Note 15 — Borrowings

Match Funded Liabilities

Match funded liabilities are comprised of the following at December 31:



Borrowing Type	Interest Rate	Maturity (1)	Amortization Date (1)	Available Borrowing Capacity (2)	2013	2012
Fixed Rate:
2011-Servicer Advance Revolving Trust 1 (3)	2.23%	May 2043	May 2013	—	—	325,000
2011-Servicer Advance Revolving Trust 1 (3)	3.37 – 5.92%	May 2043	May 2013	—	—	525,000
2012-Servicing Advance Revolving Trust 2 (3)	3.27 – 6.90%	Sep. 2043	Sep. 2013	—	—	250,000
2012-Servicing Advance Revolving Trust 3 (3)	2.98%	Mar. 2043	Mar. 2013	—	—	248,999
2012-Servicing Advance Revolving Trust 3 (3)	3.72 – 7.04%	Mar. 2044	Mar. 2014	—	—	299,278
Total fixed rate				—	—	1,648,277



Borrowing Type	Interest Rate	Maturity (1)	Amortization Date (1)	Available Borrowing Capacity (2)		2013			2012
Variable Rate:
Advance Receivable Backed Notes (4)	1ML (5) + 285 bps	Apr. 2015	Apr. 2014	—		—			205,016
Advance Receivable Backed Notes Series 2012-ADV1 (6)	Commercial Paper (CP) rate + 225 or 335 bps	Dec. 2043	Dec. 2013	—		—			232,712
Advance Receivable Backed Notes Series 2012-ADV1 (7)	1ML + 250 bps	Jun. 2016	Jun. 2014	57,612		417,388			94,095
Advance Receivable Backed Note	1ML + 300 bps	Dec. 2015	Dec. 2014	16,789		33,211			49,138
2011-Servicing Advance Revolving Trust 1 (3)	1ML + 300 bps	May 2043	May 2013	—		—			204,633
2012-Servicing Advance Revolving Trust 2 (3)	1ML + 315 bps	Sep. 2043	Sep. 2013	—		—			22,003
2012-Servicing Advance Revolving Trust 3 (3)	1ML + 300 bps – 675 bps	Mar. 2044	Mar. 2014	—		—			40,626
2012-Homeward Agency Advance Funding Trust 2012-1 (3)	Cost of Funds + 300 bps	Jan. 2014	Jan. 2014	3,981		21,019			16,094
2012-Homeward DSF Advance Revolving Trust 2012-1 (3)	1ML + 450 bps	Feb. 2013	Feb. 2013	—		—			20,151
Advance Receivables Backed Notes, Series 2013-VF1, Class A (8)	1ML + 175 bps (9)	Oct. 2044	Oct. 2014	5,372		1,494,628			—
Advance Receivables Backed Notes, Series 2013-VF2, Class A (8)	1ML + 167 bps (10)	Oct. 2044	Oct. 2014	1,325		385,645			—
Advance Receivables Backed Notes, Series 2013-VF2, Class B (8)	1ML + 425 bps (11)	Oct. 2044	Oct. 2014	107		12,923			—
Total variable rate				85,186		2,364,814			884,468
				$	85,186	$	2,364,814		$	2,532,745

Weighted average interest rate						2.08		%	3.52		%

(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 two 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 additional eligible collateral to pledge. Collateral may only be pledged to one facility. At December 31, 2013, none of the available borrowing capacity could be used based on the amount of eligible collateral that had been pledged.

(3)

Advance facility assumed in the Homeward Acquisition. The 2011-Servicing Advance Revolving Trust 1, 2012-Servicing Advance Revolving Trust 2, 2012-Servicing Advance Revolving Trust 3 and 2012-Homeward DSF Advance Revolving Trust 2012-1 facilities were repaid in February 2013 from the proceeds of a new $1.7 billion bridge facility which has an amortization date of August 14, 2013. The amortization date of the 2012-Homeward Agency Advance Funding Trust 2012-1 facility has been extended to March 3, 2014.


(4)	These notes were issued to finance the advances acquired from Bank of America, NA (BANA) in connection with the acquisition of MSRs. We repaid this facility in full in July 2013.


(5)	1-Month LIBOR (1ML) was 0.17% and 0.21% at December 31, 2013 and 2012, respectively.


(6)	These notes were issued to finance the advances acquired from BANA in connection with the acquisition of MSRs. We repaid this facility in full in October 2013.


(7)	The borrowing capacity under this facility was increased to $475.0 million in November 2013.

(8)

These notes were issued in connection with the OneWest MSR Transaction. On February 3, 2014, the maximum borrowing capacity on the 2013-VF2 notes was increased by $100.0 million to a total of $500.0 million. On February 28, 2014, the maximum borrowing capacity under the 2013-VF1 note is scheduled to decline by $250.0 million to a total of $1.3 billion. On February 28, 2014 we negotiated a deferral for a month of the scheduled decrease in the maximum borrowing capacity under the 2013-VF1 Note.


(9)	The interest margin on these notes increases to 200 bps on July 15, 2014, to 225 bps on August 15, 2014 and 250 bps on September 15, 2014.


(10)	The interest margin on these notes increases to 191 bps on July 15, 2014, to 215 bps on August 15, 2014 and 238 bps on September 15, 2014.


(11)	The interest margin on these notes increases to 486 bps on July 15, 2014, to 546 bps on August 15, 2014 and 607 bps on September 15, 2014.

Financing Liabilities

Financing liabilities are comprised of the following at December 31:



Borrowings	Collateral	Interest Rate	Maturity	2013		2012
Servicing:
Financing liability – MSRs pledged	MSRs	(1)	(1)	$	651,060	$	303,705
Financing liability – MSRs pledged	MSRs	(2)	(2)	—		2,603
				651,060		306,308

Lending:
Financing liability - MSRs pledged	MSRs	(2)	(2)	17,593		—
HMBS-related borrowings (3)	Loans held for investment	1ML + 220 bps	(3)	615,576		—
				633,169		—

				$	1,284,229	$	306,308

(1)

The HLSS Transaction financing liabilities have no contractual maturity but are amortized over the estimated life of the transferred Rights to MSRs using the interest method with the servicing income that is remitted to HLSS representing payments of principal and interest. For purposes of applying the interest method, the balance of the liability is reduced each month based on the change in the present value of the estimated future cash flows underlying the related MSRs. See Note 4 — Sales of Advances and MSRs for additional information regarding the HLSS Transactions.


(2)	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.


(3)	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. See Note 2 — Securitizations and Variable Interest Entities for additional information.

Other Secured Borrowings

Other secured borrowings are comprised of the following at December 31:



Borrowings	Collateral	Interest Rate	Maturity	Available Borrowing Capacity		December 31, 2013			December 31, 2012
Servicing:
SSTL (1)	(1)	1ML + 550 bps with a LIBOR floor of 150 bps (1)	Sep. 2016	$	—	$	—		314,229
SSTL (2)	(2)	1-Month Euro-dollar rate + 375 bps with a Eurodollar floor of 125 bps (2)	Feb. 2018	—		1,290,250			—
Senior unsecured term loan (3)		1-Month Euro-dollar rate + 675 bps with a Eurodollar floor of 150 bps	Mar. 2017	—		—			75,000
Promissory note (4)	MSRs	1ML + 350 bps	May 2017	—		15,529			18,466
Repurchase agreement	Loans held for sale (LHFS)	1ML + 200 - 345 bps	Apr. 2014	82,493		17,507			—
				82,493		1,323,286			407,695

Lending:
Master repurchase agreement (5)	LHFS	1ML + 175 bps	Mar. 2014	194,341		105,659			88,122
Participation agreement (6)	LHFS	N/A	May 2014	—		81,268			58,938
Master repurchase agreement (7)	LHFS	1ML + 175 - 275 bps	Jul. 2014	58,010		91,990			133,995
Master repurchase agreement (8)	LHFS	1ML + 175 - 200 bps	Sep. 2014	210,164		89,836			107,020
Master repurchase agreement	LHFS	1ML + 275bps	Jul. 2014	48,025		51,975			—
Mortgage warehouse agreement	LHFS	1ML + 275 bps; floor of 350 bps	Jun. 2014	25,708		34,292			—
				536,248		455,020			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	—		4,712			2,833
				618,741		1,783,018			798,603
Discount (1)(2)				—		(5,349		)	(8,232		)
				$	618,741	$	1,777,669		$	790,371

Weighted average interest rate						4.86		%	4.49		%


(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 one month Eurodollar 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 Shares, 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)	Ocwen borrowed funds from Altisource in connection with the financing of the Homeward Acquisition. See Note 26 — Related Party Transactions for additional information regarding this agreement with Altisource. We repaid this loan in full in February 2013.


(4)	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.


(5)	On March 19, 2013, the maturity date was extended to March 18, 2014 and the maximum borrowing capacity was increased from $125.0 million to $300.0 million.

(6)

Under this participation agreement, the lender provides financing on an uncommitted basis for $50.0 million to $90.0 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 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. In April 2013, we extended the maturity date of the participation agreement to May 31, 2014.


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


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


(9)	Repurchase agreement for Class A-2 and A-3 notes issued by Ocwen Real Estate Asset Liquidating Trust 2007-1 which have a current face value of $24.5 million at December 31, 2013. This agreement has no stated credit limit and lending is determined for each transaction based on the acceptability of the securities presented as collateral.

Covenants

Match funded liabilities and other secured borrowings are collateralized by specific assets. Under the terms of these borrowing agreements, we are subject to various qualitative and quantitative covenants. Collectively, these covenants include:


•	Specified net worth requirements;


•	Restrictions on future indebtedness; and


•	Monitoring and reporting of various specified transactions or events, including specific reporting on defined events affecting collateral underlying certain borrowing agreements.

Financial covenants in our borrowing agreements require that we maintain consolidated tangible net worth, the most restrictive of which is $630.0 million plus 65% of quarterly net income, without adjustment for quarterly net losses, beginning with the three months ended December 31, 2012. The required consolidated tangible net worth in connection with this agreement was $863.7 million at December 31, 2013. Should we fail to be in compliance with these requirements, remedies include but are not limited to, at the option of the facility provider, termination of further funding, acceleration of outstanding obligations, enforcement of liens against the assets securing or otherwise supporting the agreement, and other legal remedies. Our lenders can waive their contractual rights in the event of a default. Our borrowing agreements generally include cross default provisions such that a default under one agreement could trigger defaults under other agreements. We are in compliance with all of our qualitative and quantitative covenants at the date of these financial statements.

Maturities of Borrowings

Aggregate long-term borrowings by maturity date at December 31, 2013 are as follows:



	Expected Maturity Date (1) (2)
	2014		2015		2016		2017		2018		There- after		Total Balance		Fair Value
Match funded liabilities (3)	$	2,364,814	$	—	$	—	$	—	$	—	$	—	$	2,364,814	$	2,364,814
Other secured borrowings (3)	488,929		27,219		11,690		11,690		1,238,141		—		1,777,669		1,762,876
	$	2,853,743	$	27,219	$	11,690	$	11,690	$	1,238,141	$	—	$	4,142,483	$	4,127,690


(1)	For match funded liabilities, the expected maturity date is the date on which the revolving period ends for each advance financing facility note and repayment of the outstanding balance must begin if the note is not renewed or extended.

(2)

Excludes $651.1 million recorded in connection with sales of MSRs and Rights to MSRs accounted for as financings and $615.6 million recorded in connection with the securitizations of HMBS that we record as financings. The MSR-related financing liabilities have no contractual maturity and are amortized over the life of the transferred Rights to MSRs. The HMBS-related financing liabilities have no contractual maturity and are amortized as the related loans are repaid. See Note 2 — Securitizations and Variable Interest Entities and Note 15 — Borrowings for additional information.


(3)	At December 31, 2013 all Match funded liabilities and all Other secured borrowings were variable rate obligations.