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Fair Value (Tables)
 12 Months Ended
Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments and Nonfinancial Assets Measured at Fair Value on a Recurring or Non-recurring basis or Disclosed, but not Carried, at Fair Value
The carrying amounts and the estimated fair values of our financial instruments and certain of our nonfinancial assets measured at fair value on a recurring or non-recurring basis or disclosed, but not carried, at fair value are as follows:
 
 
 
December 31,
 
 
 
2018
 
2017
 
Level
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Financial assets:
 
 
 

 
 

 
 

 
 

Loans held for sale:
 
 
 
 
 
 
 
 
 
Loans held for sale, at fair value (a)
2
 
$
176,525

 
$
176,525

 
$
214,262

 
$
214,262

Loans held for sale, at lower of cost or fair value (b)
3
 
66,097

 
66,097

 
24,096

 
24,096

Total Loans held for sale
 
 
$
242,622

 
$
242,622

 
$
238,358

 
$
238,358

Loans held for investment, at fair value
 
 
 
 
 
 
 
 
 
Loans held for investment - Reverse mortgages (a)
3
 
$
5,472,199

 
$
5,472,199

 
$
4,715,831

 
$
4,715,831

Loans held for investment - Restricted for securitization investors (a)
3
 
26,520

 
26,520

 
—

 
—

Total loans held for investment
 
 
5,498,719

 
5,498,719

 
4,715,831

 
4,715,831

 
 
 
 
 
 
 
 
 
 
Advances (including match funded) (c)
3
 
1,186,676

 
1,186,676

 
1,356,393

 
1,356,393

Automotive dealer financing notes (including match funded) (c)
3
 
—

 
—

 
32,757

 
32,590

Receivables, net (c)
3
 
198,262

 
198,262

 
199,529

 
199,529

Mortgage-backed securities, at fair value (a)
3
 
1,502

 
1,502

 
1,592

 
1,592

U.S. Treasury notes (a)
1
 
1,064

 
1,064

 
1,567

 
1,567

Corporate bonds (a)
2
 
450

 
450

 
313

 
313

 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 

 
 

 
 

 
 

Match funded liabilities (c)
3
 
$
778,284

 
$
776,485

 
$
998,618

 
$
992,698

Financing liabilities:
 
 
 
 
 
 
 
 
 
HMBS-related borrowings, at fair value (a)
3
 
$
5,380,448

 
$
5,380,448

 
$
4,601,556

 
$
4,601,556

Financing liability - MSRs pledged, at fair value (a)
3
 
1,032,856

 
1,032,856

 
508,291

 
508,291

Financing liability - Owed to securitization investors, at fair value (a)
3
 
24,815

 
24,815

 
—

 
—

Other (c)
3
 
69,942

 
53,570

 
85,227

 
65,202

Total Financing liabilities
 
 
$
6,508,061

 
$
6,491,689

 
$
5,195,074

 
$
5,175,049

Other secured borrowings:
 
 
 
 
 
 
 
 
 
Senior secured term loan (c) (d)
2
 
$
226,825

 
$
227,449

 
$
290,068

 
$
299,741

Other (c)
3
 
155,713

 
155,713

 
255,782

 
255,782

Total Other secured borrowings
 
 
$
382,538

 
$
383,162

 
$
545,850

 
$
555,523

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
 
 
2018
 
2017
Senior notes:
 
 
 
 
 
 
 
 
 
Senior unsecured notes (c) (d)
2
 
$
119,924

 
$
119,258

 
$
3,122

 
$
2,872

Senior secured notes (c) (d)
2
 
328,803

 
306,889

 
344,216

 
355,550

Total Senior notes
 
 
$
448,727

 
$
426,147

 
$
347,338

 
$
358,422

 
 
 
 
 
 
 
 
 
 
Derivative financial instrument assets (liabilities), at fair value (a):
 
 
 

 
 

 
 

 
 

Interest rate lock commitments
2
 
$
3,871

 
$
3,871

 
$
3,283

 
$
3,283

Forward mortgage-backed securities
1
 
(4,983
)
 
(4,983
)
 
(545
)
 
(545
)
Interest rate caps
3
 
678

 
678

 
2,056

 
2,056

 
 
 
 
 
 
 
 
 
 
Mortgage servicing rights:
 
 
 
 
 
 
 
 
 
Mortgage servicing rights, at fair value (a)
3
 
$
1,457,149

 
$
1,457,149

 
$
671,962

 
$
671,962

Mortgage servicing rights, at amortized cost (e)
3
 
—

 
—

 
336,882

 
418,745

Total Mortgage servicing rights
 
 
$
1,457,149

 
$
1,457,149

 
$
1,008,844

 
$
1,090,707

 
(a)
Measured at fair value on a recurring basis.
(b)
Measured at fair value on a non-recurring basis.
(c)
Disclosed, but not measured, at fair value.
(d)
The carrying values are net of unamortized debt issuance costs and discount. See Note 13 — Borrowings for additional information. 
(e)
Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. The balance at December 31, 2017 includes the impaired government-insured stratum of amortization method MSRs, which was measured at fair value on a non-recurring basis and reported net of the valuation allowance. At December 31, 2017, the carrying value of this stratum was $158.0 million before applying the valuation allowance of $24.8 million.
Summary of Reconciliation of the Changes in Fair Value of Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present a reconciliation of the changes in fair value of Level 3 assets and liabilities that we measure at fair value on a recurring basis:
 
Loans Held for Investment - Reverse Mortgages
 
HMBS-Related Borrowings
 
Loans Held for Inv. - Restricted for Securitiza-
tion Investors
 
Financing Liability - Owed to Securitiza -
tion Investors
 
Mortgage-Backed Securities
 
Financing Liability - MSRs Pledged
 
Derivatives
 
MSRs
Year Ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
4,715,831

 
$
(4,601,556
)
 
$
—

 
$
—

 
$
1,592

 
$
(508,291
)
 
$
2,056

 
$
671,962

Purchases, issuances, sales and settlements
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Purchases
—

 
—

 
—

 
—

 
—

 
(667
)
 
95

 
13,712

Recognized (assumed) in connection with the acquisition of PHH
—

 
—

 
—

 
—

 
—

 
(481,020
)
 
—

 
518,127

Issuances (1)
920,476

 
(948,917
)
 
—

 
—

 
—

 
(279,586
)
 
—

 
—

Consolidation of mortgage-backed securitization trusts
—

 
—

 
28,373

 
(26,643
)
 
—

 
—

 
—

 
—

Sales
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(6,240
)
Settlements
(400,521
)
 
391,985

 
(1,853
)
 
1,828

 
—

 
211,766

 
(371
)
 
(5,880
)
 
Loans Held for Investment - Reverse Mortgages
 
HMBS-Related Borrowings
 
Loans Held for Inv. - Restricted for Securitiza-
tion Investors
 
Financing Liability - Owed to Securitiza -
tion Investors
 
Mortgage-Backed Securities
 
Financing Liability - MSRs Pledged
 
Derivatives
 
MSRs
Year Ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transfers (to) from:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MSRs carried at amortized cost, net of valuation allowance
—

 
—

 
—

 
—

 
—

 
—

 
—

 
418,925

Loans held for sale, at fair value
(1,039
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Receivables, net
(158
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Other assets
(411
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
518,347

 
(556,932
)
 
26,520

 
(24,815
)
 
—

 
(549,507
)
 
(276
)
 
938,644

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total realized and unrealized gains (losses) (2)
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Included in earnings (1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in fair value
238,021

 
(221,960
)
 
—

 
—

 
(90
)
 
19,269

 
(1,102
)
 
(153,457
)
Calls and other
—

 
—

 
—

 
—

 
—

 
5,673

 
—

 
—

Included in Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
238,021

 
(221,960
)
 
—

 
—

 
(90
)
 
24,942

 
(1,102
)
 
(153,457
)
Transfers in and / or out of Level 3
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Ending balance
$
5,472,199

 
$
(5,380,448
)
 
$
26,520

 
$
(24,815
)
 
$
1,502

 
$
(1,032,856
)
 
$
678

 
$
1,457,149

 
Loans Held for Investment - Reverse Mortgages
 
HMBS-Related Borrowings
 
Mortgage-Backed Securities
 
Financing Liability - MSRs Pledged
 
Derivatives
 
MSRs
Year Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
3,565,716

 
$
(3,433,781
)
 
$
8,342

 
$
(477,707
)
 
$
1,836

 
$
679,256

Purchases, issuances, sales and settlements
 
 
 
 
 
 
 
 
 

 
 

Purchases
—

 
—

 
—

 
—

 
655

 
—

Issuances
1,277,615

 
(1,281,543
)
 
—

 
(54,601
)
 
—

 
(2,214
)
Sales
—

 
—

 
—

 
—

 
—

 
(540
)
Settlements
(444,388
)
 
418,503

 
—

 
59,190

 
(445
)
 
—

Transfers (to) from:
 
 
 
 
 
 
 
 
 
 
 
Loans held for sale, at fair value
(3,803
)
 
—

 
—

 
—

 
—

 
—

Receivables, net
(3,583
)
 
—

 
—

 
—

 
—

 
—

Other assets
(1,929
)
 
—

 
—

 
—

 
—

 
—

 
823,912

 
(863,040
)
 
—

 
4,589

 
210

 
(2,754
)
Total realized and unrealized gains (losses) (2)
 
 
 
 
 
 
 
 
 

 
 

Included in earnings (1):
 
 
 
 
 
 
 
 
 
 
 
Change in fair value
326,203

 
(304,735
)
 
(6,750
)
 
(41,282
)
 
10

 
(4,540
)
Calls and other
—

 
—

 
—

 
6,109

 
—

 
—

Included in Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
326,203

 
(304,735
)
 
(6,750
)
 
(35,173
)
 
10

 
(4,540
)
Transfers in and / or out of Level 3
—

 
—

 
—

 
—

 
—

 
—

Ending balance
$
4,715,831

 
$
(4,601,556
)
 
$
1,592

 
$
(508,291
)
 
$
2,056

 
$
671,962



 
Loans Held for Investment - Reverse Mortgages
 
HMBS-Related Borrowings
 
Mortgage-Backed Securities
 
Financing Liability - MSRs Pledged
 
Derivatives
 
MSRs
Year Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,488,253

 
$
(2,391,362
)
 
$
7,985

 
$
(541,704
)
 
$
2,042

 
$
761,190

Purchases, issuances, sales and settlements
 
 
 
 
 
 
 
 
 

 
 
Purchases
—

 
—

 
—

 
—

 
1,337

 
—

Issuances
1,107,046

 
(1,086,795
)
 
—

 
—

 
—

 
(1,548
)
Sales
—

 
—

 
—

 
—

 
—

 
(148
)
Settlements
(243,596
)
 
230,045

 
—

 
63,997

 
(156
)
 
—

 
863,450

 
(856,750
)
 
—

 
63,997

 
1,181

 
(1,696
)
Total realized and unrealized gains (losses)
 
 
 
 
 
 
 
 
 

 
 
Included in earnings
 
 
 
 
 
 
 
 
 
 
 
Change in fair value
214,013

 
(185,669
)
 
357

 
—

 
(1,387
)
 
(80,238
)
Included in Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
214,013

 
(185,669
)
 
357

 
—

 
(1,387
)
 
(80,238
)
Transfers in and / or out of Level 3
—

 
—

 
—

 
—

 
—

 
—

Ending balance
$
3,565,716

 
$
(3,433,781
)
 
$
8,342

 
$
(477,707
)
 
$
1,836

 
$
679,256

 
(1)
On January 18, 2018, Ocwen received a lump-sum payment of $279.6 million in accordance with terms of the agreements with NRZ. A $16.6 million reduction in the fair value of the Financing Liability - MSRs Pledged was recognized in connection with the receipt of the lump-sum payment. See Note 9 — Rights to MSRs.
(2)
On September 1, 2017, Ocwen transferred MSRs with UPB of $15.9 billion to NRZ and received a lump-sum payment of $54.6 million. A reduction in the fair value of the Financing Liability - MSRs Pledged of $37.6 million was recognized at the time of the initial transfer of the MSRs. See Note 9 — Rights to MSRs.
(3)
Total gains (losses) attributable to derivative financial instruments still held at December 31, 2018 and 2017 and 2016 were $(1.1) million, $0.1 million and $0.3 million for 2018, 2017 and 2016, respectively. Total losses for 2018, 2017 and 2016 attributable to MSRs still held at December 31, 2018, 2017 and 2016 were $153.5 million, $4.5 million and $78.3 million, respectively.
Loans Held for Investment [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Schedule of Significant Assumptions used in Valuation
 
December 31,
Significant valuation assumptions
2018
 
2017
Life in years
 
 
 
Range
3.0 to 7.6

 
4.4 to 8.1

Weighted average
5.9

 
6.4

Conditional repayment rate
 
 
 
Range
6.8% to 38.4%

 
5.4% to 51.9%

Weighted average
14.7
%
 
13.1
%
Discount rate
3.4
%
 
3.2
%
Mortgage Servicing Rights - Amortized Costs [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Schedule of Significant Assumptions used in Valuation
Significant valuation assumptions
December 31, 2017
Weighted average prepayment speed
8.8
%
Weighted average delinquency rate
10.9
%
Advance financing cost
5-year swap

Interest rate for computing float earnings
5-year swap

Weighted average discount rate
9.2
%
Weighted average cost to service (in dollars)
$
108
Fair Value Mortgage Servicing Rights [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Schedule of Significant Assumptions used in Valuation
 
December 31,
Significant valuation assumptions
2018
 
2017
 
Agency
 
Non-Agency
 
Agency
 
Non-Agency
Weighted average prepayment speed
8.5
%
 
15.4
%
 
8.1
%
 
16.6
%
Weighted average delinquency rate
6.6
%
 
27.1
%
 
1.0
%
 
28.5
%
Advance financing cost
5-year swap

 
5-yr swap plus 2.75%

 
5-year swap

 
5-yr swap plus 2.75%

Interest rate for computing float earnings
5-year swap

 
5-yr swap minus 0.50%

 
5-year swap

 
5-yr swap minus 0.50%

Weighted average discount rate
9.1
%
 
12.8
%
 
9.0
%
 
13.0
%
Weighted average cost to service (in dollars)
$
90

 
$
297

 
$
64

 
$
305
Automotive Dealer Financing Notes [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Schedule of Significant Assumptions used in Valuation
Significant valuation assumptions
December 31, 2017
Weighted average life in months
2.2

Average note rate
8.5
%
Discount rate
10.0
%
Loan loss rate
21.5
%
HMBS - Related Borrowings [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Schedule of Significant Assumptions used in Valuation
 
December 31,
Significant valuation assumptions
2018
 
2017
Life in years
 
 
 
Range
3.0 to 7.6

 
4.4 to 8.1

Weighted average
5.9

 
6.4

Conditional repayment rate
 
 
 
Range
6.8% to 38.4%

 
5.4% to 51.9%

Weighted average
14.7
%
 
13.1
%
Discount rate
3.3
%
 
3.11
%
Mortgage Servicing Rights Pledged [Member]  
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Schedule of Significant Assumptions used in Valuation
 
December 31,
Significant valuation assumptions
2018
 
2017
Weighted average prepayment speed
13.9
%
 
17.0
%
Weighted average delinquency rate
20.3
%
 
28.9
%
Advance financing cost
5-year swap plus 0% to 2.75%

 
5-year swap plus 2.75%

Interest rate for computing float earnings
5-year swap minus 0% to 0.50%

 
5-year swap minus 0.50%

Weighted average discount rate
12.0
%
 
13.7
%
Weighted average cost to service (in dollars)
$
234

 
$
311