Borrowings (Tables)

9 Months Ended

Sep. 30, 2014

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)		September 30, 2014			December 31, 2013
Advance Receivable Backed Notes Series 2012-ADV1 (3)	1ML (4) + 175 bps	Jun. 2017	Jun. 2015	$	130,753	$	344,247		$	417,388
Advance Receivable Backed Note	1ML + 300 bps	Dec. 2015	Dec. 2014	44,987		5,013			33,211
2012-Homeward Agency Advance Funding Trust 2012-1 (5)	Cost of Funds + 300 bps	Apr. 2014	Apr. 2014	—		—			21,019
Advance Receivables Backed Notes, Series 2013-VF1, Class A (6)	1ML + 175 bps (7)(11)	Oct. 2044	Oct. 2014	156,812		843,188			1,494,628
Advance Receivables Backed Notes, Series 2013-VF2, Class A (6)	1ML + 167 bps (8)(11)	Oct. 2044	Oct. 2014	75,693		408,019			385,645
Advance Receivables Backed Notes, Series 2013-VF2, Class B (6)	1ML + 425 bps (9)(11)	Oct. 2044	Oct. 2014	2,711		13,577			12,923
Advance Receivables Backed Notes - Series 2014-VF3, Class A (10)	1ML + 175 bps (10)(11)	Oct. 2044	Oct. 2014	78,405		421,595			—
				$	489,361	$	2,035,639		$	2,364,814

Weighted average interest rate						1.91		%	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 September 30, 2014, only $51.2 million of the available borrowing capacity could be used based on the amount of eligible collateral that had been pledged.


(3)	On October 28, 2014, the maximum borrowing capacity under this facility was reduced to $450.0 million and will further decline to $400.0 million in February 2015.


(4)	1-Month LIBOR (1ML) was 0.16% and 0.17% at September 30, 2014 and December 31, 2013, respectively.


(5)	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.

(6)

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. On October 1, 2014, the VF1 note was fully repaid. The maximum borrowing capacity of the VF2, Class A notes was increased to $564.0 million, and the maximum borrowing capacity of the VF2, Class B notes was increased to $36.0 million. In addition, the amortization date of the VF2 Class A and B notes was extended to October 15, 2015, and the maturity date was extended to October 15, 2045. Finally, a new series, the Series 2014-VF4 note, was issued with a maximum borrowing capacity of $600.0 million, an amortization date of October 15, 2015 and a maturity date of October 15, 2045. The interest margin on this new series of notes was set to 175 bps through July 14, 2015, to 200 bps on July 15, 2015, to 212 bps on August 15, 2015 and to 250 bps on September 15, 2015.


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


(8)	The interest margin on these notes increased to 191 bps on July 15, 2014, to 215 bps on August 15, 2014 and 238 bps on September 15, 2014. Effective October 1, 2014, the interest margin on these notes was set to 167 bps through July 14, 2015, to 191 bps on July 15, 2015, to 215 bps on August 15, 2015 and to 239 bps on September 15, 2015.


(9)	The interest margin on these notes increased to 486 bps on July 15, 2014, to 546 bps on August 15, 2014 and 607 bps on September 15, 2014. Effective October 1, 2014, the interest margin on these notes was set to 300 bps through July 14, 2015, to 343 bps on July 15, 2015, to 386 bps on August 15, 2015 and to 429 bps on September 15, 2015.

(10)

This note was issued on March 17, 2014 with a maximum borrowing capacity of $500.0 million. The interest margin on this note increased to 200 bps on July 15, 2014, to 225 bps on August 15, 2014 and 250 bps on September 15, 2014. On October 1, 2014, the maximum borrowing capacity of the note was increased to $600.0 million, the amortization date was extended to October 15, 2015 and the maturity date was extended to October 15, 2045. The interest margin was set to 175 bps through July 14, 2015, to 200 bps on July 15, 2015, to 225 bps on August 15, 2015 and to 250 bps on September 15, 2015.


(11)	On July 15, 2014, the lenders agreed to waive the increase in interest margin scheduled for July 15, 2014. On August 15, 2014, the lenders also agreed to waive the increases in interest margin that were scheduled for August 15, 2014 and September 15, 2014.

Schedule of Financing Liabilities

Financing liabilities are comprised of the following at the dates indicated:



Borrowings	Collateral	Interest Rate	Maturity	September 30, 2014		December 31, 2013
Servicing:
Financing liability – MSRs pledged	MSRs	(1)	(1)	$	618,855	$	633,804
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (2)	MSRs	(2)	Feb. 2028	115,039		—
Financing Liability – Advances Pledged (3)	Advances on loans	(3)	(3)	87,502		—
				821,396		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)	1,236,094		615,576
				1,236,094		633,169

				$	2,057,490	$	1,266,973

(1)

The HLSS Transaction financing liabilities have no contractual maturity. The balance of the liability is adjusted each reporting period to its fair value based on 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 reported consolidated operating results for the three and nine months ended September 30, 2013 to correct an error in the accounting applicable to the financing liabilities in connection with Rights to MSRs sold to HLSS.

(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 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.

Schedule of Other Secured Borrowings

Other secured borrowings are comprised of the following at the dates indicated:



Borrowings	Collateral	Interest Rate	Maturity	Available Borrowing Capacity		September 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	$	—	$	1,280,500		$	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	27,338		22,662			17,507
				27,338		1,303,162			1,323,286

Lending:
Master repurchase agreement (4)	LHFS	1ML + 175 bps	Apr. 2015	17,199		132,801			105,659
Participation agreement (5)	LHFS	N/A	May 2015	—		54,369			81,268
Master repurchase agreement (6)	LHFS	1ML + 175 - 275 bps	Oct. 2014	10,645		64,355			91,990
Master repurchase agreement (7)	LHFS	1ML + 175 - 200 bps	Nov. 2014	99,527		50,473			89,836
Master repurchase agreement (8)	LHFI	1ML + 275bps	Oct. 2014	858		36,642			51,975
Mortgage warehouse agreement (9)	LHFI	1ML + 275 bps; floor of 350 bps	May 2015	35,695		24,305			34,292
				163,924		362,945			455,020

Corporate Items and Other:
Securities sold under an agreement to repurchase (10)	Ocwen Real Estate Asset Liquidating Trust 2007-1 Notes	Class A-2 notes: 1ML + 200 bps; Class A-3 notes: 1ML + 300 bps	Monthly	—		4,678			4,712
				191,262		1,670,785			1,783,018
Discount (1)				—		(4,358		)	(5,349		)
				$	191,262	$	1,666,427		$	1,777,669

Weighted average interest rate						4.94		%	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 reinvestment 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 repurchase agreement, the lender provides financing on a committed basis for $150.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $150.0 million.

(5)

Under this participation agreement, the lender provides financing on an uncommitted basis for $50.0 million 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. 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.


(6)	Under this repurchase agreement, the lender provides financing on a committed basis for $75.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $75.0 million. On September 2, 2014, the maturity date of this facility was extended to October 2, 2014. On October 2, 2014, the maturity date was further extended to September 1, 2015.


(7)	Under this repurchase agreement, the lender provides financing on a committed basis for $150.0 million and, at the discretion of the lender, on an uncommitted basis for an additional $300.0 million. On October 24, 2014, this facility was repaid in full and terminated.

(8)

On September 2, 2014, the maturity date of this facility was extended to October 2, 2014, and the maximum borrowing capacity was reduced to $37.5 million on a committed basis plus an additional $37.5 million on an uncommitted basis at the discretion of the lender. On October 1, 2014, the maturity date was extended to October 31, 2014. Effective October 31, 2014, the maturity date was further extended to November 14, 2014.


(9)	In August 2014, the maturity date of this facility was extended to May 28, 2015.


(10)	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 $22.4 million at September 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.

Debt Instrument Redemption

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%