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 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 consolidated statements of operations. Changes in fair value of the Rights to MSRs are recognized in MSR valuation adjustments, net in the consolidated statements of operations. Changes in fair value of the MSR related financing liability are reported in Pledged MSR liability expense.


	Years Ended December 31,
	2020		2019		2018
Balance Sheets
MSRs, at fair value (1)	$	566,952	$	915,148	$	894,002
Due from NRZ (Receivables)
Sales and transfers of MSRs (2)	—		24,167		23,757
Advance funding, subservicing fees and reimbursable expenses	4,611		9,197		30,845
	$	4,611	$	33,364	$	54,602

Due to NRZ (Other liabilities)	$	94,691	$	63,596	$	53,001
Financing liability - MSRs pledged, at fair value
Original Rights to MSRs Agreements	$	566,952	$	603,046	$	436,511
2017 Agreements and New RMSR Agreements	—		35,445		138,854
PMC MSR Agreements (1)	—		312,102		457,491
	$	566,952	$	950,593	$	1,032,856

Statements of Operations
Servicing fees collected on behalf of NRZ (1)	$	383,685	$	577,015	$	539,039
Less: Subservicing fee retained (1)	104,848		139,343		142,334
Net servicing fees remitted to NRZ	278,837		437,672		396,705

Less: Reduction (increase) in financing liability
Changes in fair value:
Original Rights to MSRs Agreements	(21,964)		(229,198)		171
2017 Agreements and New RMSR Agreements	(903)		(5,866)		14,369
PMC MSR Agreements (1)	40,720		82,078		4,729
	17,853		(152,986)		19,269
Runoff and settlement:
Original Rights to MSRs Agreements	56,302		48,729		58,837
2017 Agreements and New RMSR Agreements	35,121		101,003		134,509
PMC MSR Agreements (1)	7,492		64,631		18,420
	98,915		214,363		211,766

Other	9,735		4,206		(6,000)

Pledged MSR liability expense	$	152,334	$	372,089	$	171,670

(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 completing deboarding on October 1, 2020, and accounted for them as a subservicing relationship.


	Year Ended December 31, 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	—		—		—		—
Sales	—		—		(226)		(226)
Changes in fair value:
Original Rights to MSRs Agreements	21,964		—		—		21,964
2017 Agreements and New RMSR Agreements	—		903		—		903
PMC MSR Agreements	—		—		(40,720)		(40,720)
Runoff and settlement:
Original Rights to MSRs Agreements	(56,302)		—		—		(56,302)
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	(1,756)		—		—		(1,756)
2017 Agreements and New RMSR Agreements	—		(1,227)		—		(1,227)
PMC MSR Agreements	—		—		—		—
Ending balance	$	566,952	$	—	$	—	$	566,952


	Year Ended December 31, 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
Additions	—		—		1,276		1,276


Sales	—		—		44		44
Changes in fair value:
Original Rights to MSRs Agreements	229,198		—		—		229,198
2017 Agreements and New RMSR Agreements	—		5,866		—		5,866
PMC MSR Agreements	—		—		(82,078)		(82,078)
Runoff and settlement:
Original Rights to MSRs Agreements	(48,730)		—		—		(48,730)
2017 Agreements and New RMSR Agreements	—		(101,003)		—		(101,003)
PMC MSR Agreements	—		—		(64,631)		(64,631)
Calls (1):	—		—		—
Original Rights to MSRs Agreements	(13,933)		—		—		(13,933)
2017 Agreements and New RMSR Agreements	—		(8,272)		—		(8,272)
PMC MSR Agreements	—		—		—		—
Ending balance	$	603,046	$	35,445	$	312,102	$	950,593


	Year Ended December 31, 2018
Financing Liability - MSRs Pledged	Original Rights to MSRs Agreements		2017 Agreements and New RMSR Agreements		PMC MSR Agreements		Total
Beginning balance	$	499,042	$	9,249	$	—	$	508,291
Additions	—		—		667		667
Assumed in connection with the acquisition of PHH	—		—		481,020		481,020
Receipt of lump-sum cash payments	—		279,586		—		279,586

Changes in fair value:
Original Rights to MSRs Agreements	(171)		—		—		(171)
2017 Agreements and New RMSR Agreements	—		(14,369)		—		(14,369)
PMC MSR Agreements	—		—		(4,729)		(4,729)
Runoff and settlement:
Original Rights to MSRs Agreements	(58,837)		—		—		(58,837)
2017 Agreements and New RMSR Agreements	—		(134,509)		—		(134,509)
PMC MSR Agreements	—		—		(18,420)		(18,420)
Calls (1):
Original Rights to MSRs Agreements	(3,523)		—		—		(3,523)
2017 Agreements and New RMSR Agreements	—		(1,103)		—		(1,103)
PMC MSR Agreements	—		—		(1,047)		(1,047)
Ending balance	$	436,511	$	138,854	$	457,491	$	1,032,856

(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).

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 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 December 31, 2020, the UPB of MSRs subject to the Servicing Agreements and the New RMSR Agreements is $67.1 billion, including $16.3 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 $16.3 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 $16.3 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 subservicing agreement. 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 serviced these loans until deboarding, and accounted for them as a subservicing relationship. Accordingly, during 2020, we recognized subservicing fees of $15.9 million associated with the subservicing agreement subsequent to February 20, 2020 and have not reported any servicing fees collected on behalf of, and remitted to NRZ, any change in fair value, runoff and settlement in financing liability thereafter. On September 1, 2020, 133,718 loans representing $18.2 billion of UPB were deboarded and the remaining 136,500 loans representing $16.0 billion of UPB were deboarded on October 1, 2020.