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Borrowings (Tables)
 3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Schedule of Match Funded Liabilities
Advance Match Funded Liabilities
 
 
 
 
 
 
 
March 31, 2020
 
December 31, 2019
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 2015-VF5 (4)
 
Dec. 2050
 
Dec. 2020
 
$
59,021

 
3.05
%
 
$
140,979

 
3.36
%
 
$
190,555

Advance Receivables Backed Notes, Series 2019-T1 (5)
 
Aug. 2050
 
Aug. 2020
 
—

 
2.62

 
185,000

 
2.62

 
185,000

Advance Receivables Backed Notes, Series 2019-T2 (5)
 
Aug. 2051
 
Aug. 2021
 
—

 
2.53

 
285,000

 
2.53

 
285,000

Total Ocwen Master Advance Receivables Trust (OMART)
 
 
 
 
 
59,021

 
2.68

 
610,979

 
2.79

 
660,555

Ocwen Freddie Advance Funding (OFAF) - Advance Receivables Backed Notes, Series 2015-VF1 (6)
 
Jun. 2050
 
Jun. 2020
 
45,028

 
3.26

 
14,972

 
3.53

 
18,554

 
 
 
 
 
 
$
104,049

 
2.69
%
 
$
625,951

 
2.81
%
 
$
679,109

(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 ratably to each outstanding amortizing note to reduce the balance and as such the collection of advances allocated to the amortizing note may not be used to fund new advances.
(2)
Borrowing capacity under the OMART and OFAF facilities is available to us provided that we have sufficient eligible collateral to pledge. At March 31, 2020, none of the available borrowing capacity of our advance financing notes could be used based on the amount of eligible collateral.
(3)
1ML was 0.99% and 1.76% at March 31, 2020 and December 31, 2019, respectively.
(4)
The total borrowing capacity of the Series 2015-VF5 variable notes is $200.0 million, with interest computed based on the lender’s cost of funds plus a margin. At March 31, 2020, the weighted average interest margin was 136 bps.
(5)
On August 14, 2019, we issued two fixed-rate term notes of $185.0 million (Series 2019 T-1) and $285.0 million (Series 2019-T2) with amortization dates of August 17, 2020 and August 16, 2021, respectively, for a total combined borrowing capacity of $470.0 million. The weighted average rate of the notes is 2.57% with rates on the individual classes of notes ranging from 2.42% to 4.44%.
(6)
The borrowing capacity of this facility is $60.0 million with interest computed based on the lender’s cost of funds plus a margin. At March 31, 2020, the weighted average interest margin was 157 bps.
Schedule of Financing Liabilities
Financing Liabilities
 
 
 
 
 
 
 
Outstanding Balance
Borrowing Type
 
Collateral
 
Interest Rate
 
Maturity
 
March 31, 2020
 
December 31, 2019
HMBS-Related Borrowings, at fair value (1)
 
Loans held for investment
 
1ML + 260 bps
 
(1)
 
$
6,323,091

 
$
6,063,435

Other Financing Liabilities
 
 
 
 
 
 
 
 
 
 
MSRs pledged (Rights to MSRs), at fair value:
 
 
 
 
 
 
 
 
 
 
Original Rights to MSRs Agreements
 
MSRs
 
(2)
 
(2)
 
591,705

 
603,046

2017 Agreements and New RMSR Agreements
 
MSRs
 
(3)
 
(3)
 
9,979

 
35,445

PMC MSR Agreements
 
MSRs
 
(4)
 
(4)
 
—

 
312,102

 
 
 
 
 
 
 
 
601,684

 
950,593

 
 
 
 
 
 
 
 
 
 
 
Financing liability - Owed to securitization investors, at fair value:
 
 
 
 
 
 
 
 
 
 
IndyMac Mortgage Loan Trust (INDX 2004-AR11) (5)
 
Loans held for investment
 
(5)
 
(5)
 
9,544

 
9,794

Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) (5)
 
Loans held for investment
 
(5)
 
(5)
 
11,821

 
12,208

 
 
 
 
 
 
 
 
21,365

 
22,002

Total Other Financing Liabilities
 
 
 
 
 
 
 
623,049

 
972,595

 
 
 
 
 
 
 
 
$
6,946,140

 
$
7,036,030

(1)
Represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed HMBS which did not qualify for sale accounting treatment of HECM loans. Under this accounting treatment, the HECM loans securitized with Ginnie Mae remain on our consolidated balance sheet and the proceeds from the sale are recognized as a secured liability. The beneficial interests have no maturity dates, and the borrowings mature as the related loans are repaid. We elected to record the HMBS-related borrowings at fair value consistent with the related HECM loans. Changes in fair value are reported within Reverse mortgage revenue, net.
(2)
This pledged MSR liability is recognized due to the accounting treatment of MSR sale transactions with NRZ which did not qualify as sales for accounting purposes. Under this accounting treatment, the MSRs transferred to NRZ remain on the consolidated balance sheet and the proceeds from the sale are recognized as a secured liability. This financing liability has no contractual maturity or repayment schedule. We elected to record the liability at fair value consistent with the related MSRs. 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. Changes in fair value are reported within Pledged MSR liability expense, and are offset by corresponding changes in fair value of the MSR pledged to NRZ within MSR valuation adjustments, net.
(3)
This financing liability arose in connection with lump sum payments of $54.6 million received upon transfer of legal title of the MSRs related to the Rights to MSRs transactions to NRZ in September 2017. In connection with the execution of the New RMSR Agreements in January 2018, we received a lump sum payment of $279.6 million as compensation for foregoing certain payments under the Original Rights to MSRs Agreements. We recognized the cash received as a financing liability that we are accounting for at fair value through the remaining term of the original agreements (April 2020). 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, with changes in fair value recognized in Pledged MSR liability expense in the unaudited consolidated statements of operations.
(4)
Represented a liability for sales of MSRs to NRZ which did not qualify for sale accounting treatment and were accounted for as a secured borrowing which we assumed in connection with the acquisition of PHH. Under this accounting treatment, the MSRs transferred to NRZ remained on the consolidated balance sheet and the proceeds from the sale were recognized as a secured liability. We elected to record the liability at fair value consistent with the related MSRs. As disclosed in Note 8 — Rights to MSRs, the liability was derecognized upon termination of the agreement by NRZ on February 20, 2020.
(5)
Consists of securitization debt certificates due to third parties that represent beneficial interests in trusts that we include in our unaudited consolidated financial statements, as more fully described in Note 3 – Securitizations and Variable Interest Entities. The holders of these certificates have no recourse against the assets of Ocwen. The certificates in the INDX 2004-AR11 Trust pay interest based on variable rates which are generally based on weighted average net mortgage rates and which range between 3.38% and 3.85% at March 31, 2020. The certificates in the RAST 2003-A11 Trust pay interest based on fixed rates ranging between 4.25% and 5.75% and a variable rate based on 1ML plus 0.45%. The maturity of the certificates occurs upon maturity of the loans held by the trust. The remaining loans in the INDX 2004-AR11 Trust and RAST 2003-A11 Trust have maturity dates extending through November 2034 and October 2033, respectively.
Schedule of Other Secured Borrowings
Other Secured Borrowings
 
 
 
 
 
 
 
 
Outstanding Balance
Borrowing Type
 
Collateral
 
Interest Rate
 
Termination / Maturity
 
Available Borrowing Capacity (1)
 
March 31, 2020
 
December 31, 2019
SSTL (2)
 
(2)
 
1-Month Euro-dollar rate + 600 bps with a Eurodollar floor of 100 bps (2)
 
May 2022
 
$
—

 
$
200,000

 
$
326,066

Other Secured Borrowings
 
 
 
 
 
 
 
 
Outstanding Balance
Borrowing Type
 
Collateral
 
Interest Rate
 
Termination / Maturity
 
Available Borrowing Capacity (1)
 
March 31, 2020
 
December 31, 2019
Mortgage loan warehouse facilities
 
 
 
 
 
 
 
 
 
 
 
 
Master repurchase agreement (3)
 
Loans held for sale (LHFS)
 
1ML + 195 - 300 bps
 
Sep. 2020
 
—

 
110,607

 
91,573

Mortgage warehouse agreement (4)
 
LHFS (reverse mortgages)
 
Greater of 1ML + 250 bps or 350 bps; Libor Floor 0%
 
Aug. 2020
 
—

 
—

 
72,443

Master repurchase agreement (5)
 
LHFS (forward and reverse mortgages)
 
1ML + 225 bps forward; 1ML + 275 bps reverse
 
Dec. 2020
 
119,637

 
80,363

 
139,227

Master repurchase agreement (6)
 
LHFS (reverse mortgages)
 
Prime + 0.0% (4.0% floor)
 
Jan. 2020
 
—

 
—

 
898

Master repurchase agreement (7)
 
N/A
 
1ML + 170 bps; Libor Floor 35 bps
 
N/A
 
—

 
—

 
—

Participation agreement (8)
 
LHFS
 
N/A
 
May 2020
 
—

 
29,102

 
17,304

Mortgage warehouse agreement (9)
 
LHFS
 
1ML + 350 bps; Libor Floor 175 bps
 
Dec. 2020
 
36,583

 
13,417

 
10,780

Mortgage warehouse agreement (10)
 
LHFS (reverse mortgages)
 
1ML + 250 bps; 1ML floor of 350 bps
 
Aug. 2020
 
—

 
55,633

 
—

 
 
 
 
 
 
 
 
156,220

 
289,122

 
332,225

 
 
 
 
 
 
 
 
 
 
 
 
 
Agency MSR financing facility (11)
 
MSRs
 
1ML + 300bps
 
Jun. 2020
 
185,710

 
114,290

 
147,706

Ginnie Mae MSR financing facility (12)
 
MSRs
 
1ML + 395 bps
 
Nov. 2021
 
—

 
61,082

 
72,320

Ocwen Excess Spread-Collateralized Notes, Series 2019-PLS1 (13)
 
MSRs
 
5.07%
 
Nov. 2024
 
—

 
86,911

 
94,395

Secured Notes, Ocwen Asset Servicing Income Series, Series 2014-1 (14)
 
MSRs
 
(14)
 
Feb. 2028
 
—

 
55,596

 
57,594

 
 
 
 
 
 
 
 
185,710

 
317,879

 
372,015

 
 
 
 
 
 
 
 
$
341,930

 
807,001

 
1,030,306

Unamortized debt issuance costs - SSTL and PLS Notes
 
 
 
(8,808
)
 
(3,381
)
Discount - SSTL
 
 
 
(578
)
 
(1,134
)
 
 
 
 
 
 
 
 


 
$
797,615

 
$
1,025,791

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average interest rate
 
4.09
%
 
4.74
%
(1)
Available borrowing capacity for our mortgage loan warehouse facilities 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 of the available borrowing capacity could be used at March 31, 2020 based on the amount of eligible collateral that could be pledged.
(2)
On January 27, 2020, we entered into a Joinder and Second Amendment Agreement (the Amendment) which amends the Amended and Restated SSTL Facility Agreement dated as of December 5, 2016, as amended by a Joinder and Amendment Agreement dated as of March 18, 2019. The Amendment provided for a net prepayment of $126.1 million of the outstanding balance at December 31, 2019 such that the facility has a maximum outstanding balance of $200.0 million. The Amendment also (i) extended the maturity of the remaining outstanding loans under the SSTL to May 15, 2022, (ii) provides that the loans under the SSTL bear interest at the one-month Eurodollar Rate or the Base Rate (as defined in the SSTL), at our option, plus a margin of 6.00% per annum for Eurodollar Rate loans or 5.00% per annum for Base Rate loans (increasing to a margin of 6.50% per annum for Eurodollar Rate loans or 5.50% per annum for Base Rate loans on January 27, 2021), (iii) provides for a prepayment premium of 2.00% until January 27, 2022 and (iv) requires quarterly principal payments of $5.0 million.
(3)
The maximum borrowing under this agreement is $175.0 million, of which $100.0 million is available on a committed basis and the remainder is available at the discretion of the lender.
(4)
Under this participation agreement, the lender provides financing for $1.0 million on a committed basis. 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. On March 12, 2020, we voluntarily reduced the maximum borrowing capacity from $100.0 million to $1.0 million in connection with Liberty’s transfer of substantially all of its assets, liabilities, contracts and employees to PMC effective March 15, 2020.
(5)
The maximum borrowing under this agreement is $250.0 million, of which $200.0 million is available on a committed basis and the remainder is available on an uncommitted basis. The 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.
(6)
Under this agreement, the lender provides financing for up to $50.0 million on an uncommitted basis. This facility expired on January 22, 2020 and was not renewed.
(7)
This agreement was originally entered into by PHH and subsequently assumed by Ocwen in connection with its acquisition of PHH. The lender provides financing for up to $200.0 million at the discretion of the lender. The agreement has no stated maturity date.
(8)
Under this master participation agreement, the lender will provide $300.0 million of borrowing capacity to PMC on an uncommitted basis. 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 March 26, 2020, we renewed this facility through May 3, 2020, and subsequently extended for an additional 30 days until June 3, 2020 for $150.0 million.
(9)
Under this agreement, the lender provides financing for up to $50.0 million on a committed basis. The lender earns the stated interest rate of 1ML plus a margin of 350 bps.
(10)
On March 12, 2020, PMC entered into a mortgage loan warehouse agreement to fund reverse mortgage loan draws by borrowers subsequent to origination. Under this agreement, the lender provides financing for up to $100.0 million on an uncommitted basis and the lender earns the stated interest rate of 1ML plus a margin of 250 bps.
(11)
Financing facility entered into by PMC that is secured by certain Fannie Mae and Freddie Mac MSRs. In connection with this facility, PMC entered into repurchase agreements pursuant to which PMC sold trust certificates representing certain indirect economic interests in the MSRs and agreed to repurchase such trust certificates at a future date at the repurchase price set forth in the repurchase agreements. PMC’s obligations under this facility are secured by a lien on the related MSRs. Ocwen guarantees the obligations of PMC under this facility. The maximum amount which we may borrow pursuant to the repurchase agreements is $300.0 million on a committed basis. The lender earns the stated interest rate of 1ML plus a margin of 300 bps. See Note 3 – Securitizations and Variable Interest Entities for additional information. We are subject to daily margining requirements under the terms of our MSR financing facilities. Declines in fair value of our MSRs due to declines in market interest rates, assumption updates or other factors require that we provide additional collateral to our lenders under these facilities.
(12)
Financing facility entered into by PMC that is secured by certain Ginnie Mae MSRs. In connection with the facility, PMC entered into a repurchase agreement pursuant to which PMC has sold a participation certificate representing certain economic interests in the Ginnie Mae MSRs and has agreed to repurchase such participation certificate at a future date at the repurchase price set forth in the repurchase agreement. PMC’s obligations under the facility are secured by a lien on the related Ginnie Mae MSRs. Ocwen guarantees the obligations of PMC under the facility. The maximum amount which we may borrow pursuant to the facility is $100.0 million on an uncommitted basis. The lender earns the stated interest rate of 1ML plus a margin of 395 bps. See (11) above regarding daily margining requirements.
(13)
PMC issued the PLS Notes secured by certain of PMC’s MSRs (PLS MSRs) pursuant to a credit agreement. PLS Issuer’s obligations under the facility are secured by a lien on the related PLS MSRs. Ocwen guarantees the obligations of PLS Issuer under the facility. The Class A PLS Notes issued pursuant to the credit agreement have an initial principal amount of $100.0 million and amortize in accordance with a pre-determined schedule subject to modification under certain events. The notes have a stated coupon rate of 5.07%. See Note 3 – Securitizations and Variable Interest Entities for additional information. See (11) above regarding daily margining requirements.
(14)
OASIS noteholders are entitled to receive a monthly payment equal to the sum of: (a) 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. 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 notes.
Schedule of Senior Notes
Senior Notes
Interest Rate
 
Maturity
Outstanding Balance
 
March 31, 2020
 
December 31, 2019
Senior unsecured notes:
 
 
 
 
 
 
PHH (1)
6.375%
 
Aug. 2021
$
21,543

 
$
21,543

 
 
 
 
21,543

 
21,543

Senior secured notes
8.375%
 
Nov. 2022
291,509

 
291,509

 
 
 
 
313,052

 
313,052

Unamortized debt issuance costs
 
 
 
(1,344
)
 
(1,470
)
Fair value adjustments (1)
 
 
 
(418
)
 
(497
)
 
 
 
 
$
311,290

 
$
311,085

(1)
These notes were originally issued by PHH and subsequently assumed by Ocwen in connection with its acquisition of PHH. We recorded the notes at their respective fair values on the date of acquisition, and we are amortizing the resulting fair value purchase accounting adjustments over the remaining term of the notes. We have the option to redeem the notes due in August 2021, in whole or in part, on or after January 1, 2019 at a redemption price equal to 100.0% of the principal amount plus any accrued and unpaid interest.
Schedule of Redemption Prices
The redemption prices during the twelve-month periods beginning on November 15th of each year are as follows:
Year
 
Redemption Price
2019
 
104.188%
2020
 
102.094%
2021 and thereafter
 
100.000%
Schedule of Assets Held as Collateral Related to Secured Borrowings
Our assets held as collateral related to secured borrowings, committed under sale or other contractual obligations and which may be subject to secured liens under the SSTL and Senior Secured Notes are as follows at March 31, 2020:
 
 
 
Collateral for Secured Borrowings
 
 
 
 
 
Total Assets
 
Advance Match Funded Liabilities
 
Financing Liabilities
 
Mortgage Loan Warehouse / MSR Facilities
 
Sales and Other Commitments (1)
 
Other (2)
Cash
$
263,555

 
$
—

 
$
—

 
$
—

 
$
—

 
$
263,555

Restricted cash
53,177

 
10,838

 
—

 
5,031

 
37,308

 
—

MSRs (3)
1,050,228

 
—

 
591,705

 
459,027

 
—

 
513

Advances, net
1,024,807

 
751,020

 
—

 
—

 
—

 
273,787

Loans held for sale
246,015

 
—

 
—

 
205,080

 
—

 
40,935

Loans held for investment
6,591,382

 
—

 
6,461,371

 
97,273

 
—

 
32,738

Receivables, net
235,305

 
—

 
—

 
32,560

 
—

 
202,745

Premises and equipment, net
37,430

 
—

 
—

 
—

 
—

 
37,430

Other assets
484,125

 
—

 
—

 
5,204

 
410,718

 
68,203

Total assets
$
9,986,024

 
$
761,858

 
$
7,053,076

 
$
804,175

 
$
448,026

 
$
919,906

(1)
Sales and Other Commitments include MSRs and related advances committed under sale agreements, Restricted cash and deposits held as collateral to support certain contractual obligations, and Contingent loan repurchase assets related to the Ginnie Mae EBO program for which a corresponding liability is recognized in Other liabilities.
(2)
The borrowings under the SSTL are secured by a first priority security interest in substantially all of the assets of Ocwen, PHH, PMC and the other guarantors thereunder, excluding among other things, 35% of the voting capital stock of foreign subsidiaries, securitization assets and equity interests of securitization entities, assets securing permitted funding indebtedness and non-recourse indebtedness, REO assets, as well as other customary carve-outs (collectively, the Collateral). The Collateral is subject to certain permitted liens set forth under the SSTL and related security agreement. The Senior Secured Notes are guaranteed by Ocwen and the other guarantors that guarantee the SSTL, and the borrowings under the Senior Secured Notes are secured by a second priority security interest in the Collateral. Assets securing borrowings under the SSTL and Senior Secured Notes may include amounts presented in Other as well as certain assets presented in Collateral for Secured Borrowings and Sales and Other Commitments, subject to permitted liens as defined in the applicable debt documents. The amounts presented here may differ in their calculation and are not intended to represent amounts that may be used in connection with covenants under the applicable debt documents.
(3)
MSRs pledged as collateral for secured borrowings includes MSRs pledged to NRZ in connection with the Rights to MSRs transactions which are accounted for as secured financings and MSRs securing the financing facilities. Certain MSR cohorts with a negative fair value of $1.0 million that would be presented as Other are excluded from the eligible collateral of the facilities and are comprised of $23.3 million of negative fair value related to RMBS and $22.1 million of positive fair value related to private EBO and PLS MSRs.