Business Acquisitions (Tables)

9 Months Ended

Sep. 30, 2014

The following table summarizes the fair values of assets acquired and liabilities assumed as part of the ResCap Acquisition:



Purchase Price Allocation	February 15, 2013			Adjustments			Final
MSRs (1)	$	393,891		$	7,423		$	401,314
Advances and match funded advances (1)	1,622,348			164,061			1,786,409
Deferred tax assets	—			—			—
Premises and equipment	22,398			(5,975		)	16,423
Receivables and other assets	2,989			—			2,989
Other liabilities:
Liability for indemnification obligations	(49,500		)	—			(49,500		)
Other	(24,840		)	(285		)	(25,125		)
Total identifiable net assets	1,967,286			165,224			2,132,510
Goodwill	204,743			6,676			211,419
Total consideration	$	2,172,029		$	171,900		$	2,343,929

(1)

As of the acquisition date, the purchase of certain MSRs from ResCap was not complete pending the receipt of certain consents and court approvals. Subsequent to the acquisition, we obtained the required consents and approvals for a portion of these MSRs and paid an additional purchase price of $174.6 million to acquire the MSRs and related advances, including $54.2 million in 2014. The purchase price allocation has been revised to include the resulting adjustments to MSRs, advances and goodwill.

Schedule of Restructuring Reserve Liability

The following table provides a reconciliation of the beginning and ending liability balances for these termination costs for the nine months ended September 30, 2014:



	Employee termination benefits			Lease and other contract termination costs			Total
Liability balance as at December 31, 2013	$	4,816		$	7,432		$	12,248
Additions charged to operations (1)	14,748			2,813			17,561
Amortization of discount	—			115			115
Payments	(17,215		)	(2,928		)	(20,143		)
Liability balance as at September 30, 2014 (2)	$	2,349		$	7,432		$	9,781

(1)

Of the additions charged to operations during the period, $14.4 million was recognized in the Servicing segment, $(0.1) million was recognized in the Lending segment and the remaining $3.3 million was recognized in the Corporate Items and Other segment. Charges related to employee termination benefits, lease termination costs and other contract termination costs are reported in Compensation and benefits expense, Occupancy and equipment expense and Other operating expenses, respectively, in the unaudited Consolidated Statements of Operations. The liabilities are included in Other liabilities in the unaudited Consolidated Balance Sheet.


(2)	We expect the remaining liability for employee termination benefits at September 30, 2014 to be settled in late 2014 or early 2015.

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 for the three and nine months ended September 30, 2013 (from the acquisition date of February 15, 2013):



	Three Months		Nine Months
Revenues	$	212,164	$	508,589
Net income	$	8,230	$	81,362

Pro Forma Results of Operations

The following table presents unaudited supplemental pro forma information for Ocwen for the nine months ended September 30, 2013 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.



Revenues	$	1,530,055
Net income	$	205,062