — Transfers (to) from: MSRs carried at amortized cost, net of valuation allowance — — — — — — — 418,925 Loans held for sale, at fair value (694 ) — — — — — — — Other assets (307 ) — — — — — — — Receivables, net (92 ) — — — — — — — 413,142 (438,407 ) 28,373 (26,643 ) — (125,457 ) (276 ) 419,015 Total realized and unrealized gains (losses) included in earnings Included in earnings: Change in fair value 150,214 (144,264 ) — — 78 11,323 (569 ) (91,695 ) Calls and other — — — — — 2,226 — — 150,214 (144,264 ) — — 78 13,549 (569 ) (91,695 ) Transfers in and / or out of Level 3 — — — — — — — — Ending Balance $ 5,279,187 $ (5,184,227 ) $ 28,373 $ (26,643 ) $ 1,670 $ (620,199 ) $ 1,211 $ 999,282 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Nine months ended September 30, 2017 Beginning balance $ 3,565,716 $ (3,433,781 ) $ 8,342 $ (477,707 ) $ 1,836 $ 679,256 Purchases, issuances, sales and settlements Purchases — — — — 655 — Issuances 961,642 (981,730 ) — (54,601 ) — (2,131 ) Sales — — — — — (541 ) Settlements (311,560 ) 287,908 — 52,963 (445 ) — Transfers (to) from: Other assets (1,335 ) — — — — — 648,747 (693,822 ) — (1,638 ) 210 (2,672 ) Total realized and unrealized gains (losses) included in earnings Change in fair value 245,297 (230,674 ) 985 27,024 (207 ) (78,437 ) Calls and other — — — 4,478 — — 245,297 (230,674 ) 985 31,502 (207 ) (78,437 ) Transfers in and / or out of Level 3 — — — — — — Ending balance $ 4,459,760 $ (4,358,277 ) $ 9,327 $ (447,843 ) $ 1,839 $ 598,147 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 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 loans for which we have no agreement to sell on the expected future cash flows discounted at a rate commensurate with the risk of the estimated cash flows. Loans Held for Investment Loans Held for Investment - Reverse Mortgages We measure these loans at fair value based 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. Significant valuation assumptions September 30, December 31, 2017 Life in years Range 2.8 to 7.6 4.4 to 8.1 Weighted average 5.8 6.4 Conditional repayment rate Range 6.3% to 41.3% 5.4% to 51.9% Weighted average 14.7 % 13.1 % Discount rate 3.7 % 3.2 % 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. Loans Held for Investment – Restricted for securitization investors We have elected to measure loans held by consolidated mortgage-backed securitization trusts at fair value. The loans are secured by first liens on single family residential properties. Fair value is based on proprietary cash flow modeling processes for a third-party broker/dealer and a third-party valuation expert. Significant assumptions used in the valuation include projected monthly payments, projected prepayments and defaults, property liquidation values and discount rates. 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 understand 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 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 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. Significant valuation assumptions September 30, 2018 December 31, 2017 Agency (1) Non-Agency Agency Non-Agency Weighted average prepayment speed 8.1 % 15.7 % 8.1 % 16.6 % Weighted average delinquency rate 9.9 % 27.6 % 1.0 % 28.5 % Advance financing cost 5-year swap 5-yr swap plus 2.75% 5-year swap 5-yr swap plus 2.75% Interest rate for computing float earnings 5-year swap 5-yr swap minus 0.50% 5-year swap 5-yr swap minus 0.50% Weighted average discount rate 9.0 % 12.7 % 9.0 % 13.0 % Weighted average cost to service (in dollars) $ 105 $ 301 $ 64 $ 305 (1) Valuation assumptions for Agency MSRs at September 30, 2018 include assumptions for MSRs we carried at amortized cost at December 31, 2017. Effective January 1, 2018, we elected fair value accounting for our remaining MSRs that we had previously carried at amortized cost. Amortized Cost MSRs Prior to our fair value election on January 1, 2018 for our remaining portfolio of MSRs carried at amortized cost, we estimated the fair value using a process that involved 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 disclosed actual Ocwen sale prices for orderly transactions where available in lieu of third-party valuations. Significant valuation assumptions December 31, 2017 Weighted average prepayment speed 8.8 % Weighted average delinquency rate 10.9 % Advance financing cost 5-year swap Interest rate for computing float earnings 5-year swap Weighted average discount rate 9.2 % Weighted average cost to service (in dollars) $ 108 We performed an impairment analysis based on the difference between the carrying amount and fair value after grouping the underlying loans into the applicable strata, which we defined as conventional and government-insured. Advances We value advances at their net realizable value, which generally approximates fair value, because advances have no stated maturity, are generally realized within a relatively short period of time and do not bear interest. Receivables The carrying value of receivables generally approximates fair value because of the relatively short period of time between their origination and realization. Mortgage-Backed Securities (MBS) Our subordinate and residual securities are not actively traded, and therefore, we estimate the fair value of these securities using a process based upon the use of an independent third-party valuation expert. Where possible, we consider observable trading activity in the valuation of our securities. 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. U.S. Treasury Notes We classify U.S. Treasury notes as trading securities and account for them at fair value on a recurring basis. We base the fair value on quoted prices in active markets to which we have access. Changes in the fair value of our investment in U.S. Treasury notes are recognized in Other, net in the unaudited consolidated statements of operations. Match Funded Liabilities For match funded liabilities that bear interest at a rate that is adjusted regularly based on a market index, the carrying value approximates fair value. For match funded liabilities that bear interest at a fixed rate, we determine fair value by discounting the future principal and interest repayments at a market rate commensurate with the risk of the estimated cash flows. We estimate principal repayments of match funded liabilities during the amortization period based on our historical advance collection rates and taking into consideration any plans to refinance the notes. Financing Liabilities HMBS-Related Borrowings We have elected to measure these borrowings at fair value. These borrowings are not actively traded, and therefore, quoted market prices are not available. We determine fair value by discounting the projected recovery of principal, interest and advances 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. 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. Significant valuation assumptions September 30, December 31, 2017 Life in years Range 2.8 to 7.6 4.4 to 8.1 Weighted average 5.8 6.4 Conditional repayment rate Range 6.3% to 41.3% 5.4% to 51.9% Weighted average 14.7 % 13.1 % Discount rate 3.7 % 3.1 % Significant increases or decreases in any of these assumptions in isolation would result in a significantly higher or lower fair value. MSRs Pledged (Rights to MSRs) 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. Because we have elected fair value for our portfolio of non-Agency MSRs, fair value changes in the Financing Liability - MSRs Pledged are partially offset by changes in the fair value of the related MSRs. See Note 8 — Rights to MSRs for additional information. Significant valuation assumptions September 30, 2018 December 31, 2017 Weighted average prepayment speed 16.1 % 17.0 % Weighted average delinquency rate 28.1 % 28.9 % Advance financing cost 5-yr swap plus 2.75% 5-year swap plus 2.75% Interest rate for computing float earnings 5-yr swap minus 0.50% 5-year swap minus 0.50% Weighted average discount rate 13.7 % 13.7 % Weighted average cost to service (in dollars) $ 307 $ 311 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. Financing Liability – Owed to Securitization Investors Consists of securitization debt certificates due to third parties that represent beneficial ownership interests in mortgage-backed securitization trusts that we include in our consolidated financial statements. We determine fair value using the measurement alternative to ASC Topic 820, Fair Value Measurement as disclosed in Note 2 – Securitizations and Variable Interest Entities . In accordance with the measurement alternative, the fair value of the consolidated securitization debt certificates is measured as the fair value of the loans held by the trust less the fair value of the beneficial interests held by us in the form of residual securities. 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 Senior Secured Term Loan (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 one-month or three-month Eurodollar rate (1ML or 3 ML, respectively) 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, 2018 | |
Receivables [Abstract] | |
Loans Held for Sale | Note 4 – Loans Held for Sale Loans Held for Sale - Fair Value Nine Months Ended September 30, 2018 2017 Beginning balance $ 214,262 $ 284,632 Originations and purchases 671,503 2,204,028 Proceeds from sales (728,531 ) (2,310,294 ) Principal collections (14,201 ) (3,684 ) Transfers from (to): Loans held for investment, at fair value 694 — Loans held for sale - Lower of cost or fair value (11,564 ) — Receivables, net (1,165 ) — Real estate owned (Other assets) (2,240 ) — Gain on sale of loans 25,525 22,131 Increase (decrease) in fair value of loans (12,791 ) 1,836 Other 3,925 1,789 Ending balance (1) $ 145,417 $ 200,438 (1) At September 30, 2018 and 2017 , the balances include $(6.5) million and $6.7 million , respectively, of fair value adjustments. At September 30, 2018 , loans held for sale, at fair value with a UPB of $76.3 million were pledged as collateral to warehouse lines of credit in our Lending segment. Loans Held for Sale - Lower of Cost or Fair Value Nine Months Ended September 30, 2018 2017 Beginning balance $ 24,096 $ 29,374 Purchases 563,327 870,697 Proceeds from sales (400,693 ) (746,999 ) Principal collections (11,101 ) (6,545 ) Transfers from (to): Receivables, net (118,762 ) (137,807 ) Real estate owned (Other assets) (1,681 ) (711 ) Loans held for sale - Fair value 11,564 — Gain on sale of loans 2,180 8,332 (Increase) decrease in valuation allowance (3,144 ) 1,566 Other 6,233 5,317 Ending balance (1) $ 72,019 $ 23,224 (1) At September 30, 2018 and 2017 , the balances include $53.0 million and $17.6 million , respectively, of loans that we repurchased from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines. We may repurchase loans that have been modified, to facilitate loss reduction strategies, or as otherwise obligated as a Ginnie Mae servicer. Repurchased loans may be modified or otherwise remediated through loss mitigation activities, may be sold to a third party, or are reclassified to receivables. Valuation Allowance - Loans Held for Sale at Lower of Cost or Fair Value Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ 7,535 $ 6,491 $ 7,318 $ 10,064 Provision 2,755 906 3,036 1,761 Transfer from Liability for indemnification obligations (Other liabilities) 554 1,529 1,551 2,416 Sales of loans (382 ) (426 ) (1,464 ) (6,071 ) Other — (2 ) 21 328 Ending balance $ 10,462 $ 8,498 $ 10,462 $ 8,498 Gain on Loans Held for Sale, Net Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Gain on sales of loans, net MSRs retained on transfers of forward loans $ 1,427 $ 3,572 $ 5,880 $ 18,604 Fair value gains related to transfers of reverse mortgage loans, net 9,421 15,747 36,870 37,434 Gain on sale of repurchased Ginnie Mae loans 1,222 4,577 2,179 8,332 Other, net 4,459 6,730 24,028 19,635 16,529 30,626 68,957 84,005 Change in fair value of IRLCs 26 (178 ) 137 (1,605 ) Change in fair value of loans held for sale 365 (2,078 ) (9,781 ) 3,735 Gain (loss) on economic hedge instruments 84 (2,420 ) 2,082 (8,604 ) Other (62 ) (173 ) (260 ) (555 ) $ 16,942 $ 25,777 $ 61,135 $ 76,976 |
Advances
Advances | 9 Months Ended |
Sep. 30, 2018 | |
Advances [Abstract] | |
Advances | Note 5 – Advances September 30, 2018 December 31, 2017 Principal and interest $ 16,385 $ 20,207 Taxes and insurance 105,633 144,454 Foreclosures, bankruptcy and other 59,759 63,597 181,777 228,258 Allowance for losses (15,753 ) (16,465 ) $ 166,024 $ 211,793 Advances at September 30, 2018 and December 31, 2017 include $8.2 million and $18.1 million , respectively, of advances relating to sales of loans that did not qualify for sale accounting. The following table summarizes the activity in net advances: Nine Months Ended September 30, 2018 2017 Beginning balance $ 211,793 $ 257,882 Sales of advances (4,777 ) (399 ) Collections of advances, charge-offs and other, net (41,704 ) (63,320 ) Decrease in allowance for losses 712 3,790 Ending balance $ 166,024 $ 197,953 Allowance for Losses Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ 16,485 $ 20,328 $ 16,465 $ 37,952 Provision 2,696 13,756 6,197 17,054 Net (charge-offs) recoveries and other (3,428 ) 78 (6,909 ) (20,844 ) Ending balance $ 15,753 $ 34,162 $ 15,753 $ 34,162 |
Match Funded Advances
Match Funded Advances | 9 Months Ended |
Sep. 30, 2018 | |
Transfers and Servicing [Abstract] | |
Match Funded Assets | Note 6 – Match Funded Assets September 30, 2018 December 31, 2017 Advances Principal and interest $ 424,520 $ 523,248 Taxes and insurance 352,376 439,857 Foreclosures, bankruptcy, real estate and other 158,184 181,495 935,080 1,144,600 Automotive dealer financing notes (1) — 35,392 Allowance for losses — (2,635 ) — 32,757 $ 935,080 $ 1,177,357 (1) In January 2018, we terminated our automotive dealer loan financing facility. Automotive dealer financing notes not pledged to our automotive dealer loan financing facility are reported as Other assets. The following table summarizes the activity in match funded assets: Nine Months Ended September 30, 2018 2017 Advances Automotive Dealer Financing Notes Advances Automotive Dealer Financing Notes Beginning balance $ 1,144,600 $ 32,757 $ 1,451,964 $ — Transfer (to) from Other assets — (36,896 ) — 25,180 Sales — — (691 ) — New advances (collections), net (209,520 ) 1,504 (243,410 ) 10,856 Decrease in allowance for losses (1) — 2,635 — — Ending balance $ 935,080 $ — $ 1,207,863 $ 36,036 (1) The remaining allowance was charged off in connection with the exit from the ACS business. |
Mortgage Servicing
Mortgage Servicing | 9 Months Ended |
Sep. 30, 2018 | |
Transfers and Servicing [Abstract] | |
Mortgage Servicing | Note 7 – Mortgage Servicing Mortgage Servicing Rights – Amortization Method Nine Months Ended September 30, 2018 2017 Beginning balance $ 336,882 $ 363,722 Fair value election - transfer of MSRs carried at fair value (1) (361,670 ) — Additions recognized in connection with asset acquisitions — 1,658 Additions recognized on the sale of mortgage loans — 18,604 Sales and other transfers — (814 ) (24,788 ) 383,170 Amortization (1) — (38,560 ) Decrease in impairment valuation allowance (1) (2) 24,788 1,551 Ending balance $ — $ 346,161 Estimated fair value at end of period $ — $ 424,208 (1) Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with each of these classes. We recorded a cumulative-effect adjustment of $82.0 million to retained earnings as of January 1, 2018 to reflect the excess of the fair value of the Agency MSRs over their carrying amount. We also recognized the tax effect of this adjustment through an increase in retained earnings of $6.8 million and a deferred tax asset for the same amount. However, we established a full valuation allowance on the resulting deferred tax asset through a reduction in retained earnings. The government-insured MSRs were impaired by $24.8 million at December 31, 2017; therefore, these MSRs were already effectively carried at fair value. (2) Impairment of MSRs is recognized in MSR valuation adjustments, net in the unaudited consolidated statements of operations for the nine months ended September 30, 2017 . Impairment valuation allowance balance of $24.8 million was reclassified to reduce the carrying value of the related MSRs on January 1, 2018 in connection with our fair value election. See Note 3 – Fair Value for additional information regarding impairment and the valuation allowance. Mortgage Servicing Rights – Fair Value Measurement Method Nine Months Ended September 30, 2018 2017 Agency Non-Agency Total Agency Non-Agency Total Beginning balance $ 11,960 $ 660,002 $ 671,962 $ 13,357 $ 665,899 $ 679,256 Fair value election - transfer of MSRs carried at amortized cost, net of valuation allowance 336,882 — 336,882 — — — Cumulative effect of fair value election 82,043 — 82,043 — — — Sales and other transfers (5,950 ) (175 ) (6,125 ) — (2,672 ) (2,672 ) Additions 8,809 — 8,809 — — — Servicing transfers and adjustments — (2,594 ) (2,594 ) — — — Changes in fair value (1): Changes in valuation inputs or other assumptions 19,217 (424 ) 18,793 (131 ) 2,303 2,172 Realization of expected future cash flows and other changes (43,545 ) (66,943 ) (110,488 ) (1,385 ) (79,224 ) (80,609 ) Ending balance $ 409,416 $ 589,866 $ 999,282 $ 11,841 $ 586,306 $ 598,147 (1) Changes in fair value are recognized in MSR valuation adjustments, net 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, 2018 given hypothetical shifts in lifetime prepayments and yield assumptions: Adverse change in fair value 10% 20% Weighted average prepayment speeds $ (92,659 ) $ (178,462 ) Discount rate (option-adjusted spread) (28,326 ) (54,351 ) The sensitivity analysis measures the potential impact on fair values based on hypothetical changes, which in the case of our portfolio at September 30, 2018 are increased prepayment speeds and a decrease in the yield assumption. Portfolio of Assets Serviced The following table presents the composition of our residential primary servicing and subservicing portfolios as measured by UPB, including foreclosed real estate and small-balance commercial loans. 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. UPB at September 30, 2018 Servicing $ 68,076,254 Subservicing 1,387,641 NRZ (1) 91,532,579 $ 160,996,474 UPB at December 31, 2017 Servicing $ 75,469,327 Subservicing 2,063,669 NRZ (1) 101,819,557 $ 179,352,553 UPB at September 30, 2017 Servicing $ 78,254,463 Subservicing (2) 3,656,197 NRZ (1) 105,557,658 $ 187,468,318 (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. (2) Excludes $9.8 million of large-balance commercial foreclosed real estate. During 2017, we sold or transferred servicing on the remaining managed assets. During the nine months ended September 30, 2018 and 2017 , we sold MSRs with a UPB of $580.0 million and $210.2 million , 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 in 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. At September 30, 2018 , S&P Global Ratings’ (S&P) servicer ratings outlook for Ocwen is stable. Fitch Ratings, Inc.’s (Fitch) servicer ratings outlook is Stable and Moody’s Investors Service, Inc.’s (Moody’s) servicer ratings are on Watch for Downgrade. Downgrades in servicer ratings could adversely affect our ability to sell or finance servicing advances and could impair our ability to consummate future servicing transactions or adversely affect our dealings with lenders, other contractual counterparties, and regulators, including our ability to 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. Certain of our servicing agreements require that we maintain specified servicer ratings from rating agencies such as Moody’s and S&P. At September 30, 2018 , non-Agency servicing agreements with a UPB of $27.0 billion have minimum servicer ratings criteria. As a result of our current servicer ratings, termination rights have been triggered in non-Agency servicing agreements with a UPB of $8.4 billion , or approximately 9% of our total non-Agency servicing portfolio. To date, terminations as servicer as a result of a breach of any of these provisions have been minimal. Servicing Revenue Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Loan servicing and subservicing fees Servicing $ 52,610 $ 63,071 $ 167,389 $ 197,712 Subservicing 658 1,760 2,443 5,877 NRZ 120,593 129,228 374,322 420,151 173,861 194,059 544,154 623,740 Late charges 14,839 14,958 44,743 47,352 Custodial accounts (float earnings) 10,241 7,489 25,965 18,322 Loan collection fees 4,916 5,663 14,700 17,918 Home Affordable Modification Program (HAMP) fees (1) 3,365 6,202 11,622 37,692 Other 6,508 4,849 16,911 16,499 $ 213,730 $ 233,220 $ 658,095 $ 761,523 (1) The HAMP program expired on December 31, 2016. Borrowers who had requested assistance or to whom an offer of assistance had been extended as of that date had until September 30, 2017 to finalize their modification. We continue to earn HAMP success fees for HAMP modifications that remain less than 90 days delinquent at the first, second and third year anniversary of the start of the trial modification. 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 $1.7 billion and $2.0 billion at September 30, 2018 and September 30, 2017 , respectively. |
Rights to MSRs
Rights to MSRs | 9 Months Ended |
Sep. 30, 2018 | |
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. 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 unaudited 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 unaudited consolidated statements of operations. Prior to the transfer of legal title under the Master Servicing Rights Purchase Agreement dated as of October 1, 2012, as amended, and certain Sale Supplements, as amended (collectively, the Original Rights to MSRs Agreements), Ocwen agreed to service the mortgage loans underlying the MSRs on the economic terms set forth in the Original Rights to MSRs Agreements. After the transfer of legal title as contemplated under the Original Rights to MSRs Agreements, Ocwen was to service the mortgage loans underlying the MSRs as subservicer on substantially the same economic terms. On July 23, 2017 and January 18, 2018, we entered into a series of agreements with NRZ that collectively modify, supplement and supersede the arrangements among the parties as set forth in the Original Rights to MSRs Agreements. The July 23, 2017 agreements, as amended, include a Master Agreement, Transfer Agreement and Subservicing Agreement (collectively, the 2017 Agreements) pursuant to which the parties agreed, among other things, to undertake certain actions to facilitate the transfer from Ocwen to NRZ of Ocwen’s legal title to the remaining MSRs, with a UPB of $109.6 billion as of June 30, 2017, that were subject to the Original Rights to MSRs Agreements and under which Ocwen will subservice mortgage loans underlying the MSRs for an initial term of five years (the Initial Term). While we continue the process of obtaining the third-party consents necessary to transfer the MSRs to NRZ, on January 18, 2018, the parties entered into new agreements (including a Servicing Addendum) regarding the Rights to MSRs related to MSRs that remained subject to the Original Rights to MSRs Agreements as of January 1, 2018 and amended the Transfer Agreement (collectively, New RMSR Agreements) to accelerate the implementation of certain parts of our arrangements in order to achieve the intent of the 2017 Agreements sooner. Ocwen will continue to service the related mortgage loans until the necessary third-party consents are obtained in order to transfer the applicable MSRs in accordance with the New RMSR Agreements. Upon receiving the required consents and transferring the MSRs, Ocwen will subservice the mortgage loans underlying the MSRs pursuant to the 2017 Agreements. On August 17, 2018, Ocwen and NRZ entered into certain amendments to the New RMSR Agreements to include New Penn Financial, LLC dba Shellpoint Mortgage Servicing (Shellpoint), a subsidiary of NRZ, as a party and to conform the New RMSR Agreements to certain of the terms of the Shellpoint Subservicing Agreement, between Ocwen and Shellpoint. The 2017 Agreements and New RMSR Agreements (as amended) provide for the conversion of the economics of the Original Rights to MSRs Agreements into a more traditional subservicing arrangement and involve upfront payments to Ocwen. Prior to the execution of the New RMSR Agreements, we received these payments upon obtaining the required third-party consents and the transfer of the MSRs. Upon execution of the New RMSR Agreements, we received the balance of these upfront payments. These upfront payments generally represent the net present value of the difference between the future revenue stream Ocwen would have received under the Original Rights to MSRs Agreements and the future revenue stream Ocwen expects to receive under the 2017 Agreements and the New RMSR Agreements. On September 1, 2017, pursuant to the 2017 Agreements, Ocwen successfully transferred MSRs with UPB of $15.9 billion to NRZ and received a lump-sum payment of $54.6 million . On January 18, 2018, Ocwen received a lump-sum payment of $279.6 million in accordance with the terms of the New RMSR Agreements. Due to the length of the Initial Term of the Subservicing Agreement, the transactions in which MSRs are transferred as described above do not qualify as a sale and are accounted for as secured financings. A new liability is recognized in an amount equal to the fair value of any lump sum payments received in connection with the 2017 Agreements and New RMSR Agreements. 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. In the event the required third-party consents are not obtained with respect to any dates specified in, and in accordance with the process set forth in, the New RMSR Agreements, such MSRs will either: (i) remain subject to the New RMSR Agreements at the option of NRZ, (ii) be acquired by Ocwen at a price determined in accordance with the terms of the New RMSR Agreements, or (iii) be sold to a third party in accordance with the terms of the New RMSR Agreements. At any time during the Initial Term, NRZ may terminate the Subservicing Agreement and Servicing Addendum 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 and Servicing Addendum for additional three -month periods by providing proper notice. Following the Initial Term, the Subservicing Agreement and Servicing Addendum can be cancelled by Ocwen on an annual basis. NRZ and Ocwen have the ability to terminate the Subservicing Agreement and Servicing Addendum for cause if certain specified conditions occur. Under the terms of the Subservicing Agreement and Servicing Addendum, in addition to a base servicing fee, Ocwen will continue to receive ancillary income, which primarily includes late fees, 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 certain real estate owned (REO) related income including REO referral commissions. Prior to January 18, 2018, MSRs as to which necessary transfer consents had not yet been obtained continued to be subject to the terms of the agreements entered into in 2012 and 2013. Under the 2012 and 2013 agreements, the servicing fees payable under the servicing agreements underlying the Rights to MSRs were apportioned between NRZ and us. NRZ retained a fee based on the UPB of the loans serviced, and OLS received certain fees, including a performance fee based on servicing fees paid less an amount calculated based on the amount of servicing advances and the cost of financing those advances. Interest expense related to financing liabilities recorded in connection with the NRZ transactions is indicated in the table below. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Servicing fees collected on behalf of NRZ $ 120,593 $ 129,228 $ 374,322 $ 420,151 Less: Subservicing fee retained by Ocwen 33,335 68,536 101,997 226,483 Net servicing fees remitted to NRZ 87,258 60,692 272,325 193,668 Less: Reduction (increase) in financing liability Changes in fair value Original Rights to MSRs Agreements 4,844 (9,854 ) (3,938 ) (9,854 ) 2017 Agreements and New RMSR Agreements (2,163 ) 36,878 15,261 36,878 Runoff, settlement and other Original Rights to MSRs Agreements 14,095 19,003 45,455 52,196 2017 Agreements and New RMSR Agreements 33,765 767 104,291 767 $ 36,717 $ 13,898 $ 111,256 $ 113,681 In April 2015, Ocwen sold all economic beneficial rights to the “clean-up call rights” to which we were 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. As a result of the 2017 Agreements and the New RMSR Agreements, Ocwen is no longer entitled to the 0.50% purchase price but will continue to be reimbursed for costs incurred with respect to such efforts and receives administrative fees. We received $0.8 million and $5.5 million during the three and nine months ended September 30, 2017 , respectively, from NRZ in connection with such clean-up calls. The clean-up calls are recognized in Other, net in the unaudited consolidated statements of operations. |
Receivables
Receivables | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Receivables | Note 9 – Receivables September 30, 2018 December 31, 2017 Servicing-related receivables: Government-insured loan claims, net $ 100,786 $ 114,971 Reimbursable expenses 30,493 31,709 Due from custodial accounts 27,990 36,122 Due from NRZ 6,137 14,924 Other 9,048 11,959 174,454 209,685 Income taxes receivable 35,153 36,831 Other receivables 11,153 19,600 220,760 266,116 Allowance for losses (64,823 ) (66,587 ) $ 155,937 $ 199,529 At September 30, 2018 and December 31, 2017 , the allowance for losses related to receivables of our Servicing business was $64.4 million and $66.3 million , respectively, and was primarily comprised of an allowance for losses related to defaulted FHA or VA insured loans repurchased from Ginnie Mae guaranteed securitizations (government-insured loan claims). Allowance for Losses - Government-Insured Loan Claims Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ 53,155 $ 46,577 $ 53,340 $ 53,258 Provision 10,180 9,162 29,214 31,848 Net charge-offs and other (10,297 ) (7,069 ) (29,516 ) (36,436 ) Ending balance $ 53,038 $ 48,670 $ 53,038 $ 48,670 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2018 | |
Other Assets [Abstract] | |
Other Assets | Note 10 – Other Assets September 30, 2018 December 31, 2017 Contingent loan repurchase asset $ 307,684 $ 431,492 Prepaid expenses 23,023 22,559 Debt service accounts (restricted cash) 22,454 33,726 Prepaid representation, warranty and indemnification claims - Agency MSR sale 15,173 20,173 Prepaid lender fees, net 6,290 9,496 Real estate 5,216 3,070 Derivatives, at fair value 4,721 5,429 Other restricted cash 3,056 9,179 Mortgage backed securities, at fair value 1,670 1,592 Interest-earning time deposits 1,629 4,739 Prepaid income taxes — 5,621 Other 8,086 7,715 $ 399,002 $ 554,791 Automotive dealer financing notes not pledged to our former automotive dealer loan financing facility are reported as Other assets. We ceased new lending and terminated this facility in January 2018. There were no remaining notes outstanding at September 30, 2018. At December 31, 2017 , the balance of the notes was $0 , net of an allowance of $7.7 million . Changes in the allowance are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ — $ 9,586 $ 7,664 $ 4,371 Provision — (1,019 ) (265 ) 4,196 Net charge-offs and other — — (7,399 ) — Ending balance $ — $ 8,567 $ — $ 8,567 |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Borrowings | Note 11 – Borrowings Match Funded Liabilities September 30, 2018 December 31, 2017 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-VF4 (4) Aug. 2048 Aug. 2018 $ — — % $ — 4.29 % $ 67,095 Advance Receivables Backed Notes - Series 2015-VF5 (4) Dec. 2049 Dec. 2019 46,178 3.76 178,822 4.29 67,095 Advance Receivables Backed Notes - Series 2016-T1 (5) Aug. 2048 Aug. 2018 — — — 2.77 265,000 Advance Receivables Backed Notes - Series 2016-T2 (5) Aug. 2049 Aug. 2019 — 2.99 235,000 2.99 235,000 Advance Receivables Backed Notes - Series 2017-T1 (5) Sep. 2048 Sep. 2018 — — — 2.64 250,000 Advance Receivables Backed Notes, Series 2018-T1 (5) Aug. 2049 Aug. 2019 — 3.50 150,000 — — Advance Receivables Backed Notes, Series 2018-T2 (5) Aug. 2050 Aug. 2020 — 3.81 150,000 — — Total Ocwen Master Advance Receivables Trust (OMART) 46,178 3.46 713,822 3.02 884,190 Ocwen Servicer Advance Receivables Trust III (OSART III) - Advance Receivables Backed Notes, Series 2014-VF1 (6) Dec. 2048 Dec. 2018 54,626 5.49 374 4.63 33,768 Ocwen Freddie Advance Funding (OFAF) - Advance Receivables Backed Notes, Series 2015-VF1 (7) Jun. 2049 Jun. 2019 64,950 4.83 50 4.52 56,078 Total Servicing Advance Financing Facilities 165,754 3.46 % 714,246 3.16 % 974,036 Automotive Capital Asset Receivables Trust (ACART) - Loan Series 2017-1 (8) Feb. 2021 Feb. 2019 — — % — 6.77 % 24,582 $ 165,754 3.46 % $ 714,246 3.25 % $ 998,618 (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 eligible collateral to pledge. Collateral may only be pledged to one facility. At September 30, 2018 , $52.8 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 2.26% and 1.56% at September 30, 2018 and December 31, 2017 , respectively. (4) Effective January 1, 2018, the borrowing capacity of the Series 2014-VF4 and the Series 2015-VF5 variable rate notes were each reduced from $105.0 million to $70.0 million . The interest rate was based on 1ML, with a ceiling of 125 basis points (bps), plus a margin of 235 to 635 bps. On July 13, 2018, we increased the borrowing capacity of the Series 2015-VF5 variable notes to $225.0 million and extended the amortization date to December 15, 2019, with interest computed based on the lender’s cost of funds plus a margin of 105 to 250 bps. The increased capacity was used on July 16, 2018 to redeem the Series 2016-T1 term notes with an outstanding balance of $265.0 million and an amortization date of August 15, 2018. We also voluntarily terminated the Series 2014-VF4 variable notes on July 16, 2018. (5) Under the terms of the agreement, we must continue to borrow the full amount of the Series 2016-T2, 2018-T1 and 2018-T2 fixed-rate term notes until the amortization date. If there is insufficient eligible collateral to support the level of borrowing, the excess cash proceeds in an amount necessary to make up the deficit are not distributed to Ocwen but are held by the trustee, and interest expense continues to be based on the full amount of the outstanding notes. The Series 2016-T2, 2018-T1 and 2018-T2 term notes have a total combined borrowing capacity of $535.0 million . Rates on the individual classes of notes range from 2.72% to 4.53% . The Series 2016-T1 and Series 2017-T1 term notes were redeemed on July 16, 2018 and August 14, 2018, respectively. On August 15, 2018, we issued two $150.0 million fixed-rate term notes (Series 2018 T-1 and Series 2018-T2) with amortization dates of August 15, 2019 and August 2020, respectively. (6) The maximum borrowing capacity under this facility is $55.0 million . There is a ceiling of 300 bps for the 3ML 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 235 to 475 bps. (7) On June 7, 2018, borrowing capacity was reduced from $110.0 million to $65.0 million with interest computed based on the lender’s cost of funds plus a margin of 180 to 450 bps. There is a ceiling of 300 bps for 3ML in determining the interest rate for these variable rate notes. (8) On January 23, 2018, we voluntarily terminated the Loan Series 2017-1 Notes. Pursuant to the 2017 Agreements and New RMSR Agreements, NRZ is obligated to fund new servicing advances with respect to the MSRs underlying the Rights to MSRs. 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, 2018 , we were the servicer of Rights to MSRs sold to NRZ pertaining to $91.5 billion in UPB and the associated outstanding servicing advances as of such date were approximately $2.3 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. 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 advances subsequently sold to, or reimbursed by, NRZ. Financing Liabilities Outstanding Balance Borrowing Type Collateral Interest Rate Maturity September 30, 2018 December 31, 2017 HMBS-Related Borrowings, at fair value (1) Loans held for investment 1ML + 260 bps (1) $ 5,184,227 $ 4,601,556 Other Financing Liabilities MSRs pledged, at fair value: Original Rights to MSRs Agreements MSRs (2) (2) 450,845 499,042 2017 Agreements and New RMSR Agreements MSRs (3) (3) 169,354 9,249 620,199 508,291 Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (4) MSRs (4) Feb. 2028 67,194 72,575 Financing liability - Owed to securitization investors, at fair value: IndyMac Mortgage Loan Trust (INDX 2004-AR11) (5) Loans held for investment (5) (5) 13,250 — Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) (5) Loans held for investment (5) (5) 13,393 — 26,643 — Advances pledged (6) Advances on loans (6) (6) 5,283 12,652 719,319 593,518 $ 5,903,546 $ 5,195,074 (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 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 lump sum payments received upon transfer of legal title of the MSRs related to the Rights to MSRs transactions to NRZ in September 2017. In connection with the execution of the New RMSR Agreements in January 2018, we received a lump sum payment of $279.6 million as compensation for foregoing certain payments under the Original Rights to MSRs Agreements. 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. The expected maturity of the liability is April 30, 2020, the date through which we were scheduled to be the servicer on loans underlying the Rights to MSRs per the Original Rights to MSRs Agreements. (4) OASIS noteholders are entitled to receive a monthly payment equal to the sum of: (a) 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. 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 notes. (5) Consists of securitization debt certificates due to third parties that represent beneficial interests in trusts that we include in our unaudited consolidated financial statements, as more fully described in Note 2 – Securitizations and Variable Interest Entities . The holders of these certificates have no recourse against the assets of Ocwen. The certificates in the INDX 2004-AR11 Trust pay interest based on variable rates which are generally based on weighted average net mortgage rates and which range between 3.29% and 3.62% at September 30, 2018. The certificates in the RAST 2003-A11 Trust pay interest based on fixed rates ranging between 4.25% and 5.75% and a variable rate based on 1ML plus 0.45% . The maturity of the certificates occurs upon maturity of the loans held by the trust. The remaining loans in the INDX 2004-AR11 Trust and RAST 2003-A11 Trust have maturity dates extending through November 2034 and October 2033, respectively. (6) 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. The effective interest rate is based on 1ML plus a margin of 450 bps. Other Secured Borrowings Outstanding Balance Borrowing Type Collateral Interest Rate Termination / Maturity Available Borrowing Capacity (1) September 30, 2018 December 31, 2017 SSTL (2) (2) 1-Month Euro-dollar rate + 500 bps with a Eurodollar floor of 100 bps (2) Dec. 2020 $ — $ 235,687 $ 298,251 Mortgage loan warehouse facilities Repurchase agreement (3) Loans held for sale (LHFS) 1ML + 200 - 345 bps Sep. 2019 100,000 — 8,221 Participation agreements (4) LHFS N/A (4) — 64,798 161,433 Mortgage warehouse agreement (5) LHFS (reverse mortgages) 1ML + 275 bps; 1ML floor of 350 bps Aug. 2019 — 9,899 32,042 Master repurchase agreement (6) LHFS (forward and reverse mortgages) 1ML + 225 bps forward; 1ML + 275 bps reverse Dec. 2018 109,567 40,433 54,086 Master repurchase agreement (7) LHFS (reverse mortgages) Prime + 0.0% (4.0% floor) Dec. 2018 — — — 209,567 115,130 255,782 $ 209,567 350,817 554,033 Unamortized debt issuance costs - SSTL (3,573 ) (5,423 ) Discount - SSTL (1,819 ) (2,760 ) $ 345,425 $ 545,850 Weighted average interest rate 5.79 % 5.22 % (1) Available borrowing capacity for our mortgage loan warehouse facilities 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, $100.0 million could be used at September 30, 2018 based on the amount of eligible collateral that could be pledged. (2) Under the terms of the Amended and Restated Senior Secured Term Loan Facility Agreement with an original borrowing capacity of $335.0 million , we may request increases to the loan amount of up to $100.0 million , with additional increases subject to certain limitations. We are required to make quarterly principal payments of $4.2 million on the SSTL, 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) 1ML, plus a margin of 4.00% and subject to a base rate floor of 2.00% or (b) 1ML, plus a margin of 5.00% and subject to a 1ML floor of 1.00% . To date, we have elected option (b) to determine the interest rate. (3) 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 September 28, 2018, we renewed this facility through September 27, 2019. In connection with the renewal, we increased the maximum borrowing amount from $137.5 million to $175.0 million , of which $100.0 million is available on a committed basis and the remainder is available at the discretion of the lender. (4) Under these participation agreements, the lender provides financing for a combined total of $250.0 million at the discretion of the lender. The participation agreements allow 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 May 31, 2018, we renewed these facilities through April 30, 2019 ( $175.0 million ) and May 31, 2019 ( $75.0 million ). (5) Under this participation agreement, the lender provides financing for $100.0 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. On August 15, 2018, we renewed these facilities through August 15, 2019. (6) Under this agreement, the lender provides financing on a committed basis for up to $150.0 million . The 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. (7) Under this agreement, t he lender provides financing for up to $50.0 million at the discretion of the lender. Senior Notes Interest Rate Maturity Outstanding Balance September 30, 2018 December 31, 2017 Senior unsecured notes (1) 6.625% May 2019 $ 3,122 $ 3,122 Senior secured notes (2) 8.375% Nov. 2022 346,878 346,878 350,000 350,000 Unamortized debt issuance costs (2,251 ) (2,662 ) $ 347,749 $ 347,338 (1) 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 a redemption price (expressed as a percentage of principal amount) of 100.000% beginning May 15, 2018 plus accrued and unpaid interest and additional interest, if any. (2) 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 th 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. Credit Ratings Credit ratings are intended to be an indicator of the creditworthiness of a particular company, security or obligation. As of September 30, 2018 , the S&P long-term corporate rating was “B-”. On September 14, 2018, Moody’s affirmed the long-term corporate rating of “Caa1” and revised the outlook to stable from negative. On July 25, 2018, Fitch affirmed the long-term issuer default rating of “B-” and withdrew all corporate ratings. 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 or 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 and entering into transactions with affiliates; • 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 requirements 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 certain of 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 OLS level. As of September 30, 2018 , the most restrictive consolidated tangible net worth requirements contained in our debt agreements were for a minimum of $1.1 billion in consolidated tangible net worth, as defined, at OLS under our match funded debt and certain of our other debt agreements. 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, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Note 12 – Other Liabilities September 30, 2018 December 31, 2017 Contingent loan repurchase liability $ 307,684 $ 431,492 Other accrued expenses 60,238 75,088 Accrued legal fees and settlements 53,380 51,057 Due to NRZ 46,550 98,493 Servicing-related obligations 30,958 35,239 Checks held for escheat 20,686 19,306 Liability for indemnification obligations 20,543 23,117 Accrued interest payable 15,069 5,172 Liability for mortgage insurance contingency 6,820 6,820 Deferred revenue 4,836 3,463 Liability for uncertain tax positions 3,306 3,252 Derivatives, at fair value 2,567 635 Amounts due in connection with MSR sales 403 8,291 Other 16,287 7,985 $ 589,327 $ 769,410 We establish a liability for legal settlements, including fines and penalties, judgments on appeal and filed and/or threatened claims for which we believe it is probable that a loss has been or will be incurred and the amount can be reasonably estimated. See Note 20 – Contingencies for additional information. Accrued Legal Fees and Settlements Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ 54,295 $ 117,020 $ 51,057 $ 93,797 Accrual for probable losses (1) 995 2,500 10,777 80,815 Payments (2) (460 ) (55,188 ) (8,103 ) (120,441 ) Issuance of common stock in settlement of litigation (3) — — (5,719 ) — Net increase (decrease) in accrued legal fees (1,450 ) (4,389 ) 3,282 3,229 Other — — 2,086 2,543 Ending balance $ 53,380 $ 59,943 $ 53,380 $ 59,943 (1) Consists of amounts accrued for probable losses in connection with legal and regulatory settlements and judgments. Such amounts are reported in Professional services expense in the unaudited consolidated statements of operations. (2) Includes cash payments made in connection with resolved legal and regulatory matters. (3) In January 2018, Ocwen issued 1,875,000 shares of common stock in connection with a previously approved securities litigation settlement. |
Derivative Financial Instrument
Derivative Financial Instruments and Hedging Activities | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments and Hedging Activities | Note 13 – Derivative Financial Instruments and Hedging Activities The following table summarizes derivative activity, including the derivatives used in each of our identified hedging programs. The notional amount of our contracts does not represent our exposure to credit loss. None of the derivatives was designated as a hedge for accounting purposes at September 30, 2018 : Interest Rate Risk IRLCs and Loans Held for Sale Borrowings IRLCs Forward MBS Trades Interest Rate Caps Notional balance at December 31, 2017 $ 96,339 $ 240,823 $ 375,000 Additions 927,700 386,311 154,583 Amortization — — (208,750 ) Maturities (746,615 ) (407,759 ) — Terminations (164,978 ) — — Notional balance at September 30, 2018 $ 112,446 $ 219,375 $ 320,833 Maturity Oct. 2018 - Nov. 2018 Dec. 2018 May 2019 - May 2020 Fair value of derivative assets (liabilities) (1) at: September 30, 2018 $ 2,816 $ (1,873 ) $ 1,211 December 31, 2017 3,283 (545 ) 2,056 Gains (losses) on derivatives during the nine months ended: Gain on Loans Held for Sale, Net Other, Net September 30, 2018 $ 137 $ 2,082 $ (308 ) September 30, 2017 (1,605 ) (8,604 ) (207 ) (1) 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. Foreign Currency Exchange Rate Risk Our operations in India and the Philippines expose us to foreign currency exchange rate risk to the extent that our foreign exchange positions remain unhedged. We have not entered into any forward exchange contracts during the reported periods to hedge against the effect of changes in the value of the India Rupee or Philippine Peso. Foreign currency remeasurement exchange gains (losses) were $(2.0) million and $(4.7) million , and $(0.7) million and $0.7 million , during the three and nine months ended September 30, 2018 and 2017 , respectively, and are reported in Other, net in the unaudited consolidated statements of operations. The losses in 2018 are primarily attributed to depreciation of the India Rupee against the U.S. Dollar. Interest Rate Risk 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. 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. 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. Accumulated Other Comprehensive Loss (AOCL) Included in AOCL at September 30, 2018 and 2017 , were $1.1 million and $1.3 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. |
Interest Expense
Interest Expense | 9 Months Ended |
Sep. 30, 2018 | |
Other Income and Expenses [Abstract] | |
Interest Expense | Note 14 – Interest Expense Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Financing liabilities NRZ $ 36,717 $ 13,898 $ 111,256 $ 113,681 Other financing liabilities 1,305 1,419 3,849 4,898 38,022 15,317 115,105 118,579 Match funded liabilities 7,229 11,981 24,491 37,499 Other secured borrowings 6,958 10,990 23,190 30,174 Senior notes 7,452 7,452 22,355 22,355 Other 1,627 1,541 4,460 3,864 $ 61,288 $ 47,281 $ 189,601 $ 212,471 |
Income Taxes (Notes)
Income Taxes (Notes) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 15 - Income Taxes Our effective tax rate for the nine months ended September 30, 2018 and 2017 was (7.1)% and 15.7% , respectively. For the nine months ended September 30, 2018 and 2017 , we recorded income tax expense (benefit) of $4.5 million and $(15.5) million on loss before income taxes of $63.7 million and $98.7 million , respectively. The change in the effective tax rate for the nine months ended September 30, 2018 , compared with the same period in 2017 , was primarily due to the $22.7 million income tax benefit recognized in the third quarter of 2017 related to the reversal of an uncertain tax position liability upon expiration of the statute of limitations. The most significant potential benefit of the Tax Act, the reduction in the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018, did not have an impact on our effective tax rate as we are currently generating losses in the U.S. for which a tax benefit has not been recorded as we have recognized a full valuation allowance on our U.S. deferred tax assets. We recognized incremental income tax expense of $2.8 million for the Base Erosion and Anti-Abuse Tax (BEAT) provision of the Tax Act in the nine months ended September 30, 2018 . This increase in income tax expense related to implementing provisions of the Tax Act that were effective January 1, 2018 was offset by a reduction in income tax expense as a result of our adoption of ASU 2016-16 on January 1, 2018, as the deferred tax effects of intra-entity transfers of assets recognized as prepaid income taxes are no longer amortized to income tax expense over the life of the asset. Income tax expense related to uncertain tax positions increased in the nine months ended September 30, 2018 as compared to the same period of 2017 , due to the $22.7 million reversal recognized in the third quarter of 2017 as disclosed above. The reduction in the statutory U.S. federal rate is expected to positively impact our future U.S. after-tax earnings. However, the ultimate impact is subject to the effect of other complex provisions in the Tax Act (including BEAT, Global Intangible Low-Taxed Income (GILTI) and revised interest deductibility limitations) which we are currently reviewing. It is possible that any impact of these provisions could significantly reduce the benefit of the reduction in the statutory U.S. federal rate. Due to the uncertain practical and technical application of many of these provisions in the Tax Act, at this time, we are unable to make a final determination of the precise impact on our future earnings, and our accounting for the Tax Act remains incomplete. Ocwen will continue to gather additional information and evaluate the impact within the measurement period allowed, which will be completed no later than the fourth quarter of calendar year 2018. At December 31, 2017 we were able to reasonably estimate certain effects and, therefore, recorded provisional adjustments associated with the deemed repatriation transition tax and the reduction in the statutory U.S. federal tax rate. We have not recorded any additional measurement-period adjustments related to the transition tax or the reduction in the U.S. federal tax rate during the nine months ended September 30, 2018 . We are continuing to gather additional information and expect to complete our accounting for the transition tax within the prescribed measurement period. At September 30, 2018 we were not yet able to reasonably estimate the effects of certain elements of the Tax Act, such as BEAT, GILTI and revised interest deductibility limitations. Therefore, no provisional adjustments were recorded. Because of the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Tax Act and the application of ASC 740. Under U.S. GAAP, we are permitted to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). Our selection of an accounting policy related to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Whether we expect to have future U.S. inclusions in taxable income related to GILTI depends on a number of different aspects of our estimated future results of global operations, and as a result, we are not yet able to reasonably estimate the long-term effects of this provision of the Tax Act. Therefore, we have not recorded any deferred tax effects related to GILTI in our financial statements and have not made a policy election regarding whether to record deferred taxes on GILTI or to apply the period cost method as of September 30, 2018 . We have, however, included an estimate of the 2018 current GILTI impact in the calculation of our annualized effective tax rate for 2018. In addition, we have included an estimate of the 2018 current BEAT impact in the calculation of our annualized effective tax rate for 2018. We expect to complete our accounting within the prescribed measurement period. |
Basic and Diluted Earnings (Los
Basic and Diluted Earnings (Loss) per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings (Loss) per Share | Note 16 – 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 or loss 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. For the three and nine months ended September 30, 2018 and 2017, we have excluded the effect of all 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. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Basic loss per share Net loss attributable to Ocwen stockholders $ (41,147 ) $ (6,252 ) $ (68,430 ) $ (83,483 ) Weighted average shares of common stock 133,912,425 128,744,152 133,632,905 125,797,777 Basic loss per share $ (0.31 ) $ (0.05 ) $ (0.51 ) $ (0.66 ) Diluted loss per share Net loss attributable to Ocwen stockholders $ (41,147 ) $ (6,252 ) $ (68,430 ) $ (83,483 ) Weighted average shares of common stock 133,912,425 128,744,152 133,632,905 125,797,777 Effect of dilutive elements Stock option awards — — — — Common stock awards — — — — Dilutive weighted average shares of common stock 133,912,425 128,744,152 133,632,905 125,797,777 Diluted loss per share $ (0.31 ) $ (0.05 ) $ (0.51 ) $ (0.66 ) Stock options and common stock awards excluded from the computation of diluted earnings per share Anti-dilutive (1) 4,057,937 6,600,164 5,684,663 5,121,844 Market-based (2) 645,984 862,446 645,984 862,446 (1) Stock options were anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock. (2) 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, 2018 | |
Segment Reporting [Abstract] | |
Business Segment Reporting | Note 17 – Business Segment Reporting Our business segments reflect the internal reporting that we use to evaluate operating performance of services and to assess the allocation of our resources. A brief description of our current business segments is as follows: Servicing. This segment is primarily comprised of our core residential servicing business. We provide residential and commercial mortgage loan servicing, special servicing and asset management services. We earn fees for providing these services to owners of the mortgage loans and foreclosed real estate. In most cases, we provide these services either because we purchased the MSRs from the owner of the mortgage, retained the MSRs on the sale of residential mortgage loans or because we entered into a subservicing or special servicing agreement with the entity that owns the MSR. Our residential servicing portfolio includes conventional, government-insured and non-Agency loans. Non-Agency loans include subprime loans, which represent residential loans that generally did not qualify under GSE guidelines or have subsequently become delinquent. Lending. The Lending segment originates conventional and government-insured residential forward and reverse mortgage loans. 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. We originate loans directly with customers (retail channel) in forward lending as well as through our correspondent lending arrangements, broker relationships (wholesale) and retail channels of reverse mortgage lending. In 2017, we closed our forward correspondent lending channel and exited the forward wholesale lending business due to higher liquidity and capital requirements which in turn resulted in these channels being less profitable. Corporate Items and Other. Corporate Items and Other includes revenues and expenses of 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. CRL provides re-insurance related to coverage on foreclosed real estate properties owned or serviced by us. In January 2018, we decided to exit the ACS business and have liquidated the majority of our portfolio of inventory-secured loans to independent used car dealers. 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: Three Months Ended September 30, 2018 Results of Operations Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated Revenue $ 217,630 $ 16,917 $ 3,731 $ — $ 238,278 Expenses (1) 185,077 18,954 13,495 — 217,526 Other income (expense): Interest income 2,242 1,255 466 — 3,963 Interest expense (47,359 ) (1,437 ) (12,492 ) — (61,288 ) Gain on sale of mortgage servicing rights, net (733 ) — — — (733 ) Other (602 ) 154 (2,519 ) — (2,967 ) Other expense, net (46,452 ) (28 ) (14,545 ) — (61,025 ) Loss before income taxes $ (13,899 ) $ (2,065 ) $ (24,309 ) $ — $ (40,273 ) Three Months Ended September 30, 2017 Results of Operations Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated 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 ) Nine months ended September 30, 2018 Revenue $ 674,233 $ 65,116 $ 12,767 $ — $ 752,116 Expenses (1) 523,061 57,036 49,580 — 629,677 Other income (expense): Interest income 4,136 4,107 1,775 — 10,018 Interest expense (144,551 ) (4,855 ) (40,195 ) — (189,601 ) Gain on sale of mortgage servicing rights, net 303 — — — 303 Other (2,392 ) 774 (5,254 ) — (6,872 ) Other income (expense), net (142,504 ) 26 (43,674 ) — (186,152 ) Income (loss) before income taxes $ 8,668 $ 8,106 $ (80,487 ) $ — $ (63,713 ) 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 ) Total Assets Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated September 30, 2018 $ 2,726,905 $ 5,385,437 $ 348,695 $ — $ 8,461,037 December 31, 2017 $ 3,033,243 $ 4,945,456 $ 424,465 $ — $ 8,403,164 September 30, 2017 $ 2,905,817 $ 4,679,641 $ 512,147 $ — $ 8,097,605 Depreciation and Amortization Expense Servicing Lending Corporate Items and Other Business Segments Consolidated Three months ended September 30, 2018 Depreciation expense $ 1,035 $ 23 $ 4,500 $ 5,558 Amortization of debt discount — — 235 235 Amortization of debt issuance costs — — 599 599 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 Nine months ended September 30, 2018 Depreciation expense $ 3,647 $ 77 $ 14,475 $ 18,199 Amortization of debt discount — — 941 941 Amortization of debt issuance costs — — 2,261 2,261 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 (1) Expenses in the Corporate Items and Other segment for the nine months ended September 30, 2018 includes $7.5 million of severance expense attributable to headcount reductions in connection with our strategic initiatives to exit the ACS business and the forward lending correspondent and wholesale channels, as well as our overall efforts to reduce costs. |
Regulatory Requirements
Regulatory Requirements | 9 Months Ended |
Sep. 30, 2018 | |
Brokers and Dealers [Abstract] | |
Regulatory Requirements | Note 18 – Regulatory Requirements Our business is subject to extensive regulation by federal, state and local governmental authorities, including the Consumer Financial Protection Bureau (CFPB), HUD, the SEC and various state agencies that license and conduct examinations of our servicing and lending activities. In addition, we operate under a number of regulatory settlements that subject us to ongoing reporting and other obligations. 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 evolving regulatory environment in which we operate and to meet its requirements. 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, but not limited to, the costs of audits, reviews and third-party firms to monitor our compliance with such resolutions. 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, 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. Over the past decade, the general trend among federal, state and local legislative bodies and regulatory agencies as well as state attorneys general has been toward increasing laws, regulations, investigative proceedings and enforcement actions with regard to residential real estate lenders and servicers. New regulatory and legislative measures, or changes in enforcement practices, including those related to the technology we use, could, either individually or in the aggregate, require significant changes to our business practices, impose additional costs on us, limit our product offerings, limit our ability to efficiently pursue business opportunities, negatively impact asset values or reduce our revenues. Accordingly, they could materially and adversely affect our business and our financial condition, liquidity and results of operations. As further described below and in Note 20 – Contingencies , in recent years Ocwen has entered into a number of significant settlements with federal and state regulators and state attorneys general that have imposed additional requirements on our business. For example, we have made various commitments relating to the process of moving loans off the REALServicing® servicing system and onto the Black Knight MSP servicing system, we have engaged a third-party auditor to perform an analysis with respect to our compliance with certain federal and state laws relating to the escrow of mortgage loan payments, we have revised various aspects of our complaint handling processes and we have extensive review and reporting obligations to various regulatory bodies with respect to various matters, including our financial condition. We devote significant management time and resources to compliance with these additional requirements. These requirements are generally unique to Ocwen and, while certain of our competitors may have entered into regulatory-related settlements of their own, our competitors are generally not subject to either the same specific or the same breadth of additional requirements to which we are subject. Ocwen has various subsidiaries 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, entry into a consent order, 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, 2018 . 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 contain financial requirements, including capital requirements related to tangible net worth, as defined by the applicable agency, an obligation to provide audited consolidated financial statements within 90 days of the applicable entity’s fiscal year end as well as extensive requirements regarding servicing, selling and other matters. To the extent that these requirements are not met or waived, the applicable agency may, at its option, utilize a variety of remedies including requirements to provide certain information or take actions at the direction of the applicable agency, 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 20 – Contingencies for additional information relating to our recent interactions with Ginnie Mae as a result of the state regulatory actions discussed in that note. We believe we were in compliance with applicable net worth requirements at September 30, 2018 . 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. 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 $174.5 million at September 30, 2018 . In addition, a number of foreign laws and regulations apply 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 countries, (ii) fines, penalties or sanctions or (iii) reputational damage. New York Department of Financial Services . In December 2014, we entered into a consent order (the 2014 NY Consent Order) with the NY DFS as a result of an investigation relating to Ocwen’s servicing of residential mortgages. In March 2017, we entered into another consent order with the NY DFS (the 2017 NY Consent Order) that provided for the termination of the engagement of the monitor appointed pursuant to the 2014 NY Consent Order and for us to comply with certain reporting and other obligations. The 2017 NY Consent Order requires us to update the NY DFS quarterly on our implementation of certain operational enhancements that we and the NY DFS agreed should be made. We made what we believe to be our final required report to the NY DFS in December 2017. Our updates to date show that all agreed upon enhancements are being implemented. Pursuant to the 2017 NY Consent Order, the NY DFS has the right to examine Ocwen to assess our implementation of such enhancements and the general safety and soundness of our servicing operations. As a result of such examination, if the NY DFS concludes that we have materially failed to implement such enhancements or otherwise finds that our servicing operations are materially deficient, the NY DFS may require Ocwen to hire an independent consultant to review and issue additional recommendations on our servicing operations. The 2017 NY Consent Order grants the NY DFS the additional right to conduct an on-site examination of Ocwen’s servicing practices in order to determine whether to approve Ocwen’s request to ease the restrictions on its ability to acquire new MSRs. To the extent that the NY DFS servicing examination results in adverse findings against Ocwen, the 2017 NY Consent Order provides that the NY DFS could determine not to ease restrictions on our acquiring MSRs or to take other regulatory actions against us, including imposing fines or penalties or otherwise restricting our business activities. Any such actions could have a material adverse impact on our business, financial condition liquidity and results of operations. However, as set forth below, the NY DFS has since modified its restriction on Ocwen’s ability to acquire MSRs in connection with its conditional approval of Ocwen’s acquisition of PHH. The approval of the NY DFS for the acquisition imposed certain post-closing requirements on Ocwen, including reporting obligations and record retention and other requirements relating to the planned transfer of loans collateralized by New York property (New York loans) onto the Black Knight MSP and certain requirements with respect to the evaluation and supervision of management of both Ocwen Financial Corporation and PHH Mortgage Corporation. In addition, the conditions under which the NY DFS approved the acquisition prohibit Ocwen from boarding any additional loans to the REALServicing ® platform and require that all New York loans be transferred from the REALServicing ® platform by April 30, 2020. With respect to the pre-existing restriction on our ability to acquire MSRs, the conditional approval modifies this restriction to apply only to New York loans and, with respect to New York loans, provides that Ocwen may not increase its aggregate portfolio of New York loans serviced or subserviced by Ocwen by more than 2% per year (based on the unpaid principal balance of loans serviced at the prior calendar year-end). This restriction will remain in place until the NY DFS determines that all loans serviced on the REALServicing ® platform have been successfully migrated to the Black Knight MSP and that Ocwen has developed a satisfactory infrastructure to board sizable portfolios of MSRs. California Department of Business Oversight . In January 2015, OLS entered into a consent order (the 2015 CA Consent Order) with the CA DBO relating to our alleged failure to produce certain information and documents during a routine licensing examination. In February 2017, we entered into another consent order with the CA DBO (the 2017 CA Consent Order) that terminated the 2015 CA Consent Order and resolved open matters between us and the CA DBO. We believe that we have completed those obligations of the 2017 CA Consent Order that have already come due, and we have so notified the CA DBO. We have certain remaining reporting and other obligations under the 2017 CA Consent Order. Pursuant to the 2017 CA Consent Order, the CA DBO has engaged a third-party administrator who, at the expense of the CA DBO, has commenced work to confirm that Ocwen has completed certain commitments under the 2017 CA Consent Order. If the CA DBO were to allege that we failed to comply with these or other obligations under the 2017 CA Consent Order or that we otherwise were in breach of applicable laws, regulations or licensing requirements, the CA DBO could take regulatory actions against us, including imposing fines or penalties or otherwise restricting our business activities. Any such actions could have a material adverse impact on our business, financial condition liquidity and results of operations. Separately, in June 2018, we entered into a consent order with the CA DBO in order to resolve a finding stemming from a lending examination of Homeward. Pursuant to the consent order, we consented to a finding that certain records maintained by Homeward were not in compliance with certain California statutory requirements. Homeward cooperated in the examination, timely produced requested documents and records, and confirmed that no borrowers were overcharged as a result. No fines or penalties were payable under the consent order. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2018 | |
Other Commitments [Abstract] | |
Commitments | Note 19 — Commitments Unfunded Lending Commitments We have originated floating-rate reverse mortgage loans under which the borrowers have additional borrowing capacity of $1.5 billion at September 30, 2018 . This additional borrowing capacity is available on a scheduled or unscheduled payment basis. We also had short-term commitments to lend $91.1 million and $21.3 million in connection with our forward and reverse mortgage loan IRLCs, respectively, outstanding at September 30, 2018 . 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 a subsidiary of 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 currently provides title services to Liberty. Ocwen also has a General Referral Fee Agreement with Altisource 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. However, for MSRs that transferred to NRZ in September 2017, as well as those subject to the New RMSR Agreements we entered into in January 2018, we are not entitled to REO referral commissions. 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, pursuant to which we plan to transition to the Black Knight MSP. We originally anticipated an 18 to 24-month timeline to complete our transition onto the new servicing system; however, the PHH merger will likely accelerate that timeline because PHH utilizes the Black Knight MSP as its servicing system. Based on substantive discussions with Altisource prior to entering into our agreements with Black Knight, Ocwen expects to enter into mutually acceptable agreements that provide for Ocwen’s transition to the Black Knight MSP and the termination of the statement of work for the use of the REALServicing ® system. Our discussions with Altisource regarding finalizing such agreements are ongoing. 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. Under certain circumstances, we would have recourse under our contractual agreements with Altisource if we were to experience adverse consequences as a result of Altisource’s non-compliance with applicable servicing criteria. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Loss Contingency [Abstract] | |
Contingencies | Note 20 – Contingencies When we become aware of a matter involving uncertainty for which we may incur a loss, we assess the likelihood of any loss. If a loss contingency is probable and the amount of the loss can be reasonably estimated, we record an accrual for the loss. In such cases, there may be an exposure to potential loss in excess of the amount accrued. Where a loss is not probable but is reasonably possible or where a loss in excess of the amount accrued is reasonably possible, we disclose an estimate of the amount of the loss or range of possible losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible loss is not material to our financial position, results of operations or cash flows. If a reasonable estimate of loss cannot be made, we do not accrue for any loss or disclose any estimate of exposure to potential loss 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, among others, the Dodd-Frank Act, the Gramm-Leach-Bliley Act, the Fair Debt Collection Practices Act (FDCPA), the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act, the Telephone Consumer Protection Act (TCPA), the Equal Credit Opportunity Act, as well as individual state licensing and foreclosure laws and federal and local bankruptcy rules. Such proceedings include wrongful foreclosure and eviction actions, allegations of wrongdoing in connection with lender-placed insurance arrangements, claims relating to our property preservation activities, claims related to REO management, claims relating to our written and telephonic communications with our borrowers such as claims under the TCPA, 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, claims related to ancillary products marketed and sold to borrowers, 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. For example, we are a defendant in various class action matters alleging that (1) certain fees we assess on borrowers are marked up improperly in violation of applicable state and federal law; and (2) the solicitation and marketing to borrowers of certain ancillary products was unfair and deceptive. 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. We have accrued 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. Our accrual for probable and estimable legal and regulatory matters, including accrued legal fees, was $53.4 million at September 30, 2018 . We cannot currently estimate the amount, if any, of reasonably possible losses above amounts that have been recorded at September 30, 2018 . In 2014, plaintiffs filed a putative class action against Ocwen in the United States District Court for the Northern District of Alabama, alleging that Ocwen violated the FDCPA by charging borrowers a convenience fee for making certain loan payments. See McWhorter et al. v. Ocwen Loan Servicing, LLC, 2:15-cv-01831 (N.D. Ala.) . The plaintiffs are seeking statutory damages under the FDCPA, compensatory damages and injunctive relief. The presiding court previously ruled on Ocwen’s motions to dismiss, and Ocwen answered the operative complaint. Ocwen subsequently entered into an agreement in principle to resolve this matter, and the presiding court is considering motions to approve the settlement. While Ocwen believes that it has sound legal and factual defenses, Ocwen has 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. There can be no assurance that the court 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. Our accrual with respect to this matter is included in the $53.4 million legal and regulatory accrual referenced above. We cannot currently estimate the amount, if any, of reasonably possible loss above the amount accrued. Ocwen has been named in putative class actions and individual actions related to its compliance with the TCPA. Generally, plaintiffs in these actions allege that Ocwen knowingly and willfully violated the TCPA 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. 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. In October 2017, the court preliminarily approved the settlement and, thereafter, we paid the settlement amount into an escrow account held by the settlement administrator. However, on September 28, 2018, the Court denied the motion for final approval. On October 9, 2018, the parties advised the Court of their intention to further mediate the dispute, in an effort to address certain issues raised by the Court. There can be no assurance that the Court will finally approve the settlement or any revisions to it to which the parties may agree. In the event the settlement or any agreed upon revisions are 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. We have previously disclosed the settlement of the consolidated securities fraud class action lawsuit that contained allegations in connection with the restatements of our 2013 and first quarter 2014 financial statements, among other matters, in the United States District Court for the Southern District of Florida captioned In re Ocwen Financial Corporation Securities Litigation , 9:14-cv-81057-WPD (S.D. Fla.) (such consolidated lawsuit, the Securities Class Action). In March 2018 and April 2018, respectively, Ocwen was named as a defendant in two separate “opt-out” securities fraud actions brought on behalf of certain putative shareholders of Ocwen based on similar allegations to those contained in the Securities Class Action. See Brahman Partners et al. v. Ocwen Financial Corporation et al., 9:18-cv-80359-DMM (S.D. Fla.) and Owl Creek et al. v. Ocwen Financial Corporation et al., 9:18-cv-80506-BB (S.D. Fla.). Our accrual with respect to these matters is included in the $53.4 million legal and regulatory accrual referenced above. We cannot currently estimate the amount, if any, of reasonably possible loss above the amount accrued. Ocwen and the other defendants intend 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. We have previously disclosed that as a result of the April 2017 federal and state regulatory actions described below under “Regulatory”, and the impact on our stock price, several putative securities fraud class action lawsuits were 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. Those lawsuits were consolidated in the United States District Court for the Southern District of Florida in the matter captioned Carvelli v. Ocwen Financial Corporation et al. , 9:14-cv-9:17-cv-80500-RLR (S.D. Fla.). On April 27, 2018, the court in Carvelli granted our motion to dismiss, and dismissed the consolidated case with prejudice. Plaintiffs thereafter filed a notice of appeal, and that appeal remains pending. Ocwen and the other defendants intend to defend themselves vigorously. 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 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. If additional lawsuits are filed, Ocwen intends to vigorously defend itself against such lawsuits. If our efforts to defend the existing lawsuit or any future lawsuit are not successful, our business, financial condition, liquidity and results of operations could be materially and adversely affected. In several recent court actions, mortgage loan sellers against whom repurchase claims have been asserted based on alleged breaches of representations and warranties are defending on various grounds including the expiration of statutes of limitation, lack of notice and opportunity to cure, and vitiation of the obligation to repurchase as a result of foreclosure or charge-off of the loan. We have entered into tolling agreements with respect to our role as servicer for a 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. Previously, 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 RMBS investors subsequently filed an amended complaint. On January 23, 2018, the court dismissed the RMBS investors’ amended suit with prejudice. The RMBS investors thereafter appealed the district court’s dismissal, and that appeal remains pending. Ocwen is vigorously defending itself. 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. To the extent that an examination, audit or other regulatory engagement results in an alleged failure by us to comply with applicable laws, regulations or licensing requirements, or if allegations are made that we have failed to comply with applicable laws, regulations or licensing requirements or the commitments we have made in connection with our regulatory settlements (whether such allegations are made through administrative actions such as cease and desist orders, through legal proceedings or otherwise) or if other regulatory actions of a similar or different nature are taken in the future against us, this 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. Any of these occurrences could increase our operating expenses and reduce our revenues, hamper our ability to grow or otherwise materially and adversely affect our business, reputation, financial condition, liquidity and results of operations. 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 initiation of legal proceedings, we had been engaged with the CFPB in efforts to resolve the matter and recorded $12.5 million as of December 31, 2016 as a result of these discussions. Our accrual with respect to this matter is included in the $53.4 million legal and regulatory accrual referenced above. The outcome of the matters raised by the CFPB, whether through negotiated settlements, court rulings or otherwise, could have a material adverse impact on our business, reputation, financial condition, liquidity and results of operations. 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, entry into a consent order, 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, payments of monetary amounts and other agreements in order to settle issues identified in connection with examinations 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 29 states and the District of Columbia took regulatory actions against OLS and certain other Ocwen companies that alleged deficiencies in our compliance with laws and regulations relating to our servicing and lending activities. An additional state regulator brought legal action together with that state’s attorney general, as described below. In general, the regulatory actions took the form of orders styled as “cease and desist orders,” and we use that term to refer to all of the orders for ease of reference; for ease of reference we also include the District of Columbia as a state when we reference states below. 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, Liberty, OFSPL and Ocwen Business Solutions, Inc. (OBS). We have entered into agreements with all 30 states to resolve these regulatory actions. These agreements generally contain the following key terms (the Multi-State Common Settlement Terms): • Ocwen would 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 (which prior notice requirement is independent of, and in addition to, applicable state law notice and consent requirements relating to change of control transactions). 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 entered into settlements with certain states on different or additional terms, which include making additional communications with and for borrowers, certain review, reporting and remediation obligations, and the following additional terms: • Ocwen agreed with the Connecticut regulatory agency to pay certain amounts only in the event we fail to comply with certain requirements under our agreement with Connecticut. • In its agreement with the Maryland regulatory agency, Ocwen agreed to complete an independent management assessment and enterprise risk assessment and to a prohibition, with certain de minimis exceptions, on repurchases of our stock until December 7, 2018. Ocwen also agreed to make certain payments to Maryland, to provide remediation to certain borrowers in the form of cash payments or credits and to pay certain amounts only in the event we fail to comply with certain requirements under our agreement with Maryland. • Ocwen agreed with the Massachusetts regulatory agency to pay $1.0 million to the Commonwealth of Massachusetts Mortgage Education Trust. Ocwen and the Massachusetts regulatory agency also agreed on a schedule pursuant to which we will regain eligibility to acquire residential MSRs on Massachusetts loans (including loans originated by Ocwen) as it meets certain thresholds in its transition to a new servicing platform. All restrictions on Massachusetts MSR acquisitions will be lifted when Ocwen completes the second phase of a three-phase data integrity audit which will be conducted by an independent third-party following completion of Ocwen’s servicing platform transition. Accordingly, we have now resolved all of the administrative actions (but not all of the legal actions, which are described below) taken by state regulators on April 20, 2017 and shortly thereafter. We have taken substantial steps toward fulfilling our commitments under the agreements described above, including, developing and providing periodic updates regarding our plan to transition to an alternate loan servicing system (which our acquisition of PHH could help to accelerate), developing and implementing certain enhancements to our consumer complaint process, engaging a third-party auditor who is currently performing escrow-related testing, and complying with our other information sharing and reporting obligations. 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, together with the Florida Office of Financial Regulation, 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 lawsuit seeks injunctive and equitable relief, costs, and civil money penalties in excess of $10,000 per confirmed violation of the applicable statute. 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. Previously, 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. 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 above amounts currently accrued. Our accrual with respect to the administrative and legal actions initiated on April 20, 2017 and shortly thereafter is included in the $53.4 million litigation and regulatory matters accrual referenced above. We will also incur costs complying with the terms of the settlements we have entered into, including in connection with the escrow review and transition to a new servicing system. For example, with respect to the escrow review, which is currently underway, we will incur remediation costs to the extent that errors are identified which require remediation. If we fail to comply with the terms of our settlements, additional administrative or legal regulatory actions could be taken against us. Such actions could have a materially adverse impact on our business, reputation, financial condition, liquidity and results of operations. 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. 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. We continue to provide information to the Department of Justice and we are engaged in ongoing discussions with the Department of Justice relating to this inquiry. In addition, Ocwen was named as a defendant in a HUD administrative complaint filed by a non-profit organization alleging discrimination in the manner in which the company maintains REO properties in minority communities. In February 2018, this matter was administratively closed, and similar claims were filed in federal court. We believe these claims are without merit and intend to vigorously defend ourselves. In April 2017, Ocwen rec |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 21 – Subsequent Events PHH Acquisition On October 4, 2018, Ocwen completed its acquisition of PHH, a non-bank servicer with established servicing and origination recapture capabilities. We believe this acquisition will enable us to obtain the following key strategic and financial benefits: (i) accelerate Ocwen’s transition to the Black Knight MSP servicing platform; (ii) reduce fixed costs, on a combined basis, through reductions in corporate overhead and other costs and improved economies of scale; and (iii) provide a foundation to enable the combined servicing platform to resume new business and growth activities to offset portfolio runoff. The results of PHH operations will be included in Ocwen’s consolidated statement of operations from the date of acquisition. Assets acquired and liabilities assumed will be recorded at their fair value as of the date of acquisition based on management’s estimates using currently available information. The acquisition will be accounted for under the acquisition method of accounting pursuant to ASC 805, Business Combinations . The aggregate consideration paid to the former holders of PHH common stock was $358.4 million in cash, with $325.0 million from PHH and $33.4 million from Ocwen. We expect to recognize a bargain purchase gain, net of tax, in connection with the acquisition. The anticipated bargain purchase gain results from the losses we expect PHH to incur in the future that were contemplated as part of the purchase price. To the extent those losses are realized, they will be included in our consolidated statements of operations. Due to the timing of the acquisition, the initial accounting for the acquisition is incomplete as of the filing date and therefore the amount of the actual bargain purchase gain has not yet been determined. As part of the acquisition Ocwen assumed certain contingent liabilities, including contingent liabilities relating to pending and threatened legal and regulatory proceedings. Similar to Ocwen and other mortgage loan servicers and lenders, PHH and its subsidiaries are routinely, and currently, defendants in various legal proceedings that arise in the ordinary course of PHH's business, including class action proceedings. These proceedings are generally based on alleged violations of federal, state and local laws and regulations governing mortgage servicing and lending activities, and contractual obligations. Similar to Ocwen and other mortgage loan servicers and lenders, PHH and its subsidiaries are also routinely, and currently, subject to government and regulatory examinations, investigations and inquiries or other requests for information. The resolution of these various legal and regulatory matters may result in adverse judgments, fines, penalties, injunctions and other relief against PHH as well as monetary payments or other agreements and obligations. In particular, legal proceedings brought under RESPA or other federal or state consumer protection laws that are ongoing, or may arise from time to time, may include the award of treble and other damages substantially in excess of actual losses, attorneys' fees and expenses, injunctive relief and remediation or other consumer relief. These proceedings and matters are at varying procedural stages and PHH may engage in settlement discussions on certain matters in order to avoid the additional costs of engaging in litigation. The outcome of any legal or regulatory matter is inherently difficult to predict or estimate and the ultimate time to resolve any such matter may be protracted. In addition, the outcome in one or more legal or regulatory matters may affect the outcome of other pending or threatened legal or regulatory matters. The ultimate resolution of any particular legal or regulatory matter, whether through negotiated settlement, court rulings or otherwise, could be material to Ocwen’s business, reputation, financial condition, liquidity and results of operations. Costs incurred in connection with the transaction are expensed as incurred and are reported in Professional services in the unaudited consolidated statements of operations. Such costs were $1.7 million and $6.6 million during the three and nine months ended September 30, 2018 , respectively. Due to the timing of the acquisition occurring subsequent to the end of the third quarter of 2018, the initial accounting for the business combination is incomplete as of the filing date as disclosed above, and certain disclosures, including the supplemental pro forma financial information, have been omitted from these unaudited consolidated financial statements. We will include the disclosures required by ASC 805, Business Combinations , in our 2018 Annual Report on Form 10-K. We are currently evaluating the impact of this acquisition on our reportable segments. |
Organization, Business Enviro_2
Organization, Business Environment and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2018 . The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 . |
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, income taxes, the provision for potential losses that may arise from litigation proceedings, 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 Within the expenses section of the unaudited statement of operations for the three and nine months ended September 30, 2017 , we reclassified impairment charges and fair value gains and losses on mortgage servicing rights (MSRs), both previously included in the Servicing and origination line item, and Amortization of MSRs to a new line item titled MSR valuation adjustments, net. As a result of our adoption on January 1, 2018 of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash , debt service accounts and other restricted cash which are included in Other assets on the consolidated balance sheets have been classified as Cash and restricted cash in our consolidated statements of cash flows. Our revision of the unaudited consolidated statement of cash flows for the nine months ended September 30, 2017 to conform to the new standard resulted in an increase in net cash provided by operating activities of $4.2 million (Decrease in receivables and other assets, net line item is higher as revised). Certain amounts in the unaudited consolidated statement of cash flows for the nine months ended September 30, 2017 have been reclassified to conform to the current year presentation as follows: • Within the operating activities section, we reclassified Amortization of MSRs, Loss on valuation of MSRs, at fair value, and Impairment of MSRs to a new line item (MSR valuation adjustments, net). In addition, we reclassified Realized and unrealized gains on derivative financial instruments to Other, net. • Within the financing activities section, we reclassified Payment of debt issuance costs to Other, net. These reclassifications had no impact on our consolidated cash flows from operating, investing or financing activities. |
Recently Adopted And Issued Accounting Standards | Recently Adopted Accounting Standards Revenue from Contracts with Customers (Accounting Standards Update (ASU) 2014-09) This ASU clarifies the principles for recognizing revenue and creates a common revenue standard. Under this ASU, an entity will 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 will recognize revenue through a five-step process. The guidance in this standard does not apply to financial instruments and other contractual rights or obligations within the scope of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 860, Transfers and Servicing , among other ASC topics . As a result, our adoption of this standard on a modified retrospective basis on January 1, 2018 did not have a material impact on our consolidated financial statements. Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) This ASU provides users with more useful information regarding the recognition, measurement, presentation, and disclosure of financial instruments and also improves the accounting model to better meet the requirements of today’s complex economic environment. Most changes in this ASU require the same information, but some changes revise the geography of that information on the financial statements. Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15) This ASU clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows under FASB ASC Topic 230, Statement of Cash Flows (ASC 230). Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16) This ASU requires an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. Previously, recognition of current and deferred income taxes for an intra-entity transfer was prohibited until the asset had been sold to an outside party. We adopted this standard on a modified retrospective basis on January 1, 2018 by recording a cumulative-effect reduction of $5.6 million to retained earnings. Statement of Cash Flows: Restricted Cash (ASU 2016-18) This ASU clarifies how changes in restricted cash are classified and presented in the statement of cash flows under ASC 230. This standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. The amendments in this update have been applied using a retrospective transition method to each period presented. We have revised the unaudited consolidated statement of cash flows for the nine months ended September 30, 2017 to conform to the new standard. Business Combinations: Clarifying the Definition of a Business (ASU 2017-01) This ASU clarifies 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. Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. Compensation: Stock Compensation (ASU 2017-09) This ASU reduces 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. Our adoption of this standard on January 1, 2018 did not have a material impact on our consolidated financial statements. Financial Instruments: Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10) (ASU 2018-03) This ASU provides clarification of areas in ASU 2016-01 by improving the measurement and reporting of certain financial assets and liabilities. Our adoption of this standard on July 1, 2018 did not have a material impact on our consolidated financial statements. Income Taxes: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (ASU 2018-05) This ASU adds various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act (Tax Act) in the period of enactment. We adopted the now codified guidance in SAB 118 as of December 31, 2017 and continue to rely on the guidance in these interim financial statements. Accounting Standards Issued but Not Yet Adopted Leases (ASU 2016-02) This ASU will require a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months, regardless of whether the lease is classified as a finance or operating lease. Additional disclosures of the amount, timing and uncertainty of cash flows arising from leases will be required. In July 2018, the FASB amended this guidance by issuing ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842): Targeted Improvements which provides clarification and further guidance on areas identified as potential implementation issues, as well as providing for an additional optional transition method to allow initial application of the new leasing guidance at the adoption date and recognition of a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. These standards will be effective for us on January 1, 2019, with early application permitted. At adoption, we expect to apply the new transition method provided for in ASU 2018-11. While we are continuing to evaluate the effects that this guidance will have on our financial statements, we have determined it will result in the recognition of certain operating leases as right-of-use assets and lease liabilities in the consolidated balance sheet, but we do not anticipate that the impact will be material. Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13) This ASU will require timelier recording of credit losses on loans and other financial instruments. This standard aligns the accounting with the economics of lending by requiring banks and other lending institutions to immediately record the full amount of credit losses that are expected in their loan portfolios. The new guidance requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This standard requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. Additionally, the new guidance amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. This standard will be effective for us on January 1, 2020, with early application permitted. We are currently evaluating the effect of adopting this standard. Receivables: Nonrefundable Fees and Other Costs (ASU 2017-08) This ASU amends 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. 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. Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02) This ASU provides entities with an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. 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. Codification Improvements (ASU 2018-09) This ASU amends multiple codification Topics. The transition and effective date guidance is based on the facts and circumstances of each amendment. While some of the amendments in this ASU do not require transition guidance and were effective upon issuance of this ASU, many of the amendments in this ASU have transition guidance with an effective date of January 1, 2019. We do not anticipate that our adoption of this standard will have a material impact on our consolidated financial statements. Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) This ASU modifies the disclosure requirements on fair value measurements in FASB ASC Topic 820, Fair Value Measurement. The main provisions in this update include removal of the following disclosure requirements from this ASC: 1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, 2) the policy for timing of transfers between levels and 3) the valuation processes for Level 3 fair value measurements. This standard adds disclosure requirements to report the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and for certain unobservable inputs an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. This standard will be effective for us on January 1, 2020, with early application permitted on any removed or modified disclosures and to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption, and to allow a delayed adoption of the additional disclosures until the effective date. We are currently evaluating the effect of adopting this standard. Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15) This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this ASU. The amendments in this ASU require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this ASU require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments in this ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of operations as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. This standard will be effective for us on January 1, 2020, with early adoption permitted, including adoption in any interim period. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are currently evaluating the effect of adopting this standard. SEC Simplifies and Updates Disclosure Requirements (US 2018-21) In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , to eliminate, modify, or integrate into other SEC requirements certain disclosure rules. The amendments eliminate the following: • Redundant and duplicative requirements, which require substantially similar disclosures as GAAP, IFRS, or other SEC disclosure requirements; • Overlapping requirements, which are related to, but not the same as GAAP, IFRS, or other SEC disclosure requirements - including the elimination of the ratio of earnings to fixed charges; • Outdated requirements, which have become obsolete as a result of the passage of time or changes in the regulatory, business, or technological environment; and • Superseded requirements, which are inconsistent with recent legislation, more recently updated SEC disclosure requirements, or more recently updated GAAP. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule will become effective on November 5, 2018. We are currently evaluating the impact on our consolidated financial statements. |
Securitizations and Variable _2
Securitizations and Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Proceeds received from securitizations $ 282,507 $ 687,502 $ 998,204 $ 2,711,651 Servicing fees collected 9,808 10,300 30,233 30,250 Purchases of previously transferred assets, net of claims reimbursed (1,507 ) (1,234 ) (4,336 ) (3,958 ) $ 290,808 $ 696,568 $ 1,024,101 $ 2,737,943 |
Schedule of Assets That Relate to Continuing Involvement with Transferred Financial Assets with Servicing Rights and Maximum Exposure to Loss Including the Unpaid Principal Balance | The following table presents the carrying amounts of our assets that relate to our continuing involvement with forward loans that we have transferred with servicing rights retained as well as our maximum exposure to loss including the unpaid principal balance (UPB) of the transferred loans: September 30, 2018 December 31, 2017 Carrying value of assets MSRs, at fair value $ 111,586 $ 227 MSRs, at amortized cost — 97,832 Advances and match funded advances 61,500 57,636 UPB of loans transferred 11,118,533 12,077,635 Maximum exposure to loss $ 11,291,619 $ 12,233,330 |
Schedule of Carrying Value of Assets and Liabilities of Consolidated Mortgage-backed Securitization Trusts | The table below presents the carrying value and classification of the assets and liabilities of two consolidated mortgage-backed securitization trusts included in our unaudited consolidated balance sheet at September 30, 2018 as a result of residual securities issued by the trust that we acquired during the third quarter of 2018. Loans held for investment, at fair value - Restricted for securitization investors $ 28,373 Financing liability - Owed to securitization investors, at fair value 26,643 |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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: September 30, 2018 December 31, 2017 Level Carrying Value Fair Value Carrying Value Fair Value Financial assets Loans held for sale Loans held for sale, at fair value (a) 2 $ 145,417 $ 145,417 $ 214,262 $ 214,262 Loans held for sale, at lower of cost or fair value (b) 3 72,019 72,019 24,096 24,096 Total Loans held for sale 217,436 217,436 238,358 238,358 September 30, 2018 December 31, 2017 Level Carrying Value Fair Value Carrying Value Fair Value Loans held for investment, at fair value Loans held for investment - Reverse mortgages (a) 3 5,279,187 5,279,187 4,715,831 4,715,831 Loans held for investment - Restricted for securitization investors (a) 3 28,373 28,373 — — Total loans held for investment 5,307,560 5,307,560 4,715,831 4,715,831 Advances (including match funded) (c) 3 1,101,104 1,101,104 1,356,393 1,356,393 Automotive dealer financing notes (including match funded) (c) 3 — — 32,757 32,590 Receivables, net (c) 3 155,937 155,937 199,529 199,529 Mortgage-backed securities, at fair value (a) 3 1,670 1,670 1,592 1,592 U.S. Treasury notes (a) 1 1,059 1,059 1,567 1,567 Financial liabilities: Match funded liabilities (c) 3 $ 714,246 $ 710,303 $ 998,618 $ 992,698 Financing liabilities: HMBS-related borrowings, at fair value (a) 3 5,184,227 5,184,227 4,601,556 4,601,556 Financing liability - MSRs pledged, at fair value (a) 3 620,199 620,199 508,291 508,291 Financing liability - Owed to securitization investors, at fair value (a) 3 26,643 26,643 — — Other (c) 3 72,477 57,984 85,227 65,202 Total Financing liabilities $ 5,903,546 $ 5,889,053 $ 5,195,074 $ 5,175,049 Other secured borrowings: Senior secured term loan (c) (d) 2 230,295 236,866 290,068 299,741 Other (c) 3 115,130 115,130 255,782 255,782 Total Other secured borrowings 345,425 351,996 545,850 555,523 Senior notes: Senior unsecured notes (c) (d) 2 3,122 3,090 3,122 2,872 Senior secured notes (c) (d) 2 344,627 352,071 344,216 355,550 Total Senior notes 347,749 355,161 347,338 358,422 Derivative financial instrument assets (liabilities), at fair value (a) Interest rate lock commitments 2 2,816 2,816 3,283 3,283 Forward mortgage-backed securities 1 (1,873 ) (1,873 ) (545 ) (545 ) Interest rate caps 3 1,211 1,211 2,056 2,056 Mortgage servicing rights Mortgage servicing rights, at fair value (a) 3 $ 999,282 $ 999,282 $ 671,962 $ 671,962 Mortgage servicing rights, at amortized cost (c) (e) 3 — — 336,882 418,745 Total Mortgage servicing rights $ 999,282 $ 999,282 $ 1,008,844 $ 1,090,707 (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) Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. The balance at December 31, 2017 includes the impaired government-insured stratum of amortization method MSRs, which was measured at fair value on a non-recurring basis and reported net of the valuation allowance. At December 31, 2017, the carrying value of this stratum was $158.0 million before applying the valuation allowance of $24.8 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 Loans Held for Inv. - Restricted for Securitiza- tion Investors Financing Liability - Owed to Securit - ization Investors Mortgage-Backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Three months ended September 30, 2018 Beginning balance $ 5,143,758 $ (5,040,983 ) $ — $ — $ 1,732 $ (672,619 ) $ 1,657 $ 1,043,995 Purchases, issuances, sales and settlements Purchases — — — — — — — 2,924 Issuances 223,563 (229,169 ) — — — — — 1,930 Consolidation of mortgage-backed securitization trusts — — 28,373 (26,643 ) — — — — Sales — — — — — — — (8,119 ) Settlements (110,584 ) 108,790 — — — 49,620 — — Transfers (to) from: Loans held for sale, at fair value (253 ) — — — — — — — Other assets (170 ) — — — — — — — Receivables, net (20 ) — — — — — — — 112,536 (120,379 ) 28,373 (26,643 ) — 49,620 — (3,265 ) Total realized and unrealized gains (losses) included in earnings Change in fair value 22,893 (22,865 ) — — (62 ) 2,681 (446 ) (41,448 ) Calls and other — — — — — 119 — — 22,893 (22,865 ) — — (62 ) 2,800 (446 ) (41,448 ) Transfers in and / or out of Level 3 — — — — — — — — Ending balance $ 5,279,187 $ (5,184,227 ) $ 28,373 $ (26,643 ) $ 1,670 $ (620,199 ) $ 1,211 $ 999,282 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-Backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Three months ended September 30, 2017 Beginning balance $ 4,223,776 $ (4,061,626 ) $ 8,986 $ (441,007 ) $ 1,937 $ 625,650 Purchases, issuances, sales and settlements Purchases — — — — 655 — Issuances 263,169 (317,277 ) — (54,601 ) — (715 ) Sales — — — — — (311 ) Settlements (118,991 ) 111,677 — 19,770 (403 ) — Transfers (to) from: Other assets 88 — — — — — 144,266 (205,600 ) — (34,831 ) 252 (1,026 ) Total realized and unrealized gains (losses) included in earnings Change in fair value 91,718 (91,051 ) 341 27,024 (350 ) (26,477 ) Calls and other — — — 971 — — 91,718 (91,051 ) 341 27,995 (350 ) (26,477 ) Transfers in and / or out of Level 3 — — — — — — Ending balance $ 4,459,760 $ (4,358,277 ) $ 9,327 $ (447,843 ) $ 1,839 $ 598,147 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Loans Held for Inv. - Restricted for Securitiza- Financing Liability - Owed to Securiti- Mortgage-backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Nine months ended September 30, 2018 Beginning balance $ 4,715,831 $ (4,601,556 ) $ — $ — $ 1,592 $ (508,291 ) $ 2,056 $ 671,962 Purchases, issuances, sales and settlements Purchases — — — — — — 95 8,809 Issuances 711,035 (728,745 ) — — — (279,586 ) — (445 ) Consolidation of mortgage-backed securitization trusts — — 28,373 (26,643 ) — — — — Sales — — — — — — — (8,274 ) Settlements (296,800 ) 290,338 — — — 154,129 (371 ) — Transfers (to) from: MSRs carried at amortized cost, net of valuation allowance — — — — — — — 418,925 Loans held for sale, at fair value (694 ) — — — — — — — Other assets (307 ) — — — — — — — Receivables, net (92 ) — — — — — — — 413,142 (438,407 ) 28,373 (26,643 ) — (125,457 ) (276 ) 419,015 Total realized and unrealized gains (losses) included in earnings Included in earnings: Change in fair value 150,214 (144,264 ) — — 78 11,323 (569 ) (91,695 ) Calls and other — — — — — 2,226 — — 150,214 (144,264 ) — — 78 13,549 (569 ) (91,695 ) Transfers in and / or out of Level 3 — — — — — — — — Ending Balance $ 5,279,187 $ (5,184,227 ) $ 28,373 $ (26,643 ) $ 1,670 $ (620,199 ) $ 1,211 $ 999,282 Loans Held for Investment - Reverse Mortgages HMBS-Related Borrowings Mortgage-backed Securities Financing Liability - MSRs Pledged Derivatives MSRs Nine months ended September 30, 2017 Beginning balance $ 3,565,716 $ (3,433,781 ) $ 8,342 $ (477,707 ) $ 1,836 $ 679,256 Purchases, issuances, sales and settlements Purchases — — — — 655 — Issuances 961,642 (981,730 ) — (54,601 ) — (2,131 ) Sales — — — — — (541 ) Settlements (311,560 ) 287,908 — 52,963 (445 ) — Transfers (to) from: Other assets (1,335 ) — — — — — 648,747 (693,822 ) — (1,638 ) 210 (2,672 ) Total realized and unrealized gains (losses) included in earnings Change in fair value 245,297 (230,674 ) 985 27,024 (207 ) (78,437 ) Calls and other — — — 4,478 — — 245,297 (230,674 ) 985 31,502 (207 ) (78,437 ) Transfers in and / or out of Level 3 — — — — — — Ending balance $ 4,459,760 $ (4,358,277 ) $ 9,327 $ (447,843 ) $ 1,839 $ 598,147 |
Schedule of Significant Assumptions used in Valuation | Significant valuation assumptions September 30, December 31, 2017 Life in years Range 2.8 to 7.6 4.4 to 8.1 Weighted average 5.8 6.4 Conditional repayment rate Range 6.3% to 41.3% 5.4% to 51.9% Weighted average 14.7 % 13.1 % Discount rate 3.7 % 3.2 % |
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 | Significant valuation assumptions September 30, 2018 December 31, 2017 Agency (1) Non-Agency Agency Non-Agency Weighted average prepayment speed 8.1 % 15.7 % 8.1 % 16.6 % Weighted average delinquency rate 9.9 % 27.6 % 1.0 % 28.5 % Advance financing cost 5-year swap 5-yr swap plus 2.75% 5-year swap 5-yr swap plus 2.75% Interest rate for computing float earnings 5-year swap 5-yr swap minus 0.50% 5-year swap 5-yr swap minus 0.50% Weighted average discount rate 9.0 % 12.7 % 9.0 % 13.0 % Weighted average cost to service (in dollars) $ 105 $ 301 $ 64 $ 305 (1) Valuation assumptions for Agency MSRs at September 30, 2018 include assumptions for MSRs we carried at amortized cost at December 31, 2017. Effective January 1, 2018, we elected fair value accounting for our remaining MSRs that we had previously carried at amortized cost. |
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 | Significant valuation assumptions December 31, 2017 Weighted average prepayment speed 8.8 % Weighted average delinquency rate 10.9 % Advance financing cost 5-year swap Interest rate for computing float earnings 5-year swap Weighted average discount rate 9.2 % Weighted average cost to service (in dollars) $ 108 |
HMBS - Related Borrowings [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Schedule of Significant Assumptions used in Valuation | Significant valuation assumptions September 30, December 31, 2017 Life in years Range 2.8 to 7.6 4.4 to 8.1 Weighted average 5.8 6.4 Conditional repayment rate Range 6.3% to 41.3% 5.4% to 51.9% Weighted average 14.7 % 13.1 % Discount rate 3.7 % 3.1 % |
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 | Significant valuation assumptions September 30, 2018 December 31, 2017 Weighted average prepayment speed 16.1 % 17.0 % Weighted average delinquency rate 28.1 % 28.9 % Advance financing cost 5-yr swap plus 2.75% 5-year swap plus 2.75% Interest rate for computing float earnings 5-yr swap minus 0.50% 5-year swap minus 0.50% Weighted average discount rate 13.7 % 13.7 % Weighted average cost to service (in dollars) $ 307 $ 311 |
Loans Held for Sale (Tables)
Loans Held for Sale (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of Loans Held for Sale Fair Value | Loans Held for Sale - Fair Value Nine Months Ended September 30, 2018 2017 Beginning balance $ 214,262 $ 284,632 Originations and purchases 671,503 2,204,028 Proceeds from sales (728,531 ) (2,310,294 ) Principal collections (14,201 ) (3,684 ) Transfers from (to): Loans held for investment, at fair value 694 — Loans held for sale - Lower of cost or fair value (11,564 ) — Receivables, net (1,165 ) — Real estate owned (Other assets) (2,240 ) — Gain on sale of loans 25,525 22,131 Increase (decrease) in fair value of loans (12,791 ) 1,836 Other 3,925 1,789 Ending balance (1) $ 145,417 $ 200,438 (1) At September 30, 2018 and 2017 , the balances include $(6.5) million and $6.7 million , respectively, of fair value adjustments. |
Schedule of Loans Held for Sale at Lower Cost or Fair Value, Activity | Loans Held for Sale - Lower of Cost or Fair Value Nine Months Ended September 30, 2018 2017 Beginning balance $ 24,096 $ 29,374 Purchases 563,327 870,697 Proceeds from sales (400,693 ) (746,999 ) Principal collections (11,101 ) (6,545 ) Transfers from (to): Receivables, net (118,762 ) (137,807 ) Real estate owned (Other assets) (1,681 ) (711 ) Loans held for sale - Fair value 11,564 — Gain on sale of loans 2,180 8,332 (Increase) decrease in valuation allowance (3,144 ) 1,566 Other 6,233 5,317 Ending balance (1) $ 72,019 $ 23,224 (1) At September 30, 2018 and 2017 , the balances include $53.0 million and $17.6 million , respectively, of loans that we repurchased from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines. We may repurchase loans that have been modified, to facilitate loss reduction strategies, or as otherwise obligated as a Ginnie Mae servicer. Repurchased loans may be modified or otherwise remediated through loss mitigation activities, may be sold to a third party, or are reclassified to receivables. |
Schedule of Gains on Loans Held for Sale, Net | Gain on Loans Held for Sale, Net Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Gain on sales of loans, net MSRs retained on transfers of forward loans $ 1,427 $ 3,572 $ 5,880 $ 18,604 Fair value gains related to transfers of reverse mortgage loans, net 9,421 15,747 36,870 37,434 Gain on sale of repurchased Ginnie Mae loans 1,222 4,577 2,179 8,332 Other, net 4,459 6,730 24,028 19,635 16,529 30,626 68,957 84,005 Change in fair value of IRLCs 26 (178 ) 137 (1,605 ) Change in fair value of loans held for sale 365 (2,078 ) (9,781 ) 3,735 Gain (loss) on economic hedge instruments 84 (2,420 ) 2,082 (8,604 ) Other (62 ) (173 ) (260 ) (555 ) $ 16,942 $ 25,777 $ 61,135 $ 76,976 |
Valuation Allowance for Loans Held for Sale [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of Changes in Allowance For Losses | Valuation Allowance - Loans Held for Sale at Lower of Cost or Fair Value Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ 7,535 $ 6,491 $ 7,318 $ 10,064 Provision 2,755 906 3,036 1,761 Transfer from Liability for indemnification obligations (Other liabilities) 554 1,529 1,551 2,416 Sales of loans (382 ) (426 ) (1,464 ) (6,071 ) Other — (2 ) 21 328 Ending balance $ 10,462 $ 8,498 $ 10,462 $ 8,498 |
Advances (Tables)
Advances (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Advances [Abstract] | |
Schedule of Advances Paid on Behalf of Borrowers or on Foreclosed Properties | September 30, 2018 December 31, 2017 Principal and interest $ 16,385 $ 20,207 Taxes and insurance 105,633 144,454 Foreclosures, bankruptcy and other 59,759 63,597 181,777 228,258 Allowance for losses (15,753 ) (16,465 ) $ 166,024 $ 211,793 |
Schedule of Activity in Advances | The following table summarizes the activity in net advances: Nine Months Ended September 30, 2018 2017 Beginning balance $ 211,793 $ 257,882 Sales of advances (4,777 ) (399 ) Collections of advances, charge-offs and other, net (41,704 ) (63,320 ) Decrease in allowance for losses 712 3,790 Ending balance $ 166,024 $ 197,953 |
Schedule of Change in Allowance for Losses | Allowance for Losses Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ 16,485 $ 20,328 $ 16,465 $ 37,952 Provision 2,696 13,756 6,197 17,054 Net (charge-offs) recoveries and other (3,428 ) 78 (6,909 ) (20,844 ) Ending balance $ 15,753 $ 34,162 $ 15,753 $ 34,162 |
Match Funded Advances (Tables)
Match Funded Advances (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Transfers and Servicing [Abstract] | |
Schedule of Match Funded Assets | September 30, 2018 December 31, 2017 Advances Principal and interest $ 424,520 $ 523,248 Taxes and insurance 352,376 439,857 Foreclosures, bankruptcy, real estate and other 158,184 181,495 935,080 1,144,600 Automotive dealer financing notes (1) — 35,392 Allowance for losses — (2,635 ) — 32,757 $ 935,080 $ 1,177,357 (1) In January 2018, we terminated our automotive dealer loan financing facility. Automotive dealer financing notes not pledged to our automotive dealer loan financing facility are reported as Other assets. |
Schedule of Activity In Match Funded Assets | The following table summarizes the activity in match funded assets: Nine Months Ended September 30, 2018 2017 Advances Automotive Dealer Financing Notes Advances Automotive Dealer Financing Notes Beginning balance $ 1,144,600 $ 32,757 $ 1,451,964 $ — Transfer (to) from Other assets — (36,896 ) — 25,180 Sales — — (691 ) — New advances (collections), net (209,520 ) 1,504 (243,410 ) 10,856 Decrease in allowance for losses (1) — 2,635 — — Ending balance $ 935,080 $ — $ 1,207,863 $ 36,036 (1) The remaining allowance was charged off in connection with the exit from the ACS business. |
Mortgage Servicing (Tables)
Mortgage Servicing (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Transfers and Servicing [Abstract] | |
Schedule of Activity Related to MSRs - Amortization Method | Mortgage Servicing Rights – Amortization Method Nine Months Ended September 30, 2018 2017 Beginning balance $ 336,882 $ 363,722 Fair value election - transfer of MSRs carried at fair value (1) (361,670 ) — Additions recognized in connection with asset acquisitions — 1,658 Additions recognized on the sale of mortgage loans — 18,604 Sales and other transfers — (814 ) (24,788 ) 383,170 Amortization (1) — (38,560 ) Decrease in impairment valuation allowance (1) (2) 24,788 1,551 Ending balance $ — $ 346,161 Estimated fair value at end of period $ — $ 424,208 (1) Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with each of these classes. We recorded a cumulative-effect adjustment of $82.0 million to retained earnings as of January 1, 2018 to reflect the excess of the fair value of the Agency MSRs over their carrying amount. We also recognized the tax effect of this adjustment through an increase in retained earnings of $6.8 million and a deferred tax asset for the same amount. However, we established a full valuation allowance on the resulting deferred tax asset through a reduction in retained earnings. The government-insured MSRs were impaired by $24.8 million at December 31, 2017; therefore, these MSRs were already effectively carried at fair value. (2) Impairment of MSRs is recognized in MSR valuation adjustments, net in the unaudited consolidated statements of operations for the nine months ended September 30, 2017 . Impairment valuation allowance balance of $24.8 million was reclassified to reduce the carrying value of the related MSRs on January 1, 2018 in connection with our fair value election. See Note 3 – Fair Value for additional information regarding impairment and the valuation allowance. |
Schedule of Activity Related to MSRs - Fair Value Measurement Method | Mortgage Servicing Rights – Fair Value Measurement Method Nine Months Ended September 30, 2018 2017 Agency Non-Agency Total Agency Non-Agency Total Beginning balance $ 11,960 $ 660,002 $ 671,962 $ 13,357 $ 665,899 $ 679,256 Fair value election - transfer of MSRs carried at amortized cost, net of valuation allowance 336,882 — 336,882 — — — Cumulative effect of fair value election 82,043 — 82,043 — — — Sales and other transfers (5,950 ) (175 ) (6,125 ) — (2,672 ) (2,672 ) Additions 8,809 — 8,809 — — — Servicing transfers and adjustments — (2,594 ) (2,594 ) — — — Changes in fair value (1): Changes in valuation inputs or other assumptions 19,217 (424 ) 18,793 (131 ) 2,303 2,172 Realization of expected future cash flows and other changes (43,545 ) (66,943 ) (110,488 ) (1,385 ) (79,224 ) (80,609 ) Ending balance $ 409,416 $ 589,866 $ 999,282 $ 11,841 $ 586,306 $ 598,147 (1) Changes in fair value are recognized in MSR valuation adjustments, net 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, 2018 given hypothetical shifts in lifetime prepayments and yield assumptions: Adverse change in fair value 10% 20% Weighted average prepayment speeds $ (92,659 ) $ (178,462 ) Discount rate (option-adjusted spread) (28,326 ) (54,351 ) |
Schedule of Composition of Servicing and Subservicing Portfolios by Type of Property Serviced | The following table presents the composition of our residential primary servicing and subservicing portfolios as measured by UPB, including foreclosed real estate and small-balance commercial loans. 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. UPB at September 30, 2018 Servicing $ 68,076,254 Subservicing 1,387,641 NRZ (1) 91,532,579 $ 160,996,474 UPB at December 31, 2017 Servicing $ 75,469,327 Subservicing 2,063,669 NRZ (1) 101,819,557 $ 179,352,553 UPB at September 30, 2017 Servicing $ 78,254,463 Subservicing (2) 3,656,197 NRZ (1) 105,557,658 $ 187,468,318 (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. (2) Excludes $9.8 million of large-balance commercial foreclosed real estate. During 2017, we sold or transferred servicing on the remaining managed assets. |
Schedule of Components of Servicing and Subservicing Fees | Servicing Revenue Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Loan servicing and subservicing fees Servicing $ 52,610 $ 63,071 $ 167,389 $ 197,712 Subservicing 658 1,760 2,443 5,877 NRZ 120,593 129,228 374,322 420,151 173,861 194,059 544,154 623,740 Late charges 14,839 14,958 44,743 47,352 Custodial accounts (float earnings) 10,241 7,489 25,965 18,322 Loan collection fees 4,916 5,663 14,700 17,918 Home Affordable Modification Program (HAMP) fees (1) 3,365 6,202 11,622 37,692 Other 6,508 4,849 16,911 16,499 $ 213,730 $ 233,220 $ 658,095 $ 761,523 (1) The HAMP program expired on December 31, 2016. Borrowers who had requested assistance or to whom an offer of assistance had been extended as of that date had until September 30, 2017 to finalize their modification. We continue to earn HAMP success fees for HAMP modifications that remain less than 90 days delinquent at the first, second and third year anniversary of the start of the trial modification. |
Rights to MSRs (Tables)
Rights to MSRs (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Transfers and Servicing [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. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Servicing fees collected on behalf of NRZ $ 120,593 $ 129,228 $ 374,322 $ 420,151 Less: Subservicing fee retained by Ocwen 33,335 68,536 101,997 226,483 Net servicing fees remitted to NRZ 87,258 60,692 272,325 193,668 Less: Reduction (increase) in financing liability Changes in fair value Original Rights to MSRs Agreements 4,844 (9,854 ) (3,938 ) (9,854 ) 2017 Agreements and New RMSR Agreements (2,163 ) 36,878 15,261 36,878 Runoff, settlement and other Original Rights to MSRs Agreements 14,095 19,003 45,455 52,196 2017 Agreements and New RMSR Agreements 33,765 767 104,291 767 $ 36,717 $ 13,898 $ 111,256 $ 113,681 |
Receivables (Tables)
Receivables (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of Receivables | September 30, 2018 December 31, 2017 Servicing-related receivables: Government-insured loan claims, net $ 100,786 $ 114,971 Reimbursable expenses 30,493 31,709 Due from custodial accounts 27,990 36,122 Due from NRZ 6,137 14,924 Other 9,048 11,959 174,454 209,685 Income taxes receivable 35,153 36,831 Other receivables 11,153 19,600 220,760 266,116 Allowance for losses (64,823 ) (66,587 ) $ 155,937 $ 199,529 |
Government Insured Loans Claims [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of Changes in Allowance For Losses | Allowance for Losses - Government-Insured Loan Claims Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ 53,155 $ 46,577 $ 53,340 $ 53,258 Provision 10,180 9,162 29,214 31,848 Net charge-offs and other (10,297 ) (7,069 ) (29,516 ) (36,436 ) Ending balance $ 53,038 $ 48,670 $ 53,038 $ 48,670 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Other Assets [Line Items] | |
Schedule of Other Assets | September 30, 2018 December 31, 2017 Contingent loan repurchase asset $ 307,684 $ 431,492 Prepaid expenses 23,023 22,559 Debt service accounts (restricted cash) 22,454 33,726 Prepaid representation, warranty and indemnification claims - Agency MSR sale 15,173 20,173 Prepaid lender fees, net 6,290 9,496 Real estate 5,216 3,070 Derivatives, at fair value 4,721 5,429 Other restricted cash 3,056 9,179 Mortgage backed securities, at fair value 1,670 1,592 Interest-earning time deposits 1,629 4,739 Prepaid income taxes — 5,621 Other 8,086 7,715 $ 399,002 $ 554,791 |
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: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ — $ 9,586 $ 7,664 $ 4,371 Provision — (1,019 ) (265 ) 4,196 Net charge-offs and other — — (7,399 ) — Ending balance $ — $ 8,567 $ — $ 8,567 |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Match Funded Liabilities | Match Funded Liabilities September 30, 2018 December 31, 2017 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-VF4 (4) Aug. 2048 Aug. 2018 $ — — % $ — 4.29 % $ 67,095 Advance Receivables Backed Notes - Series 2015-VF5 (4) Dec. 2049 Dec. 2019 46,178 3.76 178,822 4.29 67,095 Advance Receivables Backed Notes - Series 2016-T1 (5) Aug. 2048 Aug. 2018 — — — 2.77 265,000 Advance Receivables Backed Notes - Series 2016-T2 (5) Aug. 2049 Aug. 2019 — 2.99 235,000 2.99 235,000 Advance Receivables Backed Notes - Series 2017-T1 (5) Sep. 2048 Sep. 2018 — — — 2.64 250,000 Advance Receivables Backed Notes, Series 2018-T1 (5) Aug. 2049 Aug. 2019 — 3.50 150,000 — — Advance Receivables Backed Notes, Series 2018-T2 (5) Aug. 2050 Aug. 2020 — 3.81 150,000 — — Total Ocwen Master Advance Receivables Trust (OMART) 46,178 3.46 713,822 3.02 884,190 Ocwen Servicer Advance Receivables Trust III (OSART III) - Advance Receivables Backed Notes, Series 2014-VF1 (6) Dec. 2048 Dec. 2018 54,626 5.49 374 4.63 33,768 Ocwen Freddie Advance Funding (OFAF) - Advance Receivables Backed Notes, Series 2015-VF1 (7) Jun. 2049 Jun. 2019 64,950 4.83 50 4.52 56,078 Total Servicing Advance Financing Facilities 165,754 3.46 % 714,246 3.16 % 974,036 Automotive Capital Asset Receivables Trust (ACART) - Loan Series 2017-1 (8) Feb. 2021 Feb. 2019 — — % — 6.77 % 24,582 $ 165,754 3.46 % $ 714,246 3.25 % $ 998,618 (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 eligible collateral to pledge. Collateral may only be pledged to one facility. At September 30, 2018 , $52.8 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 2.26% and 1.56% at September 30, 2018 and December 31, 2017 , respectively. (4) Effective January 1, 2018, the borrowing capacity of the Series 2014-VF4 and the Series 2015-VF5 variable rate notes were each reduced from $105.0 million to $70.0 million . The interest rate was based on 1ML, with a ceiling of 125 basis points (bps), plus a margin of 235 to 635 bps. On July 13, 2018, we increased the borrowing capacity of the Series 2015-VF5 variable notes to $225.0 million and extended the amortization date to December 15, 2019, with interest computed based on the lender’s cost of funds plus a margin of 105 to 250 bps. The increased capacity was used on July 16, 2018 to redeem the Series 2016-T1 term notes with an outstanding balance of $265.0 million and an amortization date of August 15, 2018. We also voluntarily terminated the Series 2014-VF4 variable notes on July 16, 2018. (5) Under the terms of the agreement, we must continue to borrow the full amount of the Series 2016-T2, 2018-T1 and 2018-T2 fixed-rate term notes until the amortization date. If there is insufficient eligible collateral to support the level of borrowing, the excess cash proceeds in an amount necessary to make up the deficit are not distributed to Ocwen but are held by the trustee, and interest expense continues to be based on the full amount of the outstanding notes. The Series 2016-T2, 2018-T1 and 2018-T2 term notes have a total combined borrowing capacity of $535.0 million . Rates on the individual classes of notes range from 2.72% to 4.53% . The Series 2016-T1 and Series 2017-T1 term notes were redeemed on July 16, 2018 and August 14, 2018, respectively. On August 15, 2018, we issued two $150.0 million fixed-rate term notes (Series 2018 T-1 and Series 2018-T2) with amortization dates of August 15, 2019 and August 2020, respectively. (6) The maximum borrowing capacity under this facility is $55.0 million . There is a ceiling of 300 bps for the 3ML 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 235 to 475 bps. (7) On June 7, 2018, borrowing capacity was reduced from $110.0 million to $65.0 million with interest computed based on the lender’s cost of funds plus a margin of 180 to 450 bps. There is a ceiling of 300 bps for 3ML in determining the interest rate for these variable rate notes. (8) On January 23, 2018, we voluntarily terminated the Loan Series 2017-1 Notes. |
Schedule of Financing Liabilities | Financing Liabilities Outstanding Balance Borrowing Type Collateral Interest Rate Maturity September 30, 2018 December 31, 2017 HMBS-Related Borrowings, at fair value (1) Loans held for investment 1ML + 260 bps (1) $ 5,184,227 $ 4,601,556 Other Financing Liabilities MSRs pledged, at fair value: Original Rights to MSRs Agreements MSRs (2) (2) 450,845 499,042 2017 Agreements and New RMSR Agreements MSRs (3) (3) 169,354 9,249 620,199 508,291 Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (4) MSRs (4) Feb. 2028 67,194 72,575 Financing liability - Owed to securitization investors, at fair value: IndyMac Mortgage Loan Trust (INDX 2004-AR11) (5) Loans held for investment (5) (5) 13,250 — Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) (5) Loans held for investment (5) (5) 13,393 — 26,643 — Advances pledged (6) Advances on loans (6) (6) 5,283 12,652 719,319 593,518 $ 5,903,546 $ 5,195,074 (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 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 lump sum payments received upon transfer of legal title of the MSRs related to the Rights to MSRs transactions to NRZ in September 2017. In connection with the execution of the New RMSR Agreements in January 2018, we received a lump sum payment of $279.6 million as compensation for foregoing certain payments under the Original Rights to MSRs Agreements. 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. The expected maturity of the liability is April 30, 2020, the date through which we were scheduled to be the servicer on loans underlying the Rights to MSRs per the Original Rights to MSRs Agreements. (4) OASIS noteholders are entitled to receive a monthly payment equal to the sum of: (a) 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. 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 notes. (5) Consists of securitization debt certificates due to third parties that represent beneficial interests in trusts that we include in our unaudited consolidated financial statements, as more fully described in Note 2 – Securitizations and Variable Interest Entities . The holders of these certificates have no recourse against the assets of Ocwen. The certificates in the INDX 2004-AR11 Trust pay interest based on variable rates which are generally based on weighted average net mortgage rates and which range between 3.29% and 3.62% at September 30, 2018. The certificates in the RAST 2003-A11 Trust pay interest based on fixed rates ranging between 4.25% and 5.75% and a variable rate based on 1ML plus 0.45% . The maturity of the certificates occurs upon maturity of the loans held by the trust. The remaining loans in the INDX 2004-AR11 Trust and RAST 2003-A11 Trust have maturity dates extending through November 2034 and October 2033, respectively. (6) 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. The effective interest rate is based on 1ML plus a margin of 450 bps. |
Schedule of Other Secured Borrowings | Other Secured Borrowings Outstanding Balance Borrowing Type Collateral Interest Rate Termination / Maturity Available Borrowing Capacity (1) September 30, 2018 December 31, 2017 SSTL (2) (2) 1-Month Euro-dollar rate + 500 bps with a Eurodollar floor of 100 bps (2) Dec. 2020 $ — $ 235,687 $ 298,251 Mortgage loan warehouse facilities Repurchase agreement (3) Loans held for sale (LHFS) 1ML + 200 - 345 bps Sep. 2019 100,000 — 8,221 Participation agreements (4) LHFS N/A (4) — 64,798 161,433 Mortgage warehouse agreement (5) LHFS (reverse mortgages) 1ML + 275 bps; 1ML floor of 350 bps Aug. 2019 — 9,899 32,042 Master repurchase agreement (6) LHFS (forward and reverse mortgages) 1ML + 225 bps forward; 1ML + 275 bps reverse Dec. 2018 109,567 40,433 54,086 Master repurchase agreement (7) LHFS (reverse mortgages) Prime + 0.0% (4.0% floor) Dec. 2018 — — — 209,567 115,130 255,782 $ 209,567 350,817 554,033 Unamortized debt issuance costs - SSTL (3,573 ) (5,423 ) Discount - SSTL (1,819 ) (2,760 ) $ 345,425 $ 545,850 Weighted average interest rate 5.79 % 5.22 % (1) Available borrowing capacity for our mortgage loan warehouse facilities 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, $100.0 million could be used at September 30, 2018 based on the amount of eligible collateral that could be pledged. (2) Under the terms of the Amended and Restated Senior Secured Term Loan Facility Agreement with an original borrowing capacity of $335.0 million , we may request increases to the loan amount of up to $100.0 million , with additional increases subject to certain limitations. We are required to make quarterly principal payments of $4.2 million on the SSTL, 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) 1ML, plus a margin of 4.00% and subject to a base rate floor of 2.00% or (b) 1ML, plus a margin of 5.00% and subject to a 1ML floor of 1.00% . To date, we have elected option (b) to determine the interest rate. (3) 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 September 28, 2018, we renewed this facility through September 27, 2019. In connection with the renewal, we increased the maximum borrowing amount from $137.5 million to $175.0 million , of which $100.0 million is available on a committed basis and the remainder is available at the discretion of the lender. (4) Under these participation agreements, the lender provides financing for a combined total of $250.0 million at the discretion of the lender. The participation agreements allow 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 May 31, 2018, we renewed these facilities through April 30, 2019 ( $175.0 million ) and May 31, 2019 ( $75.0 million ). (5) Under this participation agreement, the lender provides financing for $100.0 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. On August 15, 2018, we renewed these facilities through August 15, 2019. (6) Under this agreement, the lender provides financing on a committed basis for up to $150.0 million . The 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. (7) Under this agreement, t he lender provides financing for up to $50.0 million at the discretion of the lender. |
Schedule of Senior Notes | Senior Notes Interest Rate Maturity Outstanding Balance September 30, 2018 December 31, 2017 Senior unsecured notes (1) 6.625% May 2019 $ 3,122 $ 3,122 Senior secured notes (2) 8.375% Nov. 2022 346,878 346,878 350,000 350,000 Unamortized debt issuance costs (2,251 ) (2,662 ) $ 347,749 $ 347,338 (1) 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 a redemption price (expressed as a percentage of principal amount) of 100.000% beginning May 15, 2018 plus accrued and unpaid interest and additional interest, if any. (2) 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. |
Schedule of Redemption Prices | The redemption prices during the twelve-month periods beginning on November 15 th 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, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Liabilities | September 30, 2018 December 31, 2017 Contingent loan repurchase liability $ 307,684 $ 431,492 Other accrued expenses 60,238 75,088 Accrued legal fees and settlements 53,380 51,057 Due to NRZ 46,550 98,493 Servicing-related obligations 30,958 35,239 Checks held for escheat 20,686 19,306 Liability for indemnification obligations 20,543 23,117 Accrued interest payable 15,069 5,172 Liability for mortgage insurance contingency 6,820 6,820 Deferred revenue 4,836 3,463 Liability for uncertain tax positions 3,306 3,252 Derivatives, at fair value 2,567 635 Amounts due in connection with MSR sales 403 8,291 Other 16,287 7,985 $ 589,327 $ 769,410 |
Schedule of Accrued Legal Fees and Settlements | Accrued Legal Fees and Settlements Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Beginning balance $ 54,295 $ 117,020 $ 51,057 $ 93,797 Accrual for probable losses (1) 995 2,500 10,777 80,815 Payments (2) (460 ) (55,188 ) (8,103 ) (120,441 ) Issuance of common stock in settlement of litigation (3) — — (5,719 ) — Net increase (decrease) in accrued legal fees (1,450 ) (4,389 ) 3,282 3,229 Other — — 2,086 2,543 Ending balance $ 53,380 $ 59,943 $ 53,380 $ 59,943 (1) Consists of amounts accrued for probable losses in connection with legal and regulatory settlements and judgments. Such amounts are reported in Professional services expense in the unaudited consolidated statements of operations. (2) Includes cash payments made in connection with resolved legal and regulatory matters. (3) In January 2018, Ocwen issued 1,875,000 shares of common stock in connection with a previously approved securities litigation settlement. |
Derivative Financial Instrume_2
Derivative Financial Instruments and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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. The notional amount of our contracts does not represent our exposure to credit loss. None of the derivatives was designated as a hedge for accounting purposes at September 30, 2018 : Interest Rate Risk IRLCs and Loans Held for Sale Borrowings IRLCs Forward MBS Trades Interest Rate Caps Notional balance at December 31, 2017 $ 96,339 $ 240,823 $ 375,000 Additions 927,700 386,311 154,583 Amortization — — (208,750 ) Maturities (746,615 ) (407,759 ) — Terminations (164,978 ) — — Notional balance at September 30, 2018 $ 112,446 $ 219,375 $ 320,833 Maturity Oct. 2018 - Nov. 2018 Dec. 2018 May 2019 - May 2020 Fair value of derivative assets (liabilities) (1) at: September 30, 2018 $ 2,816 $ (1,873 ) $ 1,211 December 31, 2017 3,283 (545 ) 2,056 Gains (losses) on derivatives during the nine months ended: Gain on Loans Held for Sale, Net Other, Net September 30, 2018 $ 137 $ 2,082 $ (308 ) September 30, 2017 (1,605 ) (8,604 ) (207 ) (1) Derivatives are reported at fair value in Other assets or in Other liabilities on our unaudited consolidated balance sheets. |
Interest Expense (Tables)
Interest Expense (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Other Income and Expenses [Abstract] | |
Schedule of Components of Interest Expense | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Financing liabilities NRZ $ 36,717 $ 13,898 $ 111,256 $ 113,681 Other financing liabilities 1,305 1,419 3,849 4,898 38,022 15,317 115,105 118,579 Match funded liabilities 7,229 11,981 24,491 37,499 Other secured borrowings 6,958 10,990 23,190 30,174 Senior notes 7,452 7,452 22,355 22,355 Other 1,627 1,541 4,460 3,864 $ 61,288 $ 47,281 $ 189,601 $ 212,471 |
Basic and Diluted Earnings (L_2
Basic and Diluted Earnings (Loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Calculation of Basic Loss per Share to Diluted Loss per Share | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Basic loss per share Net loss attributable to Ocwen stockholders $ (41,147 ) $ (6,252 ) $ (68,430 ) $ (83,483 ) Weighted average shares of common stock 133,912,425 128,744,152 133,632,905 125,797,777 Basic loss per share $ (0.31 ) $ (0.05 ) $ (0.51 ) $ (0.66 ) Diluted loss per share Net loss attributable to Ocwen stockholders $ (41,147 ) $ (6,252 ) $ (68,430 ) $ (83,483 ) Weighted average shares of common stock 133,912,425 128,744,152 133,632,905 125,797,777 Effect of dilutive elements Stock option awards — — — — Common stock awards — — — — Dilutive weighted average shares of common stock 133,912,425 128,744,152 133,632,905 125,797,777 Diluted loss per share $ (0.31 ) $ (0.05 ) $ (0.51 ) $ (0.66 ) Stock options and common stock awards excluded from the computation of diluted earnings per share Anti-dilutive (1) 4,057,937 6,600,164 5,684,663 5,121,844 Market-based (2) 645,984 862,446 645,984 862,446 (1) Stock options were anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock. (2) 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, 2018 | |
Segment Reporting Information [Line Items] | |
Schedule of Segment Reporting Information | Financial information for our segments is as follows: Three Months Ended September 30, 2018 Results of Operations Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated Revenue $ 217,630 $ 16,917 $ 3,731 $ — $ 238,278 Expenses (1) 185,077 18,954 13,495 — 217,526 Other income (expense): Interest income 2,242 1,255 466 — 3,963 Interest expense (47,359 ) (1,437 ) (12,492 ) — (61,288 ) Gain on sale of mortgage servicing rights, net (733 ) — — — (733 ) Other (602 ) 154 (2,519 ) — (2,967 ) Other expense, net (46,452 ) (28 ) (14,545 ) — (61,025 ) Loss before income taxes $ (13,899 ) $ (2,065 ) $ (24,309 ) $ — $ (40,273 ) Three Months Ended September 30, 2017 Results of Operations Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated 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 ) Nine months ended September 30, 2018 Revenue $ 674,233 $ 65,116 $ 12,767 $ — $ 752,116 Expenses (1) 523,061 57,036 49,580 — 629,677 Other income (expense): Interest income 4,136 4,107 1,775 — 10,018 Interest expense (144,551 ) (4,855 ) (40,195 ) — (189,601 ) Gain on sale of mortgage servicing rights, net 303 — — — 303 Other (2,392 ) 774 (5,254 ) — (6,872 ) Other income (expense), net (142,504 ) 26 (43,674 ) — (186,152 ) Income (loss) before income taxes $ 8,668 $ 8,106 $ (80,487 ) $ — $ (63,713 ) 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 ) Total Assets Servicing Lending Corporate Items and Other Corporate Eliminations Business Segments Consolidated September 30, 2018 $ 2,726,905 $ 5,385,437 $ 348,695 $ — $ 8,461,037 December 31, 2017 $ 3,033,243 $ 4,945,456 $ 424,465 $ — $ 8,403,164 September 30, 2017 $ 2,905,817 $ 4,679,641 $ 512,147 $ — $ 8,097,605 Depreciation and Amortization Expense Servicing Lending Corporate Items and Other Business Segments Consolidated Three months ended September 30, 2018 Depreciation expense $ 1,035 $ 23 $ 4,500 $ 5,558 Amortization of debt discount — — 235 235 Amortization of debt issuance costs — — 599 599 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 Nine months ended September 30, 2018 Depreciation expense $ 3,647 $ 77 $ 14,475 $ 18,199 Amortization of debt discount — — 941 941 Amortization of debt issuance costs — — 2,261 2,261 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 (1) Expenses in the Corporate Items and Other segment for the nine months ended September 30, 2018 includes $7.5 million of severance expense attributable to headcount reductions in connection with our strategic initiatives to exit the ACS business and the forward lending correspondent and wholesale channels, as well as our overall efforts to reduce costs. |
Depreciation and Amortization [Member] | |
Segment Reporting Information [Line Items] | |
Schedule of Segment Reporting Information | Depreciation and Amortization Expense Servicing Lending Corporate Items and Other Business Segments Consolidated Three months ended September 30, 2018 Depreciation expense $ 1,035 $ 23 $ 4,500 $ 5,558 Amortization of debt discount — — 235 235 Amortization of debt issuance costs — — 599 599 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 Nine months ended September 30, 2018 Depreciation expense $ 3,647 $ 77 $ 14,475 $ 18,199 Amortization of debt discount — — 941 941 Amortization of debt issuance costs — — 2,261 2,261 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 |
Contingencies (Tables)
Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 2017 Beginning balance $ 19,229 $ 24,285 Provision for representation and warranty obligations 4,443 (3,285 ) New production reserves 259 554 Charge-offs and other (1) (6,824 ) (3,036 ) Ending balance $ 17,107 $ 18,518 (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 Enviro_3
Organization, Business Environment and Basis of Presentation - Narrative (Details) $ in Thousands | Jan. 18, 2018USD ($) | Sep. 01, 2017USD ($) | Sep. 30, 2018USD ($)Employee | Sep. 30, 2017USD ($) |
Description of Business and Basis of Presentation [Line Items] | ||||
Total number of employees | Employee | 6,400 | |||
Percentage of foreign based employees engaged in supporting loan servicing operations | 80.00% | |||
Proceeds from sale of mortgage servicing rights accounted for as financing | $ 279,586 | $ 54,601 | ||
Current maturities of borrowings in next 12 months | $ 520,400 | |||
Debt instrument, term | 364 days | |||
Increase in net cash provided by operating activities | $ 4,200 | |||
Cumulative effect of adoption of FASB Accounting Standards Update 2016-16 | $ (5,621) | |||
INDIA | ||||
Description of Business and Basis of Presentation [Line Items] | ||||
Total number of employees | Employee | 4,300 | |||
PHILIPPINES | ||||
Description of Business and Basis of Presentation [Line Items] | ||||
Total number of employees | Employee | 500 | |||
NRZ [Member] | ||||
Description of Business and Basis of Presentation [Line Items] | ||||
Proceeds from sale of mortgage servicing rights accounted for as financing | $ 279,600 | $ 54,600 |
Securitizations and Variable _3
Securitizations and Variable Interest Entities - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||||||
Average period to securitization | 30 days | |||||
MSRs retained | $ 1,400 | $ 3,600 | $ 5,900 | $ 18,600 | ||
Percentage of loan transferred through securitization 60 days or more past due | 7.40% | 8.90% | ||||
Loans held for investment, not pledged as collateral | 78,100 | $ 78,100 | $ 83,800 | |||
Pledged advance remittance period | 2 days | |||||
Mortgage servicing rights, at fair value | 999,282 | $ 598,147 | $ 999,282 | $ 598,147 | 671,962 | $ 679,256 |
Advances | 166,024 | 166,024 | $ 211,793 | |||
Residential Mortgage-Backed Securitization Trusts [Member] | ||||||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||||||
Mortgage servicing rights, at fair value | 200 | 200 | ||||
Investment in residual securities of trusts | 1,700 | 1,700 | ||||
Advances | $ 1,200 | $ 1,200 |
Securitizations and Variable _4
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | ||||
Proceeds received from securitizations | $ 282,507 | $ 687,502 | $ 998,204 | $ 2,711,651 |
Servicing fees collected | 9,808 | 10,300 | 30,233 | 30,250 |
Purchases of previously transferred assets, net of claims reimbursed | (1,507) | (1,234) | (4,336) | (3,958) |
Cash flows received from and paid to securitization trusts | $ 290,808 | $ 696,568 | $ 1,024,101 | $ 2,737,943 |
Securitizations and Variable _5
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, 2018 | Dec. 31, 2017 |
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
UPB of loans transferred | $ 11,118,533 | $ 12,077,635 |
Maximum exposure to loss | 11,291,619 | 12,233,330 |
Mortgage Servicing Rights - Fair Value [Member] | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | 111,586 | 227 |
Mortgage Servicing Rights - Amortized Costs [Member] | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | 0 | 97,832 |
Advances And Match Funded Advances [Member] | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | $ 61,500 | $ 57,636 |
Securitizations and Variable _6
Securitizations and Variable Interest Entities Schedule of Carrying Value of Assets and Liabilities of Consolidated Mortgage-backed Securitization Trusts (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Loans held for investment, at fair value | $ 5,307,560 | $ 4,715,831 |
Other financing liabilities | 719,319 | 593,518 |
Residential Mortgage-Backed Securitization Trusts [Member] | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Loans held for investment, at fair value | 28,373 | 0 |
Other financing liabilities | $ 26,643 | $ 0 |
Fair Value - Schedule of Fair V
Fair Value - Schedule of Fair Value Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |||
Loans held for sale | |||||||
Loans held for sale, at fair value | $ 145,417 | [1] | $ 214,262 | $ 200,438 | [1] | $ 284,632 | |
Financial liabilities: | |||||||
Match funded liabilities | 714,246 | 998,618 | |||||
HMBS-related borrowings | [2] | 5,184,227 | 4,601,556 | ||||
Financing liabilities: | |||||||
Other financing liabilities | 719,319 | 593,518 | |||||
Total Financing liabilities | 5,903,546 | 5,195,074 | |||||
Other secured borrowings: | |||||||
Total Other secured borrowings | 345,425 | 545,850 | |||||
Senior Notes [Abstract] | |||||||
Senior notes, net | 347,749 | 347,338 | |||||
Mortgage servicing rights | |||||||
Mortgage servicing rights, at fair value | 999,282 | 671,962 | $ 598,147 | $ 679,256 | |||
Total Mortgage servicing rights | 999,282 | 1,008,844 | |||||
Carrying Value [Member] | |||||||
Loans held for sale | |||||||
Total Loans held for sale | 217,436 | 238,358 | |||||
Loans held for investment | 5,307,560 | 4,715,831 | |||||
Financing liabilities: | |||||||
Total Financing liabilities | 5,903,546 | 5,195,074 | |||||
Other secured borrowings: | |||||||
Total Other secured borrowings | 345,425 | 545,850 | |||||
Senior Notes [Abstract] | |||||||
Senior notes, net | 347,749 | 347,338 | |||||
Mortgage servicing rights | |||||||
Total Mortgage servicing rights | 999,282 | 1,008,844 | |||||
Fair Value [Member] | |||||||
Loans held for sale | |||||||
Total Loans held for sale | 217,436 | 238,358 | |||||
Loans held for investment | 5,307,560 | 4,715,831 | |||||
Financing liabilities: | |||||||
Total Financing liabilities | 5,889,053 | 5,175,049 | |||||
Other secured borrowings: | |||||||
Total Other secured borrowings | 351,996 | 555,523 | |||||
Senior Notes [Abstract] | |||||||
Senior notes, net | 355,161 | 358,422 | |||||
Mortgage servicing rights | |||||||
Total Mortgage servicing rights | 999,282 | 1,090,707 | |||||
Level 2 [Member] | Carrying Value [Member] | |||||||
Loans held for sale | |||||||
Loans held for sale, at fair value | [3] | 145,417 | 214,262 | ||||
Other secured borrowings: | |||||||
Senior secured term loan | [4],[5] | 230,295 | 290,068 | ||||
Senior Notes [Abstract] | |||||||
Senior unsecured notes | [4],[5] | 3,122 | 3,122 | ||||
Senior secured notes | [4],[5] | 344,627 | 344,216 | ||||
Derivative financial instruments assets (liabilities): | |||||||
Interest rate lock commitments | [3] | 2,816 | 3,283 | ||||
Level 2 [Member] | Fair Value [Member] | |||||||
Loans held for sale | |||||||
Loans held for sale, at fair value | [3] | 145,417 | 214,262 | ||||
Other secured borrowings: | |||||||
Senior secured term loan | [4],[5] | 236,866 | 299,741 | ||||
Senior Notes [Abstract] | |||||||
Senior unsecured notes | [4],[5] | 3,090 | 2,872 | ||||
Senior secured notes | [4],[5] | 352,071 | 355,550 | ||||
Derivative financial instruments assets (liabilities): | |||||||
Interest rate lock commitments | [3] | 2,816 | 3,283 | ||||
Level 3 [Member] | Carrying Value [Member] | |||||||
Loans held for sale | |||||||
Loans held for sale, at lower of cost or fair value | [6] | 72,019 | 24,096 | ||||
Loans held for investment | [3] | 5,279,187 | 4,715,831 | ||||
Advances (including match funded) | [4] | 1,101,104 | 1,356,393 | ||||
Automotive dealer financing notes (including match funded) | [4] | 0 | 32,757 | ||||
Receivables, net | [4] | 155,937 | 199,529 | ||||
Mortgage-backed securities, at fair value | [3] | 1,670 | 1,592 | ||||
Financial liabilities: | |||||||
Match funded liabilities | [4] | 714,246 | 998,618 | ||||
HMBS-related borrowings | [3] | 5,184,227 | 4,601,556 | ||||
Other secured borrowings: | |||||||
Other | [4] | 115,130 | 255,782 | ||||
Derivative financial instruments assets (liabilities): | |||||||
Interest rate caps | [3] | 1,211 | 2,056 | ||||
Mortgage servicing rights | |||||||
Mortgage servicing rights, at fair value | [3] | 999,282 | 671,962 | ||||
Mortgage servicing rights, at amortized cost | [4],[7] | 0 | 336,882 | ||||
Level 3 [Member] | Fair Value [Member] | |||||||
Loans held for sale | |||||||
Loans held for sale, at lower of cost or fair value | [6] | 72,019 | 24,096 | ||||
Loans held for investment | [3] | 5,279,187 | 4,715,831 | ||||
Advances (including match funded) | [4] | 1,101,104 | 1,356,393 | ||||
Automotive dealer financing notes (including match funded) | [4] | 0 | 32,590 | ||||
Receivables, net | [4] | 155,937 | 199,529 | ||||
Mortgage-backed securities, at fair value | [3] | 1,670 | 1,592 | ||||
Financial liabilities: | |||||||
Match funded liabilities | [4] | 710,303 | 992,698 | ||||
HMBS-related borrowings | [3] | 5,184,227 | 4,601,556 | ||||
Other secured borrowings: | |||||||
Other | [4] | 115,130 | 255,782 | ||||
Derivative financial instruments assets (liabilities): | |||||||
Interest rate caps | [3] | 1,211 | 2,056 | ||||
Mortgage servicing rights | |||||||
Mortgage servicing rights, at fair value | [3] | 999,282 | 671,962 | ||||
Mortgage servicing rights, at amortized cost | [4],[7] | 0 | 418,745 | ||||
Level 1 [Member] | Carrying Value [Member] | |||||||
Loans held for sale | |||||||
U.S. Treasury notes | [3] | 1,059 | 1,567 | ||||
Derivative financial instruments assets (liabilities): | |||||||
Forward mortgage-backed securities | [3] | (1,873) | (545) | ||||
Level 1 [Member] | Fair Value [Member] | |||||||
Loans held for sale | |||||||
U.S. Treasury notes | [3] | 1,059 | 1,567 | ||||
Derivative financial instruments assets (liabilities): | |||||||
Forward mortgage-backed securities | [3] | (1,873) | (545) | ||||
Loans Held for Investment Securitization Trusts [Member] | Level 3 [Member] | Carrying Value [Member] | |||||||
Loans held for sale | |||||||
Loans held for investment | [3] | 28,373 | 0 | ||||
Loans Held for Investment Securitization Trusts [Member] | Level 3 [Member] | Fair Value [Member] | |||||||
Loans held for sale | |||||||
Loans held for investment | [3] | 28,373 | 0 | ||||
Financing Liability - MSRs Pledged [Member] | Level 3 [Member] | Carrying Value [Member] | |||||||
Financing liabilities: | |||||||
Other financing liabilities | [3] | 620,199 | 508,291 | ||||
Financing Liability - MSRs Pledged [Member] | Level 3 [Member] | Fair Value [Member] | |||||||
Financing liabilities: | |||||||
Other financing liabilities | [3] | 620,199 | 508,291 | ||||
Financing Liability Owed to Securitization Investors [Member] | Level 3 [Member] | Carrying Value [Member] | |||||||
Financing liabilities: | |||||||
Other financing liabilities | [3] | 26,643 | 0 | ||||
Financing Liability Owed to Securitization Investors [Member] | Level 3 [Member] | Fair Value [Member] | |||||||
Financing liabilities: | |||||||
Other financing liabilities | [3] | 26,643 | 0 | ||||
Other Financing Liabilities [Member] | Level 3 [Member] | Carrying Value [Member] | |||||||
Financing liabilities: | |||||||
Other financing liabilities | [4] | 72,477 | 85,227 | ||||
Other Financing Liabilities [Member] | Level 3 [Member] | Fair Value [Member] | |||||||
Financing liabilities: | |||||||
Other financing liabilities | [4] | $ 57,984 | $ 65,202 | ||||
[1] | At September 30, 2018 and 2017, the balances include $(6.5) million and $6.7 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] | Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. The balance at December 31, 2017 includes the impaired government-insured stratum of amortization method MSRs, which was measured at fair value on a non-recurring basis and reported net of the valuation allowance. At December 31, 2017, the carrying value of this stratum was $158.0 million before applying the valuation allowance of $24.8 million. |
Fair Value - Schedule of Fair_2
Fair Value - Schedule of Fair Value Assets and Liabilities (Footnote) (Details) - Impaired Government Insured Stratum [Member] $ in Millions | Dec. 31, 2017USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Valuation allowance | $ 24.8 |
Carrying Value [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
MSRs, at amortized cost | $ 158 |
Fair Value - Schedule of Reconc
Fair Value - Schedule of Reconciliation of Changes in Fair Value of Level 3 Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Purchases, issuances, sales and settlements | ||||
Consolidation of mortgage-backed securitization trusts | $ 0 | |||
Level 3 [Member] | ||||
Purchases, issuances, sales and settlements | ||||
Consolidation of mortgage-backed securitization trusts | $ 0 | |||
Level 3 [Member] | Loans Held for Investment - Reverse Mortgages [Member] | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 5,143,758 | $ 4,223,776 | 4,715,831 | $ 3,565,716 |
Purchases, issuances, sales and settlements | ||||
Purchases | 0 | 0 | 0 | 0 |
Issuances | 223,563 | 263,169 | 711,035 | 961,642 |
Sales | 0 | 0 | 0 | 0 |
Settlements | (110,584) | (118,991) | (296,800) | (311,560) |
Transfers to loans held for sale, at fair value | (253) | (694) | ||
Transfers to other assets | (170) | 88 | (307) | (1,335) |
Transfers to receivables, net | (20) | (92) | ||
Purchases, issuances, sales and settlements, total | 112,536 | 144,266 | 413,142 | 648,747 |
Total realized and unrealized gains and (losses): | ||||
Change in fair value | 22,893 | 91,718 | 150,214 | 245,297 |
Calls and other | 0 | 0 | 0 | |
Total realized and unrealized gains (losses) included in earnings | 22,893 | 91,718 | 150,214 | 245,297 |
Transfers in and / or out of Level 3 | 0 | 0 | 0 | |
Ending balance | 5,279,187 | 4,459,760 | 5,279,187 | 4,459,760 |
Level 3 [Member] | HMBS - Related Borrowings [Member] | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | (5,040,983) | (4,061,626) | (4,601,556) | (3,433,781) |
Purchases, issuances, sales and settlements | ||||
Purchases | 0 | 0 | 0 | 0 |
Issuances | (229,169) | (317,277) | (728,745) | (981,730) |
Sales | 0 | 0 | 0 | 0 |
Settlements | 108,790 | 111,677 | 290,338 | 287,908 |
Transfers to other assets | 0 | |||
Purchases, issuances, sales and settlements, total | (120,379) | (205,600) | (438,407) | (693,822) |
Total realized and unrealized gains and (losses): | ||||
Change in fair value | (22,865) | (91,051) | (144,264) | (230,674) |
Calls and other | 0 | 0 | 0 | |
Total realized and unrealized gains (losses) included in earnings | (22,865) | (91,051) | (144,264) | (230,674) |
Transfers in and / or out of Level 3 | 0 | 0 | 0 | |
Ending balance | (5,184,227) | (4,358,277) | (5,184,227) | (4,358,277) |
Level 3 [Member] | Loans Held for Inv. - Restricted for Securitization Investors [Member] | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 0 | 0 | ||
Purchases, issuances, sales and settlements | ||||
Consolidation of mortgage-backed securitization trusts | 28,373 | 28,373 | ||
Purchases, issuances, sales and settlements, total | 28,373 | 28,373 | ||
Total realized and unrealized gains and (losses): | ||||
Change in fair value | 0 | 0 | ||
Total realized and unrealized gains (losses) included in earnings | 0 | 0 | ||
Ending balance | 28,373 | 28,373 | ||
Level 3 [Member] | Financing Liability Owed to Securitization Investors [Member] | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 0 | 0 | ||
Purchases, issuances, sales and settlements | ||||
Consolidation of mortgage-backed securitization trusts | (26,643) | (26,643) | ||
Purchases, issuances, sales and settlements, total | (26,643) | (26,643) | ||
Total realized and unrealized gains and (losses): | ||||
Change in fair value | 0 | 0 | ||
Total realized and unrealized gains (losses) included in earnings | 0 | 0 | ||
Ending balance | (26,643) | (26,643) | ||
Level 3 [Member] | Mortgage-Backed Securities [Member] | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 1,732 | 8,986 | 1,592 | 8,342 |
Purchases, issuances, sales and settlements | ||||
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 | 0 |
Transfers to other assets | 0 | |||
Purchases, issuances, sales and settlements, total | 0 | 0 | 0 | 0 |
Total realized and unrealized gains and (losses): | ||||
Change in fair value | (62) | 341 | 78 | 985 |
Calls and other | 0 | 0 | 0 | |
Total realized and unrealized gains (losses) included in earnings | (62) | 341 | 78 | 985 |
Transfers in and / or out of Level 3 | 0 | 0 | 0 | 0 |
Ending balance | 1,670 | 9,327 | 1,670 | 9,327 |
Level 3 [Member] | Financing Liability - MSRs Pledged [Member] | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | (672,619) | (441,007) | (508,291) | (477,707) |
Purchases, issuances, sales and settlements | ||||
Purchases | 0 | 0 | 0 | 0 |
Issuances | 0 | (54,601) | (279,586) | (54,601) |
Sales | 0 | 0 | 0 | 0 |
Settlements | 49,620 | 19,770 | 154,129 | 52,963 |
Transfers to other assets | 0 | |||
Purchases, issuances, sales and settlements, total | 49,620 | (34,831) | (125,457) | (1,638) |
Total realized and unrealized gains and (losses): | ||||
Change in fair value | 2,681 | 27,024 | 11,323 | 27,024 |
Calls and other | 119 | 971 | 2,226 | 4,478 |
Total realized and unrealized gains (losses) included in earnings | 2,800 | 27,995 | 13,549 | 31,502 |
Transfers in and / or out of Level 3 | 0 | 0 | 0 | |
Ending balance | (620,199) | (447,843) | (620,199) | (447,843) |
Level 3 [Member] | Derivatives [Member] | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 1,657 | 1,937 | 2,056 | 1,836 |
Purchases, issuances, sales and settlements | ||||
Purchases | 0 | 655 | 95 | 655 |
Issuances | 0 | 0 | 0 | 0 |
Sales | 0 | 0 | 0 | 0 |
Settlements | 0 | (403) | (371) | (445) |
Transfers to other assets | 0 | |||
Purchases, issuances, sales and settlements, total | 0 | 252 | (276) | 210 |
Total realized and unrealized gains and (losses): | ||||
Change in fair value | (446) | (350) | (569) | (207) |
Calls and other | 0 | 0 | 0 | |
Total realized and unrealized gains (losses) included in earnings | (446) | (350) | (569) | (207) |
Transfers in and / or out of Level 3 | 0 | 0 | 0 | 0 |
Ending balance | 1,211 | 1,839 | 1,211 | 1,839 |
Level 3 [Member] | MSRs [Member] | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | 1,043,995 | 625,650 | 671,962 | 679,256 |
Purchases, issuances, sales and settlements | ||||
Purchases | 2,924 | 0 | 8,809 | 0 |
Issuances | 1,930 | (715) | (445) | (2,131) |
Sales | (8,119) | (311) | (8,274) | (541) |
Settlements | 0 | 0 | 0 | 0 |
Transfers from MSRs carried at amortized cost, net of valuation allowance | 418,925 | |||
Transfers to other assets | 0 | |||
Purchases, issuances, sales and settlements, total | (3,265) | (1,026) | 419,015 | (2,672) |
Total realized and unrealized gains and (losses): | ||||
Change in fair value | (41,448) | (26,477) | (91,695) | (78,437) |
Calls and other | 0 | 0 | 0 | |
Total realized and unrealized gains (losses) included in earnings | (41,448) | (26,477) | (91,695) | (78,437) |
Transfers in and / or out of Level 3 | 0 | 0 | 0 | 0 |
Ending balance | $ 999,282 | $ 598,147 | $ 999,282 | $ 598,147 |
Fair Value - Schedule of Signif
Fair Value - Schedule of Significant Assumptions used in Valuation (Details) - $ / loan | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | ||
Loans Held for Investment [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Life | 5 years 9 months 18 days | 6 years 4 months 24 days | |
Weighted average prepayment speed | 14.70% | 13.10% | |
Weighted average discount rate | 3.70% | 3.20% | |
Loans Held for Investment [Member] | Minimum [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Life | 2 years 9 months 18 days | 4 years 4 months 24 days | |
Weighted average prepayment speed | 6.30% | 5.40% | |
Loans Held for Investment [Member] | Maximum [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Life | 7 years 7 months 6 days | 8 years 1 month 6 days | |
Weighted average prepayment speed | 41.30% | 51.90% | |
Mortgage Servicing Rights - Amortized Costs [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Weighted average prepayment speed | 8.80% | ||
Weighted average delinquency rate | 10.90% | ||
Advance financing cost | 5 years | ||
Interest rate for computing float earnings | 5 years | ||
Weighted average discount rate | 9.20% | ||
Weighted average cost to service (in dollars) | 108 | ||
Fair Value Agency Mortgage Servicing Rights [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Weighted average prepayment speed | 8.10% | [1] | 8.10% |
Weighted average delinquency rate | 9.90% | [1] | 1.00% |
Advance financing cost | 5 years | [1] | 5 years |
Interest rate for computing float earnings | 5 years | [1] | 5 years |
Weighted average discount rate | 9.00% | [1] | 9.00% |
Weighted average cost to service (in dollars) | 105 | [1] | 64 |
Fair Value Non-Agency Mortgage Servicing Rights [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Weighted average prepayment speed | 15.70% | 16.60% | |
Weighted average delinquency rate | 27.60% | 28.50% | |
Fair value inputs financing costs float earnings, basis spread | 0.50% | 0.50% | |
Fair value input, interest rate | 2.75% | 2.75% | |
Weighted average discount rate | 12.70% | 13.00% | |
Weighted average cost to service (in dollars) | 301 | 305 | |
HMBS - Related Borrowings [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Life | 5 years 9 months 18 days | 6 years 4 months 24 days | |
Weighted average prepayment speed | 14.70% | 13.10% | |
Weighted average discount rate | 3.70% | 3.10% | |
HMBS - Related Borrowings [Member] | Minimum [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Life | 2 years 9 months 18 days | 4 years 4 months 24 days | |
Weighted average prepayment speed | 6.30% | 5.40% | |
HMBS - Related Borrowings [Member] | Maximum [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Life | 7 years 7 months 6 days | 8 years 1 month 6 days | |
Weighted average prepayment speed | 41.30% | 51.90% | |
Mortgage Servicing Rights Pledged [Member] | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Weighted average prepayment speed | 16.10% | 17.00% | |
Weighted average delinquency rate | 28.10% | 28.90% | |
Fair value inputs financing costs float earnings, basis spread | 0.50% | 0.50% | |
Fair value input, interest rate | 2.75% | 2.75% | |
Weighted average discount rate | 13.70% | 13.70% | |
Weighted average cost to service (in dollars) | 307 | 311 | |
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 | 5 years | |
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 | 5 years | |
[1] | Valuation assumptions for Agency MSRs at September 30, 2018 include assumptions for MSRs we carried at amortized cost at December 31, 2017. Effective January 1, 2018, we elected fair value accounting for our remaining MSRs that we had previously carried at amortized cost. |
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, 2018 | Sep. 30, 2017 | ||
Movement In Loans Held For Sale At Fair Value [Roll Forward] | |||
Beginning balance | $ 214,262 | $ 284,632 | |
Originations and purchases | 671,503 | 2,204,028 | |
Proceeds from sales | (728,531) | (2,310,294) | |
Principal collections | (14,201) | (3,684) | |
Loans held for investment, at fair value | (694) | 0 | |
Loans held for sale - Lower of cost or fair value | (11,564) | 0 | |
Receivables, net | (1,165) | 0 | |
Real estate owned (Other assets) | (2,240) | 0 | |
Gain on sale of loans | 25,525 | 22,131 | |
Increase (decrease) in fair value of loans | (12,791) | 1,836 | |
Other | 3,925 | 1,789 | |
Ending balance | [1] | $ 145,417 | $ 200,438 |
[1] | At September 30, 2018 and 2017, the balances include $(6.5) million and $6.7 million, respectively, of fair value adjustments. |
Loans Held for Sale - Schedul_2
Loans Held for Sale - Schedule of Loans Held for Sale Fair Value (Footnote) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Receivables [Abstract] | ||
Increase (decrease) in fair value of loans held for sale | $ (6.5) | $ 6.7 |
Loans Held for Sale - Narrative
Loans Held for Sale - Narrative (Details) $ in Millions | Sep. 30, 2018USD ($) |
Lending [Member] | Line of Credit [Member] | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Collateral | $ 76.3 |
Loans Held for Sale - Schedul_3
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, 2018 | Sep. 30, 2017 | ||
Movement In Loans Held For Sale At Fair Value [Roll Forward] | |||
Beginning balance | $ 24,096 | $ 29,374 | |
Purchases | 563,327 | 870,697 | |
Proceeds from sales | (400,693) | (746,999) | |
Principal collections | (11,101) | (6,545) | |
Receivables, net | (118,762) | (137,807) | |
Real estate owned (Other assets) | (1,681) | (711) | |
Loans held for sale - Fair value | 11,564 | 0 | |
Gain on sale of loans | 2,180 | 8,332 | |
(Increase) decrease in valuation allowance | (3,144) | 1,566 | |
Other | 6,233 | 5,317 | |
Ending balance | [1] | $ 72,019 | $ 23,224 |
[1] | At September 30, 2018 and 2017, the balances include $53.0 million and $17.6 million, respectively, of loans that we repurchased from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines. We may repurchase loans that have been modified, to facilitate loss reduction strategies, or as otherwise obligated as a Ginnie Mae servicer. Repurchased loans may be modified or otherwise remediated through loss mitigation activities, may be sold to a third party, or are reclassified to receivables. |
Loans Held for Sale - Schedul_4
Loans Held for Sale - Schedule of Loans Held for Sale at Lower Cost or Fair Value Activity (Footnote) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Sep. 30, 2017 |
Ginnie Mae Loans [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans repurchase obligation | $ 53 | $ 17.6 |
Loans Held for Sale - Schedule
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Beginning balance | $ 7,535 | $ 6,491 | $ 7,318 | $ 10,064 |
Provision | 2,755 | 906 | 3,036 | 1,761 |
Transfer from Liability for indemnification obligations (Other liabilities) | 554 | 1,529 | 1,551 | 2,416 |
Sales of loans | (382) | (426) | (1,464) | (6,071) |
Other | 0 | (2) | 21 | 328 |
Ending balance | $ 10,462 | $ 8,498 | $ 10,462 | $ 8,498 |
Loans Held for Sale - Schedul_5
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | $ 16,529 | $ 30,626 | $ 68,957 | $ 84,005 |
Change in fair value of IRLCs | 26 | (178) | 137 | (1,605) |
Change in fair value of loans held for sale | 365 | (2,078) | (9,781) | 3,735 |
Gain (loss) on economic hedge instruments | 84 | (2,420) | 2,082 | (8,604) |
Other | (62) | (173) | (260) | (555) |
Gain on loans held for sale, net | 16,942 | 25,777 | 61,135 | 76,976 |
MSRs Retained on Transfers of Forward Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | 1,427 | 3,572 | 5,880 | 18,604 |
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 | 9,421 | 15,747 | 36,870 | 37,434 |
Gain on Sale of Repurchased Ginnie Mae Loans [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | 1,222 | 4,577 | 2,179 | 8,332 |
Other, Net [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Gain on sales of loans, net | $ 4,459 | $ 6,730 | $ 24,028 | $ 19,635 |
Advances - Schedule of Advances
Advances - Schedule of Advances Paid on Behalf of Borrowers or on Foreclosed Properties (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Advances On Behalf of Borrowers [Line Items] | ||||||
Advances, gross | $ 181,777 | $ 228,258 | ||||
Allowance for losses | (15,753) | $ (16,485) | (16,465) | $ (34,162) | $ (20,328) | $ (37,952) |
Advances, net | 166,024 | 211,793 | ||||
Principal and Interest [Member] | ||||||
Advances On Behalf of Borrowers [Line Items] | ||||||
Advances, gross | 16,385 | 20,207 | ||||
Taxes and Insurance [Member] | ||||||
Advances On Behalf of Borrowers [Line Items] | ||||||
Advances, gross | 105,633 | 144,454 | ||||
Foreclosures, Bankruptcy and Other [Member] | ||||||
Advances On Behalf of Borrowers [Line Items] | ||||||
Advances, gross | $ 59,759 | $ 63,597 |
Advances - Narrative (Details)
Advances - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Advances [Abstract] | ||
Sold advances | $ 8.2 | $ 18.1 |
Advances - Schedule of Activity
Advances - Schedule of Activity in Advances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Advances [Roll Forward] | ||
Beginning balance | $ 211,793 | $ 257,882 |
Sales of advances | (4,777) | (399) |
Collections of advances, charge-offs and other, net | (41,704) | (63,320) |
Decrease in allowance for losses | 712 | 3,790 |
Ending balance | $ 166,024 | $ 197,953 |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Advances [Abstract] | ||||
Beginning balance | $ 16,485 | $ 20,328 | $ 16,465 | $ 37,952 |
Provision | 2,696 | 13,756 | 6,197 | 17,054 |
Net (charge-offs) recoveries and other | (3,428) | 78 | (6,909) | (20,844) |
Ending balance | $ 15,753 | $ 34,162 | $ 15,753 | $ 34,162 |
Match Funded Advances - Schedul
Match Funded Advances - Schedule of Match Funded Advances on Residential Loans (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Match Funded Assets [Line Items] | |||||
Match funded assets | $ 935,080 | $ 1,177,357 | |||
Automotive Dealer Financing Notes [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | 0 | 32,757 | $ 36,036 | $ 0 | |
Automotive dealer financing notes, gross | [1] | 0 | 35,392 | ||
Allowance for losses | 0 | (2,635) | |||
Residential Mortgage [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | 935,080 | 1,144,600 | $ 1,207,863 | $ 1,451,964 | |
Residential Mortgage [Member] | Principal and Interest [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | 424,520 | 523,248 | |||
Residential Mortgage [Member] | Taxes and Insurance [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | 352,376 | 439,857 | |||
Residential Mortgage [Member] | Foreclosures Bankruptcy And Other [Member] | |||||
Match Funded Assets [Line Items] | |||||
Match funded assets | $ 158,184 | $ 181,495 | |||
[1] | In January 2018, we terminated our automotive dealer loan financing facility. Automotive dealer financing notes not pledged to our automotive dealer loan financing facility are reported as Other assets. |
Match Funded Advances - Sched_2
Match Funded Advances - Schedule of Activity in Match Funded Advances (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Match Funded Assets [Line Items] | |||
Beginning balance | $ 1,177,357 | ||
Decrease in allowance for losses | 712 | $ 3,790 | |
Ending balance | 935,080 | ||
Automotive Dealer Financing Notes [Member] | |||
Match Funded Assets [Line Items] | |||
Beginning balance | 32,757 | 0 | |
Transfer (to) from Other assets | (36,896) | 25,180 | |
New advances (collections), net | 1,504 | 10,856 | |
Decrease in allowance for losses | [1] | 2,635 | |
Ending balance | 0 | 36,036 | |
Advances [Member] | |||
Match Funded Assets [Line Items] | |||
Beginning balance | 1,144,600 | 1,451,964 | |
Sales | 0 | (691) | |
New advances (collections), net | (209,520) | (243,410) | |
Ending balance | $ 935,080 | $ 1,207,863 | |
[1] | The remaining allowance was charged off in connection with the exit from the ACS business. |
Mortgage Servicing - Schedule o
Mortgage Servicing - Schedule of Activity Related to MSRs - Amortization Method (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Servicing Asset at Amortized Cost, Balance [Roll Forward] | |||||
Estimated fair value at end of period | $ 999,282 | $ 598,147 | $ 671,962 | $ 679,256 | |
Mortgage Servicing Rights - Amortized Costs [Member] | |||||
Servicing Asset at Amortized Cost, Balance [Roll Forward] | |||||
Beginning balance, MSRs | 336,882 | 363,722 | |||
Fair value election - transfer of MSRs carried at fair value | [1] | (361,670) | 0 | ||
Additions recognized in connection with asset acquisitions | 0 | 1,658 | |||
Additions recognized on the sale of mortgage loans | 0 | 18,604 | |||
Sales and other transfers | 0 | (814) | |||
Servicing asset at amortized value, gross | (24,788) | 383,170 | |||
Amortization | [1] | 0 | (38,560) | ||
Decrease in impairment valuation allowance | [1],[2] | 24,788 | 1,551 | ||
Ending balance, MSRs | 0 | 346,161 | |||
Estimated fair value at end of period | $ 0 | $ 424,208 | |||
[1] | Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with each of these classes. We recorded a cumulative-effect adjustment of $82.0 million to retained earnings as of January 1, 2018 to reflect the excess of the fair value of the Agency MSRs over their carrying amount. We also recognized the tax effect of this adjustment through an increase in retained earnings of $6.8 million and a deferred tax asset for the same amount. However, we established a full valuation allowance on the resulting deferred tax asset through a reduction in retained earnings. The government-insured MSRs were impaired by $24.8 million at December 31, 2017; therefore, these MSRs were already effectively carried at fair value. | ||||
[2] | Impairment of MSRs is recognized in MSR valuation adjustments, net in the unaudited consolidated statements of operations for the nine months ended September 30, 2017. Impairment valuation allowance balance of $24.8 million was reclassified to reduce the carrying value of the related MSRs on January 1, 2018 in connection with our fair value election. See Note 3 – Fair Value for additional information regarding impairment and the valuation allowance. |
Mortgage Servicing - Schedule_2
Mortgage Servicing - Schedule of Activity Related to MSRs - Amortization Method (Footnote) (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
Servicing Asset at Amortized Cost [Line Items] | ||||
Cumulative effect of fair value election | $ 82,043 | |||
Tax effect of adjustment on retained earnings | 6,800 | |||
Impaired Government Insured Stratum [Member] | ||||
Servicing Asset at Amortized Cost [Line Items] | ||||
Valuation allowance | $ 24,800 | |||
Mortgage Servicing Rights - Amortized Costs [Member] | ||||
Servicing Asset at Amortized Cost [Line Items] | ||||
Decrease in impairment valuation allowance | [1],[2] | 24,788 | $ 1,551 | |
Retained Earnings [Member] | ||||
Servicing Asset at Amortized Cost [Line Items] | ||||
Cumulative effect of fair value election | $ 82,043 | |||
[1] | Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with each of these classes. We recorded a cumulative-effect adjustment of $82.0 million to retained earnings as of January 1, 2018 to reflect the excess of the fair value of the Agency MSRs over their carrying amount. We also recognized the tax effect of this adjustment through an increase in retained earnings of $6.8 million and a deferred tax asset for the same amount. However, we established a full valuation allowance on the resulting deferred tax asset through a reduction in retained earnings. The government-insured MSRs were impaired by $24.8 million at December 31, 2017; therefore, these MSRs were already effectively carried at fair value. | |||
[2] | Impairment of MSRs is recognized in MSR valuation adjustments, net in the unaudited consolidated statements of operations for the nine months ended September 30, 2017. Impairment valuation allowance balance of $24.8 million was reclassified to reduce the carrying value of the related MSRs on January 1, 2018 in connection with our fair value election. See Note 3 – Fair Value for additional information regarding impairment and the valuation allowance. |
Mortgage Servicing - Schedule_3
Mortgage Servicing - Schedule of Activity Related to MSRs - Fair Value Measurement Method (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||
Beginning balance | $ 671,962 | $ 679,256 | |
Fair value election - transfer of MSRs carried at amortized cost, net of valuation allowance | 336,882 | ||
Cumulative effect of fair value election | 82,043 | ||
Sales and other transfers | (6,125) | (2,672) | |
Additions | 8,809 | ||
Servicing transfers and adjustments | (2,594) | 0 | |
Changes in fair value: | |||
Changes in valuation inputs or other assumptions | [1] | 18,793 | 2,172 |
Realization of expected future cash flows and other changes | [1] | (110,488) | (80,609) |
Ending balance | 999,282 | 598,147 | |
Fair Value Agency Mortgage Servicing Rights [Member] | |||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||
Beginning balance | 11,960 | 13,357 | |
Fair value election - transfer of MSRs carried at amortized cost, net of valuation allowance | 336,882 | ||
Cumulative effect of fair value election | 82,043 | ||
Sales and other transfers | (5,950) | ||
Additions | 8,809 | ||
Changes in fair value: | |||
Changes in valuation inputs or other assumptions | [1] | 19,217 | (131) |
Realization of expected future cash flows and other changes | [1] | (43,545) | (1,385) |
Ending balance | 409,416 | 11,841 | |
Fair Value Non-Agency Mortgage Servicing Rights [Member] | |||
Servicing Asset at Fair Value, Amount [Roll Forward] | |||
Beginning balance | 660,002 | 665,899 | |
Sales and other transfers | (175) | (2,672) | |
Servicing transfers and adjustments | (2,594) | 0 | |
Changes in fair value: | |||
Changes in valuation inputs or other assumptions | [1] | (424) | 2,303 |
Realization of expected future cash flows and other changes | [1] | (66,943) | (79,224) |
Ending balance | $ 589,866 | $ 586,306 | |
[1] | Changes in fair value are recognized in MSR valuation adjustments, net in the unaudited consolidated statements of operations. |
Mortgage Servicing - Schedule_4
Mortgage Servicing - Schedule of Estimated Change in Fair Value of MSRs (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Transfers and Servicing [Abstract] | |
Weighted average prepayment speeds, 10% | $ (92,659) |
Weighted average prepayment speeds, 20% | (178,462) |
Discount rate (Option-adjusted spread), 10% | (28,326) |
Discount rate (Option-adjusted spread), 20% | $ (54,351) |
Mortgage Servicing - Schedule_5
Mortgage Servicing - Schedule of Composition of Servicing and Subservicing Portfolios by Type of Property Serviced (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | ||
Commercial Real Estate [Member] | |||||
Schedule of Servicing and Subservicing Portfolio [Line Items] | |||||
Subservicing | [1] | $ 9,800 | |||
Residential [Member] | |||||
Schedule of Servicing and Subservicing Portfolio [Line Items] | |||||
Servicing | $ 68,076,254 | $ 75,469,327 | 78,254,463 | ||
Subservicing | 1,387,641 | 2,063,669 | 3,656,197 | [1] | |
NRZ | [2] | 91,532,579 | 101,819,557 | 105,557,658 | |
Assets serviced | [2] | $ 160,996,474 | $ 179,352,553 | $ 187,468,318 | |
[1] | Excludes $9.8 million of large-balance commercial foreclosed real estate. During 2017, we sold or transferred servicing on the remaining managed assets. | ||||
[2] | UPB of loans serviced for which the Rights to MSRs have been sold to NRZ, including those subserviced for which third-party consents have been received and the MSRs have been transferred to NRZ. |
Mortgage Servicing - Schedule_6
Mortgage Servicing - Schedule of Components of Servicing and Subservicing Fees (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Transfers and Servicing [Abstract] | |||||
Servicing | $ 52,610 | $ 63,071 | $ 167,389 | $ 197,712 | |
Subservicing | 658 | 1,760 | 2,443 | 5,877 | |
NRZ | 120,593 | 129,228 | 374,322 | 420,151 | |
Servicing and Subservicing fees, total | 173,861 | 194,059 | 544,154 | 623,740 | |
Late charges | 14,839 | 14,958 | 44,743 | 47,352 | |
Custodial accounts (float earnings) | 10,241 | 7,489 | 25,965 | 18,322 | |
Loan collection fees | 4,916 | 5,663 | 14,700 | 17,918 | |
Home Affordable Modification Program (HAMP) fees | [1] | 3,365 | 6,202 | 11,622 | 37,692 |
Other | 6,508 | 4,849 | 16,911 | 16,499 | |
Fees, total | $ 213,730 | $ 233,220 | $ 658,095 | $ 761,523 | |
[1] | The HAMP program expired on December 31, 2016. Borrowers who had requested assistance or to whom an offer of assistance had been extended as of that date had until September 30, 2017 to finalize their modification. We continue to earn HAMP success fees for HAMP modifications that remain less than 90 days delinquent at the first, second and third year anniversary of the start of the trial modification. |
Mortgage Servicing - Narrative
Mortgage Servicing - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Transfers and Servicing [Abstract] | ||
UPB of MSRs sold | $ 580 | $ 210.2 |
Unpaid principal balance of non-agency and whole loans servicing agreements with minimum servicer ratings | 27,000 | |
Unpaid principal balance of non-agency and whole loans servicing agreements with termination rights triggered | $ 8,400 | |
Percentage of non-agency and whole loans servicing agreements with termination rights triggered of servicing portfolio | 9.00% | |
Float balances | $ 1,700 | $ 2,000 |
Rights to MSRs - Narrative (Det
Rights to MSRs - Narrative (Details) - USD ($) $ in Thousands | Jan. 18, 2018 | Sep. 01, 2017 | Jul. 23, 2017 | Apr. 30, 2015 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2017 |
Servicing Assets at Fair Value [Line Items] | ||||||||
Proceeds from sale of mortgage servicing rights accounted for as financing | $ 279,586 | $ 54,601 | ||||||
NRZ [Member] | ||||||||
Servicing Assets at Fair Value [Line Items] | ||||||||
UPB of MSRs for which servicing rights has been sold | $ 109,600,000 | |||||||
Initial term to subservice mortgage servicing rights | 5 years | |||||||
Transfers upon receipt of consents, MSRs | $ 15,900,000 | |||||||
Proceeds from sale of mortgage servicing rights accounted for as financing | $ 279,600 | $ 54,600 | ||||||
Term of extended subservicing agreement following initial term | 3 months | |||||||
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 |
Rights to MSRs - Schedule of In
Rights to MSRs - Schedule of Interest Related to Financial Liability (Details) - NRZ [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Servicing Liabilities at Fair Value [Line Items] | ||||
Servicing fees collected on behalf of NRZ | $ 120,593 | $ 129,228 | $ 374,322 | $ 420,151 |
Less: Subservicing fee retained by Ocwen | 33,335 | 68,536 | 101,997 | 226,483 |
Net servicing fees remitted to NRZ | 87,258 | 60,692 | 272,325 | 193,668 |
Interest expense on NRZ/HLSS financing liability | 36,717 | 13,898 | 111,256 | 113,681 |
Original Rights to MSRs Agreements [Member] | ||||
Servicing Liabilities at Fair Value [Line Items] | ||||
Changes in fair value | 4,844 | (9,854) | (3,938) | (9,854) |
Runoff, settlement and other | 14,095 | 19,003 | 45,455 | 52,196 |
2017 Agreements and New RMSR Agreements [Member] | ||||
Servicing Liabilities at Fair Value [Line Items] | ||||
Changes in fair value | (2,163) | 36,878 | 15,261 | 36,878 |
Runoff, settlement and other | $ 33,765 | $ 767 | $ 104,291 | $ 767 |
Receivables - Schedule of Recei
Receivables - Schedule of Receivables (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Government-insured loan claims, net | $ 100,786 | $ 114,971 |
Reimbursable expenses | 30,493 | 31,709 |
Due from custodial accounts | 27,990 | 36,122 |
Due from NRZ | 6,137 | 14,924 |
Other | 9,048 | 11,959 |
Servicing receivable, total | 174,454 | 209,685 |
Income taxes receivable | 35,153 | 36,831 |
Other receivables | 11,153 | 19,600 |
Other receivables, gross | 220,760 | 266,116 |
Allowance for losses | (64,823) | (66,587) |
Receivables, net | $ 155,937 | $ 199,529 |
Receivables - Narrative (Detail
Receivables - Narrative (Detail) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for financing notes | $ 7.7 | |
Servicing [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for financing notes | $ 64.4 | $ 66.3 |
Receivables - Schedule of Chang
Receivables - Schedule of Changes in allowance of Government-Insured Loan Claims (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Beginning balance | $ 7,700 | |||
Government Insured Loans Claims [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Beginning balance | $ 53,155 | $ 46,577 | 53,340 | $ 53,258 |
Provision | 10,180 | 9,162 | 29,214 | 31,848 |
Net charge-offs and other | (10,297) | (7,069) | (29,516) | (36,436) |
Ending balance | $ 53,038 | $ 48,670 | $ 53,038 | $ 48,670 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Other Assets [Abstract] | |||
Contingent loan repurchase asset | $ 307,684 | $ 431,492 | |
Prepaid expenses | 23,023 | 22,559 | |
Debt service accounts (restricted cash) | 22,454 | 33,726 | $ 38,753 |
Prepaid representation, warranty and indemnification claims - Agency MSR sale | 15,173 | 20,173 | |
Prepaid lender fees, net | 6,290 | 9,496 | |
Real estate | 5,216 | 3,070 | |
Derivatives, at fair value | 4,721 | 5,429 | |
Other restricted cash | 3,056 | 9,179 | $ 11,257 |
Mortgage backed securities, at fair value | 1,670 | 1,592 | |
Interest-earning time deposits | 1,629 | 4,739 | |
Prepaid income taxes | 0 | 5,621 | |
Other | 8,086 | 7,715 | |
Other assets | $ 399,002 | $ 554,791 |
Other Assets - Narrative (Detai
Other Assets - Narrative (Details) $ in Millions | Dec. 31, 2017USD ($) |
Other Assets [Abstract] | |
Financing notes, net | $ 0 |
Allowance for financing notes | $ 7.7 |
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Beginning balance | $ 7,700 | |||
Automotive Dealer Financing Notes [Member] | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Beginning balance | $ 0 | $ 9,586 | 7,664 | $ 4,371 |
Provision | 0 | (1,019) | (265) | 4,196 |
Net charge-offs and other | 0 | 0 | (7,399) | 0 |
Ending balance | $ 0 | $ 8,567 | $ 0 | $ 8,567 |
Borrowings - Schedule of Match
Borrowings - Schedule of Match Funded Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | ||
Debt Instrument [Line Items] | |||
Available borrowing capacity | $ 52,800 | ||
Match funded liabilities (related to VIEs) | 714,246 | $ 998,618 | |
Advance Receivables Backed Notes, Series 2018-T1 [Member] | |||
Debt Instrument [Line Items] | |||
Match funded liabilities (related to VIEs) | 150,000 | ||
Advance Receivables Backed Notes, Series 2018-T2 [Member] | |||
Debt Instrument [Line Items] | |||
Match funded liabilities (related to VIEs) | 150,000 | ||
Advance Financing Facilities [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1] | $ 165,754 | |
Weighted average interest rate | [2] | 3.46% | 3.16% |
Match funded liabilities (related to VIEs) | $ 714,246 | $ 974,036 | |
Match Funded Liabilties [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1] | $ 165,754 | |
Weighted average interest rate | [2] | 3.46% | 3.25% |
Match funded liabilities (related to VIEs) | $ 714,246 | $ 998,618 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1] | $ 46,178 | |
Weighted average interest rate | [2] | 3.46% | 3.02% |
Match funded liabilities (related to VIEs) | $ 713,822 | $ 884,190 | |
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] | $ 0 | |
Weighted average interest rate | [2],[3] | 0.00% | 4.29% |
Match funded liabilities (related to VIEs) | [3] | $ 0 | $ 67,095 |
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] | $ 46,178 | |
Weighted average interest rate | [2],[3] | 3.76% | 4.29% |
Match funded liabilities (related to VIEs) | [3] | $ 178,822 | $ 67,095 |
Maturity date | [3],[4] | Dec. 31, 2049 | |
Amortization date | [3],[4] | Dec. 31, 2019 | |
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] | 0.00% | 2.77% |
Match funded liabilities (related to VIEs) | [5] | $ 0 | $ 265,000 |
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 | $ 235,000 |
Maturity date | [4],[5] | Aug. 31, 2049 | |
Amortization date | [4],[5] | Aug. 31, 2019 | |
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] | 0.00% | 2.64% |
Match funded liabilities (related to VIEs) | [5] | $ 0 | $ 250,000 |
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 2018-T1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[5] | $ 0 | |
Weighted average interest rate | [2],[5] | 3.50% | 0.00% |
Match funded liabilities (related to VIEs) | [5] | $ 150,000 | $ 0 |
Maturity date | [4],[5] | Aug. 31, 2049 | |
Amortization date | [4],[5] | Aug. 31, 2019 | |
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes, Series 2018-T2 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[5] | $ 0 | |
Weighted average interest rate | [2],[5] | 3.81% | 0.00% |
Match funded liabilities (related to VIEs) | [5] | $ 150,000 | $ 0 |
Maturity date | [4],[5] | Aug. 31, 2050 | |
Amortization date | [4],[5] | Aug. 31, 2020 | |
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] | $ 54,626 | |
Weighted average interest rate | [2],[6] | 5.49% | 4.63% |
Match funded liabilities (related to VIEs) | [6] | $ 374 | $ 33,768 |
Maturity date | [4],[6] | Dec. 31, 2048 | |
Amortization date | [4],[6] | Dec. 31, 2018 | |
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] | $ 64,950 | |
Weighted average interest rate | [2],[7] | 4.83% | 4.52% |
Match funded liabilities (related to VIEs) | [7] | $ 50 | $ 56,078 |
Maturity date | [4],[7] | Jun. 30, 2049 | |
Amortization date | [4],[7] | Jun. 30, 2019 | |
Total Automotive Capital Asset Receivables Trust [Member] | Loan Series 2017-1 [Member] | |||
Debt Instrument [Line Items] | |||
Available borrowing capacity | [1],[8] | $ 0 | |
Weighted average interest rate | [2],[8] | 0.00% | 6.77% |
Match funded liabilities (related to VIEs) | [8] | $ 0 | $ 24,582 |
Maturity date | [4],[8] | Feb. 28, 2021 | |
Amortization date | [4],[8] | Feb. 28, 2019 | |
[1] | Borrowing capacity is available to us provided that we have eligible collateral to pledge. Collateral may only be pledged to one facility. At September 30, 2018, $52.8 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 2.26% and 1.56% at September 30, 2018 and December 31, 2017, respectively. | ||
[3] | Effective January 1, 2018, the borrowing capacity of the Series 2014-VF4 and the Series 2015-VF5 variable rate notes were each reduced from $105.0 million to $70.0 million. The interest rate was based on 1ML, with a ceiling of 125 basis points (bps), plus a margin of 235 to 635 bps. On July 13, 2018, we increased the borrowing capacity of the Series 2015-VF5 variable notes to $225.0 million and extended the amortization date to December 15, 2019, with interest computed based on the lender’s cost of funds plus a margin of 105 to 250 bps. The increased capacity was used on July 16, 2018 to redeem the Series 2016-T1 term notes with an outstanding balance of $265.0 million and an amortization date of August 15, 2018. We also voluntarily terminated the Series 2014-VF4 variable notes on July 16, 2018. | ||
[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-T2, 2018-T1 and 2018-T2 fixed-rate term notes until the amortization date. If there is insufficient eligible collateral to support the level of borrowing, the excess cash proceeds in an amount necessary to make up the deficit are not distributed to Ocwen but are held by the trustee, and interest expense continues to be based on the full amount of the outstanding notes. The Series 2016-T2, 2018-T1 and 2018-T2 term notes have a total combined borrowing capacity of $535.0 million. Rates on the individual classes of notes range from 2.72% to 4.53%. The Series 2016-T1 and Series 2017-T1 term notes were redeemed on July 16, 2018 and August 14, 2018, respectively. On August 15, 2018, we issued two $150.0 million fixed-rate term notes (Series 2018 T-1 and Series 2018-T2) with amortization dates of August 15, 2019 and August 2020, respectively. | ||
[6] | The maximum borrowing capacity under this facility is $55.0 million. There is a ceiling of 300 bps for the 3ML 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 235 to 475 bps. | ||
[7] | On June 7, 2018, borrowing capacity was reduced from $110.0 million to $65.0 million with interest computed based on the lender’s cost of funds plus a margin of 180 to 450 bps. There is a ceiling of 300 bps for 3ML in determining the interest rate for these variable rate notes. | ||
[8] | On January 23, 2018, we voluntarily terminated the Loan Series 2017-1 Notes. |
Borrowings - Schedule of Matc_2
Borrowings - Schedule of Match Funded Liabilities (Footnote) (Details) - USD ($) | 9 Months Ended | |||||
Sep. 30, 2018 | Jul. 16, 2018 | Jul. 13, 2018 | Jun. 07, 2018 | Dec. 31, 2017 | ||
Debt Instrument [Line Items] | ||||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | $ 52,800,000 | |||||
Match funded liabilities | 714,246,000 | $ 998,618,000 | ||||
Series 2014 and 2015 Variable Funding Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 70,000,000 | 105,000,000 | ||||
Advance Receivables Backed Notes - Series 2015-VF5 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 225,000,000 | |||||
Advance Receivables Backed Notes - Series 2015-VF5 [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate | 1.05% | |||||
Advance Receivables Backed Notes - Series 2015-VF5 [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate | 2.50% | |||||
Advance Receivables Backed Notes - Series 2016-T1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, redeemed | $ 265,000,000 | |||||
Series 2016 and 2018 Term Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total borrowing capacity | $ 535,000,000 | |||||
Series 2016 and 2018 Term Notes [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate | 2.7215% | |||||
Series 2016 and 2018 Term Notes [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate | 4.5319% | |||||
Advance Receivables Backed Notes, Series 2018-T1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Match funded liabilities | $ 150,000,000 | |||||
Advance Receivables Backed Notes, Series 2018-T2 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Match funded liabilities | 150,000,000 | |||||
Advance Receivables Backed Notes, Series 2014-VF1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 55,000,000 | |||||
Advance Receivables Backed Notes, Series 2014-VF1 [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 2.35% | |||||
Advance Receivables Backed Notes, Series 2014-VF1 [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 4.75% | |||||
Advance Receivables Backed Notes, Series 2015-VF1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 65,000,000 | $ 110,000,000 | ||||
Advance Receivables Backed Notes, Series 2015-VF1 [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate | 1.80% | |||||
Advance Receivables Backed Notes, Series 2015-VF1 [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate | 4.50% | |||||
London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, interest rate | 2.26056% | 1.564% | ||||
Basis spread on variable rate | [1] | 2.60% | ||||
London Interbank Offered Rate (LIBOR) [Member] | Series 2014 and 2015 Variable Funding Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Ceiling percentage of 1ML in determining interest rate | 1.25% | |||||
London Interbank Offered Rate (LIBOR) [Member] | Series 2014 and 2015 Variable Funding Notes [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 2.35% | |||||
London Interbank Offered Rate (LIBOR) [Member] | Series 2014 and 2015 Variable Funding Notes [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 6.35% | |||||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes, Series 2014-VF1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Ceiling percentage of 1ML in determining interest rate | 3.00% | |||||
London Interbank Offered Rate (LIBOR) [Member] | Advance Receivables Backed Notes, Series 2015-VF1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Ceiling percentage of 1ML in determining interest rate | 3.00% | |||||
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 | [2] | $ 46,178,000 | ||||
Debt instrument, interest rate | [3] | 3.46% | 3.02% | |||
Match funded liabilities | $ 713,822,000 | $ 884,190,000 | ||||
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2015-VF5 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [2],[4] | $ 46,178,000 | ||||
Debt instrument, interest rate | [3],[4] | 3.76% | 4.29% | |||
Match funded liabilities | [4] | $ 178,822,000 | $ 67,095,000 | |||
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes - Series 2016-T1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [2],[5] | $ 0 | ||||
Debt instrument, interest rate | [3],[5] | 0.00% | 2.77% | |||
Match funded liabilities | [5] | $ 0 | $ 265,000,000 | |||
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes, Series 2018-T1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [2],[5] | $ 0 | ||||
Debt instrument, interest rate | [3],[5] | 3.50% | 0.00% | |||
Match funded liabilities | [5] | $ 150,000,000 | $ 0 | |||
Total Ocwen Master Advance Receivables Trust (OMART) [Member] | Advance Receivables Backed Notes, Series 2018-T2 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Available borrowing capacity that could be used based on amount of eligible collateral pledged | [2],[5] | $ 0 | ||||
Debt instrument, interest rate | [3],[5] | 3.81% | 0.00% | |||
Match funded liabilities | [5] | $ 150,000,000 | $ 0 | |||
[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] | Borrowing capacity is available to us provided that we have eligible collateral to pledge. Collateral may only be pledged to one facility. At September 30, 2018, $52.8 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 2.26% and 1.56% at September 30, 2018 and December 31, 2017, respectively. | |||||
[4] | Effective January 1, 2018, the borrowing capacity of the Series 2014-VF4 and the Series 2015-VF5 variable rate notes were each reduced from $105.0 million to $70.0 million. The interest rate was based on 1ML, with a ceiling of 125 basis points (bps), plus a margin of 235 to 635 bps. On July 13, 2018, we increased the borrowing capacity of the Series 2015-VF5 variable notes to $225.0 million and extended the amortization date to December 15, 2019, with interest computed based on the lender’s cost of funds plus a margin of 105 to 250 bps. The increased capacity was used on July 16, 2018 to redeem the Series 2016-T1 term notes with an outstanding balance of $265.0 million and an amortization date of August 15, 2018. We also voluntarily terminated the Series 2014-VF4 variable notes on July 16, 2018. | |||||
[5] | Under the terms of the agreement, we must continue to borrow the full amount of the Series 2016-T2, 2018-T1 and 2018-T2 fixed-rate term notes until the amortization date. If there is insufficient eligible collateral to support the level of borrowing, the excess cash proceeds in an amount necessary to make up the deficit are not distributed to Ocwen but are held by the trustee, and interest expense continues to be based on the full amount of the outstanding notes. The Series 2016-T2, 2018-T1 and 2018-T2 term notes have a total combined borrowing capacity of $535.0 million. Rates on the individual classes of notes range from 2.72% to 4.53%. The Series 2016-T1 and Series 2017-T1 term notes were redeemed on July 16, 2018 and August 14, 2018, respectively. On August 15, 2018, we issued two $150.0 million fixed-rate term notes (Series 2018 T-1 and Series 2018-T2) with amortization dates of August 15, 2019 and August 2020, respectively. |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) $ in Billions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Debt Instrument [Line Items] | |
Covenant compliance, consolidated tangible net worth at period end | $ 1.1 |
NRZ [Member] | |
Debt Instrument [Line Items] | |
UPB of rights to MSRs sold | 91.5 |
Outstanding servicing advances | $ 2.3 |
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% |
Senior Secured Term Loan [Member] | |
Debt Instrument [Line Items] | |
Percentage of loan to value | 40.00% |
Minimum [Member] | Senior Notes [Member] | 8.375% Senior Secured Notes Due In 2022 [Member] | |
Debt Instrument [Line Items] | |
Redemption period, notice | 30 days |
Maximum [Member] | Senior Notes [Member] | 8.375% Senior Secured Notes Due In 2022 [Member] | |
Debt Instrument [Line Items] | |
Redemption period, notice | 60 days |
Redemption price | 100.00% |
Borrowings - Schedule of Financ
Borrowings - Schedule of Financing Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | ||
Debt Instrument [Line Items] | |||
HMBS-related borrowings | [1] | $ 5,184,227 | $ 4,601,556 |
Other financing liabilities | 719,319 | 593,518 | |
Total Financing liabilities | 5,903,546 | 5,195,074 | |
Financing liability – MSRs pledged [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | 620,199 | 508,291 | |
Financing liability – MSRs pledged [Member] | Original Rights to MSRs Agreements [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | [2] | 450,845 | 499,042 |
Financing liability – MSRs pledged [Member] | 2017 Agreements and New RMSR Agreements [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | [3] | $ 169,354 | 9,249 |
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 [Member] | |||
Debt Instrument [Line Items] | |||
Maturity date | [4] | Feb. 28, 2028 | |
Other financing liabilities | [4] | $ 67,194 | 72,575 |
IndyMac Mortgage Loan Trust (INDX 2004-AR11) [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | [5] | 13,250 | 0 |
Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | [5] | 13,393 | 0 |
Financing Liability Owed to Securitization Investors [Member] | |||
Debt Instrument [Line Items] | |||
Other financing liabilities | $ 26,643 | 0 | |
Financing Liability – Advances Pledged [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 4.50% | ||
Other financing liabilities | [6] | $ 5,283 | $ 12,652 |
London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | [1] | 2.60% | |
[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 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 lump sum payments received upon transfer of legal title of the MSRs related to the Rights to MSRs transactions to NRZ in September 2017. In connection with the execution of the New RMSR Agreements in January 2018, we received a lump sum payment of $279.6 million as compensation for foregoing certain payments under the Original Rights to MSRs Agreements. 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. The expected maturity of the liability is April 30, 2020, the date through which we were scheduled to be the servicer on loans underlying the Rights to MSRs per the Original Rights to MSRs Agreements. | ||
[4] | OASIS noteholders are entitled to receive a monthly payment equal to the sum of: (a) 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. 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 notes. | ||
[5] | Consists of securitization debt certificates due to third parties that represent beneficial interests in trusts that we include in our unaudited consolidated financial statements, as more fully described in Note 2 – Securitizations and Variable Interest Entities. The holders of these certificates have no recourse against the assets of Ocwen. The certificates in the INDX 2004-AR11 Trust pay interest based on variable rates which are generally based on weighted average net mortgage rates and which range between 3.29% and 3.62% at September 30, 2018. The certificates in the RAST 2003-A11 Trust pay interest based on fixed rates ranging between 4.25% and 5.75% and a variable rate based on 1ML plus 0.45%. The maturity of the certificates occurs upon maturity of the loans held by the trust. The remaining loans in the INDX 2004-AR11 Trust and RAST 2003-A11 Trust have maturity dates extending through November 2034 and October 2033, respectively. | ||
[6] | 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. The effective interest rate is based on 1ML plus a margin of 450 bps. |
Borrowings - Schedule of Fina_2
Borrowings - Schedule of Financing Liabilities (Footnote) (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | ||
Jan. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | ||
Debt Instrument [Line Items] | ||||
Receipt of lump sum payment in connection with transfer of MSRs to NRZ | $ 279.6 | |||
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on UPB | 0.21% | |||
Financing Liability – Advances Pledged [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 4.50% | |||
London Interbank Offered Rate (LIBOR) [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | [1] | 2.60% | ||
Debt instrument, interest rate | 2.26056% | 1.564% | ||
London Interbank Offered Rate (LIBOR) [Member] | Financing Liability Owed to Securitization Investors [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 0.45% | |||
Minimum [Member] | IndyMac Mortgage Loan Trust (INDX 2004-AR11) [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 3.29% | |||
Minimum [Member] | Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 4.25% | |||
Maximum [Member] | IndyMac Mortgage Loan Trust (INDX 2004-AR11) [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 3.62% | |||
Maximum [Member] | Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate | 5.75% | |||
[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 Other
Borrowings - Schedule of Other Secured Borrowings (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | ||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | $ 52,800 | ||
Other secured borrowings | $ 5,903,546 | $ 5,195,074 | |
London Interbank Offered Rate (LIBOR) [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [1] | 2.60% | |
Secured Debt [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2] | $ 209,567 | |
Other secured borrowings | 115,130 | 255,782 | |
Unamortized debt issuance costs - SSTL | (3,573) | (5,423) | |
Discount - SSTL | (1,819) | (2,760) | |
Long-term Debt | $ 345,425 | $ 545,850 | |
Weighted average interest rate | 5.79% | 5.22% | |
Secured Debt [Member] | Senior Secured Term Loan [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[3] | $ 0 | |
Other secured borrowings | [3] | $ 235,687 | $ 298,251 |
Maturity date | [3] | Dec. 31, 2020 | |
Secured Debt [Member] | Repurchase Agreements [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[4] | $ 100,000 | |
Other secured borrowings | [4] | $ 0 | 8,221 |
Maturity date | [4] | Sep. 30, 2019 | |
Secured Debt [Member] | Participation Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[5] | $ 0 | |
Other secured borrowings | [5] | $ 64,798 | 161,433 |
Maturity date | [5] | May 31, 2019 | |
Secured Debt [Member] | Mortgage Warehouse Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[6] | $ 0 | |
Other secured borrowings | [6] | $ 9,899 | 32,042 |
Maturity date | [6] | Aug. 31, 2019 | |
Secured Debt [Member] | Master Repurchase Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[7] | $ 109,567 | |
Other secured borrowings | [7] | $ 40,433 | 54,086 |
Maturity date | [7] | Dec. 31, 2018 | |
Secured Debt [Member] | Master Repurchase Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2],[8] | $ 0 | |
Other secured borrowings | [8] | $ 0 | 0 |
Maturity date | [8] | Dec. 31, 2018 | |
Interest rate at index floor rate | [8] | 4.00% | |
Secured Debt [Member] | Total Servicing Lines Of Credit [Member] | |||
Line of Credit Facility [Line Items] | |||
Available borrowing capacity | [2] | $ 209,567 | |
Other secured borrowings | $ 350,817 | $ 554,033 | |
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% | |
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] | Mortgage Warehouse Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [6] | 2.75% | |
Secured Debt [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Master Repurchase Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate at index floor rate | [7] | 2.25% | |
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% | |
Secured Debt [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Mortgage Warehouse Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | [6] | 3.50% | |
Secured Debt [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | Master Repurchase Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Interest rate at index floor rate | [7] | 2.75% | |
[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] | Available borrowing capacity for our mortgage loan warehouse facilities 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, $100.0 million could be used at September 30, 2018 based on the amount of eligible collateral that could be pledged. | ||
[3] | Under the terms of the Amended and Restated Senior Secured Term Loan Facility Agreement with an original borrowing capacity of $335.0 million, we may request increases to the loan amount of up to $100.0 million, with additional increases subject to certain limitations. We are required to make quarterly principal payments of $4.2 million on the SSTL, 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) 1ML, plus a margin of 4.00% and subject to a base rate floor of 2.00% or (b) 1ML, plus a margin of 5.00% and subject to a 1ML floor of 1.00%. To date, we have elected option (b) to determine the interest rate. | ||
[4] | 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 September 28, 2018, we renewed this facility through September 27, 2019. In connection with the renewal, we increased the maximum borrowing amount from $137.5 million to $175.0 million, of which $100.0 million is available on a committed basis and the remainder is available at the discretion of the lender. | ||
[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 agreements allow 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 May 31, 2018, we renewed these facilities through April 30, 2019 ($175.0 million) and May 31, 2019 ($75.0 million). | ||
[6] | Under this participation agreement, the lender provides financing for $100.0 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. On August 15, 2018, we renewed these facilities through August 15, 2019. | ||
[7] | Under this agreement, the lender provides financing on a committed basis for up to $150.0 million. The 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. | ||
[8] | Under this agreement, the lender provides financing for up to $50.0 million at the discretion of the lender. |
Borrowings - Schedule of Othe_2
Borrowings - Schedule of Other Secured Borrowings (Footnote) (Details) - USD ($) | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 28, 2018 | Sep. 27, 2018 | May 31, 2018 | Dec. 05, 2016 | |
Debt Instrument [Line Items] | |||||||
Available borrowing capacity | $ 52,800,000 | ||||||
Amended Senior Secured Term Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount | $ 100,000,000 | ||||||
Percentage of equity interest in foreign subsidiaries pledged as security to secured debt | 35.00% | ||||||
Periodic prepayment of SSTL | $ 4,200,000 | ||||||
Maximum borrowing capacity | $ 335,000,000 | ||||||
Repurchase Agreements [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 100,000,000 | $ 175,000,000 | $ 137,500,000 | ||||
London Interbank Offered Rate (LIBOR) [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | [1] | 2.60% | |||||
Secured Debt [Member] | Participation Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 250,000,000 | ||||||
Beneficial interest | 100.00% | ||||||
Secured Debt [Member] | Mortgage Warehouse Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 100,000,000 | ||||||
Beneficial interest | 100.00% | ||||||
Secured Debt [Member] | Master Repurchase Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 150,000,000 | ||||||
Beneficial interest | 100.00% | ||||||
Secured Debt [Member] | Master Repurchase Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||
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% | ||||||
Mortgage Loan Warehouse Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Available borrowing capacity | $ 100,000,000 | ||||||
April 30, 2019 Maturity [Member] | Secured Debt [Member] | Participation Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 175,000,000 | ||||||
May 31, 2019 Maturity [Member] | Secured Debt [Member] | Participation Agreement [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 75,000,000 | ||||||
[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
Borrowings - Schedule of Senior Notes (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Senior notes | $ 347,749 | $ 347,338 | |
6.625 Senior Notes, Due 2019 [Member] | |||
Debt Instrument [Line Items] | |||
Interest Rate | [1] | 6.625% | |
8.375% Senior Secured Notes Due In 2022 [Member] | |||
Debt Instrument [Line Items] | |||
Interest Rate | [2] | 8.375% | |
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 350,000 | 350,000 | |
Unamortized debt issuance costs | (2,251) | (2,662) | |
Long-term Debt | 347,749 | 347,338 | |
Senior Notes [Member] | 6.625 Senior Notes, Due 2019 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes | [1] | 3,122 | 3,122 |
Senior Notes [Member] | 8.375% Senior Secured Notes Due In 2022 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes | [2] | $ 346,878 | $ 346,878 |
[1] | 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 a redemption price (expressed as a percentage of principal amount) of 100.000% beginning May 15, 2018 plus accrued and unpaid interest and additional interest, if any. | ||
[2] | 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. |
Borrowings - Schedule of Seni_2
Borrowings - Schedule of Senior Notes (Footnote) (Details) - Unsecured Debt [Member] - 6.625 Senior Notes, Due 2019 [Member] | 9 Months Ended |
Sep. 30, 2018 | |
Minimum [Member] | |
Debt Instrument [Line Items] | |
Redemption period, notice | 30 days |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Redemption period, notice | 60 days |
May 15, 2018 [Member] | |
Debt Instrument [Line Items] | |
Redemption price | 100.00% |
Borrowings Schedule of Redempti
Borrowings Schedule of Redemption Prices (Details) - Secured Debt [Member] | 9 Months Ended |
Sep. 30, 2018 | |
2018 [Member] | |
Debt Instrument [Line Items] | |
Redemption price | 106.2812% |
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, 2018 | Dec. 31, 2017 |
Other Liabilities Disclosure [Abstract] | ||
Contingent loan repurchase liability | $ 307,684 | $ 431,492 |
Other accrued expenses | 60,238 | 75,088 |
Accrued legal fees and settlements | 53,380 | 51,057 |
Due to NRZ | 46,550 | 98,493 |
Servicing-related obligations | 30,958 | 35,239 |
Checks held for escheat | 20,686 | 19,306 |
Liability for indemnification obligations | 20,543 | 23,117 |
Accrued interest payable | 15,069 | 5,172 |
Liability for mortgage insurance contingency | 6,820 | 6,820 |
Deferred revenue | 4,836 | 3,463 |
Liability for uncertain tax positions | 3,306 | 3,252 |
Derivatives, at fair value | 2,567 | 635 |
Amounts due in connection with MSR sales | 403 | 8,291 |
Other | 16,287 | 7,985 |
Total other liabilities | $ 589,327 | $ 769,410 |
Other Liabilities - Schedule _2
Other Liabilities - Schedule of Changes in Liability for Legal Fees and Settlements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Other Liabilities Disclosure [Abstract] | |||||
Beginning balance | $ 54,295 | $ 117,020 | $ 51,057 | $ 93,797 | |
Accrual for probable losses | [1] | 995 | 2,500 | 10,777 | 80,815 |
Payments | [2] | (460) | (55,188) | (8,103) | (120,441) |
Issuance of common stock in settlement of litigation | [3] | 0 | 0 | (5,719) | 0 |
Net increase (decrease) in accrued legal fees | (1,450) | (4,389) | 3,282 | 3,229 | |
Other | 0 | 0 | 2,086 | 2,543 | |
Ending balance | $ 53,380 | $ 59,943 | $ 53,380 | $ 59,943 | |
[1] | Consists of amounts accrued for probable losses in connection with legal and regulatory settlements and judgments. Such amounts are reported in Professional services expense in the unaudited consolidated statements of operations. | ||||
[2] | Includes cash payments made in connection with resolved legal and regulatory matters. | ||||
[3] | In January 2018, Ocwen issued 1,875,000 shares of common stock in connection with a previously approved securities litigation settlement. |
Other Liabilities - Schedule _3
Other Liabilities - Schedule of Changes in Liability for Legal Fees and Settlements (Footnote) (Details) | 1 Months Ended |
Jan. 31, 2018shares | |
Other Liabilities Disclosure [Abstract] | |
Issuance of common stock in connection with approved securities litigation | 1,875,000 |
Derivative Financial Instrume_3
Derivative Financial Instruments and Hedging Activities - Summary of Derivatives (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
Fair value of derivative assets (liabilities) at: | ||||
Derivatives, at fair value | $ 4,721 | $ 5,429 | ||
Interest Rate Lock Commitments [Member] | ||||
Derivative Notional Balance | ||||
Notional balance at December 31, 2017 | 96,339 | |||
Additions | 927,700 | |||
Amortization | 0 | |||
Maturities | (746,615) | |||
Terminations | (164,978) | |||
Notional balance at September 30, 2018 | $ 112,446 | |||
Maturity | Oct. 2018 - Nov. 2018 | |||
Fair value of derivative assets (liabilities) at: | ||||
Derivatives, at fair value | [1] | $ 2,816 | 3,283 | |
Gains (losses) on derivatives during the nine months ended: | ||||
Gains (losses) on derivatives | 137 | $ (1,605) | ||
Forward MBS Trades [Member] | ||||
Derivative Notional Balance | ||||
Notional balance at December 31, 2017 | 240,823 | |||
Additions | 386,311 | |||
Amortization | 0 | |||
Maturities | (407,759) | |||
Terminations | 0 | |||
Notional balance at September 30, 2018 | $ 219,375 | |||
Maturity | Dec. 2018 | |||
Fair value of derivative assets (liabilities) at: | ||||
Derivatives, at fair value | [1] | $ (1,873) | (545) | |
Gains (losses) on derivatives during the nine months ended: | ||||
Gains (losses) on derivatives | 2,082 | (8,604) | ||
Interest Rate Caps [Member] | ||||
Derivative Notional Balance | ||||
Notional balance at December 31, 2017 | 375,000 | |||
Additions | 154,583 | |||
Amortization | (208,750) | |||
Maturities | 0 | |||
Terminations | 0 | |||
Notional balance at September 30, 2018 | $ 320,833 | |||
Maturity | May 2019 - May 2020 | |||
Fair value of derivative assets (liabilities) at: | ||||
Derivatives, at fair value | [1] | $ 1,211 | $ 2,056 | |
Gains (losses) on derivatives during the nine months ended: | ||||
Gains (losses) on derivatives | $ (308) | $ (207) | ||
[1] | Derivatives are reported at fair value in Other assets or in Other liabilities on our unaudited consolidated balance sheets. |
Derivative Financial Instrume_4
Derivative Financial Instruments and Hedging Activities - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Foreign currency exchange gains (losses) | $ (2) | $ (0.7) | $ (4.7) | $ 0.7 |
Unrealized loss on derivatives arising during period, before tax | 1.1 | 1.3 | ||
Other comprehensive income (loss), tax | $ 0.1 | $ 0.1 |
Interest Expense - Schedule of
Interest Expense - Schedule of Components of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Debt securities: | ||||
Interest expense | $ 61,288 | $ 47,281 | $ 189,601 | $ 212,471 |
Financing Liabilities [Member] | ||||
Debt securities: | ||||
Interest expense | 38,022 | 15,317 | 115,105 | 118,579 |
Match Funded Liabilties [Member] | ||||
Debt securities: | ||||
Interest expense | 7,229 | 11,981 | 24,491 | 37,499 |
Other Secured Borrowings [Member] | ||||
Debt securities: | ||||
Interest expense | 6,958 | 10,990 | 23,190 | 30,174 |
Senior Notes [Member] | ||||
Debt securities: | ||||
Interest expense | 7,452 | 7,452 | 22,355 | 22,355 |
Other [Member] | ||||
Debt securities: | ||||
Interest expense | 1,627 | 1,541 | 4,460 | 3,864 |
NRZ [Member] | Financing Liabilities [Member] | ||||
Debt securities: | ||||
Interest expense | 36,717 | 13,898 | 111,256 | 113,681 |
Other Financing Liabilities [Member] | Financing Liabilities [Member] | ||||
Debt securities: | ||||
Interest expense | $ 1,305 | $ 1,419 | $ 3,849 | $ 4,898 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Contingency [Line Items] | ||||
Effective tax rate on pre-tax losses | (7.10%) | 15.70% | ||
Income tax expense (benefit) | $ 845 | $ (20,418) | $ 4,541 | $ (15,465) |
Pre tax losses | $ (40,273) | (26,553) | (63,713) | $ (98,659) |
Recognized tax benefits resulting from lapse of applicable statute of limitations | $ 22,700 | |||
Base Erosion And Anti-Abuse Tax [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Increase in income tax expense | $ 2,800 |
Basic and Diluted Earnings (L_3
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, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Basic loss per share | |||||
Net loss attributable to Ocwen stockholders | [1] | $ (41,147) | $ (6,252) | $ (68,430) | $ (83,483) |
Weighted average shares of common stock | 133,912,425 | 128,744,152 | 133,632,905 | 125,797,777 | |
Basic loss per share (in USD per share) | $ (0.31) | $ (0.05) | $ (0.51) | $ (0.66) | |
Diluted loss per share | |||||
Net loss attributable to Ocwen stockholders | [1] | $ (41,147) | $ (6,252) | $ (68,430) | $ (83,483) |
Weighted average shares of common stock | 133,912,425 | 128,744,152 | 133,632,905 | 125,797,777 | |
Effect of dilutive elements: | |||||
Stock options awards (in shares) | 0 | 0 | 0 | 0 | |
Common stock awards (in shares) | 0 | 0 | 0 | 0 | |
Dilutive weighted average shares of common stock (in shares) | [1] | 133,912,425 | 128,744,152 | 133,632,905 | 125,797,777 |
Diluted loss per share (in USD per share) | $ (0.31) | $ (0.05) | $ (0.51) | $ (0.66) | |
Stock options and common stock awards excluded from the computation of diluted earnings per share | |||||
Anti-dilutive Securities (in shares) | [1] | 4,057,937 | 6,600,164 | 5,684,663 | 5,121,844 |
Market Based [Member] | |||||
Stock options and common stock awards excluded from the computation of diluted earnings per share | |||||
Anti-dilutive Securities (in shares) | [2] | 645,984 | 862,446 | 645,984 | 862,446 |
[1] | Stock options were anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock. | ||||
[2] | Shares that are issuable upon the achievement of certain market-based performance criteria related to Ocwen’s stock price. |
Business Segment Reporting - Sc
Business Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |||
Results of Operations | |||||||
Revenue | $ 238,278 | $ 284,642 | $ 752,116 | $ 917,806 | |||
Expenses | 217,526 | [1] | 273,479 | 629,677 | [1] | 830,342 | |
Other income (expense): | |||||||
Interest income | 3,963 | 4,099 | 10,018 | 12,101 | |||
Interest expense | (61,288) | (47,281) | (189,601) | (212,471) | |||
Gain on sale of mortgage servicing rights, net | (733) | 6,543 | 303 | 7,863 | |||
Other | (2,967) | (1,077) | (6,872) | 6,384 | |||
Total other expense, net | (61,025) | (37,716) | (186,152) | (186,123) | |||
Loss before income taxes | (40,273) | (26,553) | (63,713) | (98,659) | |||
Total Assets | |||||||
Balance | 8,461,037 | 8,097,605 | 8,461,037 | 8,097,605 | $ 8,403,164 | ||
Operating Segments [Member] | Servicing [Member] | |||||||
Results of Operations | |||||||
Revenue | 217,630 | 246,545 | 674,233 | 802,347 | |||
Expenses | 185,077 | [1] | 218,565 | 523,061 | [1] | 637,406 | |
Other income (expense): | |||||||
Interest income | 2,242 | 144 | 4,136 | 406 | |||
Interest expense | (47,359) | (28,568) | (144,551) | (159,822) | |||
Gain on sale of mortgage servicing rights, net | (733) | 6,543 | 303 | 7,863 | |||
Other | (602) | (418) | (2,392) | 4,642 | |||
Total other expense, net | (46,452) | (22,299) | (142,504) | (146,911) | |||
Loss before income taxes | (13,899) | 5,681 | 8,668 | 18,030 | |||
Total Assets | |||||||
Balance | 2,726,905 | 2,905,817 | 2,726,905 | 2,905,817 | 3,033,243 | ||
Operating Segments [Member] | Lending [Member] | |||||||
Results of Operations | |||||||
Revenue | 16,917 | 31,935 | 65,116 | 95,457 | |||
Expenses | 18,954 | [1] | 38,412 | 57,036 | [1] | 100,628 | |
Other income (expense): | |||||||
Interest income | 1,255 | 2,857 | 4,107 | 8,612 | |||
Interest expense | (1,437) | (4,504) | (4,855) | (11,171) | |||
Gain on sale of mortgage servicing rights, net | 0 | 0 | 0 | 0 | |||
Other | 154 | 555 | 774 | 658 | |||
Total other expense, net | (28) | (1,092) | 26 | (1,901) | |||
Loss before income taxes | (2,065) | (7,569) | 8,106 | (7,072) | |||
Total Assets | |||||||
Balance | 5,385,437 | 4,679,641 | 5,385,437 | 4,679,641 | 4,945,456 | ||
Operating Segments [Member] | Corporate Items and Other [Member] | |||||||
Results of Operations | |||||||
Revenue | 3,731 | 6,162 | 12,767 | 20,002 | |||
Expenses | 13,495 | [1] | 16,502 | 49,580 | [1] | 92,308 | |
Other income (expense): | |||||||
Interest income | 466 | 1,098 | 1,775 | 3,083 | |||
Interest expense | (12,492) | (14,209) | (40,195) | (41,478) | |||
Gain on sale of mortgage servicing rights, net | 0 | 0 | 0 | 0 | |||
Other | (2,519) | (1,214) | (5,254) | 1,084 | |||
Total other expense, net | (14,545) | (14,325) | (43,674) | (37,311) | |||
Loss before income taxes | (24,309) | (24,665) | (80,487) | (109,617) | |||
Total Assets | |||||||
Balance | 348,695 | 512,147 | 348,695 | 512,147 | 424,465 | ||
Corporate Eliminations [Member] | |||||||
Results of Operations | |||||||
Revenue | 0 | 0 | 0 | 0 | |||
Expenses | 0 | [1] | 0 | 0 | [1] | 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 | |||
Loss before income taxes | 0 | 0 | 0 | 0 | |||
Total Assets | |||||||
Balance | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||
[1] | Expenses in the Corporate Items and Other segment for the nine months ended September 30, 2018 includes $7.5 million of severance expense attributable to headcount reductions in connection with our strategic initiatives to exit the ACS business and the forward lending correspondent and wholesale channels, as well as our overall efforts to reduce costs. |
Business Segment Reporting - _2
Business Segment Reporting - Schedule of Depreciation and Amortization by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Depreciation expense | $ 5,558 | $ 6,990 | $ 18,199 | $ 20,430 |
Amortization of mortgage servicing rights | 13,148 | 38,560 | ||
Amortization of debt discount | 235 | 258 | 941 | 797 |
Amortization of debt issuance costs | 599 | 644 | 2,261 | 1,979 |
Servicing [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation expense | 1,035 | 1,525 | 3,647 | 4,393 |
Amortization of mortgage servicing rights | 13,081 | 38,351 | ||
Amortization of debt discount | 0 | 0 | 0 | 0 |
Amortization of debt issuance costs | 0 | 0 | 0 | 0 |
Lending [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation expense | 23 | 57 | 77 | 162 |
Amortization of mortgage servicing rights | 67 | 209 | ||
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 | 4,500 | 5,408 | 14,475 | 15,875 |
Amortization of mortgage servicing rights | 0 | 0 | ||
Amortization of debt discount | 235 | 258 | 941 | 797 |
Amortization of debt issuance costs | $ 599 | $ 644 | $ 2,261 | $ 1,979 |
Business Segment Reporting - _3
Business Segment Reporting - Schedule of Segment Reporting Information (Footnote) (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Corporate and Other [Member] | |
Segment Reporting Information [Line Items] | |
Severance expense | $ 7.5 |
Regulatory Requirements - Narra
Regulatory Requirements - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Brokers and Dealers [Abstract] | |
Number of days from fiscal year end that servicer is obliged to provide audited financial statements | 90 days |
Net worth requirement | $ 174.5 |
Commitments - Narrative (Detail
Commitments - Narrative (Details) $ in Millions | Sep. 30, 2018USD ($) |
Floating Rate Reverse Mortgage Loans [Member] | |
Other Commitments [Line Items] | |
Additional borrowing capacity to borrowers | $ 1,500 |
Forward Mortgage Loan Interest Rate Lock Commitments [Member] | |
Other Commitments [Line Items] | |
Short-term commitments to lend | 91.1 |
Reverse Mortgage Loan Interest Rate Lock Commitments [Member] | |
Other Commitments [Line Items] | |
Short-term commitments to lend | $ 21.3 |
Contingencies - Narrative (Deta
Contingencies - Narrative (Details) | Apr. 20, 2017StateStates | Apr. 30, 2017USD ($) | Sep. 30, 2018USD ($)LoanStates | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($)Loan | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) |
Loss Contingencies [Line Items] | ||||||||
Accrued penalty | $ 53,380,000 | $ 54,295,000 | $ 51,057,000 | $ 59,943,000 | $ 117,020,000 | $ 93,797,000 | ||
Number of states charging with regulatory action | States | 29 | |||||||
Number of states where regulatory actions were resolved | States | 30 | |||||||
Number of loan files to be tested relating to escrow on residential real property | Loan | 9,000 | |||||||
Number of state attorneys general charging with regulatory action | State | 2 | |||||||
Warranty repurchase demands unpaid principal balance | $ 26,500,000 | $ 40,200,000 | ||||||
Warranty repurchase demands number of loans | Loan | 160 | 213 | ||||||
Consumer Financial Protection Bureau [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Accrued penalty | $ 12,500,000 | |||||||
Massachusetts Regulatory Agency [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Litigation settlement expense | $ 1,000,000 | |||||||
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 | |||||||
Multistate Mortgage Committee [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Accrued penalty | $ 0 | |||||||
Number of states who are part of confidential supervisory memorandum of understanding | States | 6 |
Contingencies - Schedule of Ind
Contingencies - Schedule of Indemnification Obligations (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Indemnification Obligations Liability [Roll Forward] | |||
Beginning balance | $ 19,229 | $ 24,285 | |
Provision for representation and warranty obligations | 4,443 | (3,285) | |
New production reserves | 259 | 554 | |
Charge-offs and other | [1] | (6,824) | (3,036) |
Ending balance | $ 17,107 | $ 18,518 | |
[1] | Includes principal and interest losses realized in connection with repurchased loans, make-whole, indemnification and fee payments and settlements net of recoveries, if any. |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) $ in Millions | Oct. 04, 2018 | Sep. 30, 2018 | Sep. 30, 2018 |
Subsequent Event [Line Items] | |||
Business acquisition, transaction costs | $ 1.7 | $ 6.6 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Business acquisition, aggregate consideration paid | $ 358.4 | ||
PHH [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Business acquisition, aggregate consideration paid | 325 | ||
Ocwen [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Business acquisition, aggregate consideration paid | $ 33.4 |