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Borrowings | 6 Months Ended
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Jun. 30, 2014
Debt Disclosure [Abstract] |
Borrowings | Note 11 – Borrowings Match Funded Liabilities Match funded liabilities are comprised of the following at the dates indicated:
Borrowing Type |  | Interest Rate |  | Maturity (1) |  | Amortization Date (1) |  | Available Borrowing Capacity (2) |  | June 30, 2014 |  | December 31, 2013
Advance Receivable Backed Notes Series 2012-ADV1 |  | 1ML (4) + 175 bps |  | Jun. 2017 |  | Jun. 2015 |  | $ | 221,213 |  |  | $ | 253,787 |  |  | $ | 417,388 |
Advance Receivable Backed Note |  | 1ML + 300 bps |  | Dec. 2015 |  | Dec. 2014 |  | 32,253 |  |  | 17,747 |  |  | 33,211 |
2012-Homeward Agency Advance Funding Trust 2012-1 (3) |  | Cost of Funds + 300 bps |  | Apr. 2014 |  | Apr. 2014 |  | — |  |  | — |  |  | 21,019 |
Advance Receivables Backed Notes, Series 2013-VF1, Class A (5) |  | 1ML + 175 bps (6)(10) |  | Oct. 2044 |  | Oct. 2014 |  | 99,508 |  |  | 900,492 |  |  | 1,494,628 |
Advance Receivables Backed Notes, Series 2013-VF2, Class A (5) |  | 1ML + 167 bps (7)(10) |  | Oct. 2044 |  | Oct. 2014 |  | 47,909 |  |  | 435,803 |  |  | 385,645 |
Advance Receivables Backed Notes, Series 2013-VF2, Class B (5) |  | 1ML + 425 bps (8)(10) |  | Oct. 2044 |  | Oct. 2014 |  | 1,846 |  |  | 14,442 |  |  | 12,923 |
Advance Receivables Backed Notes - Series 2014-VF3, Class A (9) |  | 1ML + 175 bps (9)(10) |  | Oct. 2044 |  | Oct. 2014 |  | 49,754 |  |  | 450,246 |  |  | — |
|  |  |  |  |  |  |  | $ | 452,483 |  |  | $ | 2,072,517 |  |  | $ | 2,364,814 |
Weighted average interest rate |  |  |  |  |  |  |  |  |  | 1.92 | % |  | 2.08 | %
(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 June 30, 2014, none of the available borrowing capacity could be used based on the amount of eligible collateral that had been pledged.
(3) | Advance facility assumed as part of the acquisition of Homeward. This facility was terminated on April 16, 2014, and the advances pledged to the facility were transferred to another facility.
(4) | 1-Month LIBOR (1ML) was 0.16% and 0.17% at June 30, 2014 and December 31, 2013, respectively.
(5) | 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 March 17, 2014, the maximum borrowing capacity under the 2013-VF1 note declined by $500.0 million to a total of $1.0 billion.
(6) | 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.
(7) | 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.
(8) | 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.
(9) | This note was issued on March 17, 2014 with a maximum borrowing capacity of $500.0 million. The interest margin on this note increases to 200 bps on July 15, 2014, to 225 bps on August 15, 2014 and 250 bps on September 15, 2014.
(10) | On July 15, 2014, the lenders agreed to waive the increase in interest margin scheduled for July 15. Subsequent scheduled increases in margin remain in effect.
Financing Liabilities Financing liabilities are comprised of the following at the dates indicated:
Borrowings |  | Collateral |  | Interest Rate |  | Maturity |  | June 30, 2014 |  | December 31, 2013
Servicing: |  |  |  |  |  |  |  |  |  |
Financing liability – MSRs pledged |  | MSRs |  | (1) |  | (1) |  | $ | 629,579 |  |  | $ | 633,804 |
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (2) |  | MSRs |  | (2) |  | Feb. 2028 |  | 118,551 |  |  | — |
Financing Liability – Advances Pledged (3) |  | Advances on loans |  | (3) |  | (3) |  | 81,734 |  |  | — |
|  |  |  |  |  |  |  | 829,864 |  |  | 633,804 |
Lending: |  |  |  |  |  |  |  |  |  |
Financing liability - MSRs pledged (4) |  | MSRs |  | (4) |  | (4) |  | — |  |  | 17,593 |
HMBS-related borrowings (5) |  | Loans held for investment (LHFI) |  | 1ML + 245 bps |  | (5) |  | 1,033,712 |  |  | 615,576 |
|  |  |  |  |  |  |  | 1,033,712 |  |  | 633,169 |
|  |  |  |  |  |  |  | $ | 1,863,576 |  |  | $ | 1,266,973 |
(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. As discussed in Note 1A — Restatement of Previously Issued Consolidated Financial Statements , we are restating our previously issued audited Consolidated Balance Sheet as of December 31, 2013 as restated on Form 10-K/A and our previously reported consolidated operating results for the three and six months ended June 30, 2013 to correct an error in applying the interest method to financing liabilities in connection with Rights to MSRs sold to HLSS. The balance of the HLSS Transaction financing liabilities at December 31, 2013 has been restated.
(2) | OASIS noteholders are entitled to receive a monthly payment amount equal to the sum of: a) the designated servicing fee amount (21 basis points of the UPB of the reference pool of Freddie Mac mortgages); b) any termination payment amounts; c) any excess refinance amounts; and d) the note redemption amounts, each as defined in the indenture supplement for the notes. The notes have a final stated maturity of February 2028. We accounted for this transaction as a financing. Monthly amortization of the liability is estimated using the proportion of monthly projected service fees on the underlying MSRs as a percentage of lifetime projected fees, adjusted for the term of the security.
(3) | Certain advances were sold to HLSS Mortgage and HLSS SEZ LP on March 4, 2014 and May 2, 2014, respectively. These sales of advances did not qualify for sales accounting treatment and were accounted for as a financing. See Note 5 – Loans Held for Sale for additional information.
(4) | Sales of MSRs to a third party were accounted for as a financing. The financing liability was being amortized using the interest method with the servicing income that was remitted to the purchaser representing payments of principal and interest. In April 2014, we derecognized the remaining liability related to this MSR sale. During 2014, we recognized a gain of $2.6 million on the extinguishment of the financing liability.
(5) | 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 the dates indicated:
Borrowings |  | Collateral |  | Interest Rate |  | Maturity |  | Available Borrowing Capacity |  | June 30, 2014 |  | December 31, 2013
Servicing: |  |  |  |  |  |  |  |  |  |  |  |
SSTL (1) |  | (1) |  | 1-Month Euro-dollar rate + 375 bps with a Eurodollar floor of 125 bps (1) |  | Feb. 2018 |  | $ | — |  |  | $ | 1,283,750 |  |  | $ | 1,290,250 |
Promissory note (2) |  | MSRs |  | 1ML + 350 bps |  | May 2017 |  | — |  |  | — |  |  | 15,529 |
Repurchase agreement (3) |  | Loans held for sale (LHFS) |  | 1ML + 200 - 345 bps |  | Jun. 2015 |  | 28,281 |  |  | 21,719 |  |  | 17,507 |
|  |  |  |  |  |  |  | 28,281 |  |  | 1,305,469 |  |  | 1,323,286 |
Lending: |  |  |  |  |  |  |  |  |  |  |  |
Master repurchase agreement |  | LHFS |  | 1ML + 175 bps |  | Apr. 2015 |  | 127,675 |  |  | 172,325 |  |  | 105,659 |
Participation agreement (4) |  | LHFS |  | N/A |  | May 2015 |  | — |  |  | 51,196 |  |  | 81,268 |
Master repurchase agreement |  | LHFS |  | 1ML + 175 - 275 bps |  | Sep. 2014 |  | 106,370 |  |  | 43,630 |  |  | 91,990 |
Master repurchase agreement |  | LHFS |  | 1ML + 175 - 200 bps |  | Nov. 2014 |  | 245,763 |  |  | 54,237 |  |  | 89,836 |
Master repurchase agreement |  | LHFI |  | 1ML + 275bps |  | Sep. 2014 |  | 64,488 |  |  | 35,512 |  |  | 51,975 |
Mortgage warehouse agreement (5) |  | LHFI |  | 1ML + 275 bps; floor of 350 bps |  | Jul. 2014 |  | 36,826 |  |  | 23,174 |  |  | 34,292 |
|  |  |  |  |  |  |  | 581,122 |  |  | 380,074 |  |  | 455,020 |
Corporate Items and Other: |  |  |  |  |  |  |  |  |  |  |  |
Securities sold under an agreement to repurchase (6) |  | Ocwen Real Estate Asset Liquidating Trust 2007-1 Notes |  | Class A-2 notes: 1ML + 200 bps; Class A-3 notes: 1ML + 300 bps |  | Monthly |  | — |  |  | 4,891 |  |  | 4,712 |
|  |  |  |  |  |  |  | 609,403 |  |  | 1,690,434 |  |  | 1,783,018 |
Discount (1) |  |  |  |  |  |  |  | — |  |  | (4,688 | ) |  | (5,349 | )
|  |  |  |  |  |  |  | $ | 609,403 |  |  | $ | 1,685,746 |  |  | $ | 1,777,669 |
Weighted average interest rate |  |  |  |  |  |  |  |  |  | 4.91 | % |  | 4.86 | %
(1) | This facility had an initial balance of $1.3 billion and 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, subject to a 270-day provision (or, in the case of a sale of MSRs, related servicing advances or other related assets to HLSS, we have a 180-day reinvestment provision and the net cash proceeds must be invested in MSRs or related assets, such as advances). We are also required to make mandatory prepayments in certain circumstances based on our corporate leverage ratio (as defined) if we have positive consolidated excess cash flow (as defined) in any fiscal year. 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.
(2) | This note was repaid in full on February 28, 2014.
(3) | Under this repurchase agreement, the lender provides financing on a committed basis for $50.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $50.0 million.
(4) | 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. 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.
(5) | On July 15, 2014, the maturity date of this facility was extended to August 14, 2014.
(6) | Represents 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 $22.9 million at June 30, 2014. This agreement has no stated credit limit and lending is determined for each transaction based on the acceptability of the securities presented as collateral.
Senior Unsecured Notes On May 12, 2014, Ocwen completed the issuance and sale of $350.0 million of its 6.625% Senior Notes due 2019 (the Senior Unsecured Notes) in a private offering. We received net proceeds of $343.8 million from the sale of the Senior Unsecured Notes after deducting underwriting fees and offering expenses. The Senior Unsecured Notes are general senior unsecured obligations of Ocwen and will mature on May 15, 2019. Interest is payable semi-annually on May 15 and November 15. The Senior Unsecured Notes are not guaranteed by any of Ocwen’s subsidiaries. At any time prior to May 15, 2016, Ocwen may redeem all or a part of the Senior Unsecured Notes, upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100.0% of the principal amount of the Senior Unsecured Notes redeemed, plus the Applicable Premium as defined in the related indenture agreement (the Indenture), plus accrued and unpaid interest and Additional Interest as defined in the Indenture, if any, on the Senior Unsecured Notes redeemed. The Additional Premium on a Note is the greater of 1% of the principal amount of the Note or the redemption price at May 15, 2016 plus all interest due from the redemption date through May 15, 2016, less the principal amount of the Note. Additional Interest is earned by the Senior Unsecured Notes if the deadline for exchange or registration of the Senior Unsecured Notes is not met and ranges from an initial 0.25% to a maximum 1.0%. On or after May 15, 2016, Ocwen may redeem all or a part of the Senior Unsecured Notes, upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) specified in the Indenture plus accrued and unpaid interest and Additional Interest, if any. The redemption prices during the twelve-month periods beginning on May 15 th of each year are as follows:
Year |  | Redemption Price
2016 |  | 104.969%
2017 |  | 103.313%
2018 and thereafter |  | 100.000%
At any time prior to May 15, 2016, Ocwen may, at its option, use the net cash proceeds of one or more Equity Offerings as defined in the Indenture to redeem up to 35% of the principal amount of all Senior Unsecured Notes issued at a redemption price equal to 106.625% of the principal amount of the Senior Unsecured Notes redeemed plus accrued and unpaid interest and Additional Interest, if any, provided that: (i) at least 65% of the principal amount of all Senior Unsecured Notes issued under the Indenture remains outstanding immediately after any such redemption; and (ii) Ocwen makes such redemption not more than 120 days after the consummation of any such Equity Offering. Upon the occurrence of a change of control as defined in the Indenture, Ocwen is required to make an offer to the holders of the Senior Unsecured Notes to repurchase the Senior Unsecured Notes at a purchase price equal to 101.0% of the principal amount of the Senior Unsecured Notes purchased plus accrued and unpaid interest and Additional Interest, if any. Each holder will have the right to require that the Ocwen purchase all or a portion of the holder’s Senior Unsecured Notes pursuant to the offer. The Indenture contains various covenants that could, unless certain conditions are met, limit or restrict the ability of Ocwen and its subsidiaries to engage in specified types of transactions. Among other things, these covenants could potentially limit or restrict the ability of Ocwen and its subsidiaries to:
• | incur additional debt or issue preferred stock;
• | pay dividends or make distributions on or purchase equity interests of Ocwen;
• | repurchase or redeem debt that is subordinate to the Senior Unsecured Notes prior to maturity;
• | make investments or other restricted payments;
• | create liens on assets to secure debt of Ocwen or any guarantor of the Senior Unsecured Notes;
• | sell or transfer assets;
• | enter into transactions with “affiliates” (any entity that controls, is controlled by or is under common control with Ocwen or certain of its subsidiaries); and
• | enter into mergers, consolidations, or sales of all or substantially all of Ocwen’s assets.
Many of the restrictive covenants will be suspended if the Senior Unsecured Notes achieve an investment grade rating from both Moody’s Investors Service, Inc. (Moody’s) and Standard & Poor’s Ratings Services (S&P) and no default or event of default, as specified in the Indenture, has occurred and is continuing. However, covenants that are suspended as a result of achieving these ratings will again apply if Moody’s or S&P withdraws its investment grade rating or downgrades the rating assigned to the Senior Unsecured Notes below an investment grade rating. Ocwen contemporaneously entered into a Registration Rights Agreement under which it agreed for the benefit of the initial purchasers of the Senior Unsecured Notes to use commercially reasonable efforts to file a registration statement and to have the registration statement become effective on or prior to 270 days after the closing of the offering. The registration statement would relate to a registered offer to exchange the Senior Unsecured Notes for other notes (referred to as the exchange notes) that would be issued by Ocwen, would be registered with the SEC and would have substantially identical terms as the Senior Unsecured Notes. If Ocwen is not able to effect the exchange offer, it will instead use commercially reasonable efforts to file and cause to become effective a shelf registration statement relating to resales of the Senior Unsecured Notes. In connection with our issuance of the Senior Unsecured Notes, we incurred certain costs that we capitalized and are amortizing over the period from the date of issuance to May 15, 2019. The unamortized balance of these issuance costs was $6.1 million at June 30, 2014. 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 $957.1 million at June 30, 2014. 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.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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