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 unaudited consolidated statements of operations, while changes in fair value of the related MSR financing liability are reported in Pledged MSR liability expense.

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 Rithm (formerly NRZ), and in all cases have been retained by Rithm 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 Rithm. 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 Rithm, legal title was retained by Ocwen, causing the transactions to be accounted for as secured financings.


	Three Months Ended September 30,
	2022						2021
Pledged MSR Liability	Original Rights to MSRs Agreements - Rithm		MAV Agreements (2)		Total		Original Rights to MSRs Agreements - Rithm		MAV Agreements (2)		Total
Beginning Balance	$	550,808	$	355,530	$	906,338	$	535,571	$	—	$	535,571

MSR transfers	—		13,420		13,420		—		132,003		132,003
Changes in fair value	71,072		18,533		89,605		63,762		(2,433)		61,329


Runoff and settlement	(17,142)		(9,592)		(26,735)		(21,100)		(683)		(21,783)
Derecognition of financing liability(3)	—		(35,925)		(35,925)		—		—		—
Calls (1)	(84)		—		(84)		(4,213)		—		(4,213)
Ending Balance	$	604,654	$	341,965	$	946,619	$	574,020	$	128,887	$	702,907


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

MSR transfers	—		84,921		84,921		—		132,003		132,003
Changes in fair value (4)	102,606		82,329		184,935		73,706		(2,433)		71,273
Runoff and settlement	(56,249)		(27,504)		(83,753)		(59,626)		(683)		(60,309)
Derecognition of financing liability(3)	—		(35,925)		(35,925)		—		—		—
Calls (1)	(643)		—		(643)		(7,012)		—		(7,012)
Ending Balance	$	604,654	$	341,965	$	946,619	$	574,020	$	128,887	$	702,907

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.

(4)The changes in fair value of the MAV Pledged MSR Liability in the nine months ended September 30, 2022 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 Rithm 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):


	September 30, 2022		December 31, 2021
Balance Sheet
Rithm - Transferred MSRs, at fair value	$	604,654	$	558,940




Other financing liability - Pledged MSR liability, at fair value
Rithm - Original Rights to MSRs Agreements	604,654		558,940





Due from Rithm (Receivables) - Advance funding, subservicing fees and reimbursable expenses	2,245		3,781

Due to Rithm (Other liabilities)	$	80,438	$	76,590


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Statements of Operations
Servicing fees
Servicing fees collected on behalf of Rithm	$	63,362	$	75,034	$	195,237	$	233,135
Servicing fees collected on behalf of MAV	17,844		1,001		$	51,048	1,001
	$	81,205	$	76,035	$	246,284	$	234,136

Pledged MSR liability expense
Rithm (see further details below)	$	102,790	$	93,253	$	188,414	$	170,914
MAV (see further details below)	28,845		(2,094)		104,202		(2,094)
	$	131,635	$	91,160	$	292,616	$	168,820


Rithm Pledged MSR liability expense:	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Servicing fees collected on behalf of Rithm	$	63,362	$	75,034	$	195,237	$	233,135
Less: Subservicing fee retained by Ocwen	17,828		21,475		55,966		67,987
Net servicing fees remitted to Rithm	45,534		53,559		139,271		165,148

Less: Reduction (increase) in Pledged MSR liability
Changes in fair value due to valuation inputs or assumptions - Original Rights to MSRs Agreements	(71,072)		(63,762)		(102,606)		(73,706)




Runoff and settlement - Original Rights to MSRs Agreements	17,142		21,100		56,249		59,627





Other	(3,326)		2,968		(2,786)		8,313

Pledged MSR liability expense - Rithm	$	102,790	$	93,253	$	188,414	$	170,914


MAV Pledged MSR liability expense:	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Servicing fees collected on behalf of MAV	$	17,844	$	1,001	$	51,048	$	1,001
Less: Subservicing fee retained by Ocwen	2,313		178		6,678		178
Net servicing fees remitted to MAV	15,531		823		44,370		823
Less: Reduction (increase) in Pledged MSR liability
Changes in fair value due to valuation inputs or assumptions	(19,770)		2,433		(83,566)		2,433
Runoff and settlement (1)	6,472		683		24,384		683


Other	(16)		(199)		(650)		(199)
Pledged MSR liability expense - MAV	$	28,845	$	(2,094)	$	104,202	$	(2,094)

Ocwen entered into a series of agreements to transfer Rithm 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 Rithm 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 Rithm, 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 Rithm 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 Rithm entered into certain amendments (i) to the New RMSR Agreements to include Shellpoint, a subsidiary of Rithm, 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.

On May 2, 2022, Ocwen entered into amendments to the following three agreements with certain subsidiaries of Rithm: (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 Rithm 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 Rithm 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. Rithm 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 Rithm 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 Rithm 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, Rithm 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 Rithm terminates any of the NRM or Shellpoint Subservicing Agreements or the Servicing Addendum for cause, the other agreements will also terminate automatically.

As of September 30, 2022, the UPB of MSRs subject to the Servicing Agreements and the New RMSR Agreements is $50.3 billion, including $11.0 billion for which title has not transferred to Rithm and $1.9 billion for which Ocwen is subservicer and Rithm servicer of record. 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 Rithm’s $11.0 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, Rithm has the right to terminate the $11.0 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 Rithm exercises this termination right, Rithm 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 Rithm 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 Rithm is not able to sell the Rights to MSRs or establish a Substitute RMSR Arrangement with another servicer, Rithm 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.