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Note 3 ASSET SALES AND FINANCING | 12 Months Ended
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Dec. 31, 2012
Asset Sales And Financing [Text Block] |
NOTE 3 | ASSET SALES AND FINANCING
On March 5, 2012, Ocwen completed its initial sale to Home Loan Servicing Solutions, Ltd. and its wholly owned subsidiary, HLSS Holdings, LLC (collectively referred to as HLSS), of the right to receive the servicing fees, excluding ancillary income, relating to certain mortgage servicing (Rights to MSRs) for approximately $15.2 billion of UPB and related servicing advances that we acquired in connection with the HomEq Acquisition. HLSS also acquired HomEq Servicer Advance Facility Transferor, LLC and HomEq Servicer Advance Receivables Trust 2010-ADV1 (together the Advance SPEs). As a result of the acquisition of the Advance SPEs, HLSS also assumed the related match funded liabilities under the structured servicing advance financing facility that we entered into as part of the HomEq Acquisition (the HomEq Servicing advance facility), with the exception of the Class D Term Note which Ocwen agreed to repay prior to closing. The final purchase price of $138,792 reflects post-closing adjustments that principally resulted from declines in match funded advances between February 28, 2012 and March 5, 2012. See Note 13 for additional information regarding the match funded liabilities assumed by HLSS. Since the initial sale on March 5, 2012, Ocwen completed five additional sales to HLSS on May 1st, August 1st, September 13th, September 28th and December 26th of Rights to MSRs for loans with approximately $67.5 billion of UPB together with the related servicing advances. The initial and flow transactions with HLSS are collectively referred to as the HLSS Transactions. In 2012, Ocwen received total proceeds of $3.1 billion from the flow transactions. On December 31, 2012, Ocwen recorded a receivable of $1,410 from HLSS for post-closing adjustments that resulted from an increase in match funded advances and a decline in MSRs through the closing date. As part of the HLSS Transactions, Ocwen retains legal ownership of the MSRs and continues to service the related mortgage loans. However, Ocwen will service the loans for a reduced fee because HLSS has assumed the match funded liabilities as well as the obligation for future servicing advances related to the MSRs. Ocwen is obligated to transfer legal ownership of the MSRs to HLSS if and when the required third party consents are obtained. At that time, Ocwen would commence subservicing the MSRs under essentially the same terms and conditions pursuant to a subservicing agreement with HLSS which was executed on February 10, 2012. The following table summarizes the sales price of the assets and liabilities acquired by HLSS in connection with the HLSS Transactions:
|  | Initial sale |  |  | Flow sales |  |  | Total |
Sale of MSRs accounted for as a financing (1) |  | $ | 62,458 |  |  | $ | 254,149 |  |  | $ | 316,607 |
Sale of match funded advances (2) |  |  | — |  |  |  | 2,827,227 |  |  |  | 2,827,227 |
Sale of Advance SPEs: |  |  |  |  |  |  |  |  |  |  |  |
Match funded advances |  |  | 413,374 |  |  |  | — |  |  |  | 413,374 |
Debt service account |  |  | 14,786 |  |  |  | — |  |  |  | 14,786 |
Prepaid lender fees and debt issuance costs |  |  | 5,422 |  |  |  | — |  |  |  | 5,422 |
Other prepaid expenses |  |  | 1,928 |  |  |  | — |  |  |  | 1,928 |
Match funded liabilities |  |  | (358,335 | ) |  |  | — |  |  |  | (358,335 | )
Accrued interest payable and other accrued expenses |  |  | (841 | ) |  |  | — |  |  |  | (841 | )
Net assets of Advance SPEs (3) |  |  | 76,334 |  |  |  | — |  |  |  | 76,334 |
Sales price, as adjusted |  |  | 138,792 |  |  |  | 3,081,376 |  |  |  | 3,220,168 |
Amount due from HLSS for post-closing adjustments at December 31, 2012 |  |  | — |  |  |  | (1,410 | ) |  |  | (1,410 | )
Cash received |  | $ | 138,792 |  |  | $ | 3,079,966 |  |  | $ | 3,218,758 |
(1) | Reported in the Consolidated Statements of Cash Flows cash flows with financing activities as Proceeds from sale of mortgage servicing rights accounted for as a financing.
(2) | Reported in the Consolidated Statements of Cash Flows with investing activities as Proceeds from sale of match funded advances.
(3) | Reported in the Consolidated Statements of Cash Flows with investing activities as Proceeds from sale of advance financing subsidiary and special purpose entity.
Because Ocwen has retained legal title to the MSRs, the sales to HLSS of Rights to MSRs have been accounted for as financings. As a result, we have not derecognized the MSRs, and we have established a liability equal to the sales price. If and when the third party consents are obtained, legal title will transfer to HLSS, and we expect to record a sale with the gain deferred and derecognize the MSRs. Until such time, we continue to recognize the full amount of servicing revenue and amortization of the MSRs. The sales proceeds represent the estimated fair value of the MSRs. This excess amount will be realized over time as the MSRs amortize. Our investment in the Advance SPEs was sold at carrying value and accounted for as a sale. The consolidated assets and liabilities of the Advance SPEs were derecognized at the time of the sale. We have determined that the HLSS Transactions do not constitute the disposal of a business. Therefore, there was no need to consider goodwill in determining the gain on the sale. Because the HLSS Transactions resulted in the sale of a portion of the assets within the Residential Servicing reporting unit which is an indicator that goodwill for the reporting unit should be tested for impairment, we updated our qualitative assessment of whether it was more likely than not that the fair value of the Residential Servicing reporting unit was less than its carrying amount. Our updated assessment indicated that goodwill was not impaired. Ocwen also entered into an agreement with HLSS Management, LLC (HLSS Management), a wholly owned subsidiary of HLSS, for the provision of certain professional services to us and the provision by us of certain professional services to HLSS Management. See Note 27 for additional information regarding this agreement.

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- Definition The entire disclosure for sales of assets and liabilities directly associated with those assets that will be transferred in the transaction. This may include a description of an asset sale (or series of individually immaterial assets sales) completed during the period, including background, timing, and assets and liabilities sold. This element does not inlcude fixed asset sales and plant closings. + References No definition available. + Details
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