Business Acquisitions (Tables)

12 Months Ended

Dec. 31, 2013

The following table summarizes the fair values of assets acquired and liabilities assumed as part of the ResCap, Homeward and Litton acquisitions:



	ResCap										Homeward									Litton
Purchase Price Allocation	February 15, 2013			Adjust- ments			Revised				December 27, 2012			Adjust- ments			Final			Final
Cash	$	—		$	—		$	—			$	79,511		$	—		$	79,511		$	23,791
Loans held for sale	—			—			—				558,721			—			558,721			—
MSRs(2)	393,891			(3,947		)	389,944			(1)	358,119			2,225			360,344			144,314
Advances and match funded advances (2)	1,622,348			123,497			1,745,845			(1)	2,266,882			—			2,266,882			2,468,137
Deferred tax assets	—			—			—				47,346			4,757			52,103			—
Premises and equipment	22,398			(5,975		)	16,423				16,803			(4,288		)	12,515			3,386
Debt service accounts	—			—			—				69,287			—			69,287			—
Investment in unconsolidated entities	—			—			—				5,485			—			5,485			—
Receivables and other assets (2) (3) (4)	2,989			51,932			54,921				56,886			(34,606		)	22,280			4,888
Match funded liabilities	—			—			—				(1,997,459		)	—			(1,997,459		)	—
Other borrowings	—			—			—				(864,969		)	—			(864,969		)	—
Other liabilities:																				—
Liability for indemnification obligations	(49,500		)	—			(49,500		)		(32,498		)	—			(32,498		)	—
Liability for certain foreclosure matters (4)	—			—			—				—			(13,430		)	(13,430		)	—
Accrued bonuses	—			—			—				(35,201		)	—			(35,201		)	—
Checks held for escheat	—			—			—				(16,418		)	(35		)	(16,453		)	(3,939		)
Other	(24,840		)	(283		)	(25,123		)		(47,614		)	(616		)	(48,230		)	(27,516		)
Total identifiable net assets	1,967,286			165,224			2,132,510				464,881			(45,993		)	418,888			2,613,061
Goodwill (2) (3)	204,743			6,676			211,419				300,843			45,093			345,936			57,430
Total consideration	2,172,029			171,900			2,343,929				765,724			(900		)	764,824			2,670,491
Debt repaid to seller at closing	—			—			—				—			—			—			(2,423,123		)
Base purchase price, as adjusted	$	2,172,029		$	171,900		$	2,343,929			$	765,724		$	(900	)	$	764,824		$	247,368


(1)	Initial fair value estimate.

(2)

As of the acquisition date, the purchase of certain MSRs from ResCap was not complete pending the receipt of certain consents and court approvals. During the third and fourth quarters of 2013, we obtained the required consents and approvals for a portion of these MSRs and paid an additional purchase price of $120.4 million to acquire the MSRs and related advances. The purchase price allocation has been revised to include the resulting adjustments to MSRs, advances and goodwill.

(3)

We completed additional settlements of MSRs and related advances from ResCap in January and February 2014 for $54.2 million and recorded a contingent asset of $51.9 million effective on the date of the acquisition. The purchase price allocation at December 31, 2013 has been revised from that originally reported to include the contingent asset and the related adjustment to increase goodwill by $2.3 million. We subsequently recorded the acquired MSRs and related advances in 2014 and derecognized the contingent asset. The purchase price allocation has also been revised from that originally reported to reflect a measurement period adjustment identified in 2014 which had the effect of reducing advances and increasing goodwill by $1.4 million. The Consolidated Balance Sheet at December 31, 2013 as originally reported has been revised for these measurement period adjustments.


(4)	The Homeward purchase price allocation has been revised to include a $34.6 million income tax liability, with an offsetting increase to goodwill.


(5)	See Note 16 — Other Liabilities for additional information.

Schedule of Restructuring Reserve Liability

The following table provides a reconciliation of the beginning and ending liability balances for these termination costs:



	Employee termination benefits			Lease termination costs			Total
Liability balance as at December 31, 2010	$	1,332		$	7,794		$	9,126
Additions charged to operations (1)	33,127			—			33,127
Amortization of discount	—			99			99
Payments	(29,296		)	(2,606		)	(31,902		)
Liability balance as at December 31, 2011	5,163			5,287			10,450
Additions charged to operations (1)	2,869			5,030			7,899
Amortization of discount	—			176			176
Payments	(8,032		)	(5,602		)	(13,634		)
Liability balance as at December 31, 2012	—			4,891			4,891
Additions charged to operations (1)	20,683			—			20,683
Amortization of discount	—			347			347
Payments	(15,867		)	(2,784		)	(18,651		)
Liability balance as at December 31, 2013 (2)	$	4,816		$	2,454		$	7,270

(1)

Additions charged to operations during 2011 and 2012 were recorded in the Servicing segment. In 2013, $15.9 million of the charges were recorded in the Servicing segment, $0.7 million was recorded in the Lending segment and the remaining $4.1 million was recorded in Corporate Items and Other. Charges related to employee termination benefits and lease termination costs are reported in Compensation and benefits expense and Occupancy and equipment expense, respectively, in the Consolidated Statements of Operations. The liabilities are included in Other liabilities in the Consolidated Balance Sheets.


(2)	We expect the remaining liability for employee termination benefits at December 31, 2013 to be settled in 2014.

ResCap [Member]

Business Acquisition [Line Items]

Post-Acquisition Results of Operations

The following table presents the revenue and earnings of the ResCap operations that are included in our unaudited Consolidated Statements of Operations from the acquisition date of February 15, 2013 through December 31, 2013:



Revenues	$	684,935
Net income	$	16,424

Pro Forma Results of Operations

The following table presents supplemental pro forma information for Ocwen as if the ResCap Acquisition occurred on January 1, 2012. Pro forma adjustments include:


•	conforming servicing revenues to the revenue recognition policies followed by Ocwen;


•	conforming the accounting for MSRs to the valuation and amortization policies of Ocwen;


•	adjusting interest expense to eliminate the pre-acquisition interest expense of ResCap and to recognize interest expense as if the acquisition-related debt of Ocwen had been outstanding at January 1, 2012; and


•	reporting acquisition-related charges for professional services as if they had been incurred in 2012 rather than 2013.



	2013		2012
	(Unaudited)		(Unaudited)
Revenues	$	2,086,010	$	1,263,692
Net income	$	285,302	$	87,262

Homeward [Member]

Business Acquisition [Line Items]

Post-Acquisition Results of Operations

The following table presents the revenue and earnings of the Homeward that is included in our Consolidated Statements of Operations from the acquisition date of December 27, 2012 through December 31, 2012:



Revenues	$	5,881
Net income	$	44

Pro Forma Results of Operations

The following table presents supplemental pro forma information as if the acquisition of Homeward occurred on January 1, 2011. Pro forma adjustments include:


•	conforming servicing revenues to the revenue recognition policy followed by Ocwen;


•	conforming the accounting for MSRs to the valuation and amortization policies of Ocwen;


•	reversing depreciation recognized by Homeward and reporting depreciation based on the estimated fair values and remaining lives of the acquired premises and equipment at the date of acquisition;


•	adjusting interest expense to eliminate the pre-acquisition interest expense of Homeward and to recognize interest expense as if the acquisition-related debt of Ocwen had been outstanding at January 1, 2011; and


•	reporting acquisition-related charges for professional services related to the acquisition as if they had been incurred in 2011 rather than 2012.



	2012		2011
	(Unaudited)		(Unaudited)
Revenues	$	1,362,927	$	1,085,914
Net income	$	254,051	$	163,647

Litton [Member]

Business Acquisition [Line Items]

Post-Acquisition Results of Operations

The following table presents the revenue and earnings of the Litton operations that are included in our Consolidated Statements of Operations from the acquisition date of September 1, 2011 through December 31, 2011:



Revenues	$	62,750
Net loss (1)	$	(20,910	)

(1)

Net loss includes non-recurring transaction related expenses of $49.6 million, including (i) $33.1 million of severance and other compensation related to Litton employees, (ii) $6.8 million of amortization of the acquired MSRs, (iii) $2.0 million of depreciation resulting from the write-down of certain of the acquired furniture and fixtures that are no longer in use and (iv) $0.4 million of fees for professional services related to the acquisition. Net loss does not include an allocation of costs related to the servicing of the Litton loans on Ocwen’s platform.

Pro Forma Results of Operations

The following table presents supplemental pro forma information as if the acquisition of Litton occurred on January 1, 2010. Pro forma adjustments include:


•	conforming revenues to the revenue recognition policy followed by Ocwen;


•	conforming the accounting for MSRs to the valuation and amortization policy of Ocwen;


•	reversing depreciation recognized by Litton and reporting depreciation based on the estimated fair values and remaining lives of the acquired premises and equipment at the date of acquisition;


•	adjusting interest expense to eliminate the pre-acquisition interest expense of Litton and to recognize interest expense as if the acquisition-related debt of Ocwen had been outstanding at January 1, 2010; and


•	reporting acquisition-related charges, including severance paid to Litton employees and fees for professional services related to the acquisition as if they had been incurred in 2010 rather than 2011.



	2011
	(Unaudited)
Revenues	$	642,033
Net income (loss)	$	52,407