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NOTE 4 ASSET SALES AND FINANCING | 3 Months Ended
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Mar. 31, 2013
Asset Sales and Financing [Abstract] |
ASSET SALES AND FINANCING |
Note 4 | Asset Sales and Financing
In order to efficiently finance our assets and operations, we periodically sell the right to receive servicing fees, excluding ancillary income, relating to certain of our mortgage servicing rights (Rights to MSRs) and related advances (collectively HLSS Transactions) to Home Loan Servicing Solutions, Ltd. and its wholly owned subsidiary, HLSS Holdings, LLC (collectively HLSS). To the extent applicable, HLSS may also acquire certain advance SPEs and the related match funded liabilities. During the three months ended March 31, 2013 and 2012, we completed HLSS Transactions relating to the Rights to MSRs for $15.9 billion and $15.2 billion of UPB, respectively. As part of the HLSS Transactions, we retain legal ownership of the MSRs and continue to service the related mortgage loans. However, we 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. We are obligated to transfer legal ownership of the MSRs to HLSS upon obtaining all required third party consents. At that time, we would subservice the MSRs pursuant to our subservicing agreement with HLSS which was executed on February 10, 2012. See Note 22 – Related Party Transactions for additional information. The following table provides a summary of the assets and liabilities sold to HLSS in connection with the HLSS Transactions during the three months ended March 31:
|  | 2013 |  |  | 2012 |
Sale of MSRs accounted for as a financing |  | $ | 100,707 |  |  | $ | 62,458 |
Sale of match funded advances |  |  | 703,206 |  |  |  | — |
Sale of advance SPEs: |  |  |  |  |  |  |  |
Match funded advances |  |  | — |  |  |  | 413,374 |
Debt service account |  |  | — |  |  |  | 14,786 |
Prepaid lender fees and debt issuance costs |  |  | — |  |  |  | 5,422 |
Other prepaid expenses |  |  | — |  |  |  | 1,928 |
Match funded liabilities |  |  | — |  |  |  | (358,335 | )
Accrued interest payable and other accrued expenses |  |  | — |  |  |  | (841 | )
Net assets of advance SPEs |  |  | — |  |  |  | 76,334 |
Sales price, as adjusted |  |  | 803,913 |  |  |  | 138,792 |
Amount due to HLSS for post-closing adjustments at March 31 |  |  | 10,406 |  |  |  | 11,006 |
Cash received |  | $ | 814,319 |  |  | $ | 149,798 |
Because we retained legal title to the MSRs, the sales of Rights to MSRs are accounted for as financings. The related advance sales meet the requirements for sale accounting under GAAP. When HLSS acquired advance SPEs from Ocwen, we derecognized the consolidated assets and liabilities of the Advance SPEs at the time of the sale. To the extent that we obtain all third party consents, legal title will transfer to HLSS, at which point we will derecognize the related MSRs. Upon derecognition, any resulting gain or loss will be deferred and amortized over the expected life of the related subservicing agreement. Until such time, we continue to recognize the full amount of servicing revenue and amortization of the MSRs.

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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 include fixed asset sales and plant closings. + References No definition available. + Details
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