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NOTE 15 OTHER BORROWINGS

9 Months Ended

Sep. 30, 2013

NOTE 15

OTHER BORROWINGS

Lines of credit and other secured and unsecured borrowings are comprised of the following at the dates indicated:


				Available		Balance Outstanding
				Borrowing		September 30,			December 31,
Borrowings	Collateral	Interest Rate	Maturity	Capacity		2013			2012
Servicing:
SSTL (1)	(1)	1ML + 550 bps; LIBOR floor of 150 bps (1)	Sept. 2016	$	—	$	—		$	314,229
SSTL (2)	(2)	(2)	Feb. 2018		—		1,293,500			—

Senior unsecured term loan (3)		1-Month Euro- dollar rate + 675 bps with a Eurodollar floor of 150 bps	Mar. 2017		—		—			75,000
Financing liability – MSRs pledged (4)	MSRs (4)	(4)	(4)		—		643,595			303,705
Financing liability – MSRs pledged (5)	MSRs (5)	(5)	(5)		—		—			2,603
Promissory note (6)	MSRs	1ML + 350 bps	May 2017		—		17,163			18,466
Repurchase agreement	Loans held for sale (LHFS)	1 ML + 250 – 345 bps	Apr. 2014		47,878		52,122			—
					47,878		2,006,380			714,003

Lending:
Master repurchase agreement (7)	LHFS	1ML + 175 bps	Mar. 2014		230,085		69,915			88,122
Participation agreement (8)	LHFS	N/A	May 2014		—		19,588			58,938
Master repurchase agreement (9)	LHFS	1ML + 175 to 275 bps	Aug. 2014		60,989		89,011			133,995
Master repurchase agreement (10)	LHFS	1ML + 175 to 200 bps	Sep. 2014		265,898		34,102			107,020
Master repurchase agreement (11)	LHFS	1ML + 275 bps	Nov. 2013		21,873		78,127			—
Financing liability – MSRs pledged (5)	MSRs (5)	(5)	(5)		—		10,403			—
Mortgage warehouse agreement	LHFS	1 ML + 275 bps; floor of 3.50%	Jun. 2014		56,755		3,245			—
Secured borrowings - owed to securitization investors (12)	Loans held for investment	1ML + 220 bps	(12)		—		284,276			—
					635,600		588,667			388,075

Corporate Items and Other
Securities sold under an agreement to repurchase (13)	Ocwen Real Estate Asset Liquidating Trust 2007-1 Notes	Class A-2 notes: 1ML + 200 bps; Class A-3 notes: 1ML + 300 bps	Monthly		—		3,223			2,833
					683,478		2,598,270			1,104,911

Discount (1)(2)					—		(5,679	)		(8,232	)
				$	683,478	$	2,592,591		$	1,096,679

(1)

In February 2013, we repaid this loan in full and wrote off the remaining discount as part of the loss on extinguishment.

(2)	On February 15, 2013, we entered into a new SSTL facility agreement and borrowed $1.3 billion that was used principally to fund the ResCap Acquisition and repay the balance of the previous SSTL. The loan was issued with an original issue discount of $6.5 million that we are amortizing over the term of the loan. We are required to repay the principal amount of the borrowings in consecutive quarterly installments of $3.3 million. In addition, we are generally required to use 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, and 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. However, for assets sales that are part of an HLSS Transaction, we have the option, within 180 days, either to invest the net cash proceeds in MSRs or related assets, such as advances, or to repay loan principal. The borrowings are secured by a first priority security interest in substantially all of the assets of Ocwen. Borrowings bear interest, at the election of Ocwen, at a rate per annum equal to either (a) the base rate [the greatest of (i) the prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50% and (iii) the one-month Eurodollar rate (1-Month LIBOR)], plus a margin of 2.75% and a base rate floor of 2.25% or (b) the one month Eurodollar rate, plus a margin of 3.75% with a 1-Month LIBOR floor of 1.25%. To date we have elected option (b) to determine the interest rate.

	On September 23, 2013, we entered into Amendment No. 1 to the Senior Secured Term Loan Facility Agreement and Amendment No. 1 to the related Pledge and Security Agreement. These amendments:

●

permit repurchases of all of the Preferred Stock, which may be converted to common stock prior to repurchase, and up to $1.5 billion of common stock, subject, in each case, to pro forma financial covenant compliance;

●

eliminate the dollar cap on Junior Indebtedness (as defined in the SSTL) but retain the requirement for any such issuance to be subject to pro forma covenant compliance;

●

include a value for whole loans (i.e., loans held for sale) in collateral value for purposes of calculating the loan-to-value ratio and include specified deferred servicing fees and the fair value of specified mortgage servicing rights in net worth for purposes of calculating the ratio of consolidated total debt to consolidated tangible net worth; and

●

modify the applicable quarterly covenant levels for the corporate leverage ratio, ratio of consolidated total debt to consolidated tangible net worth and loan-to-value ratio.

(3)

We repaid this loan in full in February 2013.

(4)

As part of the HLSS Transactions, we transfer certain Rights to MSRs to HLSS. Because we have not yet transferred legal title to the MSRs, we account for these transfers as financings with the proceeds from the sale of the Rights to MSRs recorded as a financing liability. The financing liability is 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 is amortized over the estimated life of the transferred Rights to MSRs. See Note 3 –Transfers of Financial Assets for additional information.

(5)

We sold MSRs for certain loans to an unrelated third party in December 2012 and June 2013; 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. In June 2013 and September 2013, we derecognized the liability from the December 2012 sale related to loans that had been refinanced under HARP and recognized a total gain of $4.5 million gain on the retirement of the financing liability.

(6)

Prepayments of the balance on this note may be required if the borrowing base, as defined, falls below the amount of the note outstanding.

(7)

On March 19, 2013, the maturity date of the Master Repurchase Agreement was extended to March 18, 2014 and the maximum borrowing capacity was increased from $120.0 million to $300.0 million.

(8)

Under this participation agreement, the lender provides financing on an uncommitted basis for up to $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. However, the transaction does not qualify for sales accounting treatment and 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 April 2013, we extended the participation agreement maturity date to May 31, 2014.

(9)

On August 3, 2013, we extended the maturity date of this facility to August 2, 2014.

(10)

On September 27, 2013, we extended the maturity date of this facility to September 26, 2014,

(11)

On October 28, 2013, we extended the maturity date of this facility to November 12, 2013.

(12)

This represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed securitization that we include in our consolidated financial statements because the transfers of reverse mortgage loans to the trusts did not qualify for sales accounting treatment. There are no maturity dates; the borrowings mature as the related loans are repaid.

(13)

This agreement has no stated credit limit and lending is determined for each transaction based on the acceptability of the securities presented as collateral.