XML 35 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
Business Segment Reporting
 6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Business Segment Reporting
Note 16 – Business Segment Reporting
Our business segments reflect the internal reporting that we use to evaluate operating performance of services and to assess the allocation of our resources. A brief description of our current business segments is as follows:
Servicing. This segment is primarily comprised of our core residential servicing business. We provide residential and commercial mortgage loan servicing, special servicing and asset management services. We earn fees for providing these services to owners of the mortgage loans and foreclosed real estate. In most cases, we provide these services either because we purchased the MSRs from the owner of the mortgage, retained the MSRs on the sale of residential mortgage loans or because we entered into a subservicing or special servicing agreement with the entity that owns the MSR. Our residential servicing portfolio includes conventional, government-insured and non-Agency loans. Non-Agency loans include subprime loans, which represent residential loans that generally did not qualify under GSE guidelines or have subsequently become delinquent.
Lending. The Lending segment is focused on originating and purchasing conventional and government-insured residential forward and reverse mortgage loans mainly through our correspondent lending arrangements, broker relationships and directly with mortgage customers. The loans are typically sold shortly after origination into a liquid market on a servicing retained basis.
Corporate Items and Other. Corporate Items and Other includes revenues and expenses that are not directly related to other reportable segments, business activities that are individually insignificant, interest income on short-term investments of cash, interest expense on corporate debt and certain corporate expenses. New business activities that are currently insignificant include providing short-term inventory-secured floor plan loans to independent used car dealerships through our ACS venture and providing mortgage loans to investors to refinance existing rental properties or purchase foreclosed single-family homes and apartments for lease through our Liberty Rental Finance venture. In addition, Ocwen recently formed a wholly-owned captive reinsurance entity, CR Limited (CRL) and signed a quota share re-insurance agreement with a third-party insurer related to coverage on foreclosed real estate properties owned or serviced by Ocwen.
We allocate interest income and expense to each business segment for funds raised or for funding of investments made, including interest earned on cash balances and short-term investments and interest incurred on corporate debt. We also allocate expenses generated by corporate support services to each business segment.
Financial information for our segments is as follows:
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Results of Operations
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2016
Revenue (1)
$
325,120

 
$
35,376

 
$
12,558

 
$
—

 
$
373,054

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
260,275

 
28,657

 
96,086

 
—

 
385,018

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
(15
)
 
4,204

 
951

 
—

 
5,140

Interest expense
(81,197
)
 
(3,697
)
 
(6,139
)
 
—

 
(91,033
)
Gain on sale of mortgage servicing rights, net
853

 
—

 
—

 
—

 
853

Other (1)
806

 
308

 
(508
)
 
—

 
606

Other income (expense), net
(79,553
)
 
815

 
(5,696
)
 
—

 
(84,434
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
(14,708
)
 
$
7,534

 
$
(89,224
)
 
$
—

 
$
(96,398
)
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2015
Revenue (1)
$
423,207

 
$
39,312

 
$
755

 
$
(23
)
 
$
463,251

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
284,413

 
26,586

 
41,276

 
(23
)
 
352,252

 


 


 


 


 


Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
686

 
3,547

 
805

 
—

 
5,038

Interest expense
(116,101
)
 
(2,163
)
 
(6,633
)
 
—

 
(124,897
)
Gain on sale of mortgage servicing rights, net
30,306

 
—

 
—

 
—

 
30,306

Other (1)
(9,106
)
 
335

 
(175
)
 
—

 
(8,946
)
Other income (expense), net
(94,215
)
 
1,719

 
(6,003
)
 
—

 
(98,499
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
44,579

 
$
14,445

 
$
(46,524
)
 
$
—

 
$
12,500

 
 
 
 
 
 
 
 
 
 
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Six months ended June 30, 2016
Revenue (1)
$
632,547

 
$
58,660

 
$
12,604

 
$
—

 
$
703,811

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
537,171

 
50,457

 
126,047

 
—

 
713,675

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
(161
)
 
7,815

 
1,676

 
—

 
9,330

Interest expense
(177,670
)
 
(7,145
)
 
(12,307
)
 
—

 
(197,122
)
Gain on sale of mortgage servicing rights, net
2,028

 
—

 
—

 
—

 
2,028

Other (1)
(2,537
)
 
659

 
(1,017
)
 
—

 
(2,895
)
Other income (expense), net
(178,340
)
 
1,329

 
(11,648
)
 
—

 
(188,659
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
(82,964
)
 
$
9,532

 
$
(125,091
)
 
$
—

 
$
(198,523
)
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2015
Revenue (1)
$
894,332

 
$
77,059

 
$
2,362

 
$
(58
)
 
$
973,695

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
622,325

 
50,372

 
57,971

 
(58
)
 
730,610

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
2,057

 
7,143

 
1,413

 
—

 
10,613

Interest expense
(226,730
)
 
(4,802
)
 
(12,761
)
 
—

 
(244,293
)
Gain on sale of mortgage servicing rights, net
56,712

 
—

 
—

 
—

 
56,712

Other (1)
(12,746
)
 
1,401

 
557

 
—

 
(10,788
)
Other income (expense), net
(180,707
)
 
3,742

 
(10,791
)
 
—

 
(187,756
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
91,300

 
$
30,429

 
$
(66,400
)
 
$
—

 
$
55,329

 
 
 
 
 
 
 
 
 
 
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Total Assets
 

 
 

 
 

 
 

 
 

June 30, 2016
$
3,630,920

 
$
3,424,801

 
$
432,531

 
$
—

 
$
7,488,252

 
 
 
 
 
 
 
 
 
 
December 31, 2015
$
4,089,064

 
$
2,811,154

 
$
480,090

 
$
—

 
$
7,380,308

 
 
 
 
 
 
 
 
 
 
June 30, 2015
$
5,003,108

 
$
2,381,119

 
$
585,023

 
$
—

 
$
7,969,250


(1)
Inter-segment billings for services rendered to other segments are recorded as revenues, as contra-expense or as other income, depending on the type of service that is rendered.
(2)
Depreciation and amortization expense are as follows:
 
Servicing
 
Lending
 
Corporate Items and Other
 
Business Segments Consolidated
For the three months ended June 30, 2016
Depreciation expense
$
1,206

 
$
65

 
$
5,539

 
$
6,810

Amortization of mortgage servicing rights
8,269

 
78

 
—

 
8,347

Amortization of debt discount
178

 
—

 
—

 
178

Amortization of debt issuance costs
2,889

 
—

 
332

 
3,221

 
 
 
 
 
 
 
 
For the three months ended June 30, 2015
Depreciation expense
$
513

 
$
92

 
$
3,470

 
$
4,075

Amortization of mortgage servicing rights
31,499

 
87

 
—

 
31,586

Amortization of debt discount
337

 
—

 
—

 
337

Amortization of debt issuance costs
3,183

 
—

 
373

 
3,556

 
 
 
 
 
 
 
 
For the six months ended June 30, 2016
Depreciation expense
$
2,340

 
$
136

 
$
9,374

 
$
11,850

Amortization of mortgage servicing rights
20,994

 
159

 
—

 
21,153

Amortization of debt discount
383

 
—

 
—

 
383

Amortization of debt issuance costs
5,822

 
—

 
676

 
6,498

 
 
 
 
 
 
 
 
For the six months ended June 30, 2015
Depreciation expense
$
1,042

 
$
197

 
$
7,181

 
$
8,420

Amortization of mortgage servicing rights
69,903

 
177

 
—

 
70,080

Amortization of debt discount
693

 
—

 
—

 
693

Amortization of debt issuance costs
6,606

 
—

 
705

 
7,311