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Borrowings | 6 Months Ended
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Jun. 30, 2017
Debt Disclosure [Abstract] |
Borrowings | Note 11 – Borrowings Match Funded Liabilities
|  |  |  |  |  |  |  | June 30, 2017 |  | December 31, 2016
Borrowing Type |  | Maturity (1) |  | Amorti- zation Date (1) |  | Available Borrowing Capacity (2) |  | Weighted Average Interest Rate (3) |  | Balance |  | Weighted Average Interest Rate (3) |  | Balance
Advance Financing Facilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Advance Receivables Backed Notes - Series 2014-VF3 (4) |  | Aug. 2047 |  | Aug. 2017 |  | $ | 47,173 |  |  | 3.12 | % |  | $ | 22,827 |  |  | 3.12 | % |  | $ | 74,394 |
Advance Receivables Backed Notes - Series 2014-VF4 (4) |  | Aug. 2047 |  | Aug. 2017 |  | 47,174 |  |  | 3.12 |  |  | 22,826 |  |  | 3.12 |  |  | 74,394 |
Advance Receivables Backed Notes - Series 2015-VF5 (4) |  | Aug. 2047 |  | Aug. 2017 |  | 47,174 |  |  | 3.12 |  |  | 22,826 |  |  | 3.12 |  |  | 74,394 |
Advance Receivables Backed Notes - Series 2015-T3 (5) |  | Nov. 2047 |  | Nov. 2017 |  | — |  |  | 3.48 |  |  | 400,000 |  |  | 3.48 |  |  | 400,000 |
Advance Receivables Backed Notes - Series 2016-T1 (5) |  | Aug. 2048 |  | Aug. 2018 |  | — |  |  | 2.77 |  |  | 265,000 |  |  | 2.77 |  |  | 265,000 |
Advance Receivables Backed Notes - Series 2016-T2 (5) |  | Aug. 2049 |  | Aug. 2019 |  | — |  |  | 2.99 |  |  | 235,000 |  |  | 2.99 |  |  | 235,000 |
Total Ocwen Master Advance Receivables Trust (OMART) |  |  |  |  |  | 141,521 |  |  | 3.14 |  |  | 968,479 |  |  | 3.14 |  |  | 1,123,182 |
Ocwen Servicer Advance Receivables Trust III (OSART III) - Advance Receivables Backed Notes, Series 2014-VF1 (6) |  | Dec. 2047 |  | Dec. 2017 |  | 19,214 |  |  | 4.31 | % |  | 55,786 |  |  | 4.03 | % |  | 63,093 |
Ocwen Freddie Advance Funding (OFAF) - Advance Receivables Backed Notes, Series 2015-VF1 (7) |  | Jun. 2048 |  | Jun. 2018 |  | 49,434 |  |  | 4.14 | % |  | 60,566 |  |  | 3.54 | % |  | 94,722 |
|  |  |  |  |  | 210,169 |  |  | 3.26 | % |  | 1,084,831 |  |  | 3.21 | % |  | 1,280,997 |
Automotive Dealer Loan Financing Facility: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan Series 2017-1 |  | Feb. 2021 |  | Feb. 2019 |  | 38,227 |  |  | 6.46 | % |  | 11,773 |  |  | — | % |  | — |
Loan Series 2017-2 |  | Mar. 2021 |  | Mar. 2019 |  | 38,227 |  |  | 6.23 |  |  | 11,773 |  |  | — |  |  | — |
Total Automotive Capital Asset Receivables Trust (ACART) (8) |  |  |  |  |  | 76,454 |  |  | 6.34 | % |  | 23,546 |  |  | — | % |  | — |
|  |  |  |  |  | $ | 286,623 |  |  | 3.32 | % |  | $ | 1,108,377 |  |  | 3.21 | % |  | $ | 1,280,997 |
(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 all of our 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, 2017, none of the available borrowing capacity of our advance financing notes could be used based on the amount of eligible collateral that had been pledged.
(3) | 1ML was 1.22% and 0.77% at June 30, 2017 and December 31, 2016, respectively.
(4) | Effective June 30, 2017, we negotiated a reduction in the borrowing capacity of each series of variable rate notes from $140.0 million to $70.0 million. There is a ceiling of 75 basis points (bps) for 1ML in determining the interest rate for the notes. Rates on the individual notes are based on 1ML plus a margin of 185 to 545 bps.
(5) | Under the terms of the agreement, we must continue to borrow the full amount of the Series 2015-T3, Series 2016-T1 and Series 2016-T2 fixed-rate term notes until the amortization date. If there is insufficient collateral to support the level of borrowing, the excess cash proceeds are not distributed to Ocwen but are held by the trustee, and interest expense continues to be based on the full amount of the notes. The Series 2016-T1 and 2016-T2 notes have a total borrowing capacity of $500.0 million. The Series 2015-T3 notes have a borrowing capacity of $400.0 million. Rates on the individual notes range from 2.5207% to 4.6870%
(6) | The maximum borrowing capacity under this facility is $75.0 million. There is a ceiling of 75 bps for 1ML in determining the interest rate for these variable rate notes. Rates on the individual notes are based on the lender’s cost of funds plus a margin of 230 to 470 bps.
(7) | The combined borrowing capacity of the Series 2015-VF1 Notes is $160.0 million. Rates on the individual notes are based on 1ML plus a margin of 240 to 480 bps. On June 8, 2017, we negotiated a renewal of this facility through June 7, 2018. As part of this renewal, we reduced the combined borrowing capacity of the Series 2015-VF1 Notes to $110.0 million with interest computed based on the lender’s cost of funds plus a margin of from 250 to 500 bps. There is a ceiling of 300 bps for 1ML in determining the interest rate for these variable rate notes.
(8) | We entered into the loan agreements for the Series 2017-1 Notes on February 24, 2017 and for the Series 2017-2 Notes on March 17, 2017. The committed borrowing capacity for each of the Series 2017-1 and Series 2017-2 variable rate notes is $50.0 million. We may from time to time request increases in the aggregate maximum borrowing capacity of the facility to a maximum aggregate borrowing capacity of $200.0 million. Rates on the Series 2017-1 notes are based on 1ML plus a margin of 500 bps and rates on the Series 2017-2 notes are based on the lender’s cost of funds plus a margin of 500 bps.
Pursuant to our 2012 and 2013 agreements with NRZ, NRZ has assumed the obligation to fund new servicing advances with respect to the MSRs underlying the Rights to MSRs, or NRZ/HLSS Transactions. We are dependent upon NRZ for funding the servicing advance obligations for Rights to MSRs where we are the servicer. NRZ currently uses advance financing facilities in order to fund a substantial portion of the servicing advances that they are contractually obligated to purchase pursuant to our agreements with them. As of June 30, 2017, we were the servicer on Rights to MSRs sold to NRZ pertaining to approximately $109.6 billion in UPB and the associated outstanding servicing advances as of such date were approximately $3.4 billion. Should NRZ’s advance financing facilities fail to perform as envisaged or should NRZ otherwise be unable to meet its advance funding obligations, our liquidity, financial condition and business could be materially and adversely affected. As the servicer, we are contractually required under our servicing agreements to make the relevant servicing advances even if NRZ does not perform its contractual obligations to fund those advances. On July 23, 2017, we entered into a series of new agreements with NRZ that provide for the conversion of NRZ’s existing Rights to MSRs to fully-owned MSRs. See Note 4 — Sales of Advances and MSRs for additional information. In addition, although we are not an obligor or guarantor under NRZ’s advance financing facilities, we are a party to certain of the facility documents as the servicer of the underlying loans on which advances are being financed. As the servicer, we make certain representations, warranties and covenants, including representations and warranties in connection with our sale of advances to NRZ. Financing Liabilities
Borrowings |  | Collateral |  | Interest Rate |  | Maturity |  | June 30, 2017 |  | December 31, 2016
HMBS-Related Borrowings, at fair value (1) |  | Loans held for investment |  | 1ML + 264 bps |  | (1) |  | $ | 4,061,626 |  |  | $ | 3,433,781 |
Other Financing Liabilities: |  |  |  |  |  |  |  |  |  |
Financing liability – MSRs pledged, at fair value |  | MSRs |  | (2) |  | (2) |  | 441,007 |  |  | 477,707 |
Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (3) |  | MSRs |  | (3) |  | Feb. 2028 |  | 76,877 |  |  | 81,131 |
Financing liability – Advances pledged (4) |  | Advances on loans |  | (4) |  | (4) |  | 15,922 |  |  | 20,193 |
|  |  |  |  |  |  |  | 533,806 |  |  | 579,031 |
|  |  |  |  |  |  |  | $ | 4,595,432 |  |  | $ | 4,012,812 |
(1) | 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.
(2) | This financing liability arose in connection with the NRZ/HLSS Transactions and has no contractual maturity or repayment schedule. 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.
(3) | 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. 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.
(4) | Certain sales of advances did not qualify for sales accounting treatment and were accounted for as a financing. This financing liability has no contractual maturity.
Other Secured Borrowings
Borrowings |  | Collateral |  | Interest Rate |  | Maturity |  | Available Borrowing Capacity (1) |  | June 30, 2017 |  | December 31, 2016
SSTL (2) |  | (2) |  | 1-Month Euro-dollar rate + 500 bps with a Eurodollar floor of 100 bps (2) |  | Dec. 2020 |  | $ | — |  |  | $ | 326,626 |  |  | $ | 335,000 |
Mortgage loan warehouse facilities: |  |  |  |  |  |  |  |  |  |  |  |
Repurchase agreement (3) |  | Loans held for sale (LHFS) |  | 1ML + 200 - 345 bps |  | Sep. 2017 |  | 42,100 |  |  | 7,900 |  |  | 12,370 |
Master repurchase agreements (4) |  | LHFS |  | 1ML + 200 bps; 1ML floor of 0.0% |  | Feb. 2018 |  | 33,766 |  |  | 66,234 |  |  | 173,543 |
Participation agreements (5) |  | LHFS |  | N/A |  | Apr. 2018 (5) |  | — |  |  | 151,498 |  |  | 92,739 |
Participation agreements (6) |  | LHFS (reverse mortgages) |  | 1ML + 275 bps; 1ML floor of 300 or 350 bps |  | Aug. 2017 |  | — |  |  | 39,570 |  |  | 26,254 |
Master repurchase agreement (7) |  | LHFS (reverse mortgages) |  | 1ML + 275 bps; 1ML floor of 25 bps |  | Jan. 2018 |  | 38,081 |  |  | 61,919 |  |  | 50,123 |
|  |  |  |  |  |  |  | 113,947 |  |  | 327,121 |  |  | 355,029 |
|  |  |  |  |  |  |  | $ | 113,947 |  |  | 653,747 |  |  | 690,029 |
Unamortized debt issuance costs - SSTL |  |  |  | (6,552 | ) |  | (7,612 | )
Discount - SSTL |  |  |  | (3,335 | ) |  | (3,874 | )
|  |  |  |  |  |  |  |  |  |  | $ | 643,860 |  |  | $ | 678,543 |
Weighted average interest rate |  |  |  |  |  |  |  |  |  | 4.94 | % |  | 4.56 | %
(1) | For our mortgage loan warehouse facilities, available borrowing capacity does not consider the amount of the facility that the lender has extended on an uncommitted basis. Of the borrowing capacity extended on a committed basis, none could be used at June 30, 2017 based on the amount of eligible collateral that had been pledged.
(2) | On December 5, 2016, we entered into an Amended and Restated Senior Secured Term Loan Facility Agreement that established a new SSTL with a borrowing capacity of $335.0 million and a maturity date of December 5, 2020. We may request increases to the loan amount of up to $100.0 million in total, with additional increases subject to certain limitations. We are required to make quarterly payments on the SSTL in an amount of $4.2 million the first of which was paid on March 31, 2017.
The borrowings under the SSTL are secured by a first priority security interest in substantially all of the assets of Ocwen, OLS and the other guarantors thereunder, excluding among other things, 35% of the capital stock of foreign subsidiaries, securitization assets and equity interests of securitization entities, assets securing permitted funding indebtedness and non-recourse indebtedness, REO assets, servicing agreements where an acknowledgment from the GSE has not been obtained, as well as other customary carve-outs. 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 (1ML)), plus a margin of 4.00% and subject to a base rate floor of 2.00% or (b) the one month Eurodollar rate, plus a margin of 5.00% and subject to a one month Eurodollar floor of 2.00%. To date we have elected option (b) to determine the interest rate.
(3) | Fifty percent of the maximum borrowing amount of $100.0 million is available on a committed basis and fifty percent is available at the discretion of the lender. We use this facility to fund the repurchase of certain loans from Ginnie Mae guaranteed securitizations in connection with loan modifications and loan resolution activity as part of our contractual obligations as the servicer of the loans. On August 1, 2017, we entered into an amendment to lower the advance rates under this facility by 3%.
(4) | Under these repurchase agreements, the lender provides financing on a committed basis for $100.0 million, with an additional $100.0 million available at the discretion of the lender. On August 1, 2017, we elected to voluntarily terminate these agreements.
(5) | Under these participation agreements, the lender provides financing for a combined total of $250.0 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. On April 25, 2017, the term of these participation agreements was extended to April 30, 2018.
(6) | Under these participation agreements, the lender provides uncommitted reverse mortgage financing for $75.0 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.
(7) | The lender provides financing on a committed basis for $100.0 million.
Senior Notes
| June 30, 2017 |  | December 31, 2016
6.625% Senior unsecured notes due May 15, 2019 | $ | 3,122 |  |  | $ | 3,122 |
8.375% Senior secured notes due November 15, 2022 | 346,878 |  |  | 346,878 |
| 350,000 |  |  | $ | 350,000 |
Unamortized debt issuance costs | (2,937 | ) |  | (3,211 | )
| $ | 347,063 |  |  | $ | 346,789 |
Senior Unsecured Notes Ocwen may redeem all or a part of the remaining Senior Unsecured Notes, upon not less than 30 nor more than 60 days’ notice, at the redemption price (expressed as percentages of principal amount) of 103.313% and 100.000% for the twelve-month periods beginning May 15, 2017 and 2018, respectively, plus accrued and unpaid interest and additional interest, if any. Senior Secured Notes The Senior Secured Notes are guaranteed by Ocwen, OMS, Homeward Residential Holdings, Inc., Homeward and ACS (the Guarantors). The Senior Secured Notes are secured by second priority liens on the assets and properties of OLS and the Guarantors that secure the first priority obligations under the SSTL, excluding certain MSRs. At any time, OLS may redeem all or a part of the Senior Secured Notes, upon not less than 30 nor more than 60 days’ notice at a specified redemption price, plus accrued and unpaid interest to the date of redemption. Prior to November 15, 2018, the Senior Secured Notes may be redeemed at a redemption price equal to 100.0% of the principal amount of the Senior Secured Notes redeemed, plus the applicable make whole premium (as defined in the indenture). On or after November 15, 2018, OLS may redeem all or a part of the Senior Secured Notes at the redemption prices (expressed as percentages of principal amount) specified in the Indenture. The redemption prices during the twelve-month periods beginning on November 15 of each year are as follows:
Year |  | Redemption Price
2018 |  | 106.281%
2019 |  | 104.188%
2020 |  | 102.094%
2021 and thereafter |  | 100.000%
At any time, on or prior to November 15, 2018, OLS may, at its option, use the net cash proceeds of one or more equity offerings (as defined in the Indenture) to redeem up to 35.0% of the principal amount of all Senior Secured Notes issued at a redemption price equal to 108.375% of the principal amount of the Senior Secured Notes redeemed plus accrued and unpaid interest to the date of redemption, provided that: (i) at least 65.0% of the principal amount of all Senior Secured Notes issued under the Indenture (including any additional Senior Secured Notes) remains outstanding immediately after any such redemption; and (ii) OLS makes such redemption not more than 120 days after the consummation of any such Equity Offering. Upon a change of control (as defined in the indenture), OLS is required to make an offer to the holders of the Senior Secured Notes to repurchase all or a portion of each holder’s Senior Secured Notes at a purchase price equal to 101.0% of the principal amount of the Senior Secured Notes purchased plus accrued and unpaid interest to the date of purchase. In connection with our issuance of the Senior Secured Notes, we incurred certain costs that we capitalized and are amortizing over the period from the date of issuance to November 15, 2022. The unamortized balance of these issuance costs was $2.9 million and $3.2 million at June 30, 2017 and December 31, 2016, respectively. Credit Ratings Credit ratings are intended to be an indicator of the creditworthiness of a particular company, security or obligation. On July 25, 2017, S&P affirmed our long-term corporate rating of “B-” and removed our ratings from CreditWatch with Negative implications. On July 26, 2017, Kroll Bond Rating Agency affirmed our corporate ratings at “CCC” and removed our ratings from Watch Downgrade status. On June 16, 2017, Moody’s downgraded our long-term corporate rating to “Caa1” from “B3.” On April 24, 2017, Fitch placed our ratings on Rating Watch Negative. It is possible that additional actions by credit rating agencies could have a material adverse impact on our liquidity and funding position, including materially changing the terms on which we may be able to borrow money. Covenants Under the terms of our debt agreements, we are subject to various qualitative and quantitative covenants. Collectively, these covenants include:
• | Financial covenants;
• | Covenants to operate in material compliance with applicable laws;
• | Restrictions on our ability to engage in various activities, including but not limited to incurring additional debt, paying dividends of making distributions on or purchasing equity interests of Ocwen, repurchasing or redeeming capital stock or junior capital, repurchasing or redeeming subordinated debt prior to maturity, issuing preferred stock, selling or transferring assets or making loans or investments or acquisitions or other restricted payments, entering into mergers or consolidations or sales of all or substantially all of the assets of Ocwen and its subsidiaries, creating liens on assets to secure debt of OLS or any Guarantor, enter into transactions with an affiliate;
• | Monitoring and reporting of various specified transactions or events, including specific reporting on defined events affecting collateral underlying certain debt agreements; and
• | Requirements to provide audited financial statements within specified timeframes, including a requirement under our SSTL that Ocwen’s financial statements and the related audit report be unqualified as to going concern.
Many of the restrictive covenants arising from the indenture for the Senior Secured Notes will be suspended if the Senior Secured Notes achieve an investment grade rating from both Moody’s and S&P and if no default or event of default has occurred and is continuing. Financial covenants in our debt agreements require that we maintain, among other things:
• | a 40% loan to collateral value ratio, as defined under our SSTL, as of the last date of any fiscal quarter; and
• | specified levels of tangible net worth and liquidity at the consolidated and OLS levels.
As of June 30, 2017, the most restrictive consolidated tangible net worth requirements contained in our debt agreements were for a minimum of $1.1 billion at OLS under our match funded debt agreements and three repurchase agreements and $450.0 million at Ocwen under a master repurchase agreement. As a result of the covenants to which we are subject, we may be limited in the manner in which we conduct our business and may be limited in our ability to engage in favorable business activities or raise additional capital to finance future operations or satisfy future liquidity needs. In addition, breaches or events that may result in a default under our debt agreements include, among other things, nonpayment of principal or interest, noncompliance with our covenants, breach of representations, the occurrence of a material adverse change, insolvency, bankruptcy, certain material judgments and changes of control. Covenants and default provisions of this type are commonly found in debt agreements such as ours. Certain of these covenants and default provisions are open to subjective interpretation and, if our interpretation were contested by a lender, a court may ultimately be required to determine compliance or lack thereof. In addition, our debt agreements generally include cross default provisions such that a default under one agreement could trigger defaults under other agreements. If we fail to comply with our debt agreements and are unable to avoid, remedy or secure a waiver of any resulting default, we may be subject to adverse action by our lenders, including termination of further funding, acceleration of outstanding obligations, enforcement of liens against the assets securing or otherwise supporting our obligations and other legal remedies. Our lenders can waive their contractual rights in the event of a default. We believe that we are in compliance with all of the qualitative and quantitative covenants in our debt agreements as of 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 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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