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 unaudited 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 unaudited consolidated statements of operations. In addition, changes in fair value of the transferred MSRs are recognized in MSR valuation adjustments, net in the

In 2021 and 2022, PMC entered into agreements to sell MSR portfolios to MAV on a bulk and flow basis. In each such agreement, 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 10 - Investment in Equity Method Investee and Related Party Transactions.

Starting in 2012, Ocwen 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 May 2022, Ocwen entered into amendments to the subservicing agreements to extend their terms to December 31, 2023 and establish a process for subsequent term extensions. In addition, the amendments provide for a modification of the sharing of some ancillary income between PMC and NRZ. Due to the length of the non-cancellable term of the subservicing agreements, the transactions do not qualify for sale accounting treatment which results 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.


	Three Months Ended June 30,
	2022						2021
Pledged MSR Liability	Original Rights to MSRs Agreements - NRZ		MAV Agreements (2)		Total		Original Rights to MSRs Agreements - NRZ
Beginning Balance	$	545,306	$	319,009	$	864,315	$	550,364

MSR transfers	10		30,895		30,904		—
Changes in fair value	24,736		15,136		39,872		8,393


Runoff and settlement	(19,243)		(9,509)		(28,753)		(20,910)
Calls (1)	—		—		—		(2,276)
Ending Balance	$	550,808	$	355,530	$	906,338	$	535,571


	Six Months Ended June 30,
	2022						2021
Pledged MSR Liability	Original Rights to MSRs Agreements - NRZ		MAV Agreements (2)		Total		Original Rights to MSRs Agreements - NRZ
Beginning Balance	$	558,940	$	238,144	$	797,085	$	566,952

MSR transfers	—		71,501		71,501		—
Changes in fair value (3)	31,534		63,796		95,330		9,944
Runoff and settlement	(39,106)		(17,912)		(57,018)		(38,526)

Calls (1)	(560)		—		(560)		(2,799)
Ending Balance	$	550,808	$	355,530	$	906,338	$	535,571

(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)The changes in fair value of the MAV Pledged MSR Liability include a $14.1 million loss associated with the amendment to the MAV Subservicing Agreement in March 2022, resulting in lower contractually retained ancillary income by PMC. See Note 10 - Investment in Equity Method Investee and Related Party Transactions.

The following table presents selected assets and liabilities recorded on our unaudited consolidated balance sheets in connection with the MSR transfer agreements with NRZ that do not qualify for sale accounting (refer to Note 9 – Receivables and Note 14 – Other Liabilities for receivables and other liabilities, respectively, related to MAV):


	June 30, 2022		December 31, 2021
Balance Sheet
NRZ - Transferred MSRs, at fair value	$	550,808	$	558,940




Other financing liability - Pledged MSR liability, at fair value
NRZ - Original Rights to MSRs Agreements	550,808		558,940





Due from NRZ (Receivables) - Advance funding, subservicing fees and reimbursable expenses	1,932		3,781

Due to NRZ (Other liabilities)	$	63,398	$	76,590


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Statements of Operations
Servicing fees
Servicing fees collected on behalf of NRZ	$	64,729	$	77,716	$	131,875	$	158,101
Servicing fees collected on behalf of MAV	17,471		—		$	33,204	—
	$	82,200	$	77,716	$	165,079	$	158,101

Pledged MSR liability expense
NRZ (see further details below)	$	53,239	$	39,810	$	85,623	$	77,660
MAV (see further details below)	20,843		—		75,357		—
	$	74,083	$	39,810	$	160,980	$	77,660


NRZ Pledged MSR liability expense:	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Servicing fees collected on behalf of NRZ	$	64,729	$	77,716	$	131,875	$	158,101
Less: Subservicing fee retained by Ocwen	18,771		22,521		38,137		46,512
Net servicing fees remitted to NRZ	45,958		55,195		93,738		111,589

Less: Reduction (increase) in Pledged MSR liability
Changes in fair value due to valuation inputs or assumptions - Original Rights to MSRs Agreements	(24,736)		(8,393)		(31,534)		(9,944)




Runoff and settlement - Original Rights to MSRs Agreements	19,244		20,910		39,106		38,526





Other	(1,789)		2,868		543		5,347

Pledged MSR liability expense - NRZ	$	53,239	$	39,810	$	85,623	$	77,660


MAV Pledged MSR liability expense:	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Servicing fees collected on behalf of MAV	$	17,471	$	33,204
Less: Subservicing fee retained by Ocwen	2,273		4,366
Net servicing fees remitted to MAV	15,198		28,838

Less: Reduction (increase) in Pledged MSR liability
Changes in fair value due to valuation inputs or assumptions	(15,136)		(63,796)
Runoff and settlement	9,509		17,912



Other (1)	(18)		(634)

Pledged MSR liability expense - MAV	$	20,843	$	75,357

Ocwen entered into a series of agreements to transfer NRZ the servicing of certain mortgage loans. 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 New RMSR Agreement, with an attached 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.

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

On May 2, 2022, Ocwen entered into amendments to the following three agreements with certain subsidiaries of NRZ: (a) the Shellpoint Subservicing Agreement; (b) the NRM Subservicing Agreement; and (c) the New RMSR Agreement, including the attached Servicing Addendum, dated as of January 18, 2018 with NRM, HLLS Holdings, LLC and HLSS MSR – EBO Acquisition LLC (the New RMSR Agreement or the Servicing Addendum). The amendments modified the terms of the Subservicing Agreements and the Servicing Addendum as follows: (i) the term of each Agreement was extended to December 31, 2023 (“Second Term”), with the Initial Term ending on May 1, 2022 and the Second Term beginning on May 2,2022; (ii) subsequent term extensions will be automatic one-year renewals, unless Ocwen provides six months’ advance notice of termination (by July 1), or the NRZ parties provide three months’ advance notice of termination (by October 1) at the end of the then-current term as described below; and (iii) the parties will share a portion of some ancillary revenues. In addition, the amendments provided for certain immaterial modifications and clarifications of existing terms. The amendments on May 2, 2022 do not result in the prior transfers of MSR from Ocwen to NRZ qualifying for sale accounting prior to December 31, 2023, absent any subsequent amendment.

Under the terms of the Subservicing Agreements and Servicing Addendum, as amended, in addition to a base servicing fee, Ocwen receives certain ancillary fees, primarily late fees, loan modification fees and convenience or other loan collection fees, where permitted. 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 a portion of some ancillary revenues and certain REO related income including REO referral commissions.

Pursuant to the amendments noted above, the Subservicing Agreements and Servicing Addendum may be terminated by Ocwen or NRZ without cause (in effect a non-renewal) by providing notice in advance of the end of the Second Term or the end of each one-year extension of the applicable terms after the Second Term. Ocwen must provide a notice of termination by July 1, 2023, with respect to the Second Term or by July 1 of each one-year extended term after the Second Term and NRZ must provide notice by October 1, 2023 with respect to the Second Term or by October 1 of each one-year extended term after the Second Term.

In addition, 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.

As of June 30, 2022, the UPB of MSRs subject to the Servicing Agreements and the New RMSR Agreements is $51.7 billion, including $11.3 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 $11.3 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.

As stated above, NRZ has the right to terminate the $11.3 billion New RMSR Agreements for convenience, in whole but not in part, subject to approximately three months’ advance notice of termination at the end of the Second Term or the end of the then-applicable annual extended 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.