Ocwen and PMC entered into agreements to sell MSRs or Rights to MSRs and the related servicing advances to NRZ, and in all cases have been retained by NRZ as subservicer. In the case of Ocwen Rights to MSRs transactions, while the majority of the risks and rewards of ownership were transferred in 2012 and 2013, legal title was retained by Ocwen, causing the Rights to MSRs transactions to be accounted for as secured financings. In the case of the PMC transactions, and for those Ocwen MSRs where consents were subsequently received and legal title was transferred to NRZ, due to the length of the non-cancellable term of the subservicing agreements, the transactions did not initially qualify for sale accounting treatment which resulted in such transactions being accounted for as secured financings. Until such time as the transaction qualifies as a sale for accounting purposes, we continue to recognize the MSRs and related financing liability on our consolidated balance sheets, as well as the full amount of servicing revenue and changes in the fair value of the MSRs and related financing liability in our unaudited consolidated statements of operations. Changes in fair value of the Rights to MSRs are recognized in MSR valuation adjustments, net in the unaudited consolidated statements of operations. Changes in fair value of the MSR related financing liability are reported in Pledged MSR liability expense.


Balance Sheets	September 30, 2020		December 31, 2019
MSRs, at fair value (1)	$	577,309	$	915,148

Due from NRZ (Receivables)
Sales and transfers of MSRs (2)	$	—	$	24,167
Subservicing fees and reimbursable expenses	2,364		9,197
	$	2,364	$	33,364

Due to NRZ (Other liabilities)	$	95,803	$	63,596

Financing liability - MSRs pledged, at fair value
Original Rights to MSRs Agreements	$	577,309	$	603,046
2017 Agreements and New RMSR Agreements (3)	—		35,445
PMC MSR Agreements (1)	—		312,102
	$	577,309	$	950,593

(1)On February 20, 2020, we received a notice of termination from NRZ with respect to the PMC MSR Agreements. While the MSRs and the Rights to MSRs associated with these loans were derecognized from our balance sheet, we continued to service these loans until deboarding on October 1, 2020, and accounted for them as a subservicing relationship.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Statements of Operations
Servicing fees collected on behalf of NRZ (1)	$	91,015	$	146,567	$	299,089	$	443,505
Less: Subservicing fee retained by Ocwen (1)	25,674		35,462		80,529		108,774
Net servicing fees remitted to NRZ	65,341		111,105		218,560		334,731

Less: Reduction (increase) in financing liability
Changes in fair value:
Original Rights to MSRs Agreements	(10,401)		(228,644)		(18,503)		(230,193)
2017 Agreements and New RMSR Agreements	—		(2,216)		(903)		(4,562)
PMC MSR Agreements (1)	—		30,156		40,720		111,034
	(10,401)		(200,704)		21,314		(123,721)
Runoff and settlement:
Original Rights to MSRs Agreements	15,650		11,170		41,572		31,617
2017 Agreements and New RMSR Agreements	—		26,705		35,121		76,087
PMC MSR Agreements (1)	—		15,881		7,492		49,469
	15,650		53,756		84,185		157,173

Other	2,688		1,637		7,377		(2,023)

Pledged MSR liability expense	$	57,404	$	256,416	$	105,684	$	303,302

(1)On February 20, 2020, we received a notice of termination from NRZ with respect to the PMC MSR Agreements. As the MSRs and the Rights to MSRs associated with these loans were derecognized from our consolidated balance sheet on February 20, 2020, we do not report the associated servicing fees collected on behalf of, and remitted to NRZ, or the change in fair value, runoff and settlement of the financing liability subsequent to February 20, 2020.


	Three Months Ended September 30, 2020
Financing Liability - MSRs Pledged	Original Rights to MSRs Agreements		2017 Agreements and New RMSR Agreements		PMC MSR Agreements		Total
Beginning Balance	$	582,558	$	—	$	—	$	582,558



Changes in fair value:
Original Rights to MSRs Agreements	10,402		—		—		10,402
2017 Agreements and New RMSR Agreements	—		—		—		—
PMC MSR Agreements	—		—		—		—
Runoff and settlement:
Original Rights to MSRs Agreements	(15,651)		—		—		(15,651)
2017 Agreements and New RMSR Agreements	—		—		—		—
PMC MSR Agreements	—		—		—		—





Balance at September 30, 2020	$	577,309	$	—	$	—	$	577,309


	Three Months Ended September 30, 2019
Financing Liability - MSRs Pledged	Original Rights to MSRs Agreements		2017 Agreements and New RMSR Agreements		PMC MSR Agreements		Total
Beginning Balance	$	412,909	$	88,103	$	343,901	$	844,913
Additions	—		—		345		345


Changes in fair value:
Original Rights to MSRs Agreements	228,643		—		—		228,643
2017 Agreements and New RMSR Agreements	—		2,216		—		2,216
PMC MSR Agreements	—		—		(30,156)		(30,156)
Runoff and settlement:
Original Rights to MSRs Agreements	(11,170)		—		—		(11,170)
2017 Agreements and New RMSR Agreements	—		(26,705)		—		(26,705)
PMC MSR Agreements	—		—		(15,881)		(15,881)

Calls (1):
Original Rights to MSRs Agreements	(3,095)		—		—		(3,095)
2017 Agreements and New RMSR Agreements	—		(2,169)		—		(2,169)

Balance at September 30, 2019	$	627,287	$	61,445	$	298,220	$	986,952


	Nine Months Ended September 30, 2020
Financing Liability - MSRs Pledged	Original Rights to MSRs Agreements		2017 Agreements and New RMSR Agreements		PMC MSR Agreements		Total
Beginning Balance	$	603,046	$	35,445	$	312,102	$	950,593
Additions	—		—		—		—
Receipt of lump-sum cash payments	—		—		—		—
Sales	—		—		(226)		(226)
Changes in fair value:
Original Rights to MSRs Agreements	18,503		—		—		18,503
2017 Agreements and New RMSR Agreements	—		903		—		903
PMC MSR Agreements	—		—		(40,720)		(40,720)
Runoff and settlement:
Original Rights to MSRs Agreements	(41,572)		—		—		(41,572)
2017 Agreements and New RMSR Agreements	—		(35,121)		—		(35,121)
PMC MSR Agreements	—		—		(7,492)		(7,492)
Derecognition of Pledged MSR financing liability due to termination of PMC MSR Agreements	—		—		(263,664)		(263,664)
Calls (1):
Original Rights to MSRs Agreements	(2,668)		—		—		(2,668)
2017 Agreements and New RMSR Agreements	—		(1,227)		—		(1,227)

Balance at September 30, 2020	$	577,309	$	—	$	—	$	577,309


	Nine Months Ended September 30, 2019
Financing Liability - MSRs Pledged	Original Rights to MSRs Agreements		2017 Agreements and New RMSR Agreements		PMC MSR Agreements		Total
Beginning Balance	$	436,511	$	138,854	$	457,491	$	1,032,856
Purchases	—		—		1,221		1,221

Sales	—		—		11		11
Changes in fair value:
Original Rights to MSRs Agreements	230,193		—		—		230,193
2017 Agreements and New RMSR Agreements	—		4,562		—		4,562
PMC MSR Agreements	—		—		(111,034)		(111,034)
Runoff and settlement:
Original Rights to MSRs Agreements	(31,617)		—		—		(31,617)
2017 Agreements and New RMSR Agreements	—		(76,087)		—		(76,087)
PMC MSR Agreements	—		—		(49,469)		(49,469)
Calls (1):
Original Rights to MSRs Agreements	(7,800)		—		—		(7,800)
2017 Agreements and New RMSR Agreements	—		(5,884)		—		(5,884)
Balance at September 30, 2019	$	627,287	$	61,445	$	298,220	$	986,952

(1)Represents the carrying value of MSRs in connection with call rights exercised by NRZ, for MSRs transferred to NRZ under the 2017 Agreements and New RMSR Agreements, or by Ocwen at NRZ’s direction, for MSRs underlying the Original Rights to MSRs Agreements. Ocwen derecognizes the MSRs and the related financing liability upon collapse of the securitization.

Prior to the transfer of legal title under the Master Servicing Rights Purchase Agreement dated as of October 1, 2012, as amended, and certain Sale Supplements, as amended (collectively, the Original Rights to MSRs Agreements), Ocwen agreed to service the mortgage loans underlying the MSRs on the economic terms set forth in the Original Rights to MSRs Agreements. After the transfer of legal title as contemplated under the Original Rights to MSRs Agreements, Ocwen was to service the mortgage loans underlying the MSRs as subservicer on substantially the same economic terms.

On July 23, 2017 and January 18, 2018, we entered into a series of agreements with NRZ that collectively modify, supplement and supersede the arrangements among the parties as set forth in the Original Rights to MSRs Agreements. The July 23, 2017 agreements, as amended, include a Master Agreement, a Transfer Agreement and the Subservicing Agreement between Ocwen and New Residential Mortgage LLC (NRM), a subsidiary of NRZ, relating to non-agency loans (the NRM Subservicing Agreement) (collectively, the 2017 Agreements) pursuant to which the parties agreed, among other things, to undertake certain actions to facilitate the transfer from Ocwen to NRZ of Ocwen’s legal title to the remaining MSRs that were subject to the Original Rights to MSRs Agreements and under which Ocwen would subservice mortgage loans underlying the MSRs for an initial term ending July 2022 (the Initial Term).

On January 18, 2018, the parties entered into new agreements (including a Servicing Addendum) regarding the Rights to MSRs related to MSRs that remained subject to the Original Rights to MSRs Agreements as of January 1, 2018 and amended the Transfer Agreement (collectively, New RMSR Agreements) to accelerate the implementation of certain parts of our arrangements in order to achieve the intent of the 2017 Agreements sooner. Under the new agreements, following receipt of the required consents and transfer of the MSRs, Ocwen subservices the mortgage loans underlying the transferred MSRs pursuant to the 2017 Agreements and the August 2018 subservicing agreement with NewRez LLC dba Shellpoint Mortgage Servicing (Shellpoint) described below.

Ocwen received lump-sum cash payments of $54.6 million and $279.6 million in September 2017 and January 2018 in accordance with the terms of the 2017 Agreements and New RMSR Agreements, respectively. These upfront payments generally represented the net present value of the difference between the future revenue stream Ocwen would have received under the Original Rights to MSRs Agreements and the future revenue stream Ocwen expected to receive under the 2017 Agreements and the New RMSR Agreements. We recognized the cash received as a financing liability that we accounted for at fair value through the term of the original agreements (April 2020). Changes in fair value were recognized in Pledged MSR liability expense in the unaudited consolidated statements of operations.

On August 17, 2018, Ocwen and NRZ entered into certain amendments (i) to the New RMSR Agreements to include Shellpoint, a subsidiary of NRZ, as a party to which legal title to the MSRs could be transferred after related consents are received, (ii) to add a Subservicing Agreement between Ocwen and Shellpoint relating to non-agency loans (the Shellpoint Subservicing Agreement), (iii) to add an Agency Subservicing Agreement between Ocwen and NRM relating to agency loans (the Agency Subservicing Agreement), and (iv) to conform the New RMSR Agreements and the NRM Subservicing Agreement to certain of the terms of the Shellpoint Subservicing Agreement and the Agency Subservicing Agreement.

At any time during the Initial Term, NRZ may terminate the Subservicing Agreements and Servicing Addendum for convenience, subject to Ocwen’s right to receive a termination fee and 180 days’ notice. The termination fee is calculated as specified in the Subservicing Agreements and Servicing Addendum, and is a discounted percentage of the expected revenues that would be owed to Ocwen over the remaining contract term based on certain portfolio run-off assumptions.

Following the Initial Term, NRZ may extend the term of the Subservicing Agreements and Servicing Addendum for additional three-month periods by providing proper notice. Following the Initial Term, the Subservicing Agreements and Servicing Addendum can be cancelled by Ocwen on an annual basis. NRZ and Ocwen have the ability to terminate the Subservicing Agreements and Servicing Addendum for cause if certain specified conditions occur. The terminations must be terminations in whole (i.e., cover all the loans under the relevant Subservicing Agreement or Servicing Addendum) and not in part, except for limited circumstances specified in the agreements. In addition, if NRZ terminates any of the NRM or Shellpoint Subservicing Agreements or the Servicing Addendum for cause, the other agreements will also terminate automatically.

Under the terms of the Subservicing Agreements and Servicing Addendum, in addition to a base servicing fee, Ocwen receives certain ancillary fees, primarily late fees, loan modification fees and convenience or Speedpay® fees. We may also receive certain incentive fees or pay penalties tied to various contractual performance metrics. NRZ receives all float earnings and deferred servicing fees related to delinquent borrower payments, as well as being entitled to receive certain REO related income including REO referral commissions.

As of September 30, 2020, the UPB of MSRs subject to the Servicing Agreements and the New RMSR Agreements is $69.1 billion, including $16.9 billion for which title has not transferred to NRZ. As the third-party consents required for title to the MSRs to transfer were not obtained by May 31, 2019, the New RMSR Agreements set forth a process under which NRZ’s $16.9 billion Rights to MSRs may (i) be acquired by Ocwen at a price determined in accordance with the terms of the New RMSR Agreements, at the option of Ocwen, or (ii) be sold, together with Ocwen’s title to those MSRs, to a third party in accordance with the terms of the New RMSR Agreements, subject to an additional Ocwen option to acquire at a price based on the winning third-party bid rather than selling to the third party. If the Rights to MSRs are not transferred pursuant to these alternatives, then the Rights to MSRs will remain subject to the New RMSR Agreements.

In addition, as noted above, during the Initial Term, NRZ has the right to terminate the $16.9 billion New RMSR Agreements for convenience, in whole but not in part, subject to payment of a termination fee and 180 days’ notice. If NRZ exercises this termination right, NRZ has the option of seeking (i) the transfer of the MSRs through a sale to a third party of its Rights to MSRs (together with a transfer of Ocwen’s title to those MSRs) or (ii) a substitute RMSR arrangement that substantially replicates the Rights to MSRs structure (a Substitute RMSR Arrangement) under which we would transfer title to the MSRs to a successor servicer and NRZ would continue to own the economic rights and obligations related to the MSRs. In the case of option (i), we have a purchase option as specified in the New RMSR Agreements. If NRZ is not able to sell the Rights to MSRs or establish a Substitute RMSR Arrangement with another servicer, NRZ has the right to revoke its termination notice and re-instate the Servicing Addendum or to establish a subservicing arrangement whereby the MSRs remaining subject to the New RMSR Agreements would be transferred to up to three subservicers who would subservice under Ocwen’s oversight. If such a subservicing arrangement were established, Ocwen would receive an oversight fee and reimbursement of expenses. We may also agree on alternative arrangements that are not contemplated under our existing agreements or that are variations of those contemplated under our existing agreements.

On December 28, 2016, PMC entered into an agreement to sell substantially all of its MSRs, and the related servicing advances, to NRM (the 2016 PMC Sale Agreement). In connection with this agreement, on December 28, 2016, PMC also entered into a subservicing agreement with NRZ which was subsequently amended and restated as of March 29, 2019 (together with the 2016 PMC Sale Agreement, the PMC MSR Agreements). The PMC subservicing agreement had an initial term of three years from the initial transaction date of June 16, 2017, subject to certain transfer and termination provisions. The MSR sale transaction did not originally achieve sale accounting treatment.

On February 20, 2020, we received a notice of termination from NRZ with respect to the PMC MSR Agreements, which accounted for $37.1 billion loan UPB at June 30, 2020, and $16.0 billion at September 30, 2020. This termination was for convenience and not for cause, and provided for loan deboarding fees to be paid by NRZ. As the sale accounting criteria were met upon the notice of termination, the MSRs and the Rights to MSRs were derecognized from our balance sheet on February 20, 2020 without any gain or loss on derecognition. We continued to service these loans until deboarding, and accounted for