Commitments

6 Months Ended

Jun. 30, 2021


Note 21 — Commitments

Unfunded Lending Commitments

We have originated floating-rate reverse mortgage loans under which the borrowers have additional borrowing capacity of $2.0 billion at June 30, 2021. This additional borrowing capacity is available on a scheduled or unscheduled payment basis. During the six months ended June 30, 2021, we funded $91.8 million out of the $2.0 billion borrowing capacity as of December 31, 2020. We also had short-term commitments to lend $995.0 million and $68.4 million in connection with our forward and reverse mortgage loan IRLCs, respectively, outstanding at June 30, 2021. We finance originated and purchased forward and reverse mortgage loans with repurchase and participation agreements, referred to as warehouse lines.

HMBS Issuer Obligations

As an HMBS issuer, we are required to purchase loans out of the Ginnie Mae securitization pools once the outstanding principal balance of a reverse mortgage loan is equal to or greater than 98% of the maximum claim amount (MCA repurchases), or when they become inactive (the borrower is deceased, no longer occupies the property or is delinquent on tax and insurance payments).

Activity with regard to HMBS repurchases, primarily MCA repurchases, are as follows:


	Six Months Ended June 30, 2021
	Active			Inactive			Total
	Number	Amount		Number	Amount		Number	Amount
Beginning balance	141	$	29,852	317	$	56,449	458	$	86,301
Additions	129	36,681		126	25,141		255	61,822
Recoveries, net (1)	(161)	(38,404)		(76)	(10,055)		(237)	(48,459)
Transfers	(11)	(4,713)		11	4,713		—	—
Changes in value	—	9		—	(1,484)		—	(1,475)
Ending balance	98	$	23,425	378	$	74,764	476	$	98,189

(1)Includes amounts received upon assignment of loan to HUD, loan payoff, REO liquidation and claim proceeds less any amounts charged off as unrecoverable.

NRZ Relationship

Our Servicing segment has exposure to concentration risk and client retention risk. As of June 30, 2021, our servicing portfolio included significant client relationships with NRZ which represented 26% and 36% of our servicing portfolio UPB and loan count, respectively, and approximately 63% of all delinquent loans that Ocwen services. The current terms of our agreements with NRZ extend through July 2022. Currently, subject to proper notice (generally 180 days’ notice), the payment of termination fees and certain other provisions, NRZ has rights to terminate the legacy Ocwen agreements for convenience.

MAV Right of First Offer

Until Ocwen and Oaktree have funded their pro-rata shares of the $250 million total investment in MAV, Ocwen and its affiliates may not acquire, without Oaktree’s prior written approval, GSE MSRs that meet certain underwriting and other criteria (such criteria are referred to as the “buy-box”) unless Ocwen notifies MAV of the opportunity and MAV does not pursue it by submitting a competitive bid to the MSR seller.

In addition, until the earlier of (i) the time that MAV has been fully funded and (ii) May 3, 2024 (subject to two annual extensions by mutual agreement), if Ocwen seeks to sell any GSE MSRs that meet the buy-box, Ocwen must first offer such MSRs to MAV before initiating a sale process with a third party. If MAV does not accept Ocwen’s offer, Ocwen may sell the MSRs to a third party on terms no more favorable to the purchaser than those offered to MAV. The price at which Ocwen and its affiliates will offer MSRs to MAV will be based on the valuation of an independent third-party. This first offer provision does not apply to MSRs acquired by PMC prior to May 3, 2021.

Ocwen and Oaktree have agreed to reasonably consider additional sources of MSR purchases that Ocwen or PMC may pursue to support each such party’s balance sheet and acquisition opportunities, including reallocating MSR opportunities and MSR origination channels to MAV or PMC, as applicable.

Acquisition

On June 17, 2021, PMC entered into an asset purchase agreement with Reverse Mortgage Solutions, Inc. (RMS) and its parent, Mortgage Assets Management, LLC (MAM), to acquire certain assets of RMS related to reverse mortgage subservicing, including subservicing contracts and foreclosed properties. PMC has extended employment offers to approximately 270 RMS employees and will assume certain liabilities, including those in connection with the continuing employees. As of June 30, 2021, RMS serviced approximately 37,000 reverse mortgages, or approximately $8.4 billion in UPB. As part of the transaction, PMC expects to become the subservicer under a five-year subservicing agreement for reverse mortgages owned by RMS and MAM.

The aggregate purchase price is estimated to be approximately $12.4 million and will be subject to certain post-closing adjustments. The transaction is expected to close in the second half of 2021, subject to appropriate regulatory approvals and other customary closing conditions.