MSRs transferred or sold in transactions which do not qualify for sale accounting treatment are 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 fee collected as revenue and the servicing fee remitted as Pledged MSR liability expense in our consolidated statements of operations. In addition, changes in fair value of the transferred MSRs are recognized in MSR valuation adjustments, net in the consolidated statements of operations, while changes in fair value of the related MSR financing liability are reported in Pledged MSR liability expense.

In 2021, PMC entered into agreements to sell MSR portfolios to MAV, on a bulk and flow basis. In each such agreements, PMC has been retained as subservicer for the sold portfolio in accordance with the terms of the subservicing agreement entered into on May 3, 2021. The transactions do not qualify for sale accounting treatment predominantly due to the termination restrictions of the subservicing agreement. See Note 11 — Investment in Equity Method Investee.

Starting in 2012, 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. 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. In the case of Rights to MSRs transactions with NRZ, legal title was retained by Ocwen, causing the transactions to be accounted for as secured financings.


	Year Ended December 31, 2021
Pledged MSR Liability	Original Rights to MSRs Agreements		MAV Agreements (2)		Total
Beginning balance	$	566,952	$	—	$	566,952
Additions	—		250,016		250,016
Changes in fair value	82,274		(4,329)		77,945
Runoff and settlement	(81,813)		(7,543)		(89,356)
Calls (1)	(8,472)		—		(8,472)
Ending balance	$	558,940	$	238,144	$	797,085


	Year Ended December 31, 2020
Pledged MSR Liability	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 (3)	36,065		903		(40,720)		(3,752)



Runoff and settlement (3)	(70,403)		(35,121)		(7,492)		(113,016)



Derecognition of financing liability due to termination of PMC Agreement (4)	—		—		(263,664)		(263,664)
Calls (1)	(1,756)		(1,227)		—		(2,983)



Ending balance	$	566,952	$	—	$	—	$	566,952


	Year Ended December 31, 2019
Pledged MSR Liability	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 (3)	222,697		5,866		(82,078)		146,485



Runoff and settlement (3)	(42,229)		(101,003)		(64,631)		(207,863)



Calls (1)	(13,933)		(8,272)		—		(22,205)



Ending balance	$	603,046	$	35,445	$	312,102	$	950,593

(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 (as defined below). Ocwen derecognizes the MSRs and the related financing liability upon collapse of the securitization.

(2)The fair value of the Pledged MSR liability differs from the fair value of the associated transferred MSR asset mostly due to the portion of ancillary income that is retained by PMC (shared between PMC and MAV) and other contractual cash flows under the terms of the subservicing agreement. As the MSR sales to MAV do not achieve sale accounting, the MSR asset transferred remains on the consolidated balance sheet and the proceeds from the sale are initially recognized as a financing liability (Pledged MSR liability), which is recorded at fair value with changes in fair value reported in Pledged MSR liability expense.

(3)Effective January 1, 2021, changes in fair value due to actual vs. model variances are presented as Changes in valuation inputs or assumptions. Activity for the years ended December 31, 2020 and 2019 in the table above have been recast to conform to current year disclosure, resulting in a loss of $14.1 million in 2020 and a gain of $6.5 million in 2019, reclassified from Runoff and settlement to Changes in fair value.

(4)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 during that period.


	December 31,
	2021		2020
Balance Sheet

NRZ - Transferred MSRs, at fair value	$	558,940	$	566,952


Other financing liability - Pledged MSR liability, at fair value
NRZ - Original Rights to MSRs Agreements	558,940		566,952





Due from NRZ (Receivables)

Advance funding, subservicing fees and reimbursable expenses	3,781		4,611


Due to NRZ (Other liabilities)	$	76,590	$	94,691

The following tables present selected items in our consolidated statements of operations in connection with the MSR transfer agreements with NRZ and MAV that do not qualify for sale accounting.


	Year Ended December 31,
	2021		2020		2019
Statements of Operations
Servicing fees
Servicing fees collected on behalf of NRZ	$	304,248	$	383,685	$	577,015
Servicing fees collected on behalf of MAV	14,173		—		—
	$	318,421	$	383,685	$	577,015

Pledged MSR liability expense
NRZ (see further details below)	$	205,226	$	152,334	$	372,089
MAV (see further details below)	4,675		—		—
	$	209,901	$	152,334	$	372,089


	Year Ended December 31,
	2021		2020		2019
Servicing fees collected on behalf of NRZ	$	304,248	$	383,685	$	577,015
Less: Subservicing fee retained	88,401		104,848		139,343
Net servicing fees remitted to NRZ	215,847		278,837		437,672

Less: Reduction (increase) in financing liability
Changes in fair value:
Original Rights to MSRs Agreements (1)	(82,274)		(36,065)		(222,697)
2017 Agreements and New RMSR Agreements	—		(903)		(5,866)
PMC MSR Agreements	—		40,720		82,078
	(82,274)		3,752		(146,485)
Runoff and settlement:
Original Rights to MSRs Agreements (1)	81,813		70,403		42,228
2017 Agreements and New RMSR Agreements	—		35,121		101,003
PMC MSR Agreements	—		7,492		64,631
	81,813		113,016		207,862

Other	11,082		9,735		4,206

Pledged MSR liability expense	$	205,226	$	152,334	$	372,089

(1) Effective January 1, 2021, changes in fair value due to actual vs. model variances are presented as Changes in valuation inputs or assumptions. Activity for the years ended December 31, 2020 and 2019 in the table above have been recast to conform to current year disclosure, resulting in a loss of $14.1 million in 2020 and a gain of $6.5 million in 2019, reclassified from Runoff and settlement to Changes in fair value.


	Year Ended December 31,
	2021
Servicing fees collected on behalf of MAV	$	14,173
Less: Subservicing fee retained by Ocwen	1,988
Net servicing fees remitted to MAV	12,186

Less: Reduction (increase) in Pledged MSR liability
Changes in fair value due to valuation inputs or assumptions	4,329
Runoff and settlement	7,543
	11,872

Other (1)	(4,361)
Pledged MSR liability expense - MAV	$	4,675

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 in 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 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. We did not receive any such notice of termination from NRZ 180 days prior to the end of the Initial Terms of the Subservicing Agreements or the Servicing Addendum. Therefore, no termination fee will be payable if NRZ provides a notice of termination during the remaining Initial Term of any of the agreements.

Following the Initial Term in July 2022, NRZ may extend the term of the Subservicing Agreements and Servicing Addendum for additional three-month periods by providing proper notice prior to the end of the Initial Term or the end of any three-month extended term after the Initial Term. Absent any notice of extension, each of the agreements will terminate at the end of its Initial Term in July 2022 or the end of any three-month extended term.

In addition, the Subservicing Agreements and Servicing Addendum may be terminated by Ocwen without cause on an annual basis (in effect a non-renewal) by providing at least 225 days’ notice in advance of the last day of the Initial Term or the last day of each one-year extension of the applicable terms after the Initial Term. Ocwen did not exercise its termination option. Therefore, the Subservicing Agreements and Servicing Addendum will automatically renew to July 2023, unless NRZ terminates or does not extend the term per the above discussion.

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, 2021, the UPB of MSRs subject to the Servicing Agreements and the New RMSR Agreements is $55.8 billion, including $12.1 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 $12.1 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, during the Initial Term, NRZ has the right to terminate the $12.1 billion New RMSR Agreements for convenience, in whole but not in part, subject to payment of a termination fee and 180 days’ notice. As noted above NRZ did not provide us with a notice of termination in January 2022, 180 days prior to the end of the Initial Term, so no termination fee will be payable if NRZ provides a notice of termination before the end of the Initial Term. 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 servicing 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 in October 2020 representing $34.2 billion of UPB, and accounted for them as a subservicing relationship. Accordingly, we have recognized subservicing fees 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.