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Note 14 LINES OF CREDIT AND OTHER BORROWINGS

12 Months Ended

Dec. 31, 2012

NOTE 14

LINES OF CREDIT AND OTHER BORROWINGS

Lines of credit and other secured borrowings are comprised of the following:

						Balance Outstanding
Borrowings	Collateral	Interest Rate	Maturity		Unused Borrowing Capacity		December 31, 2012			December 31, 2011

Servicing:
SSTL (1)	(1)	1ML + 550 bps with a LIBOR floor of 150 bps (1)	Sept. 2016	$	—	$	314,229			546,250
Senior unsecured term loan (2)		1-Month Euro-dollar rate + 675 bps with a Eurodollar floor of 150 bps	March, 2017		—		75,000			—
Financing liability – MSRs pledged (3)	MSRs (3)	(3)(3)			—		303,705			—
Financing liability – MSRs pledged (4)	MSRs (4)	(4)(4)			—		2,603			—
Promissory note (5)	MSRs	1ML + 350 bps	May 2017		—		18,466			—
					—		714,003			546,250

Lending:
Master repurchase agreement (6)	Loans held for sale (LHFS)	1ML + 175 bps	Jan. 2013		36,878		88,122			—
Participation agreement (7)	LHFS	N/A	Feb. 2013		—		58,938			—
Master repurchase agreement (8)	LHFS	1ML + 200 bps	Feb. 2013		116,005		133,995			—
Master repurchase agreement	LHFS	1ML + 200 bps	Jul. 2013		192,980		107,020			—
					345,863		388,075			—

Corporate Items and Other
Securities sold under an agreement to repurchase (9)	Ocwen Real Estate Asset Liquidating Trust 2007-1 Notes	Class A-2 notes: 1ML + 200 bps; Class A-3 notes: 1ML + 300 bps	Monthly		—		2,833			4,610
					345,863		1,104,911			550,860
Discount (1)					—		(8,232	)		(10,491	)
				$	345,863	$	1,096,679		$	540,369

Weighted average interest rate (10)							4.49	%		6.96	%

(1)	On September 1, 2011, we entered into a new SSTL facility agreement and borrowed $575,000 that was primarily used to fund a portion of the Litton Acquisition. This initial loan was issued with an original issue discount of $11,500 that we are amortizing over the term of the loan. Subsequently, in order to fund a portion of the Homeward Acquisition, we entered into a Joinder Agreement with the lender in December 2012 that allowed us to borrow an additional $100,000, net of an original issue discount of $1,000, under this facility on essentially the same terms and conditions as the initial borrowing. 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 of Barclays Bank PLC in effect on such day, (ii) the federal funds effective rate in effect on such day plus 0.50% and (iii) the one-month Eurodollar rate (1-Month LIBOR)], plus a margin of 4.50% and a base rate floor of 2.50% or (b) 1-Month LIBOR, plus a margin of 5.50% with a 1-Month LIBOR floor of 1.50%. We are required to repay the principal amount of the borrowings in consecutive quarterly installments of $16,875 per quarter commencing September 30, 2011 through June 30, 2016, with the balance becoming due on September 1, 2016. In addition, Ocwen is required to use 25% of the net cash proceeds (as defined) from any asset sale (as defined) to repay loan principal. Generally, this provision applies to non-operating sales of assets, such as the HLSS Transactions, and generally, net cash proceeds represent the proceeds from the sale of the assets, net of the repayment of any debt secured by a lien on the assets sold. The borrowings are secured by a first priority security interest in substantially all of the tangible and intangible assets of Ocwen. In February 2013, we repaid this loan in full.
(2)	Ocwen borrowed funds from Altisource in connection with the financing of the Homeward Acquisition. See Note 27 for additional information regarding this agreement with Altisource. We repaid this loan in full in February 2013.
(3)	As part of the HLSS Transactions completed in 2012, Ocwen transferred to HLSS certain Rights to MSRs. However, because Ocwen has not yet transferred legal title to the MSRs, the sales were accounted for as a financing with the proceeds from the sale of the MSRs recorded as a financing liability. The financing liability is being amortized using the interest method with the servicing income that is remitted to HLSS representing payments of principal and interest. The liability has no contractual maturity but will be amortized over the estimated life of the pledged MSRs. The balance of the liability is reduced each month based on the change in the estimated fair value of the pledged MSRs. See Note 3 for additional information regarding the HLSS Transactions.
(4)	We sold MSRs for certain loans to an unrelated third party in December 2012; however, we are required to repurchase the MSRs for any loans that cannot be refinanced by the purchaser under the federal government’s Home Affordable Refinance Program (HARP). As a result, the sale is being accounted for as a financing. The financing liability is being amortized using the interest method with the servicing income that is remitted to the purchaser representing payments of principal and interest.

(5)	This note was issued to finance the acquisition of MSRs from BANA. Prepayments of the balance on this note may be required if the borrowing base, as defined, falls below the amount of the note outstanding.
(6)	On January 16, 2013, we extended the Master Repurchase Agreement maturity date to March 19, 2013.
(7)	Under this participation agreement, the lender provides financing on an uncommitted basis for $50,000 to $90,000 at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. However, the transaction does not qualify for sales accounting treatment as is, therefore, accounted for as a financing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. In February 2013, we extended the participation agreement maturity date to April 30, 2013.
(8)	On January 25, 2013, we extended the Master Repurchase Agreement maturity date to May 3, 2013.
(9)	In August 2010, we obtained financing under a repurchase agreement for the Class A-2 and A-3 notes issued by Ocwen Real Estate Asset Liquidating Trust 2007-1 which have a current face value of $26,180 at December 31, 2012. This agreement has no stated credit limit and lending is determined for each transaction based on the acceptability of the securities presented as collateral.
(10)	Excludes the two financing liabilities arising for the sales of Rights to MSRs and MSRs that were accounted for as a financing and the financing liability arising from the sale of mortgage loan participations accounted for as a financing.