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Business Segment Reporting
 3 Months Ended
Mar. 31, 2017
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. While our expense allocation methodology for the current period is consistent with that used in prior periods presented, during the first quarter of 2017, we moved certain functions which had been associated with corporate cost centers to our Lending and Servicing segments because these functions align more closely with those segments. As applicable, the results of operations for the first quarter of 2016 have been recast to conform to the current period presentation. As a result of these changes, income before income taxes for the Lending segment decreased by $2.6 million while loss before income taxes for the Servicing segment decreased by the same amount for the three months ended March 31, 2016.
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 of ACS and our other business activities that are individually insignificant, revenues and expenses that are not directly related to other reportable segments, interest income on short-term investments of cash, interest expense on corporate debt and certain corporate expenses. Our cash balances are included in Corporate Items and Other. ACS provides short-term inventory-secured loans to independent used car dealers to finance their inventory. In addition, Ocwen formed CR Limited (CRL), our wholly-owned captive reinsurance subsidiary, and entered into a quota share re-insurance agreement effective in 2016 with a third-party insurer related to coverage on foreclosed real estate properties owned or serviced by us.
We allocate portions of interest income and interest expense to each business segment, including interest earned on cash balances and short-term investments and interest incurred on corporate debt. We also allocate expenses incurred 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 March 31, 2017
Revenue
$
284,019

 
$
30,746

 
$
7,099

 
$
—

 
$
321,864

 
 
 
 
 
 
 
 
 
 
Expenses
216,913

 
29,332

 
30,138

 
—

 
276,383

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
87

 
2,748

 
928

 
—

 
3,763

Interest expense
(67,351
)
 
(3,284
)
 
(13,427
)
 
—

 
(84,062
)
Gain on sale of mortgage servicing rights, net
287

 
—

 
—

 
—

 
287

Other
3,002

 
231

 
800

 
—

 
4,033

Other expense, net
(63,975
)
 
(305
)
 
(11,699
)
 
—

 
(75,979
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
3,131

 
$
1,109

 
$
(34,738
)
 
$
—

 
$
(30,498
)
 
 
 
 
 
 
 
 
 
 
Three months ended March 31, 2016
Revenue
$
307,427

 
$
23,285

 
$
45

 
$
—

 
$
330,757

 
 
 
 
 
 
 
 
 
 
Expenses
274,317

 
24,378

 
29,962

 
—

 
328,657

 


 


 


 


 


Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
(147
)
 
3,611

 
726

 
—

 
4,190

Interest expense
(96,474
)
 
(3,448
)
 
(6,167
)
 
—

 
(106,089
)
Gain on sale of mortgage servicing rights, net
1,175

 
—

 
—

 
—

 
1,175

Other
(3,343
)
 
351

 
(509
)
 
—

 
(3,501
)
Other income (expense), net
(98,789
)
 
514

 
(5,950
)
 
—

 
(104,225
)
 
 
 
 
 
 
 
 
 
 
Loss before income taxes
$
(65,679
)
 
$
(579
)
 
$
(35,867
)
 
$
—

 
$
(102,125
)
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Total Assets
 

 
 

 
 

 
 

 
 

March 31, 2017
$
3,157,083

 
$
4,248,844

 
$
457,217

 
$
—

 
$
7,863,144

 
 
 
 
 
 
 
 
 
 
December 31, 2016
$
3,312,371

 
$
3,863,862

 
$
479,430

 
$
—

 
$
7,655,663

 
 
 
 
 
 
 
 
 
 
March 31, 2016
$
3,808,495

 
$
3,116,541

 
$
482,074

 
$
—

 
$
7,407,110


 
Servicing
 
Lending
 
Corporate Items and Other
 
Business Segments Consolidated
Depreciation and Amortization Expense
 
 
 
 
 
 
 
Three months ended March 31, 2017
Depreciation expense
$
1,402

 
$
48

 
$
5,631

 
$
7,081

Amortization of mortgage servicing rights
12,643

 
72

 
—

 
12,715

Amortization of debt discount
—

 
—

 
271

 
271

Amortization of debt issuance costs
—

 
—

 
673

 
673

 
 
 
 
 
 
 
 
Three months ended March 31, 2016
Depreciation expense
$
1,135

 
$
72

 
$
3,832

 
$
5,039

Amortization of mortgage servicing rights
12,725

 
81

 
—

 
12,806

Amortization of debt discount
206

 
—

 
—

 
206

Amortization of debt issuance costs
2,933

 
—

 
344

 
3,277