ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from: ____________________ to ____________________ |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of principal executive office) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large Accelerated filer | ☐ | ☒ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
PAGE | |||||||||||
PHH Mortgage Corporation | |||||||||||||||||
Moody’s | S&P | Fitch | |||||||||||||||
Residential Prime Servicer | SQ3 | Average | RPS3 | ||||||||||||||
Residential Subprime Servicer | SQ3 | Average | RPS3 | ||||||||||||||
Residential Special Servicer | SQ3 | Average | RSS3 | ||||||||||||||
Residential Second/Subordinate Lien Servicer | SQ3 | Average | RPS3 | ||||||||||||||
Residential Home Equity Servicer | — | — | RPS3 | ||||||||||||||
Residential Alt-A Servicer | — | — | RPS3 | ||||||||||||||
Master Servicer | SQ3 | Average | RMS3 | ||||||||||||||
Ratings Outlook | N/A | Stable | Negative | ||||||||||||||
Date of last action | August 29, 2019 | December 27, 2019 | March 24, 2020 |
Location | Owned/Leased | Square Footage | ||||||||||||
Principal executive offices | ||||||||||||||
West Palm Beach, Florida | Leased | 51,546 | ||||||||||||
Document storage and imaging facility | ||||||||||||||
West Palm Beach, Florida | Leased | 51,931 | ||||||||||||
Business operations and support offices | ||||||||||||||
U.S. facilities: | ||||||||||||||
Mt. Laurel, New Jersey (1) | Leased | 483,896 | ||||||||||||
Rancho Cordova, California (2) | Leased | 53,107 | ||||||||||||
Houston, Texas (3) | Leased | 9,653 | ||||||||||||
St. Croix, USVI (4) | Leased | 6,096 | ||||||||||||
Offshore facilities (4) | ||||||||||||||
Bangalore, India (5) | Leased | 128,606 | ||||||||||||
Mumbai, India (6) | Leased | 96,696 | ||||||||||||
Pune, India (7) | Leased | 44,328 | ||||||||||||
Manila, Philippines | Leased | 39,329 | ||||||||||||
Former operations and support offices no longer utilized | ||||||||||||||
Westampton, New Jersey (8) | Leased | 71,164 | ||||||||||||
Addison, Texas (9) | Leased | 39,646 | ||||||||||||
Period Ending | ||||||||||||||||||||||||||||||||||||||
Index | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | ||||||||||||||||||||||||||||||||
Ocwen Financial Corporation | $ | 100.00 | $ | 77.67 | $ | 45.10 | $ | 19.31 | $ | 19.74 | $ | 27.77 | ||||||||||||||||||||||||||
S&P 500 | $ | 100.00 | $ | 109.54 | $ | 130.81 | $ | 122.65 | $ | 158.07 | $ | 183.77 | ||||||||||||||||||||||||||
S&P 500 Diversified Financials | $ | 100.00 | $ | 118.83 | $ | 146.55 | $ | 130.39 | $ | 160.18 | $ | 175.84 |
Period | Total number of shares purchased (1) | Average price paid per share (1) (2) | Total number of shares purchased as part of a publicly announced repurchase program (1) | Approximate dollar value of shares that may yet be purchased under the repurchase program | |||||||||||||||||||
January 1 - January 31 | — | $ | — | — | $ | 5.0 | million | ||||||||||||||||
February 1 - February 29 | — | $ | — | — | $ | 5.0 | million | ||||||||||||||||
March 1 - March 31 | 377,484 | $ | 11.8995 | 377,484 | $ | 0.5 | million |
December 31, | ||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||||||||||||||
Selected Balance Sheet Data | ||||||||||||||||||||||||||||||||
Total Assets | $ | 10,651.1 | $ | 10,406.2 | $ | 9,394.2 | $ | 8,403.2 | $ | 7,655.7 | ||||||||||||||||||||||
Loans held for sale | $ | 387.8 | $ | 275.3 | $ | 242.6 | $ | 238.4 | $ | 314.0 | ||||||||||||||||||||||
Loans held for investment | 7,006.9 | 6,292.9 | 5,498.7 | 4,715.8 | 3,565.7 | |||||||||||||||||||||||||||
Advances, net | 828.2 | 1,056.5 | 1,186.7 | 1,356.4 | 1,709.8 | |||||||||||||||||||||||||||
Mortgage servicing rights | 1,294.8 | 1,486.4 | 1,457.1 | 1,008.8 | 1,043.0 | |||||||||||||||||||||||||||
Total Liabilities | $ | 10,235.8 | $ | 9,994.2 | $ | 8,839.5 | $ | 7,856.3 | $ | 7,000.4 | ||||||||||||||||||||||
HMBS-related borrowings | $ | 6,772.7 | $ | 6,063.4 | $ | 5,380.4 | $ | 4,601.6 | $ | 3,433.8 | ||||||||||||||||||||||
Other financing liabilities | 576.7 | 972.6 | 1,062.1 | 520.9 | 497.9 | |||||||||||||||||||||||||||
Advance match funded liabilities | 581.3 | 679.1 | 778.3 | 998.6 | 1,281.0 | |||||||||||||||||||||||||||
Long-term other secured borrowings | 545.6 | 511.3 | 632.7 | 704.1 | 799.5 | |||||||||||||||||||||||||||
Total equity | $ | 415.4 | $ | 412.0 | $ | 554.7 | $ | 546.9 | $ | 655.3 | ||||||||||||||||||||||
Residential Loans and Real Estate Serviced or Subserviced for Others | ||||||||||||||||||||||||||||||||
Count | 1,107,582 | 1,419,943 | 1,562,238 | 1,221,695 | 1,393,766 | |||||||||||||||||||||||||||
UPB (in billions) | $ | 188.8 | $ | 212.4 | $ | 256.0 | $ | 179.4 | $ | 209.1 |
For the Years Ended December 31, | |||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||
Selected Results of Operations Data | |||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Servicing and subservicing fees | $ | 737.3 | $ | 975.5 | $ | 937.1 | $ | 991.6 | $ | 1,188.2 | |||||||||||||||||||
Gain on loans held for sale, net | 137.2 | 38.3 | 37.3 | 57.2 | 51.0 | ||||||||||||||||||||||||
Reverse mortgage revenue, net | 60.7 | 86.3 | 60.2 | 75.5 | 71.7 | ||||||||||||||||||||||||
Other revenue, net | 25.6 | 23.3 | 28.4 | 70.3 | 76.2 | ||||||||||||||||||||||||
Total revenue | 960.9 | 1,123.4 | 1,063.0 | 1,194.6 | 1,387.2 | ||||||||||||||||||||||||
MSR valuation adjustments, net | (251.9) | (120.9) | (153.5) | (53.0) | (124.0) | ||||||||||||||||||||||||
Operating expenses | 575.7 | 673.9 | 779.0 | 945.7 | 1,099.2 | ||||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||
Interest expense | (109.4) | (114.1) | (103.4) | (126.9) | (178.2) | ||||||||||||||||||||||||
Pledged MSR liability expense | (152.3) | (372.1) | (171.7) | (236.3) | (234.4) | ||||||||||||||||||||||||
Bargain purchase gain (1) | — | (0.4) | 64.0 | — | — | ||||||||||||||||||||||||
Other, net | 22.7 | 31.5 | 9.0 | 23.3 | 42.3 | ||||||||||||||||||||||||
Other expense, net | (239.0) | (455.1) | (202.0) | (339.9) | (370.3) | ||||||||||||||||||||||||
Loss from continuing operations before income taxes | (105.7) | (126.5) | (71.5) | (144.0) | (206.4) | ||||||||||||||||||||||||
Income tax expense (benefit) | (65.5) | 15.6 | 0.5 | (15.5) | (7.0) | ||||||||||||||||||||||||
Loss from continuing operations | (40.2) | (142.1) | (72.0) | (128.5) | (199.4) | ||||||||||||||||||||||||
Income from discontinued operations, net of tax | — | — | 1.4 | — | — | ||||||||||||||||||||||||
Net loss | (40.2) | (142.1) | (70.6) | (128.5) | (199.4) | ||||||||||||||||||||||||
Net loss (income) attributable to non-controlling interests | — | — | (0.2) | 0.5 | (0.4) | ||||||||||||||||||||||||
Net loss attributable to Ocwen stockholders | $ | (40.2) | $ | (142.1) | $ | (70.8) | $ | (128.0) | $ | (199.8) | |||||||||||||||||||
Earnings (loss) per share - Basic and Diluted (2) | |||||||||||||||||||||||||||||
Continuing operations | $ | (4.59) | $ | (15.86) | $ | (8.10) | $ | (15.10) | $ | (24.17) | |||||||||||||||||||
Discontinued operations | $ | — | $ | — | $ | 0.16 | $ | — | $ | — | |||||||||||||||||||
Total attributable to Ocwen stockholders | $ | (4.59) | $ | (15.86) | $ | (7.94) | $ | (15.10) | $ | (24.17) | |||||||||||||||||||
Weighted average common shares outstanding (2) | |||||||||||||||||||||||||||||
Basic | 8,748,725 | 8,962,961 | 8,913,558 | 8,472,138 | 8,266,047 | ||||||||||||||||||||||||
Diluted (3) | 8,748,725 | 8,962,961 | 8,913,558 | 8,472,138 | 8,266,047 |
2020 | 2019 | 2020 vs 2019 $ Change | |||||||||||||||||||||||||||||||||||||||
$ In billions | Quarter Ended March 31st | Quarter Ended June 30th | Quarter Ended September 30th | Quarter Ended December 31st | Year Ended December 31st | Year Ended December 31st | |||||||||||||||||||||||||||||||||||
Recapture (1) | $ | 0.20 | $ | 0.32 | $ | 0.37 | $ | 0.43 | $ | 1.31 | $ | 0.66 | $ | 0.65 | |||||||||||||||||||||||||||
Correspondent (1) | 0.51 | 0.66 | 1.93 | 2.59 | 5.69 | 0.49 | 5.20 | ||||||||||||||||||||||||||||||||||
Flow and GSE Cash Window MSR purchases (3) | 1.34 | 2.84 | 4.20 | 6.73 | 15.11 | 0.91 | 14.20 | ||||||||||||||||||||||||||||||||||
Reverse originations (2) | 0.23 | 0.21 | 0.23 | 0.27 | 0.94 | 0.73 | 0.21 | ||||||||||||||||||||||||||||||||||
Total | 2.28 | 4.03 | 6.72 | 10.01 | 23.05 | 2.79 | 20.26 | ||||||||||||||||||||||||||||||||||
Bulk MSR purchases (3) | 1.54 | — | — | 15.02 | 16.57 | 14.62 | 1.95 | ||||||||||||||||||||||||||||||||||
Total MSR additions | 3.82 | 4.03 | 6.72 | 25.04 | 39.62 | 17.41 | 22.21 | ||||||||||||||||||||||||||||||||||
Subservicing additions (4) | 3.14 | 4.59 | 4.43 | 5.08 | 17.24 | 8.68 | 8.56 | ||||||||||||||||||||||||||||||||||
Total servicing additions | $ | 6.96 | $ | 8.62 | $ | 11.15 | $ | 30.11 | $ | 56.86 | $ | 26.09 | $ | 30.77 |
2018/2019 Initiatives | Accomplishments | |||||||
Expanding our Originations business to replenish and grow our servicing portfolio | We have built a multi-channel, scalable originations platform and have replenished and grown our owned servicing portfolio in 2020. We selectively acquired MSRs that meet or exceed our minimum targeted investment returns, with $16.6 billion UPB in bulk transactions and $15.1 billion UPB through our now well established participation to the GSE Cash Window programs. We successfully re-entered the forward lending correspondent channel in the second quarter of 2019 with $5.7 billion UPB in 2020. We have reduced our client concentration risk with NRZ. | |||||||
Driving continuous cost improvement to maintain an industry cost competitive position | With the acquisition and integration of PHH in late 2018 and 2019, we successfully implemented cost reduction and continuous improvement initiatives, resulting in approximately $100 million lower operating expenses in 2020 as compared to 2019, and approximately $200 million as compared to 2018. Our continuous cost improvement efforts were focused on reducing operating and overhead costs through facility rationalization, optimizing strategic sourcing and actions and off-shore utilization, lean process design, simplification, automation and other technology-enabled productivity enhancements. | |||||||
Effectively managing our balance sheet to ensure adequate liquidity, finance our ongoing business needs and provide a solid platform for executing on our growth initiatives | We have managed our liquidity and financing obligations through the most challenging time of the COVID-19 and have enhanced our existing balance sheet and cost of funds. For example, we have extended to May 2022 and prepaid $126.1 million on our senior secured term loan (SSTL) and reduced our OMART cost of funds. We have concluded our strategic review process and announced an expansion of our strategic alliance with Oaktree Capital to support the refinancing of our corporate debt maturing in 2021 and 2022 and to provide capital to accelerate our growth trajectory. In addition, we have established the MSR Asset Vehicle (MAV) to support the future growth of our servicing volume with the most efficient capital allocation for us. | |||||||
Fulfilling our regulatory commitments and resolving remaining legacy and regulatory matters | On October 15, 2020, we resolved our legacy regulatory matter with the State of Florida Office of the Attorney General and Office of Financial Regulation. Ocwen has now resolved all state regulatory actions from April 2017. The legacy CFPB litigation matter remains pending. We have participated in mediation and settlement discussions with the CFPB, however, the parties were unable to reach a resolution of the litigation on satisfactory terms. |
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs. 2019 | 2019 vs. 2018 | |||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Servicing and subservicing fees | $ | 737.3 | $ | 975.5 | $ | 937.1 | (24) | % | 4 | % | |||||||||||||||||||
Gain on loans held for sale, net | 137.2 | 38.3 | 37.3 | 258 | 3 | ||||||||||||||||||||||||
Reverse mortgage revenue, net | 60.7 | 86.3 | 60.2 | (30) | 43 | ||||||||||||||||||||||||
Other revenue, net | 25.6 | 23.3 | 28.4 | 10 | (18) | ||||||||||||||||||||||||
Total revenue | 960.9 | 1,123.4 | 1,063.0 | (14) | 6 | ||||||||||||||||||||||||
MSR valuation adjustments, net | (251.9) | (120.9) | (153.5) | 108 | (21) | ||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||
Compensation and benefits | 265.3 | 313.5 | 298.0 | (15) | 5 | ||||||||||||||||||||||||
Professional services | 106.9 | 102.6 | 165.6 | 4 | (38) | ||||||||||||||||||||||||
Servicing and origination | 77.3 | 109.0 | 131.3 | (29) | (17) | ||||||||||||||||||||||||
Technology and communications | 59.6 | 79.2 | 98.2 | (25) | (19) | ||||||||||||||||||||||||
Occupancy and equipment | 47.5 | 68.1 | 59.6 | (30) | 14 | ||||||||||||||||||||||||
Other expenses | 19.2 | 1.5 | 26.3 | n/m | (94) | ||||||||||||||||||||||||
Total operating expenses | 575.7 | 673.9 | 779.0 | (15) | (13) | ||||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||
Interest income | 16.0 | 17.1 | 14.0 | (6) | 22 | ||||||||||||||||||||||||
Interest expense | (109.4) | (114.1) | (103.4) | (4) | 10 | ||||||||||||||||||||||||
Pledged MSR liability expense | (152.3) | (372.1) | (171.7) | (59) | 117 | ||||||||||||||||||||||||
Gain on repurchase of senior secured notes | — | 5.1 | — | (100) | n/m | ||||||||||||||||||||||||
Bargain purchase gain | — | (0.4) | 64.0 | (100) | (101) | ||||||||||||||||||||||||
Other, net | 6.7 | 9.3 | (5.0) | (28) | (286) | ||||||||||||||||||||||||
Total other expense, net | (239.0) | (455.1) | (202.0) | (47) | 125 | ||||||||||||||||||||||||
Loss from continuing operations before income taxes | (105.7) | (126.5) | (71.5) | (16) | 77 | ||||||||||||||||||||||||
Income tax expense (benefit) | (65.5) | 15.6 | 0.5 | (520) | n/m | ||||||||||||||||||||||||
Loss from continuing operations, net of tax | (40.2) | (142.1) | (72.0) | (72) | 97 | ||||||||||||||||||||||||
Income from discontinued operations, net of tax | — | — | 1.4 | n/m | (100) | ||||||||||||||||||||||||
Net loss | (40.2) | (142.1) | (70.6) | (72) | 101 | ||||||||||||||||||||||||
Net income attributable to non-controlling interests | — | — | (0.2) | n/m | (100) | ||||||||||||||||||||||||
Net loss attributable to Ocwen stockholders | $ | (40.2) | $ | (142.1) | $ | (70.8) | (72) | 101 | |||||||||||||||||||||
Segment income (loss) from continuing operations before taxes: | |||||||||||||||||||||||||||||
Servicing | $ | (75.8) | $ | (72.7) | $ | (47.1) | 4 | % | 54 | % | |||||||||||||||||||
Lending | 104.2 | (12.2) | (22.7) | (954) | (46) | ||||||||||||||||||||||||
Corporate Items and Other | (134.1) | (41.6) | (1.7) | 222 | n/m | ||||||||||||||||||||||||
$ | (105.7) | $ | (126.5) | $ | (71.5) | (16) | 77 | ||||||||||||||||||||||
n/m: not meaningful |
December 31, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
Cash and cash equivalents | $ | 284.8 | $ | 428.3 | $ | (143.5) | (34) | % | |||||||||||||||
Restricted cash | 72.5 | 64.0 | 8.5 | 13 | |||||||||||||||||||
MSRs, at fair value | 1,294.8 | 1,486.4 | (191.6) | (13) | |||||||||||||||||||
Advances, net | 828.2 | 1,056.5 | (228.3) | (22) | |||||||||||||||||||
Loans held for sale | 387.8 | 275.3 | 112.5 | 41 | |||||||||||||||||||
Loans held for investment, at fair value | 7,006.9 | 6,292.9 | 714.0 | 11 | |||||||||||||||||||
Receivables | 187.7 | 201.2 | (13.5) | (7) | |||||||||||||||||||
Other assets | 588.4 | 601.5 | (13.1) | (2) | |||||||||||||||||||
Total assets | $ | 10,651.1 | $ | 10,406.2 | $ | 244.9 | 2 | % | |||||||||||||||
Total Assets by Segment | |||||||||||||||||||||||
Servicing | $ | 9,847.6 | $ | 9,580.5 | $ | 267.1 | 3 | % | |||||||||||||||
Originations | 379.2 | 257.4 | 121.8 | 47 | |||||||||||||||||||
Corporate Items and Other | 424.3 | 568.3 | (144.0) | (25) | |||||||||||||||||||
$ | 10,651.1 | $ | 10,406.2 | $ | 244.9 | 2 | % | ||||||||||||||||
HMBS-related borrowings, at fair value | $ | 6,772.7 | $ | 6,063.4 | $ | 709.3 | 12 | ||||||||||||||||
Advance match funded liabilities | 581.3 | 679.1 | (97.8) | (14) | |||||||||||||||||||
Other financing liabilities, at fair value | 576.7 | 972.6 | (395.9) | (41) | |||||||||||||||||||
SSTL and other secured borrowings, net | 1,069.2 | 1,025.8 | 43.4 | 4 | |||||||||||||||||||
Senior notes, net | 311.9 | 311.1 | 0.8 | — | |||||||||||||||||||
Other liabilities | 924.0 | 942.2 | (18.2) | (2) | |||||||||||||||||||
Total liabilities | 10,235.8 | 9,994.2 | 241.6 | 2 | |||||||||||||||||||
Total stockholders’ equity | 415.4 | 412.0 | 3.4 | 1 | |||||||||||||||||||
Total liabilities and equity | $ | 10,651.1 | $ | 10,406.2 | $ | 245.0 | 2 | % | |||||||||||||||
Total Liabilities by Segment | |||||||||||||||||||||||
Servicing | $ | 9,163.5 | $ | 8,945.1 | $ | 218.4 | 2 | % | |||||||||||||||
Originations | 428.5 | 264.1 | 164.4 | 62 | |||||||||||||||||||
Corporate Items and Other | 643.7 | 785.0 | (141.3) | (18) | |||||||||||||||||||
$ | 10,235.8 | 9,994.2 | $ | 241.5 | 2 | % | |||||||||||||||||
Book value per share (1) | $ | 47.81 | $ | 45.83 | $ | 1.98 | 4 | % |
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs. 2019 | 2019 vs. 2018 | |||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Servicing and subservicing fees: | |||||||||||||||||||||||||||||
Residential | $ | 727.7 | $ | 970.3 | $ | 930.0 | (25) | % | 4 | % | |||||||||||||||||||
Commercial | 3.5 | 3.8 | 5.5 | (8) | (31) | ||||||||||||||||||||||||
731.2 | 974.2 | 935.5 | (25) | 4 | |||||||||||||||||||||||||
Gain on loans held for sale, net | 14.7 | 5.4 | 6.0 | 172 | (10) | ||||||||||||||||||||||||
Reverse mortgage revenue, net | 7.6 | 63.5 | 44.1 | (88) | 44 | ||||||||||||||||||||||||
Other revenue, net | 4.2 | 5.4 | 7.3 | (22) | (25) | ||||||||||||||||||||||||
Total revenue | 757.7 | 1,048.5 | 992.9 | (28) | 6 | ||||||||||||||||||||||||
MSR valuation adjustments, net | (276.3) | (120.9) | (153.5) | 129 | (21) | ||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||
Compensation and benefits | 113.6 | 144.0 | 154.5 | (21) | (7) | ||||||||||||||||||||||||
Servicing and origination | 68.4 | 101.3 | 114.6 | (32) | (12) | ||||||||||||||||||||||||
Professional services | 28.1 | 42.2 | 53.6 | (33) | (21) | ||||||||||||||||||||||||
Occupancy and equipment | 31.0 | 44.3 | 42.6 | (30) | 4 | ||||||||||||||||||||||||
Technology and communications | 25.2 | 32.6 | 45.6 | (23) | (28) | ||||||||||||||||||||||||
Corporate overhead allocations | 61.0 | 197.9 | 211.7 | (69) | (7) | ||||||||||||||||||||||||
Other expenses | 4.5 | (14.3) | 5.9 | (131) | (342) | ||||||||||||||||||||||||
Total operating expenses | 331.9 | 548.0 | 628.6 | (39) | (13) | ||||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||
Interest income | 7.1 | 10.1 | 7.1 | (30) | 42 | ||||||||||||||||||||||||
Interest expense | (90.7) | (102.5) | (90.8) | (12) | 13 | ||||||||||||||||||||||||
Pledged MSR liability expense | (152.5) | (372.2) | (172.3) | (59) | 116 | ||||||||||||||||||||||||
Gain on sale of MSRs, net | — | 0.5 | 1.3 | (100) | (66) | ||||||||||||||||||||||||
Other, net | 10.8 | 11.8 | (3.2) | (8) | (469) | ||||||||||||||||||||||||
Total other expense, net | (225.3) | (452.3) | (257.9) | (50) | 75 | ||||||||||||||||||||||||
Loss from continuing operations before income taxes | $ | (75.8) | $ | (72.7) | $ | (47.1) | 4 | % | 54 | % | |||||||||||||||||||
% Change | |||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs. 2019 | 2019 vs. 2018 | |||||||||||||||||||||||||
Residential Assets Serviced at December 31 | |||||||||||||||||||||||||||||
Unpaid principal balance (UPB) in billions: | |||||||||||||||||||||||||||||
Performing loans (1) | $ | 177.6 | $ | 198.9 | $ | 243.4 | (11) | % | (18) | % | |||||||||||||||||||
Non-performing loans | 10.3 | 11.2 | 10.4 | (8) | 8 | ||||||||||||||||||||||||
Non-performing real estate | 0.9 | 2.2 | 2.2 | (59) | — | ||||||||||||||||||||||||
Total | $ | 188.8 | $ | 212.4 | $ | 256.0 | (11) | (17) | |||||||||||||||||||||
Conventional loans (2) | $ | 77.0 | $ | 95.3 | $ | 127.1 | (19) | % | (25) | % | |||||||||||||||||||
Government-insured loans | 34.8 | 30.1 | 27.7 | 16 | 9 | ||||||||||||||||||||||||
Non-Agency loans | 77.0 | 87.0 | 101.3 | (11) | (14) | ||||||||||||||||||||||||
Total | $ | 188.8 | $ | 212.4 | $ | 256.0 | (11) | (17) | |||||||||||||||||||||
Servicing portfolio (5) | $ | 97.4 | $ | 76.7 | $ | 72.4 | 27 | % | 6 | % | |||||||||||||||||||
Subservicing portfolio | 24.3 | 17.1 | 53.1 | 42 | (68) | ||||||||||||||||||||||||
NRZ (3) (6) | 67.1 | 118.6 | 130.5 | (43) | (9) | ||||||||||||||||||||||||
$ | 188.8 | $ | 212.4 | $ | 256.0 | (11) | (17) | ||||||||||||||||||||||
Prepayment speed (CPR) (4 ) | |||||||||||||||||||||||||||||
12-month % Voluntary CPR | 15 | % | 11 | % | 11 | % | 36 | % | — | % | |||||||||||||||||||
12-month % Involuntary CPR | 2 | 2 | 2 | — | — | ||||||||||||||||||||||||
Total 12-month % CPR | 20 | 16 | 13 | 25 | 23 | ||||||||||||||||||||||||
Number (in 000’s): | |||||||||||||||||||||||||||||
Performing loans (1) | 1,048.7 | 1,344.9 | 1,499.0 | (22) | % | (10) | % | ||||||||||||||||||||||
Non-performing loans | 52.2 | 60.7 | 52.3 | (14) | 16 | ||||||||||||||||||||||||
Non-performing real estate | 6.7 | 14.3 | 11.0 | (53) | 30 | ||||||||||||||||||||||||
Total | 1,107.6 | 1,419.9 | 1,562.2 | (22) | (9) | ||||||||||||||||||||||||
Conventional loans (2) | 349.6 | 607.9 | 677.9 | (42) | % | (10) | % | ||||||||||||||||||||||
Government-insured loans | 201.9 | 185.1 | 182.6 | 9 | 1 | ||||||||||||||||||||||||
Non-Agency loans | 556.1 | 627.0 | 701.7 | (11) | (11) | ||||||||||||||||||||||||
Total | 1,107.6 | 1,419.9 | 1,562.2 | (22) | (9) | ||||||||||||||||||||||||
Servicing portfolio | 511.6 | 472.8 | 455.7 | 8 | % | 4 | % | ||||||||||||||||||||||
Subservicing portfolio | 96.3 | 77.3 | 155.6 | 25 | (50) | ||||||||||||||||||||||||
NRZ (3) | 499.6 | 869.9 | 951.0 | (43) | (9) | ||||||||||||||||||||||||
1,107.6 | 1,419.9 | 1,562.2 | (22) | (9) | |||||||||||||||||||||||||
n/m: not meaningful | |||||||||||||||||||||||||||||
% Change | |||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs. 2019 | 2019 vs. 2018 | |||||||||||||||||||||||||
Reverse Mortgage Loans at December 31 | |||||||||||||||||||||||||||||
Unpaid principal balance (UPB) in millions: | |||||||||||||||||||||||||||||
Loans held for investment (1) | $ | 6,299.6 | $ | 5,658.3 | $ | 4,985.0 | 11 | % | 14 | % | |||||||||||||||||||
Active Buyouts (2) | 28.4 | 10.2 | 2.4 | 178 | 325 | ||||||||||||||||||||||||
Inactive Buyouts (2) | 60.9 | 26.4 | 15.7 | 131 | 68 | ||||||||||||||||||||||||
Total | $ | 6,389.0 | $ | 5,694.9 | $ | 5,003.1 | 12 | 14 | |||||||||||||||||||||
Inactive buyouts % to total | 0.95 | % | 0.46 | % | 0.31 | % | 107 | 48 | |||||||||||||||||||||
Future draw commitments (UBP) in millions: | 2,044.4 | 1,937.4 | 1,426.8 | 6 | 36 | ||||||||||||||||||||||||
Fair value in millions: | |||||||||||||||||||||||||||||
Loans held for investment (1) | $ | 6,872.3 | $ | 6,120.9 | $ | 5,446.8 | 12 | 12 | |||||||||||||||||||||
HMBS related borrowings | 6,772.7 | 6,063.4 | 5,380.4 | 12 | 13 | ||||||||||||||||||||||||
Net asset value | $ | 99.6 | $ | 57.5 | $ | 66.4 | 73 | (13) | |||||||||||||||||||||
Future Value (3) | $ | — | $ | 47.0 | $ | 68.1 | (100) | (31) |
December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Advances by investor type | Principal and Interest | Taxes and Insurance | Foreclosures, bankruptcy, REO and other | Total | Principal and Interest | Taxes and Insurance | Foreclosures, bankruptcy, REO and other | Total | |||||||||||||||||||||||||||||||||||||||
Conventional | $ | 4 | $ | 30 | $ | 5 | $ | 38 | $ | 4 | $ | 20 | $ | 27 | $ | 51 | |||||||||||||||||||||||||||||||
Government-insured | 1 | 55 | 28 | 84 | — | 47 | 26 | 73 | |||||||||||||||||||||||||||||||||||||||
Non-Agency | 272 | 279 | 155 | 705 | 410 | 354 | 168 | 932 | |||||||||||||||||||||||||||||||||||||||
Total, net | $ | 277 | $ | 365 | $ | 187 | $ | 828 | $ | 415 | $ | 420 | $ | 221 | $ | 1,056 |
Amount of UPB (in billions) | Count (in 000’s) | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||
Portfolio at beginning of year | $ | 212.4 | $ | 256.0 | $ | 179.4 | 1,419.9 | 1,562.2 | 1,221.7 | ||||||||||||||||||||||||||
Acquisition of PHH | — | — | 119.3 | — | — | 537.2 | |||||||||||||||||||||||||||||
Other portfolio additions(1)(2) | 57.2 | 26.1 | 9.4 | 194.5 | 100.6 | 41.0 | |||||||||||||||||||||||||||||
Total additions | 57.2 | 26.1 | 128.7 | 194.5 | 100.6 | 578.2 | |||||||||||||||||||||||||||||
Sales | (0.2) | (1.2) | (0.6) | (1.6) | (8.3) | (3.3) | |||||||||||||||||||||||||||||
Servicing transfers (2) (3) | (40.2) | (30.3) | (23.0) | (303.1) | (48.5) | (73.9) | |||||||||||||||||||||||||||||
Runoff | (40.3) | (38.3) | (28.5) | (202.1) | (186.0) | (160.4) | |||||||||||||||||||||||||||||
Portfolio at end of year | $ | 188.8 | $ | 212.3 | $ | 256.0 | 1,107.6 | 1,420.0 | 1,562.3 |
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs. 2019 | 2019 vs. 2018 | |||||||||||||||||||||||||
Loan servicing and subservicing fees | |||||||||||||||||||||||||||||
Servicing | $ | 216.2 | $ | 227.5 | $ | 227.7 | (5) | % | — | % | |||||||||||||||||||
Subservicing | 28.9 | 15.4 | 8.9 | 88 | 73 | ||||||||||||||||||||||||
NRZ | 383.7 | 577.0 | 539.0 | (34) | 7 | ||||||||||||||||||||||||
Servicing and subservicing fees | 628.8 | 820.0 | 775.6 | (23) | 6 | ||||||||||||||||||||||||
Ancillary income | 102.5 | 154.2 | 159.9 | (34) | (4) | ||||||||||||||||||||||||
Total | $ | 731.2 | $ | 974.2 | $ | 935.5 | (25) | 4 |
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs 2019 | 2019 vs 2018 | |||||||||||||||||||||||||
Servicing and subservicing fee | |||||||||||||||||||||||||||||
Servicing fee | $ | 216.2 | $ | 227.5 | $ | 227.7 | (5) | % | — | % | |||||||||||||||||||
Average servicing fee (% of UPB) | 0.28 | 0.30 | 0.32 | (7) | % | (6) | % | ||||||||||||||||||||||
Subservicing fee (1) | $ | 28.9 | $ | 15.4 | $ | 8.9 | 88 | 73 | % | ||||||||||||||||||||
Average monthly fee per loan (in dollars) | $ | 9 | $ | 12 | $ | 14 | (25) | (14) | % | ||||||||||||||||||||
Residential assets serviced | |||||||||||||||||||||||||||||
Average UPB ($ in billions): | |||||||||||||||||||||||||||||
Servicing portfolio | $ | 78.30 | $ | 76.14 | $ | 72.28 | 3 | % | 5 | % | |||||||||||||||||||
Subservicing portfolio | 19.84 | 31.23 | 15.93 | (36) | 96 | % | |||||||||||||||||||||||
NRZ | 100.46 | 125.07 | 104.77 | (20) | 19 | % | |||||||||||||||||||||||
Total | $ | 198.60 | $ | 232.44 | $ | 192.98 | (15) | % | 20 | % | |||||||||||||||||||
Average number (in 000’s): | |||||||||||||||||||||||||||||
Servicing portfolio | 466.1 | 471.8 | 463.5 | (1) | % | 2 | % | ||||||||||||||||||||||
Subservicing portfolio | 268.5 | 106.2 | 53.0 | 153 | 100 | % | |||||||||||||||||||||||
NRZ | 561.6 | 913.2 | 748.4 | (39) | 22 | % | |||||||||||||||||||||||
1,296.2 | 1,491.2 | 1,264.9 | (13) | % | 18 | % |
NRZ Servicing and Subservicing Fees | Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Servicing fees collected on behalf of NRZ | $ | 383.7 | $ | 577.0 | $ | 539.0 | |||||||||||
Servicing fees remitted to NRZ (1) | (278.8) | (437.7) | (396.7) | ||||||||||||||
Retained subservicing fees on NRZ agreements (2) | $ | 104.8 | $ | 139.3 | $ | 142.3 | |||||||||||
Amortization gain of the lump-sum cash payments received (including fair value change) (1) (3) | 34.2 | 95.1 | 148.9 | ||||||||||||||
Total retained subservicing fees and amortization gain of lump-sum payments (including fair value change) | $ | 139.0 | $ | 234.4 | $ | 291.2 | |||||||||||
Average NRZ UPB (in billions) (4) | $ | 100.5 | $ | 125.1 | $ | 104.8 | |||||||||||
Average retained subservicing fees as a % of NRZ UPB (excluding amortization gain of lump-sum cash payments) | 0.10 | % | 0.11 | % | 0.14 | % |
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
Ancillary Income | 2020 | 2019 | 2018 | 2020 vs 2019 | 2019 vs 2018 | ||||||||||||||||||||||||
Late charges | $ | 47.7 | $ | 57.2 | $ | 61.5 | (17) | % | (7) | % | |||||||||||||||||||
Custodial accounts (float earnings) | 9.9 | 47.5 | 40.4 | (79) | 18 | ||||||||||||||||||||||||
Loan collection fees | 13.0 | 15.5 | 18.4 | (16) | (16) | ||||||||||||||||||||||||
HAMP fees | 0.6 | 5.5 | 14.3 | (90) | (62) | ||||||||||||||||||||||||
Other | 31.3 | 28.5 | 25.4 | 10 | 12 | ||||||||||||||||||||||||
Ancillary income | $ | 102.5 | $ | 154.2 | $ | 159.9 | (34) | % | (4) | % | |||||||||||||||||||
Number of completed modifications | 28,322 | 25,754 | 39,545 | 10 | % | (35) | % | ||||||||||||||||||||||
Revenue recognized in connection with loan modifications | $ | 30.2 | 38.5 | 59.4 | (22) | (35) |
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||
Total (1) | Owned MSR (1) | Pledged MSR (2) (NRZ) | Total (1) | Owned MSR (1) | Pledged MSR (2) (NRZ) | Total (1) | Owned MSR (1) | Pledged MSR (2) (NRZ) | |||||||||||||||||||||||||||
Runoff | $ | (173.3) | $ | (109.5) | $ | (63.8) | $ | (215.4) | $ | (102.0) | $ | (113.4) | $ | (159.3) | $ | (82.0) | $ | (77.3) | |||||||||||||||||
Rate and assumption change (1) | (147.9) | (129.1) | (18.8) | 94.0 | (53.1) | 147.1 | 5.9 | 10.8 | (4.9) | ||||||||||||||||||||||||||
Hedging gain | 44.9 | 44.9 | — | 0.5 | 0.5 | — | — | — | — | ||||||||||||||||||||||||||
Total | $ | (276.3) | $ | (193.7) | $ | (82.6) | $ | (120.9) | $ | (154.6) | $ | 33.8 | $ | (153.5) | $ | (71.2) | $ | (82.2) |
Fair Value | UPB ($ in billions) | ||||||||||||||||||||||||||||||||||||||||||||||
GSEs | Ginnie Mae | Non- Agency | Total | GSEs | Ginnie Mae | Non- Agency | Total | ||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 307.2 | $ | 99.0 | $ | 165.1 | $ | 571.3 | $ | 30.0 | $ | 14.4 | $ | 26.6 | $ | 71.0 | |||||||||||||||||||||||||||||||
Additions | |||||||||||||||||||||||||||||||||||||||||||||||
New cap. | 62.0 | 6.7 | — | 68.7 | 6.3 | 0.6 | — | 6.9 | |||||||||||||||||||||||||||||||||||||||
Purchases (1) | 267.0 | 18.8 | 3.1 | 288.9 | 30.0 | 1.6 | 0.4 | 32.0 | |||||||||||||||||||||||||||||||||||||||
Sales/servicing transfers | (1.3) | (0.2) | (0.1) | (1.6) | (0.2) | — | — | (0.2) | |||||||||||||||||||||||||||||||||||||||
Sales/calls | — | — | — | — | (0.1) | — | — | (0.1) | |||||||||||||||||||||||||||||||||||||||
Change in fair value: | |||||||||||||||||||||||||||||||||||||||||||||||
Runoff | (70.7) | (11.6) | (29.0) | (111.3) | (10.9) | (3.5) | (4.9) | (19.3) | |||||||||||||||||||||||||||||||||||||||
Assumptions (2) | (56.3) | (37.3) | 5.4 | (88.2) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 507.9 | $ | 75.4 | $ | 144.5 | $ | 727.8 | $ | 55.1 | $ | 13.1 | $ | 22.1 | $ | 90.3 | |||||||||||||||||||||||||||||||
Fair value (% of UPB) | 0.92 | % | 0.58 | % | 0.65 | % | 0.81 | % | |||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs 2019 | 2019 vs 2018 | |||||||||||||||||||||||||
Compensation and benefits | $ | 113.6 | $ | 144.0 | $ | 154.5 | (21) | % | (7) | % | |||||||||||||||||||
Average Employment - Servicing | |||||||||||||||||||||||||||||
India and other | 2,880 | 3,360 | 4,097 | (14) | % | (18) | |||||||||||||||||||||||
U.S. | 730 | 1,158 | 1,128 | (37) | 3 | ||||||||||||||||||||||||
Total | 3,610 | 4,518 | 5,225 | (20) | (14) |
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs 2019 | 2019 vs 2018 | |||||||||||||||||||||||||
Interest Expense | |||||||||||||||||||||||||||||
Advance match funded liabilities | $ | 24.1 | $ | 26.9 | $ | 30.7 | (10) | % | (12) | % | |||||||||||||||||||
Other secured borrowings | 21.3 | 11.6 | 6.3 | 84 | 84 | % | |||||||||||||||||||||||
Corporate debt interest expense allocation | 38.2 | 54.9 | 49.0 | (30) | 12 | % | |||||||||||||||||||||||
Escrow and other | 7.0 | 9.1 | 4.8 | (23) | 90 | % | |||||||||||||||||||||||
Total interest expense | $ | 90.7 | $ | 102.5 | $ | 90.8 | (12) | % | 13 | % | |||||||||||||||||||
Average balances | |||||||||||||||||||||||||||||
Average balance of advances | $ | 891.3 | $ | 1,006.3 | $ | 1,214.4 | (11) | % | (17) | % | |||||||||||||||||||
Advance match funded liabilities | 603.7 | 671.8 | 737.0 | (10) | (9) | % | |||||||||||||||||||||||
Other secured borrowings | 376.2 | 191.5 | 74.6 | 96 | 157 | % | |||||||||||||||||||||||
Effective average interest rate | n/m | ||||||||||||||||||||||||||||
Advance match funded liabilities | 4.00 | % | 4.00 | % | 4.17 | % | — | % | (4) | % | |||||||||||||||||||
Other secured borrowings | 5.66 | 6.08 | 8.48 | (7) | (28) | % | |||||||||||||||||||||||
Average one-month LIBOR | 0.52 | % | 1.75 | % | 2.45 | % | (70) | % | (29) | % |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Net servicing fee remitted to NRZ (1) | $ | 278.8 | $ | 437.7 | $ | 396.7 | |||||||||||
Pledged MSR liability fair value (gain) loss (2) | (82.6) | 33.8 | (82.2) | ||||||||||||||
2017/18 lump sum amortization gain | (34.2) | (95.1) | (148.9) | ||||||||||||||
Other | (9.6) | (4.2) | 6.7 | ||||||||||||||
Pledged MSR liability expense | $ | 152.4 | $ | 372.2 | $ | 172.3 |
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||
Statement of Operations | NRZ Pledged MSR-related Amounts | Statement of Operations | NRZ Pledged MSR-related Amounts | Statement of Operations | NRZ Pledged MSR-related Amounts | ||||||||||||||||||||||||||||||
Total revenue | $ | 960.9 | $ | 278.8 | $ | 1,123.4 | $ | 437.7 | $ | 1,063.0 | $ | 396.7 | |||||||||||||||||||||||
MSR valuation adjustments, net | (251.9) | (82.6) | (120.9) | 33.8 | (153.5) | (82.2) | |||||||||||||||||||||||||||||
Total operating expenses | 575.7 | — | 673.9 | — | 779.0 | — | |||||||||||||||||||||||||||||
Total other expense, net | (239.0) | (196.3) | (455.1) | (471.4) | (202.0) | (314.5) | |||||||||||||||||||||||||||||
Loss before income taxes | $ | (105.7) | $ | — | $ | (126.5) | $ | — | $ | (71.5) | $ | — |
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs. 2019 | 2019 vs. 2018 | |||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Gain on loans held for sale, net | $ | 105.2 | $ | 32.9 | $ | 31.3 | 220 | % | 5 | % | |||||||||||||||||||
Reverse mortgage revenue, net | 53.1 | 22.9 | 16.1 | 132 | 42 | ||||||||||||||||||||||||
Other revenue, net | 21.0 | 6.0 | 4.5 | 251 | 33 | ||||||||||||||||||||||||
Total revenue | 179.3 | 61.7 | 52.0 | 191 | 19 | ||||||||||||||||||||||||
MSR valuation adjustments, net | 41.7 | — | — | n/m | n/m | ||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||
Compensation and benefits | 62.2 | 43.8 | 37.4 | 42 | 17 | ||||||||||||||||||||||||
Servicing and origination | 7.2 | 7.0 | 16.4 | 3 | (57) | ||||||||||||||||||||||||
Occupancy and equipment | 5.4 | 6.4 | 6.0 | (16) | 7 | ||||||||||||||||||||||||
Technology and communications | 5.5 | 3.2 | 1.9 | 72 | 68 | ||||||||||||||||||||||||
Professional services | 9.3 | 1.3 | 1.2 | 615 | 8 | ||||||||||||||||||||||||
Corporate overhead allocations | 18.2 | 6.0 | 3.7 | 203 | 63 | ||||||||||||||||||||||||
Other expenses | 6.5 | 4.8 | 6.7 | 35 | (28) | ||||||||||||||||||||||||
Total operating expenses | 114.4 | 72.5 | 73.3 | 58 | (1) | ||||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||
Interest income | 7.0 | 5.2 | 4.4 | 35 | 20 | ||||||||||||||||||||||||
Interest expense | (9.8) | (7.6) | (7.3) | 29 | 4 | ||||||||||||||||||||||||
Other, net | 0.4 | 0.9 | 1.6 | (56) | (44) | ||||||||||||||||||||||||
Total other income (expense), net | (2.5) | (1.5) | (1.4) | 67 | 7 | ||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 104.2 | $ | (12.2) | $ | (22.7) | (954) | (46) | |||||||||||||||||||||
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
UPB in millions | 2020 | 2019 | 2018 | 2020 vs. 2019 | 2019 vs. 2018 | ||||||||||||||||||||||||
Loan Production by Channel | |||||||||||||||||||||||||||||
Forward loans | |||||||||||||||||||||||||||||
Correspondent | $ | 5,685.5 | $ | 494.0 | $ | 0.4 | n/m | n/m | |||||||||||||||||||||
Recapture | 1,309.8 | 656.6 | 868.1 | 99 | (24) | ||||||||||||||||||||||||
Wholesale | — | — | 1.8 | n/m | (100) | ||||||||||||||||||||||||
$ | 6,995.3 | $ | 1,150.6 | $ | 870.3 | 508 | 32 | ||||||||||||||||||||||
% Purchase production | 20 | 18 | 4 | 11 | 350 | ||||||||||||||||||||||||
% Refinance production | 80 | 82 | 96 | (2) | (15) | ||||||||||||||||||||||||
Reverse loans (1) | |||||||||||||||||||||||||||||
Correspondent | $ | 470.3 | $ | 411.6 | $ | 360.4 | 14 | % | 14 | % | |||||||||||||||||||
Wholesale | 300.5 | 238.2 | 170.9 | 26 | 39 | ||||||||||||||||||||||||
Retail | 170.8 | 79.6 | 62.4 | 115 | 28 | ||||||||||||||||||||||||
$ | 941.6 | $ | 729.4 | $ | 593.7 | 29 | 23 | ||||||||||||||||||||||
MSR Purchases by Channel (Forward only) | |||||||||||||||||||||||||||||
GSE Cash Window / Flow MSR purchases | 15,111.6 | 908.3 | — | n/m | n/m | ||||||||||||||||||||||||
Bulk MSR purchases | 16,566.2 | 14,616.7 | 144.3 | 13 | n/m | ||||||||||||||||||||||||
$ | 31,677.8 | $ | 15,525.0 | $ | 144.3 | 104 | n/m | ||||||||||||||||||||||
Total (2) | $ | 39,614.7 | $ | 17,405.0 | $ | 1,608.3 | 128 | 982 | |||||||||||||||||||||
Short-term loan commitment (at year end) | |||||||||||||||||||||||||||||
Forward loans | $ | 619.7 | $ | 204.0 | 132.1 | 204 | % | 54 | % | ||||||||||||||||||||
Reverse loans | 11.7 | 28.5 | 18.1 | (59) | 57 | ||||||||||||||||||||||||
Average Employment - Originations | |||||||||||||||||||||||||||||
U.S. | 461 | 387 | 425 | 19 | % | (9) | % | ||||||||||||||||||||||
India and other | 177 | 97 | 131 | 82 | (26) | ||||||||||||||||||||||||
Total | 638 | 484 | 556 | 32 | (13) |
Years Ended December 31, | % Change | ||||||||||||||||
2020 | 2019 | 2020 vs 2019 | |||||||||||||||
Gain on Loans Held for Sale (1) | |||||||||||||||||
Correspondent | $ | 18.6 | $ | 0.1 | n/m | ||||||||||||
Recapture | 86.6 | 32.8 | 164 | ||||||||||||||
$ | 105.2 | $ | 32.9 | 220 | % | ||||||||||||
% Gain on Sale Margin (2) | |||||||||||||||||
Correspondent | 0.32 | % | 0.02 | % | n/m | ||||||||||||
Recapture | 5.55 | 5.00 | 11 | ||||||||||||||
1.42 | % | 2.65 | % | (46) | % | ||||||||||||
Origination UPB (3) | |||||||||||||||||
Correspondent | $ | 5,851.1 | $ | 584.6 | 901 | % | |||||||||||
Recapture | 1,560.4 | 655.5 | 138 | ||||||||||||||
$ | 7,411.5 | $ | 1,240.1 | 498 | % |
Years Ended December 31, | % Change | ||||||||||||||||
2020 | 2019 | 2020 vs 2019 | |||||||||||||||
Origination UPB (1) | $ | 915.4 | $ | 731.4 | 25 | % | |||||||||||
Origination margin (2) | 5.81 | % | 3.12 | % | 86 | ||||||||||||
Reverse mortgage revenue, net (Originations) (3) | $ | 53.1 | $ | 22.9 | 132 | % |
Years Ended December 31, | % Change | ||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2020 vs. 2019 | 2019 vs. 2018 | |||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Premiums (CRL) | $ | 6.2 | $ | 12.9 | $ | 16.6 | (52) | % | (22) | % | |||||||||||||||||||
Other revenue | 0.4 | 0.3 | 1.6 | 54 | (83) | ||||||||||||||||||||||||
Total revenue | 6.6 | 13.2 | 18.1 | (50) | (27) | ||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||
Compensation and benefits | 89.6 | 125.7 | 106.1 | (29) | 19 | ||||||||||||||||||||||||
Professional services | 69.4 | 59.2 | 110.7 | 17 | (47) | ||||||||||||||||||||||||
Technology and communications | 28.9 | 43.4 | 50.8 | (34) | (15) | ||||||||||||||||||||||||
Occupancy and equipment | 11.1 | 17.4 | 11.1 | (36) | 57 | ||||||||||||||||||||||||
Servicing and origination | 1.7 | 0.7 | 0.3 | 124 | (94) | ||||||||||||||||||||||||
Other expenses | 8.2 | 11.0 | 13.7 | (25) | (20) | ||||||||||||||||||||||||
Total operating expenses before corporate overhead allocations | 208.8 | 257.4 | 292.5 | (19) | (12) | ||||||||||||||||||||||||
Corporate overhead allocations | |||||||||||||||||||||||||||||
Servicing segment | (61.0) | (197.9) | (211.7) | (69) | (7) | ||||||||||||||||||||||||
Lending segment | (18.2) | (6.0) | (3.7) | 202 | 63 | ||||||||||||||||||||||||
Total operating expenses | 129.5 | 53.5 | 77.1 | 142 | (31) | ||||||||||||||||||||||||
Other income (expense), net | |||||||||||||||||||||||||||||
Interest income | 1.9 | 1.8 | 2.6 | 9 | (31) | ||||||||||||||||||||||||
Interest expense | (8.9) | (4.0) | (5.3) | 121 | (24) | ||||||||||||||||||||||||
Bargain purchase gain | — | (0.4) | 64.0 | (100) | (101) | ||||||||||||||||||||||||
Gain on repurchase of senior secured notes | — | 5.1 | — | (100) | n/m | ||||||||||||||||||||||||
Other, net | (4.3) | (3.8) | (4.1) | 13 | (8) | ||||||||||||||||||||||||
Total other (expense) income, net | (11.2) | (1.3) | 57.2 | 775 | (102) | ||||||||||||||||||||||||
Loss from continuing operations before income taxes | $ | (134.1) | $ | (41.6) | $ | (1.7) | 222 | n/m | |||||||||||||||||||||
n/m: not meaningful |
Quarters Ended December 31, | % Change | ||||||||||||||||
2020 | 2019 | 2020 vs. 2019 | |||||||||||||||
Revenue | |||||||||||||||||
Servicing and subservicing fees | $ | 168.9 | $ | 230.4 | (27) | % | |||||||||||
Gain on loans held for sale, net | 44.5 | 12.0 | 271 | ||||||||||||||
Reverse mortgage revenue, net | 9.7 | 13.4 | (28) | ||||||||||||||
Other revenue, net | 8.0 | 5.8 | 38 | ||||||||||||||
Total revenue | 231.0 | 261.6 | (12) | ||||||||||||||
MSR valuation adjustments, net | (20.6) | 0.8 | n/m | ||||||||||||||
Operating expenses | |||||||||||||||||
Compensation and benefits | 69.9 | 63.1 | 11 | ||||||||||||||
Professional services | 29.1 | 25.4 | 15 | ||||||||||||||
Servicing and origination | 16.7 | 22.2 | (25) | ||||||||||||||
Technology and communications | 12.4 | 18.1 | (31) | ||||||||||||||
Occupancy and equipment | 9.8 | 15.6 | (37) | ||||||||||||||
Other expenses | 6.2 | (5.1) | (222) | ||||||||||||||
Total operating expenses | 144.2 | 139.3 | 4 | ||||||||||||||
Other income (expense) | |||||||||||||||||
Interest income | 3.2 | 4.6 | (30) | ||||||||||||||
Interest expense | (25.8) | (29.5) | (13) | ||||||||||||||
Pledged MSR liability expense | (46.7) | (68.8) | (32) | ||||||||||||||
Other, net | 2.1 | 7.8 | (73) | ||||||||||||||
Other expense, net | (67.1) | (85.9) | (22) | ||||||||||||||
Income (loss) before income taxes | (0.8) | 37.2 | (102) | ||||||||||||||
Income tax expense | 6.4 | 2.4 | 167 | ||||||||||||||
Net income (loss) | $ | (7.2) | $ | 34.8 | (121) | ||||||||||||
Segment income (loss) before taxes: | |||||||||||||||||
Servicing | $ | (1.5) | $ | 53.5 | (103) | % | |||||||||||
Originations | 33.0 | (0.2) | n/m | ||||||||||||||
Corporate Items and Other | (32.3) | (16.0) | 102 | ||||||||||||||
$ | (0.8) | $ | 37.2 | (102) | |||||||||||||
n/m: not meaningful |
December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
Total Borrowing Capacity (1) | Available Borrowing Capacity - Committed (1) | Available Borrowing Capacity - Uncommitted (1) | Total Borrowing Capacity (1) | Available Borrowing Capacity - Committed (1) | Available Borrowing Capacity - Uncommitted (1) | ||||||||||||||||||||||||||||||
Advance facilities | $ | 795.0 | $ | 213.7 | $ | — | $ | 730.0 | $ | 50.9 | $ | — | |||||||||||||||||||||||
Mortgage loan warehouse facilities | 1,037.0 | 186.9 | 398.4 | 1,125.0 | 108.4 | 684.4 | |||||||||||||||||||||||||||||
MSR financing facilities | 375.0 | 39.2 | 13.0 | 400.0 | 180.0 | — | |||||||||||||||||||||||||||||
Total | $ | 2,207.0 | $ | 439.8 | $ | 411.4 | $ | 2,255.0 | $ | 339.3 | $ | 684.4 |
Collateral for Secured Borrowings | |||||||||||||||||||||||||||||||||||
Assets | Total | Match Funded Liabilities | Financing Liabilities | Mortgage Loan Warehouse/MSR Facilities | Sales and Other Commitments | Other | |||||||||||||||||||||||||||||
Cash | $ | 284.8 | $ | — | $ | — | $ | — | $ | — | $ | 284.8 | |||||||||||||||||||||||
Restricted cash | 72.5 | 14.2 | — | 5.9 | 52.3 | — | |||||||||||||||||||||||||||||
MSRs (1) | 1,294.8 | — | 567.0 | 728.4 | — | — | |||||||||||||||||||||||||||||
Advances, net | 828.2 | 651.6 | — | 82.1 | — | 94.5 | |||||||||||||||||||||||||||||
Loans held for sale | 387.8 | — | — | 359.1 | — | 28.7 | |||||||||||||||||||||||||||||
Loans held for investment | 7,006.9 | — | 6,882.0 | 96.3 | — | 28.6 | |||||||||||||||||||||||||||||
Receivables, net | 187.7 | — | — | 47.2 | — | 140.5 | |||||||||||||||||||||||||||||
Premises and equipment, net | 16.9 | — | — | — | — | 16.9 | |||||||||||||||||||||||||||||
Other assets | 571.5 | — | — | 6.3 | 497.6 | 67.5 | |||||||||||||||||||||||||||||
Total assets | $ | 10,651.1 | $ | 665.8 | $ | 7,449.0 | $ | 1,325.5 | $ | 549.9 | $ | 661.5 | |||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||
HMBS - related borrowings | $ | 6,772.7 | $ | — | $ | 6,772.7 | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Other financing liabilities | 576.7 | — | 576.7 | — | — | — | |||||||||||||||||||||||||||||
Match funded liabilities | 581.3 | 581.3 | — | — | — | — | |||||||||||||||||||||||||||||
Other secured borrowings, net | 1,069.2 | — | — | 890.3 | — | 178.9 | |||||||||||||||||||||||||||||
Senior notes, net | 311.9 | — | — | — | — | 311.9 | |||||||||||||||||||||||||||||
Other liabilities | 924.0 | — | — | — | 497.6 | 426.4 | |||||||||||||||||||||||||||||
Total Liabilities | $ | 10,235.8 | $ | 581.3 | $ | 7,349.4 | $ | 890.3 | $ | 497.6 | $ | 917.2 | |||||||||||||||||||||||
Total Equity | $ | 415.3 |
Rating Agency | Long-term Corporate Rating | Review Status / Outlook | Date of last action | |||||||||||||||||
Moody’s | Caa1 | Negative | September 11, 2019 | |||||||||||||||||
S&P | B- | Negative | July 23, 2020 | |||||||||||||||||
Fair value at December 31, 2020 | Hypothetical change in fair value due to 25 bps rate decrease | ||||||||||
Agency MSR - interest rate sensitive | $ | 579.0 | $ | (30.9) | |||||||
Asset value of securitized HECM loans, net of HMBS-related liability | 99.5 | 3.5 | |||||||||
Loans held for investment - Unsecuritized HECM loans and tails | 124.9 | — | |||||||||
Loans held for sale | 366.4 | 3.8 | |||||||||
Pipeline IRLCs | 22.7 | (0.4) | |||||||||
Natural hedges (sum of the above) | 6.9 | ||||||||||
Hypothetical 30% offset by hedging instruments (1) | 7.2 | ||||||||||
Total hedge position (2) (3) | $ | 14.1 | |||||||||
Hypothetical residual exposure to changes in interest rates | $ | (16.8) |
Change in Fair Value | |||||||||||
Down 25 bps | Up 25 bps | ||||||||||
Asset value of securitized HECM loans, net of HMBS-related borrowing | $ | 3.5 | $ | (3.0) | |||||||
Loans held for investment - Unsecuritized HECM loans and tails | 0.05 | (0.04) | |||||||||
Loans held for sale | 3.8 | (5.8) | |||||||||
TBA / Forward MBS trades / Interest rate swap futures | (2.8) | 4.0 | |||||||||
Total | 4.6 | (4.8) | |||||||||
MSRs (1) | (30.6) | 31.4 | |||||||||
MSRs, embedded in pipeline | (0.4) | 0.2 | |||||||||
Total MSRs (2) | (31.0) | 31.6 | |||||||||
Derivatives related to MSRs | 11.2 | (11.0) | |||||||||
Total MSRs and related derivatives | (19.8) | 20.6 | |||||||||
Total, net | $ | (15.3) | $ | 15.8 |
Expected Maturity Date at December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2022 | 2023 | 2024 | 2025 | There- after | Total Balance | Fair Value (1) | ||||||||||||||||||||||||||||||||||||||||
Rate-Sensitive Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest-earning cash | $ | 261,515 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 261,515 | $ | 261,515 | |||||||||||||||||||||||||||||||
Average interest rate | 0.30 | % | — | % | — | % | — | % | — | % | — | % | 0.30 | % | |||||||||||||||||||||||||||||||||
Loans held for sale, at fair value | 366,364 | — | — | — | — | — | 366,364 | 366,364 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 3.33 | % | — | % | — | % | — | % | — | % | — | % | 3.33 | % | |||||||||||||||||||||||||||||||||
Loans held for sale, at lower of cost or fair value (2) | 153 | — | 473 | 6 | 17 | 20,823 | 21,472 | 21,472 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 5.00 | % | — | % | 5.51 | % | 4.61 | % | 3.50 | % | 4.21 | % | 4.23 | % | |||||||||||||||||||||||||||||||||
Loans held for investment | 396,408 | 385,882 | 729,032 | 1,550,187 | 1,392,130 | 2,543,488 | 6,997,127 | 6,997,127 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 3.26 | % | 3.46 | % | 3.64 | % | 3.52 | % | 3.53 | % | 3.44 | % | 3.39 | % | |||||||||||||||||||||||||||||||||
Debt service accounts and interest-earning time deposits | 20,451 | 283 | — | — | — | — | 20,734 | 20,734 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 0.09 | % | 5.55 | % | — | % | — | % | — | % | — | % | 0.17 | % | |||||||||||||||||||||||||||||||||
Total rate-sensitive assets | $ | 1,044,891 | $ | 386,165 | $ | 729,505 | $ | 1,550,193 | $ | 1,392,147 | $ | 2,564,311 | $ | 7,667,212 | $ | 7,667,212 | |||||||||||||||||||||||||||||||
Percent of total | 13.63 | % | 5.04 | % | 9.51 | % | 20.22 | % | 18.16 | % | 33.45 | % | 100.00 | % | |||||||||||||||||||||||||||||||||
Rate-Sensitive Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Match funded liabilities | $ | 106,288 | $ | 475,000 | $ | — | $ | — | $ | — | $ | — | $ | 581,288 | $ | 581,997 | |||||||||||||||||||||||||||||||
Average interest rate | 4.10 | % | 1.49 | % | — | % | — | % | — | % | — | % | 1.96 | % | |||||||||||||||||||||||||||||||||
Senior notes | 21,543 | 291,509 | — | — | — | — | 313,052 | 320,879 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 6.38 | % | 8.38 | % | — | % | — | % | — | % | — | % | 8.24 | % | |||||||||||||||||||||||||||||||||
SSTL and other borrowings (3) (4) | 821,141 | 206,662 | — | — | — | 47,476 | 1,075,279 | 1,043,212 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 3.91 | % | 6.48 | % | — | % | — | % | — | % | — | % | 4.55 | % | |||||||||||||||||||||||||||||||||
Total rate-sensitive liabilities | $ | 948,972 | $ | 973,171 | $ | — | $ | — | $ | — | $ | 47,476 | $ | 1,969,619 | $ | 1,946,088 | |||||||||||||||||||||||||||||||
Percent of total | 48.18 | % | 49.41 | % | — | % | — | % | — | % | 2.41 | % | 100.00 | % |
Expected Maturity Date at December 31, 2020 (Notional Amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2022 | 2023 | 2024 | 2025 | There- after | Total Balance | Fair Value (1) | ||||||||||||||||||||||||||||||||||||||||
Rate-Sensitive Derivative Financial Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets (liabilities) | |||||||||||||||||||||||||||||||||||||||||||||||
Forward MBS trades | 50,000 | — | — | — | — | — | $ | 50,000 | $ | (50) | |||||||||||||||||||||||||||||||||||||
Average coupon | 2.40 | % | — | % | — | % | — | % | — | % | — | % | 2.40 | % | |||||||||||||||||||||||||||||||||
TBA / Forward MBS Trades | 400,000 | — | — | — | — | — | 400,000 | (4,554) | |||||||||||||||||||||||||||||||||||||||
Average coupon | 2.22 | % | — | % | — | % | — | % | — | % | — | % | 2.22 | % | |||||||||||||||||||||||||||||||||
Derivatives futures | 593,500 | — | — | — | — | — | 593,500 | 504 | |||||||||||||||||||||||||||||||||||||||
Average coupon | 0.75 | % | — | % | — | % | — | % | — | % | — | % | 0.75 | % | |||||||||||||||||||||||||||||||||
IRLCs | 631,405 | — | — | — | — | — | 631,405 | 22,706 | |||||||||||||||||||||||||||||||||||||||
Average coupon | 2.89 | % | — | % | — | % | — | % | — | % | — | % | 2.89 | % | |||||||||||||||||||||||||||||||||
Total derivatives, net | $ | 1,674,905 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,674,905 | $ | 18,606 | |||||||||||||||||||||||||||||||
Forward LIBOR curve (5) | 0.14 | % | 0.13 | % | 0.20 | % | 0.36 | % | 0.60 | % | 0.86 | % | |||||||||||||||||||||||||||||||||||
Expected Maturity Date at December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | There- after | Total Balance | Fair Value (1) | ||||||||||||||||||||||||||||||||||||||||
Rate-Sensitive Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest-earning cash | $ | 433,224 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 433,224 | $ | 433,224 | |||||||||||||||||||||||||||||||
Average interest rate | 1.74 | % | — | % | — | % | — | % | — | % | — | % | 1.74 | % | |||||||||||||||||||||||||||||||||
Loans held for sale, at fair value | 208,752 | — | — | — | — | — | 208,752 | 208,752 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 5.41 | % | — | % | — | % | — | % | — | % | — | % | 5.41 | % | |||||||||||||||||||||||||||||||||
Loans held for sale, at lower of cost or fair value (2) | 5,009 | 6 | — | 559 | 203 | 60,740 | 66,517 | 66,517 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 4.67 | % | 5.29 | % | — | % | — | % | 5.52 | % | 7.06 | % | 4.42 | % | |||||||||||||||||||||||||||||||||
Loans held for investment | 258,058 | 275,651 | 608,912 | 1,231,545 | 1,566,200 | 2,329,230 | 6,269,596 | 6,269,596 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 4.77 | % | 4.57 | % | 4.71 | % | 4.92 | % | 4.91 | % | 4.95 | % | 4.82 | % | |||||||||||||||||||||||||||||||||
Debt service accounts and interest-earning time deposits | 23,463 | 203 | — | — | — | — | 23,666 | 23,666 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 0.11 | % | 9.90 | % | — | % | — | % | — | % | — | % | 0.17 | % | |||||||||||||||||||||||||||||||||
Total rate-sensitive assets | $ | 928,506 | $ | 275,860 | $ | 608,912 | $ | 1,232,104 | $ | 1,566,403 | $ | 2,389,970 | $ | 7,001,755 | $ | 7,001,755 | |||||||||||||||||||||||||||||||
Percent of total | 13.26 | % | 3.94 | % | 8.70 | % | 17.60 | % | 22.37 | % | 34.13 | % | 100.00 | % | |||||||||||||||||||||||||||||||||
Rate-Sensitive Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Match funded liabilities | $ | 394,109 | $ | 285,000 | $ | — | $ | — | $ | — | $ | — | $ | 679,109 | $ | 679,507 | |||||||||||||||||||||||||||||||
Average interest rate | 3.02 | % | 2.53 | % | — | % | — | % | — | % | — | % | 2.81 | % | |||||||||||||||||||||||||||||||||
Senior notes | — | 21,543 | 291,509 | — | — | — | 313,052 | 270,022 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | — | % | 6.38 | % | 8.38 | % | — | % | — | % | — | % | 8.24 | % | |||||||||||||||||||||||||||||||||
SSTL and other borrowings (3) (4) | 832,078 | 98,971 | 41,663 | — | — | 57,594 | 1,030,306 | 1,010,789 | |||||||||||||||||||||||||||||||||||||||
Average interest rate | 4.96 | % | 3.71 | % | — | % | — | % | 5.07 | % | — | % | 4.74 | % | |||||||||||||||||||||||||||||||||
Total rate-sensitive liabilities | $ | 1,226,187 | $ | 405,514 | $ | 333,172 | $ | — | $ | — | $ | 57,594 | $ | 2,022,467 | $ | 1,960,318 | |||||||||||||||||||||||||||||||
Percent of total | 60.63 | % | 20.05 | % | 16.47 | % | — | % | — | % | 2.85 | % | 100.00 | % |
Expected Maturity Date at December 31, 2019 (Notional Amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | There- after | Total Balance | Fair Value (1) | ||||||||||||||||||||||||||||||||||||||||
Rate-Sensitive Derivative Financial Instruments: | |||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets (liabilities) | |||||||||||||||||||||||||||||||||||||||||||||||
Interest rate caps | $ | 27,083 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 27,083 | $ | — | |||||||||||||||||||||||||||||||
Average strike rate | 3.00 | % | — | % | — | % | — | % | — | % | — | % | 3.00 | % | |||||||||||||||||||||||||||||||||
Forward MBS trades | 60,000 | — | — | — | — | — | 60,000 | (92) | |||||||||||||||||||||||||||||||||||||||
Average coupon | — | % | — | % | — | % | — | % | — | % | — | % | — | % | |||||||||||||||||||||||||||||||||
TBA / Forward MBS Trades | 1,200,000 | — | — | — | — | — | 1,200,000 | 1,121 | |||||||||||||||||||||||||||||||||||||||
Average coupon | 3.00 | % | — | % | — | % | — | % | — | % | — | % | 3.00 | % | |||||||||||||||||||||||||||||||||
IRLCs | 232,566 | — | — | — | — | — | 232,566 | 4,878 | |||||||||||||||||||||||||||||||||||||||
Average coupon | 3.97 | % | — | % | — | % | — | % | — | % | — | % | 3.97 | % | |||||||||||||||||||||||||||||||||
Total derivatives, net | $ | 1,519,649 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,519,649 | $ | 5,907 | |||||||||||||||||||||||||||||||
Forward LIBOR curve (5) | 1.76 | % | 1.51 | % | 1.48 | % | 1.58 | % | 1.68 | % | 1.78 | % |
Less Than One Year | After One Year Through Three Years | After Three Years Through Five Years | After Five Years | Total | |||||||||||||||||||||||||
Senior secured term loan (1) | $ | 20,000 | $ | 165,000 | $ | — | $ | — | $ | 185,000 | |||||||||||||||||||
Senior notes (1) | 21,543 | 291,509 | — | — | 313,052 | ||||||||||||||||||||||||
Other secured borrowings (1) | 801,141 | 41,662 | — | 47,476 | 890,279 | ||||||||||||||||||||||||
Contractual interest payments (2) | 61,819 | 28,116 | 659 | — | 90,594 | ||||||||||||||||||||||||
Originate/purchase mortgages or securities | 631,405 | — | — | — | 631,405 | ||||||||||||||||||||||||
Reverse mortgage equity draws (3) | 2,044,421 | — | — | — | 2,044,421 | ||||||||||||||||||||||||
Operating leases | 14,618 | 12,929 | 1,351 | — | 28,898 | ||||||||||||||||||||||||
$ | 3,594,947 | $ | 539,216 | $ | 2,010 | $ | 47,476 | $ | 4,183,649 |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Loans held for sale | $ | 387.8 | $ | 275.3 | |||||||
Loans held for investment - Reverse mortgages | 6,997.1 | 6,269.6 | |||||||||
Mortgage Servicing Rights | 1,294.8 | 1,486.4 | |||||||||
Other | 35.2 | 31.9 | |||||||||
Assets at fair value | $ | 8,715.0 | $ | 8,063.1 | |||||||
As a percentage of total assets | 82 | % | 77 | % | |||||||
Assets at fair value using Level 3 inputs | $ | 8,376.8 | $ | 7,847.9 | |||||||
As a percentage of assets at fair value | 96 | % | 97 | % | |||||||
HMBS-related borrowings | 6,772.7 | 6,063.4 | |||||||||
Financing liability - MSRs pledged | 567.0 | 950.6 | |||||||||
Other | 14.4 | 22.0 | |||||||||
Liabilities at fair value | $ | 7,354.1 | $ | 7,036.1 | |||||||
As a percentage of total liabilities | 72 | % | 70 | % | |||||||
Liabilities at fair value using Level 3 inputs | $ | 7,349.5 | $ | 7,036.0 | |||||||
As a percentage of liabilities at fair value | 100 | % | 100 | % |
December 31, | |||||||||||
Significant unobservable assumptions | 2020 | 2019 | |||||||||
Life in years | |||||||||||
Range | 0.9 to 8.0 | 2.4 to 7.8 | |||||||||
Weighted average | 5.9 | 6.0 | |||||||||
Conditional prepayment rate (1) | |||||||||||
Range | 10.6% to 28.8% | 7.8% to 28.3% | |||||||||
Weighted average | 15.4 | % | 14.6 | % | |||||||
Discount rate | 1.9 | % | 2.8 | % |
Conventional | Government-Insured | Non-Agency | |||||||||||||||
Prepayment speed | |||||||||||||||||
Range | 8.8% to 21.1% | 9.0% to 24.2% | 8.6% to 15.0% | ||||||||||||||
Weighted average | 13.1% | 15.5% | 11.3% | ||||||||||||||
Delinquency | |||||||||||||||||
Range | 1.6% to 3.5% | 6.8% to 17.9% | 27.7% to 29.4% | ||||||||||||||
Weighted average | 1.9% | 8.8% | 28.1% | ||||||||||||||
Cost to service (in dollars) | |||||||||||||||||
Range | $72 to $73 | $102 to $122 | $226 to $272 | ||||||||||||||
Weighted average | $72 | $109 | $261 | ||||||||||||||
Discount rate | 9.0% | 10.1% | 11.4% |
(3) | Exhibits. |
4.2 | The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument with respect to the issuance of long-term debt of the Company and its subsidiaries, the authorized principal amount of which does not exceed 10% of the consolidated assets of the Company and its subsidiaries. | |||||||||||||
101 | The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 were formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Loss, (iv) Consolidated Statements of Changes in Equity, (v) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | |||||||||||||
104 | The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, formatted in iXBRL (included as Exhibit 101). |
Ocwen Financial Corporation | ||||||||
By: | /s/ Glen A. Messina | |||||||
Glen A. Messina | ||||||||
President and Chief Executive Officer | ||||||||
Date: February 19, 2021 |
/s/ Phyllis R. Caldwell | Date: February 19, 2021 | |||||||
Phyllis R. Caldwell, Chair of the Board of Directors | ||||||||
/s/ Glen A. Messina | Date: February 19, 2021 | |||||||
Glen A. Messina, President, Chief Executive Officer and Director (principal executive officer) | ||||||||
/s/ Alan J. Bowers | Date: February 19, 2021 | |||||||
Alan J. Bowers, Director | ||||||||
/s/ Jacques J. Busquet | Date: February 19, 2021 | |||||||
Jacques J. Busquet, Director | ||||||||
/s/ Kevin Stein | Date: February 19, 2021 | |||||||
Kevin Stein, Director | ||||||||
/s/ Jenne K. Britell | Date: February 19, 2021 | |||||||
Jenne K. Britell, Director | ||||||||
/s/ DeForest B. Soaries, Jr. | Date: February 19, 2021 | |||||||
DeForest B. Soaries, Jr., Director | ||||||||
/s/ June C. Campbell | Date: February 19, 2021 | |||||||
June C. Campbell, Executive Vice President and Chief Financial Officer (principal financial officer) | ||||||||
/s/ Francois Grunenwald | Date: February 19, 2021 | |||||||
Francois Grunenwald, Senior Vice President and Chief Accounting Officer (principal accounting officer) |
Page | |||||
F-2 | |||||
F-4 | |||||
Consolidated Financial Statements: | |||||
Consolidated Balance Sheets at December 31, 2020 and 2019 | F-5 | ||||
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 | F-6 | ||||
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2020, 2019 and 2018 | F-7 | ||||
Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018 | F-8 | ||||
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 | F-9 | ||||
F-10 |
/s/ DELOITTE & TOUCHE LLP | ||
New York, NY | ||
February, 19 2021 | ||
We have served as the Company’s auditor since 2009. |
/s/ DELOITTE & TOUCHE LLP | ||
New York, NY | ||
February 19, 2021 |
December 31, 2020 | December 31, 2019 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash (amounts related to variable interest entities (VIEs) of $ | |||||||||||
Mortgage servicing rights, at fair value | |||||||||||
Advances, net (amounts related to VIEs of $ | |||||||||||
Loans held for sale ($ | |||||||||||
Loans held for investment, at fair value (amounts related to VIEs of $ | |||||||||||
Receivables, net | |||||||||||
Premises and equipment, net | |||||||||||
Other assets ($ | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
Liabilities | |||||||||||
Home Equity Conversion Mortgage-Backed Securities (HMBS) - related borrowings, at fair value | $ | $ | |||||||||
Other financing liabilities, at fair value (amounts related to VIEs of $ | |||||||||||
Advance match funded liabilities (related to VIEs) | |||||||||||
Other secured borrowings, net | |||||||||||
Senior notes, net | |||||||||||
Other liabilities ($ | |||||||||||
Total liabilities | |||||||||||
Commitments and Contingencies (Notes 25 and 26) | |||||||||||
Stockholders’ Equity | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive loss, net of income taxes | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
For the Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Revenue | |||||||||||||||||
Servicing and subservicing fees | $ | $ | $ | ||||||||||||||
Gain on loans held for sale, net | |||||||||||||||||
Reverse mortgage revenue, net | |||||||||||||||||
Other revenue, net | |||||||||||||||||
Total revenue | |||||||||||||||||
MSR valuation adjustments, net | ( | ( | ( | ||||||||||||||
Operating expenses | |||||||||||||||||
Compensation and benefits | |||||||||||||||||
Servicing and origination | |||||||||||||||||
Professional services | |||||||||||||||||
Technology and communications | |||||||||||||||||
Occupancy and equipment | |||||||||||||||||
Other expenses | |||||||||||||||||
Total operating expenses | |||||||||||||||||
Other income (expense) | |||||||||||||||||
Interest income | |||||||||||||||||
Interest expense | ( | ( | ( | ||||||||||||||
Pledged MSR liability expense | ( | ( | ( | ||||||||||||||
Gain on repurchase of senior secured notes | |||||||||||||||||
Bargain purchase gain | ( | ||||||||||||||||
Other, net | ( | ||||||||||||||||
Total other expense, net | ( | ( | ( | ||||||||||||||
Loss from continuing operations before income taxes | ( | ( | ( | ||||||||||||||
Income tax expense (benefit) | ( | ||||||||||||||||
Loss from continuing operations, net of tax | ( | ( | ( | ||||||||||||||
Income from discontinued operations, net of tax | |||||||||||||||||
Net loss | ( | ( | ( | ||||||||||||||
Net income attributable to non-controlling interests | ( | ||||||||||||||||
Net loss attributable to Ocwen stockholders | $ | ( | $ | ( | $ | ( | |||||||||||
Earnings (loss) per share attributable to Ocwen stockholders - Basic and Diluted | |||||||||||||||||
Continuing operations | $ | ( | $ | ( | $ | ( | |||||||||||
Discontinued operations | |||||||||||||||||
$ | ( | $ | ( | $ | ( | ||||||||||||
Weighted average common shares outstanding | |||||||||||||||||
Basic | |||||||||||||||||
Diluted |
For the Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income (loss), net of income taxes | |||||||||||||||||
Reclassification adjustment for losses on cash flow hedges included in net income | |||||||||||||||||
Change in unfunded pension plan obligation liability | ( | ( | ( | ||||||||||||||
Other | ( | ( | |||||||||||||||
Comprehensive loss | ( | ( | ( | ||||||||||||||
Comprehensive income attributable to non-controlling interests | ( | ||||||||||||||||
Comprehensive loss attributable to Ocwen stockholders | $ | ( | $ | ( | $ | ( |
Ocwen Stockholders | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss, Net of Taxes | Non-controlling Interest in Subsidiaries | Total | ||||||||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2018 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Cumulative effect of fair value election - MSRs, net of income taxes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Cumulative effect of adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-16 | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||||||||
Equity-based compensation and other | — | — | — | ||||||||||||||||||||||||||||||||||||||
Capital distribution to non-controlling interest | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Purchase of non-controlling interest | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of income taxes | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | ( | ||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Cumulative effect on adoption of FASB ASU 2016-02 Leases | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Equity-based compensation and other | — | — | — | ||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of income taxes | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | ( | ( | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
Cumulative effect of adoption of FASB ASU No. 2016-13 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Additional shares issued on reverse stock split rounding | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Equity-based compensation and other | — | — | — | ||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of income taxes | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | $ |
For the Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Cash flows from operating activities | |||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | |||||||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||||
MSR valuation adjustments, net | |||||||||||||||||
Gain on sale of MSRs, net | ( | ( | ( | ||||||||||||||
Provision for bad debts | |||||||||||||||||
Depreciation | |||||||||||||||||
Amortization of debt issuance costs and discount | |||||||||||||||||
Gain on repurchase of senior secured notes | ( | ||||||||||||||||
Provision for (reversal of) valuation allowance on deferred tax assets | ( | ||||||||||||||||
Decrease (increase) in deferred tax assets other than provision for valuation allowance | ( | ( | |||||||||||||||
Equity-based compensation expense | |||||||||||||||||
(Gain) loss on valuation of Pledged MSR financing liability | ( | ( | |||||||||||||||
Net gain on valuation of loans held for investment and HMBS-related borrowings | ( | ( | ( | ||||||||||||||
Bargain purchase gain | ( | ||||||||||||||||
Gain on loans held for sale, net | ( | ( | ( | ||||||||||||||
Origination and purchase of loans held for sale | ( | ( | ( | ||||||||||||||
Proceeds from sale and collections of loans held for sale | |||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||
Decrease in advances and match funded advances | |||||||||||||||||
Decrease in receivables and other assets, net | |||||||||||||||||
Decrease in other liabilities | ( | ( | ( | ||||||||||||||
Other, net | ( | ( | |||||||||||||||
Net cash provided by operating activities | |||||||||||||||||
Cash flows from investing activities | |||||||||||||||||
Origination of loans held for investment | ( | ( | ( | ||||||||||||||
Principal payments received on loans held for investment | |||||||||||||||||
Purchase of MSRs | ( | ( | ( | ||||||||||||||
Proceeds from sale of MSRs | |||||||||||||||||
Acquisition of advances in connection with the purchase of MSRs | ( | ( | — | ||||||||||||||
Proceeds from sale of advances and match funded advances | |||||||||||||||||
Proceeds from sale of real estate | |||||||||||||||||
Additions to premises and equipment | ( | ( | ( | ||||||||||||||
Net cash acquired in the acquisition of PHH | |||||||||||||||||
Restricted cash acquired in the acquisition of PHH | |||||||||||||||||
Issuance of automotive dealer financing notes | ( | ||||||||||||||||
Collections of automotive dealer financing notes | |||||||||||||||||
Other, net | ( | ||||||||||||||||
Net cash used in investing activities | ( | ( | ( | ||||||||||||||
Cash flows from financing activities | |||||||||||||||||
Repayment of match funded liabilities, net | ( | ( | ( | ||||||||||||||
Repayment of other financing liabilities | ( | ( | ( | ||||||||||||||
Proceeds from (repayments of) mortgage loan warehouse facilities, net | ( | ||||||||||||||||
Proceeds from MSR financing facilities | |||||||||||||||||
Repayment of MSR financing facilities | ( | ( | ( | ||||||||||||||
Repayment and repurchase of senior notes | ( | ( | |||||||||||||||
Proceeds from issuance of additional senior secured term loan (SSTL) | — | — | |||||||||||||||
Repayment of SSTL borrowing | ( | ( | ( | ||||||||||||||
Payment of debt issuance costs | ( | ( | — | ||||||||||||||
Proceeds from sale of MSRs accounted for as a financing | |||||||||||||||||
Proceeds from sale of Home Equity Conversion Mortgages (HECM, or reverse mortgages) accounted for as a financing (HMBS-related borrowings) | |||||||||||||||||
Repayment of HMBS-related borrowings | ( | ( | ( | ||||||||||||||
Repurchase of common stock | ( | ||||||||||||||||
Capital distribution to non-controlling interest | ( | ||||||||||||||||
Purchase of non-controlling interest | ( | ||||||||||||||||
Other, net | ( | ( | ( | ||||||||||||||
Net cash provided by financing activities | |||||||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of year | |||||||||||||||||
Cash, cash equivalents and restricted cash at end of year | $ | $ | $ | ||||||||||||||
Supplemental cash flow information | |||||||||||||||||
Interest paid | $ | $ | $ | ||||||||||||||
Income tax payments (refunds), net | ( | ||||||||||||||||
Supplemental non-cash investing and financing activities | |||||||||||||||||
Initial consolidation (subsequent deconsolidation) of mortgage-backed securitization trusts (VIEs): | |||||||||||||||||
Loans held for investment | $ | ( | $ | $ | |||||||||||||
Other financing liabilities | ( | ||||||||||||||||
Derecognition of MSRs and financing liabilities: | |||||||||||||||||
MSRs | $ | ( | |||||||||||||||
Financing liability - MSRs pledged (Rights to MSRs) | ( | ||||||||||||||||
Recognition of future draw commitments for HECM loans at fair value upon adoption of FASB ASU No. 2016-13 | |||||||||||||||||
Transfers from loans held for investment to loans held for sale | |||||||||||||||||
Transfers of loans held for sale to real estate owned (REO) | |||||||||||||||||
Issuance of common stock in connection with litigation settlement | |||||||||||||||||
Cumulative effect adjustment for election of fair value for MSRs previously accounted for using the amortization method | |||||||||||||||||
Recognition of gross right-of-use asset and lease liability: | |||||||||||||||||
Right-of-use asset | |||||||||||||||||
Lease liability | |||||||||||||||||
Supplemental business acquisition information | |||||||||||||||||
Fair value of assets acquired | $ | $ | $ | ||||||||||||||
Fair value of liabilities assumed | |||||||||||||||||
Total identifiable net assets acquired | ( | ||||||||||||||||
Bargain purchase gain related to acquisition of PHH | ( | ||||||||||||||||
Total consideration | |||||||||||||||||
Less: Cash consideration paid by PHH | ( | ||||||||||||||||
Cash consideration paid by Ocwen | |||||||||||||||||
Cash acquired from PHH | |||||||||||||||||
Net cash acquired by Ocwen | $ | $ | $ |
December 31, 2020 | December 31, 2019 | December 31, 2018 | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||||||||
Restricted cash and equivalents: | |||||||||||||||||
Debt service accounts | |||||||||||||||||
Other restricted cash | |||||||||||||||||
Total cash, cash equivalents and restricted cash reported in the statements of cash flows | $ | $ | $ |
Computer hardware and software | 2 – 3 years | ||||
Buildings | |||||
Leasehold improvements | |||||
Right of Use (ROU) assets | |||||
Furniture and fixtures | |||||
Office equipment |
Revenues | $ | |||||||
Expenses | ||||||||
Other income (expense) | ( | |||||||
Income tax benefit | ( | |||||||
Net loss from continuing operations | $ | ( |
2018 | |||||
(Unaudited) | |||||
Revenues | $ | ||||
Loss from continuing operations, net of tax attributable to Ocwen common stockholders | $ | ( | |||
Employee-related | Facility-related | Other | Total | ||||||||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | $ | |||||||||||||||||||
Charges | |||||||||||||||||||||||
Payments / Other | ( | ( | ( | ( | |||||||||||||||||||
Balance at December 31, 2019 | |||||||||||||||||||||||
Payments | ( | ( | ( | ( | |||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Proceeds received from securitizations | $ | $ | $ | ||||||||||||||
Servicing fees collected (1) | |||||||||||||||||
Purchases of previously transferred assets, net of claims reimbursed | ( | ( | ( | ||||||||||||||
$ | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Carrying value of assets | |||||||||||
MSRs, at fair value | $ | $ | |||||||||
Advances | |||||||||||
UPB of loans transferred | |||||||||||
Maximum exposure to loss | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
MSRs pledged (MSRs, at fair value) | $ | $ | |||||||||
Unamortized deferred lender fees (Other assets) | |||||||||||
Debt service account (Restricted cash) | |||||||||||
Outstanding borrowings (Other secured borrowings, net) | |||||||||||
December 31, | |||||||||||
2020 | 2019 | ||||||||||
MSRs pledged (MSRs, at fair value) | $ | $ | |||||||||
Debt service account (Restricted cash) | |||||||||||
Outstanding borrowings (Other secured borrowings, net) | |||||||||||
Unamortized debt issuance costs (Other secured borrowings, net) | |||||||||||
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Loans held for investment, at fair value - Restricted for securitization investors | $ | $ | |||||||||
Financing liability - Owed to securitization investors, at fair value |
December 31, | |||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||
Level | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||||||||
Loans held for sale, at fair value (a) (e) | 3, 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Loans held for sale, at lower of cost or fair value (b) | 3 | ||||||||||||||||||||||||||||
Total Loans held for sale | $ | $ | $ | $ | |||||||||||||||||||||||||
Loans held for investment | |||||||||||||||||||||||||||||
Loans held for investment - Reverse mortgages (a) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Loans held for investment - Restricted for securitization investors (a) | 3 | ||||||||||||||||||||||||||||
Total loans held for investment | |||||||||||||||||||||||||||||
Advances, net (c) | 3 | ||||||||||||||||||||||||||||
Receivables, net (c) | 3 | ||||||||||||||||||||||||||||
Mortgage-backed securities (a) | 3 | ||||||||||||||||||||||||||||
Corporate bonds (a) | 2 | ||||||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||
Level | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||
Advance match funded liabilities (c) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Financing liabilities: | |||||||||||||||||||||||||||||
HMBS-related borrowings (a) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Financing liability - MSRs pledged (Rights to MSRs) (a) | 3 | ||||||||||||||||||||||||||||
Financing liability - Owed to securitization investors (a) | 3 | ||||||||||||||||||||||||||||
Total Financing liabilities | $ | $ | $ | $ | |||||||||||||||||||||||||
Other secured borrowings: | |||||||||||||||||||||||||||||
Senior secured term loan (c) (d) | 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Mortgage warehouse and MSR financing (c) | 3 | ||||||||||||||||||||||||||||
Total Other secured borrowings | $ | $ | $ | $ | |||||||||||||||||||||||||
Senior notes: | |||||||||||||||||||||||||||||
Senior unsecured notes (c) (d) | 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Senior secured notes (c) (d) | 2 | ||||||||||||||||||||||||||||
Total Senior notes | $ | $ | $ | $ | |||||||||||||||||||||||||
Derivative financial instrument assets (liabilities) | |||||||||||||||||||||||||||||
Interest rate lock commitments (a) (f) | 3, 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Forward trades - Loans held for sale (a) | 1 | ( | ( | ( | ( | ||||||||||||||||||||||||
TBA / Forward mortgage-backed securities (MBS) trades and futures- MSR hedging (a) | 1 | ( | ( | ||||||||||||||||||||||||||
Derivatives futures (a) | 1 | ||||||||||||||||||||||||||||
MSRs (a) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Loans Held for Investment - Restricted for Securitization Investors | Financing Liability - Owed to Securitiza - tion Investors | Loans Held for Sale - Fair Value | Mortgage-Backed Securities | IRLCs | |||||||||||||||||||||||||
Year Ended December 31, 2020 | |||||||||||||||||||||||||||||
Beginning balance | $ | $ | ( | $ | $ | ||||||||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||||||||
Purchases | — | — | — | — | |||||||||||||||||||||||||
Issuances | — | — | — | — | |||||||||||||||||||||||||
De-consolidation of mortgage-backed securitization trusts | ( | — | — | — | |||||||||||||||||||||||||
Sales | — | — | ( | — | — | ||||||||||||||||||||||||
Settlements | ( | — | — | — | |||||||||||||||||||||||||
Transfers to: | |||||||||||||||||||||||||||||
Loans held for sale, at fair value | — | — | — | — | ( | ||||||||||||||||||||||||
Receivables, net | — | — | ( | — | |||||||||||||||||||||||||
( | |||||||||||||||||||||||||||||
Change in fair value included in earnings | — | ( | ( | ||||||||||||||||||||||||||
Transfers in and / or out of Level 3 | — | — | — | ||||||||||||||||||||||||||
Ending balance | $ | $ | ( | $ | $ | $ |
Loans Held for Investment - Restricted for Securitization Investors | Financing Liability - Owed to Securitiza - tion Investors | Mortgage-Backed Securities | Derivatives - Interest Rate Caps | ||||||||||||||||||||
Year Ended December 31, 2019 | |||||||||||||||||||||||
Beginning balance | $ | $ | ( | $ | $ | ||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||
Purchases | — | — | — | — | |||||||||||||||||||
Issuances | — | — | — | — | |||||||||||||||||||
Sales | — | — | — | — | |||||||||||||||||||
Settlements | ( | — | — | ||||||||||||||||||||
( | |||||||||||||||||||||||
Change in fair value included in earnings | — | — | ( | ||||||||||||||||||||
Transfers in and / or out of Level 3 | — | — | — | — | |||||||||||||||||||
Ending balance | $ | $ | ( | $ | $ |
Loans Held for Investment - Restricted for Securitization Investors | Financing Liability - Owed to Securitiza - tion Investors | Mortgage-Backed Securities | Derivatives - Interest Rate Caps | ||||||||||||||||||||
Year Ended December 31, 2018 | |||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | |||||||||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||||||||
Purchases | — | — | — | ||||||||||||||||||||
Issuances | — | — | — | — | |||||||||||||||||||
Consolidation of mortgage-backed securitization trusts | ( | — | — | ||||||||||||||||||||
Sales | — | — | — | — | |||||||||||||||||||
Settlements | ( | — | ( | ||||||||||||||||||||
( | ( | ||||||||||||||||||||||
Change in fair value | — | — | ( | ( | |||||||||||||||||||
Transfers in and / or out of Level 3 | — | — | — | — | |||||||||||||||||||
Ending balance | $ | $ | ( | $ | $ |
December 31, | |||||||||||
Significant unobservable assumptions | 2020 | 2019 | |||||||||
Life in years | |||||||||||
Range | |||||||||||
Weighted average | |||||||||||
Conditional prepayment rate (1) | |||||||||||
Range | |||||||||||
Weighted average | % | % | |||||||||
Discount rate | % | % |
• | Mortgage prepayment speeds | • | Delinquency rates | ||||||||
• | Cost of servicing | • | Interest rate used for computing float earnings | ||||||||
• | Discount rate | • | Compensating interest expense | ||||||||
• | Interest rate used for computing the cost of financing servicing advances | • | Collection rate of other ancillary fees | ||||||||
• | Curtailment on advances |
December 31, | |||||||||||||||||||||||
Significant unobservable assumptions | 2020 | 2019 | |||||||||||||||||||||
Agency | Non-Agency | Agency | Non-Agency | ||||||||||||||||||||
Weighted average prepayment speed | % | % | % | % | |||||||||||||||||||
Weighted average delinquency rate | % | % | % | % | |||||||||||||||||||
Weighted average discount rate | % | % | % | % | |||||||||||||||||||
Weighted average cost to service (in dollars) | $ | $ | $ | $ |
Adverse change in fair value | 10% | 20% | |||||||||
Weighted average prepayment speeds | $ | ( | $ | ( | |||||||
Weighted average discount rate | ( | ( |
December 31, | |||||||||||
Significant unobservable assumptions | 2020 | 2019 | |||||||||
Live in years | |||||||||||
Range | |||||||||||
Weighted average | |||||||||||
Conditional prepayment rate | |||||||||||
Range | |||||||||||
Weighted average | % | % | |||||||||
Discount rate | % | % |
December 31, | |||||||||||
Significant valuation assumptions | 2020 | 2019 | |||||||||
Weighted average prepayment speed | % | % | |||||||||
Weighted average delinquency rate | % | % | |||||||||
Weighted average discount rate | % | % | |||||||||
Weighted average cost to service (in dollars) | $ | $ |
Loans Held for Sale - Fair Value | Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Originations and purchases | |||||||||||||||||
Proceeds from sales | ( | ( | ( | ||||||||||||||
Principal collections | ( | ( | ( | ||||||||||||||
Acquired in connection with the acquisition of PHH | |||||||||||||||||
Transfers from (to): | |||||||||||||||||
Loans held for investment, at fair value | |||||||||||||||||
Receivables | ( | ( | ( | ||||||||||||||
REO (Other assets) | ( | ( | ( | ||||||||||||||
Gain on sale of loans | |||||||||||||||||
(Decrease) increase in fair value of loans | ( | ( | |||||||||||||||
Other | ( | ( | |||||||||||||||
Ending balance (1) (2) | $ | $ | $ |
Loans Held for Sale - Lower of Cost or Fair Value | Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Purchases (1) | |||||||||||||||||
Proceeds from sales | ( | ( | ( | ||||||||||||||
Principal collections | ( | ( | ( | ||||||||||||||
Transfers from (to): | |||||||||||||||||
Receivables, net | ( | ( | |||||||||||||||
REO (Other assets) | ( | ( | |||||||||||||||
Gain on sale of loans | |||||||||||||||||
Decrease (increase) in valuation allowance | ( | ||||||||||||||||
Other | |||||||||||||||||
Ending balance (2) | $ | $ | $ |
Valuation Allowance - Loans Held for Sale at Lower of Cost or Fair Value | Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Provision | |||||||||||||||||
Transfer from Liability for indemnification obligations (Other liabilities) | |||||||||||||||||
Sales of loans | ( | ( | ( | ||||||||||||||
Other | |||||||||||||||||
Ending balance | $ | $ | $ |
Years Ended December 31, | |||||||||||||||||
Gains on Loans Held for Sale, Net | 2020 | 2019 | 2018 | ||||||||||||||
Gain on sales of loans, net | |||||||||||||||||
MSRs retained on transfers of forward mortgage loans | $ | $ | $ | ||||||||||||||
Gain on sale of forward mortgage loans | |||||||||||||||||
Gain on sale of repurchased Ginnie Mae loans | |||||||||||||||||
Change in fair value of IRLCs | |||||||||||||||||
Change in fair value of loans held for sale | ( | ||||||||||||||||
(Loss) gain on economic hedge instruments | ( | ( | |||||||||||||||
Other | ( | ( | ( | ||||||||||||||
$ | $ | $ |
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||
Loans Held for Investment - Reverse Mortgages | HMBS - Related Borrowings | Loans Held for Investment - Reverse Mortgages | HMBS - Related Borrowings | Loans Held for Investment - Reverse Mortgages | HMBS - Related Borrowings | ||||||||||||||||||||||||||||||
Beginning balance | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Cumulative effect of fair value election (2) | — | — | — | — | — | ||||||||||||||||||||||||||||||
Originations | — | — | — | ||||||||||||||||||||||||||||||||
Securitization of HECM loans accounted for as a financing (incl. realized fair value changes) | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||
Repayments (principal payments received) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Transfers to: | |||||||||||||||||||||||||||||||||||
Loans held for sale, at fair value | ( | — | ( | — | ( | — | |||||||||||||||||||||||||||||
Receivables, net | ( | — | ( | — | ( | — | |||||||||||||||||||||||||||||
REO (Other assets) | ( | — | ( | — | ( | — | |||||||||||||||||||||||||||||
Change in fair value (1) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Ending Balance | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Securitized loans (pledged to HMBS-Related Borrowings) | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
Unsecuritized loans | $ | ||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | ||||||||||||||||||||||||||||||||
Reverse Mortgage Revenue, net | Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Gain on new originations (1) | $ | $ | $ | ||||||||||||||
Change in fair value of securitized loans held for investment and HMBS-related borrowings, net | |||||||||||||||||
Loan fees and other | |||||||||||||||||
$ | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Principal and interest | $ | $ | |||||||||
Taxes and insurance | |||||||||||
Foreclosures, bankruptcy, REO and other | |||||||||||
Allowance for losses | ( | ( | |||||||||
Advances, net | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Asset acquisition | |||||||||||||||||
Acquired in connection with the acquisition of PHH | |||||||||||||||||
Transfer to Other assets | ( | ||||||||||||||||
New advances | |||||||||||||||||
Sales of advances | ( | ( | ( | ||||||||||||||
Collections of advances and other | ( | ( | ( | ||||||||||||||
Net decrease (increase) in allowance for losses (1) | ( | ||||||||||||||||
Ending balance | $ | $ | $ |
Allowance for Losses | Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Provision | |||||||||||||||||
Net charge-offs and other (1) | ( | ( | |||||||||||||||
Ending balance | $ | $ | $ |
Mortgage Servicing Rights – Fair Value Measurement Method | Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Agency | Non-Agency | Total | Agency | Non-Agency | Total | Agency | Non-Agency | Total | |||||||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
Fair value election - Transfer from MSRs carried at amortized cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of fair value election | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Additions: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognized on the sale of residential mortgage loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognized in connection with the acquisition of PHH | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of MSRs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicing transfers and adjustments (1) | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Changes in fair value (2): | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in valuation inputs or assumptions | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Realization of expected future cash flows and other changes | ( | ( | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | $ | $ | $ | $ | $ | $ | $ | $ |
UPB at December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Owned MSRs | $ | $ | $ | ||||||||||||||
NRZ pledged MSRs (1) | |||||||||||||||||
Total MSR UPB | $ | $ | $ |
Amount | Count | ||||||||||
California | $ | ||||||||||
New York | |||||||||||
Florida | |||||||||||
New Jersey | |||||||||||
Texas | |||||||||||
Other | |||||||||||
$ |
Years Ended December 31, | |||||||||||||||||
Servicing Revenue | 2020 | 2019 | 2018 | ||||||||||||||
Loan servicing and subservicing fees | |||||||||||||||||
Servicing | $ | $ | $ | ||||||||||||||
Subservicing | |||||||||||||||||
NRZ | |||||||||||||||||
Total loan servicing and subservicing fees | |||||||||||||||||
Ancillary income | |||||||||||||||||
Late charges | |||||||||||||||||
Home Affordable Modification Program (HAMP) fees (1) | |||||||||||||||||
Custodial accounts (float earnings) | |||||||||||||||||
Loan collection fees | |||||||||||||||||
Other | |||||||||||||||||
Total ancillary income | |||||||||||||||||
$ | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Balance Sheets | |||||||||||||||||
MSRs, at fair value (1) | $ | $ | $ | ||||||||||||||
Due from NRZ (Receivables) | |||||||||||||||||
Sales and transfers of MSRs (2) | |||||||||||||||||
Advance funding, subservicing fees and reimbursable expenses | |||||||||||||||||
$ | $ | $ | |||||||||||||||
Due to NRZ (Other liabilities) | $ | $ | $ | ||||||||||||||
Financing liability - MSRs pledged, at fair value | |||||||||||||||||
Original Rights to MSRs Agreements | $ | $ | $ | ||||||||||||||
2017 Agreements and New RMSR Agreements | |||||||||||||||||
PMC MSR Agreements (1) | |||||||||||||||||
$ | $ | $ | |||||||||||||||
Statements of Operations | |||||||||||||||||
Servicing fees collected on behalf of NRZ (1) | $ | $ | $ | ||||||||||||||
Less: Subservicing fee retained (1) | |||||||||||||||||
Net servicing fees remitted to NRZ | |||||||||||||||||
Less: Reduction (increase) in financing liability | |||||||||||||||||
Changes in fair value: | |||||||||||||||||
Original Rights to MSRs Agreements | ( | ( | |||||||||||||||
2017 Agreements and New RMSR Agreements | ( | ( | |||||||||||||||
PMC MSR Agreements (1) | |||||||||||||||||
( | |||||||||||||||||
Runoff and settlement: | |||||||||||||||||
Original Rights to MSRs Agreements | |||||||||||||||||
2017 Agreements and New RMSR Agreements | |||||||||||||||||
PMC MSR Agreements (1) | |||||||||||||||||
Other | ( | ||||||||||||||||
Pledged MSR liability expense | $ | $ | $ |
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 | $ | $ | $ | $ | |||||||||||||||||||
Additions | — | — | — | — | |||||||||||||||||||
Sales | — | — | ( | ( | |||||||||||||||||||
Changes in fair value: | |||||||||||||||||||||||
Original Rights to MSRs Agreements | — | — | |||||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | — | |||||||||||||||||||||
PMC MSR Agreements | — | — | ( | ( | |||||||||||||||||||
Runoff and settlement: | |||||||||||||||||||||||
Original Rights to MSRs Agreements | ( | — | — | ( | |||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | ( | — | ( | |||||||||||||||||||
PMC MSR Agreements | — | — | ( | ( | |||||||||||||||||||
Derecognition of Pledged MSR financing liability due to termination of PMC MSR Agreements | — | — | ( | ( | |||||||||||||||||||
Calls (1): | |||||||||||||||||||||||
Original Rights to MSRs Agreements | ( | — | — | ( | |||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | ( | — | ( | |||||||||||||||||||
PMC MSR Agreements | — | — | — | — | |||||||||||||||||||
Ending balance | $ | $ | $ | $ |
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 | $ | $ | $ | $ | |||||||||||||||||||
Additions | — | — | |||||||||||||||||||||
Sales | — | — | |||||||||||||||||||||
Changes in fair value: | |||||||||||||||||||||||
Original Rights to MSRs Agreements | — | — | |||||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | — | |||||||||||||||||||||
PMC MSR Agreements | — | — | ( | ( | |||||||||||||||||||
Runoff and settlement: | |||||||||||||||||||||||
Original Rights to MSRs Agreements | ( | — | — | ( | |||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | ( | — | ( | |||||||||||||||||||
PMC MSR Agreements | — | — | ( | ( | |||||||||||||||||||
Calls (1): | — | — | — | ||||||||||||||||||||
Original Rights to MSRs Agreements | ( | — | — | ( | |||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | ( | — | ( | |||||||||||||||||||
PMC MSR Agreements | — | — | |||||||||||||||||||||
Ending balance | $ | $ | $ | $ |
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 | $ | $ | $ | $ | |||||||||||||||||||
Additions | — | — | |||||||||||||||||||||
Assumed in connection with the acquisition of PHH | — | — | |||||||||||||||||||||
Receipt of lump-sum cash payments | — | — | |||||||||||||||||||||
Changes in fair value: | |||||||||||||||||||||||
Original Rights to MSRs Agreements | ( | — | — | ( | |||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | ( | — | ( | |||||||||||||||||||
PMC MSR Agreements | — | — | ( | ( | |||||||||||||||||||
Runoff and settlement: | |||||||||||||||||||||||
Original Rights to MSRs Agreements | ( | — | — | ( | |||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | ( | — | ( | |||||||||||||||||||
PMC MSR Agreements | — | — | ( | ( | |||||||||||||||||||
Calls (1): | |||||||||||||||||||||||
Original Rights to MSRs Agreements | ( | — | — | ( | |||||||||||||||||||
2017 Agreements and New RMSR Agreements | — | ( | — | ( | |||||||||||||||||||
PMC MSR Agreements | — | — | ( | ( | |||||||||||||||||||
Ending balance | $ | $ | $ | $ |
Ocwen servicer of record (MSR title retained by Ocwen) - Ocwen MSR (1) (2) | $ | ||||
NRZ servicer of record (MSR title transferred to NRZ) - Ocwen MSR (1) | |||||
Ocwen subservicer | |||||
Total NRZ UPB at December 31, 2020 | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Servicing-related receivables: | |||||||||||
Government-insured loan claims - Forward | $ | $ | |||||||||
Government-insured loan claims - Reverse | |||||||||||
Due from custodial accounts | |||||||||||
Reimbursable expenses | |||||||||||
Advance funding, subservicing fees and reimbursable expenses - Due from NRZ | |||||||||||
Sales and transfers of MSRs - Due from NRZ | |||||||||||
Other | |||||||||||
Income taxes receivable | |||||||||||
Other receivables | |||||||||||
Allowance for losses | ( | ( | |||||||||
$ | $ |
Allowance for Losses - Government-Insured Loan Claims | Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Provision | |||||||||||||||||
Charge-offs and other, net | ( | ( | ( | ||||||||||||||
Ending balance | $ | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Computer hardware | $ | $ | |||||||||
Operating lease ROU assets | |||||||||||
Leasehold improvements | |||||||||||
Computer software | |||||||||||
Office equipment | |||||||||||
Furniture and fixtures | |||||||||||
Buildings | |||||||||||
Other | |||||||||||
Less accumulated depreciation and amortization | ( | ( | |||||||||
$ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Contingent loan repurchase asset | $ | $ | |||||||||
Derivatives, at fair value | |||||||||||
Prepaid expenses | |||||||||||
Prepaid representation, warranty and indemnification claims - Agency MSR sale | |||||||||||
Prepaid lender fees, net | |||||||||||
REO | |||||||||||
Deferred tax assets, net | |||||||||||
Security deposits | |||||||||||
Mortgage-backed securities, at fair value | |||||||||||
Other | |||||||||||
$ | $ |
Advance Match Funded Liabilities | Borrowing Capacity | December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||
Borrowing Type | Maturity (1) | Amorti-zation Date (1) | Total | Available (2) | Weighted Average Int. Rate | Balance | Weighted Average Int. Rate | Balance | ||||||||||||||||||||||||||||||||||||||||||
Advance Financing Facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
Advance Receivables Backed Notes - Series 2015-VF5 (3) | Jun. 2051 | Jun. 2021 | $ | $ | % | $ | % | $ | ||||||||||||||||||||||||||||||||||||||||||
Advance Receivables Backed Notes, Series 2020-T1 (4) | Aug. 2052 | Aug. 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
Advance Receivables Backed Notes, Series 2019-T1 (4) | Aug. 2050 | Aug. 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||
Advance Receivables Backed Notes, Series 2019-T2 (4) | Aug. 2051 | Aug. 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total Ocwen Master Advance Receivables Trust (OMART) | % | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Ocwen Freddie Advance Funding (OFAF) - Advance Receivables Backed Notes, Series 2015-VF1 (5) | Jun. 2051 | Jun. 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | % | $ | % | $ |
Financing Liabilities | Outstanding Balance at December 31, | |||||||||||||||||||||||||||||||
Borrowing Type | Collateral | Interest Rate | Maturity | 2020 | 2019 | |||||||||||||||||||||||||||
HMBS-related borrowings, at fair value (1) | Loans held for investment | 1ML + 245 bps | (1) | $ | $ | |||||||||||||||||||||||||||
Other financing liabilities, at fair value | ||||||||||||||||||||||||||||||||
MSRs pledged (Rights to MSRs), at fair value: | ||||||||||||||||||||||||||||||||
Original Rights to MSRs Agreements (2) | MSRs | (2) | (2) | |||||||||||||||||||||||||||||
2017 Agreements and New RMSR Agreements (3) | MSRs | (3) | (3) | |||||||||||||||||||||||||||||
PMC MSR Agreements (2) | MSRs | (2) | (2) | |||||||||||||||||||||||||||||
Financing liability - Owed to securitization investors, at fair value: | ||||||||||||||||||||||||||||||||
IndyMac Mortgage Loan Trust (INDX 2004-AR11) (4) | Loans held for investment | (4) | (4) | |||||||||||||||||||||||||||||
Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) (4) | Loans held for investment | (4) | (4) | |||||||||||||||||||||||||||||
Total Other financing liabilities, at fair value | ||||||||||||||||||||||||||||||||
$ | $ |
Other Secured Borrowings | Available Borrowing Capacity | Outstanding Balance December 31, | ||||||||||||||||||||||||||||||||||||||||||
Borrowing Type | Collateral | Interest Rate (1) | Maturity | Uncommitted | Committed (2) | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
SSTL (3) | (3) | 1-Month Euro-dollar rate + 600 bps; Euro-dollar floor 100 bps (3) | May 2022 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Master repurchase agreement (4) | Loans held for sale (LHFS) | 1ML + 220 - 375 bps | June 2021 | |||||||||||||||||||||||||||||||||||||||||
Mortgage warehouse agreement (5) | LHFS (reverse) | Greater of 1ML + 250 bps or 3.50%; LIBOR floor 0% | August 2021 | |||||||||||||||||||||||||||||||||||||||||
Master repurchase agreement (6) | LHFS (forward and reverse) | 1ML + 325 bps forward; 1ML + 350 bps reverse | Nov. 2021 | |||||||||||||||||||||||||||||||||||||||||
Master repurchase agreement (7) | LHFS (reverse) | Prime + 0%; 4.0% floor | January 2020 | |||||||||||||||||||||||||||||||||||||||||
Master repurchase agreement (8) | N/A | SOFR + 190 bps; SOFR floor 25 bps | N/A | |||||||||||||||||||||||||||||||||||||||||
Participation agreement (9) | LHFS | (9) | June 2021 | |||||||||||||||||||||||||||||||||||||||||
Master repurchase agreement (9) | LHFS | (9) | June 2021 | |||||||||||||||||||||||||||||||||||||||||
Master repurchase agreement | LHFS | 1 ML + 250 bps | March 2021 | |||||||||||||||||||||||||||||||||||||||||
Mortgage warehouse agreement (10) | LHFS | 1ML + 350 bps; 5.25% floor | Jan. 2022 | |||||||||||||||||||||||||||||||||||||||||
Mortgage warehouse agreement (11) | LHFS (reverse) | 1ML + 250 bps; 3.25% floor | Oct. 2021 | |||||||||||||||||||||||||||||||||||||||||
Mortgage warehouse agreement (12) | LHFS | (12) | N/A | |||||||||||||||||||||||||||||||||||||||||
Total Mortgage loan warehouse facilities | 3.33% (17) | |||||||||||||||||||||||||||||||||||||||||||
Other Secured Borrowings | Available Borrowing Capacity | Outstanding Balance December 31, | ||||||||||||||||||||||||||||||||||||||||||
Borrowing Type | Collateral | Interest Rate (1) | Maturity | Uncommitted | Committed (2) | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||
Agency MSR financing facility (13) | MSRs, Advances | 1ML + 450 bps | June 2021 | |||||||||||||||||||||||||||||||||||||||||
Ginnie Mae MSR financing facility (14) | MSRs, Advances | 1ML + 450 bps; 0.50% floor | Dec. 2021 | |||||||||||||||||||||||||||||||||||||||||
Ocwen Excess Spread-Collateralized Notes, Series 2019-PLS1 (15) | MSRs | Nov. 2024 | ||||||||||||||||||||||||||||||||||||||||||
Secured Notes, Ocwen Asset Servicing Income Series Notes, Series 2014-1 (16) | MSRs | (16) | Feb. 2028 | |||||||||||||||||||||||||||||||||||||||||
Total MSR financing facilities | 4.82% (17) | |||||||||||||||||||||||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||||||||||||||||||||||
Unamortized debt issuance costs - SSTL and PLS Notes (18) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Discount - SSTL | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||||||||||||||||||||||
Weighted average interest rate | % | % |
Senior Notes | Outstanding Balance at December 31, | ||||||||||||||||||||||
Interest Rate | Maturity | 2020 | 2019 | ||||||||||||||||||||
Senior unsecured notes (1) (3) | Aug. 2021 | ||||||||||||||||||||||
Senior secured notes (2) (3) | Nov. 2022 | ||||||||||||||||||||||
Unamortized debt issuance costs | ( | ( | |||||||||||||||||||||
Purchase accounting fair value adjustments (1) | ( | ( | |||||||||||||||||||||
$ | $ |
Collateral for Secured Borrowings | |||||||||||||||||||||||||||||||||||
Total Assets | Match Funded Liabilities | Financing Liabilities | Mortgage Loan Warehouse/MSR Facilities | Sales and Other Commitments (1) | Other (2) | ||||||||||||||||||||||||||||||
Cash | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Restricted cash | |||||||||||||||||||||||||||||||||||
MSRs (3) | |||||||||||||||||||||||||||||||||||
Advances, net | |||||||||||||||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||||||||||||||
Loans held for investment | |||||||||||||||||||||||||||||||||||
Receivables, net | |||||||||||||||||||||||||||||||||||
Premises and equipment, net | |||||||||||||||||||||||||||||||||||
Other assets | |||||||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ |
Expected Maturity Date (1) (2) (3) | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total Balance | Fair Value | ||||||||||||||||||||||||||||||||||||||||
Advance match funded liabilities | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Other secured borrowings | |||||||||||||||||||||||||||||||||||||||||||||||
Senior notes | |||||||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Contingent loan repurchase liability | $ | $ | |||||||||
Due to NRZ - Advance collections and servicing fees | |||||||||||
Other accrued expenses | |||||||||||
Liability for indemnification obligations | |||||||||||
Accrued legal fees and settlements | |||||||||||
Checks held for escheat | |||||||||||
Servicing-related obligations | |||||||||||
Lease liability | |||||||||||
MSR purchase price holdback | |||||||||||
Liability for uncertain tax positions | |||||||||||
Liability for unfunded pension obligation | |||||||||||
Liability for unfunded India gratuity plan | |||||||||||
Accrued interest payable | |||||||||||
Derivatives, at fair value | |||||||||||
Liability for mortgage insurance contingency | |||||||||||
Other | |||||||||||
$ | $ |
Accrued Legal Fees and Settlements | Years Ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Accrual for probable losses (1) | |||||||||||||||||
Payments (2) | ( | ( | ( | ||||||||||||||
Assumed in connection with the acquisition of PHH | |||||||||||||||||
Issuance of common stock in settlement of litigation (3) | ( | ||||||||||||||||
Net increase (decrease) in accrued legal fees | ( | ( | ( | ||||||||||||||
Other | |||||||||||||||||
Ending balance | $ | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Unfunded pension plan obligation, net | $ | $ | |||||||||
Unrealized losses on cash flow hedges, net | |||||||||||
Other | ( | ||||||||||
$ | $ |
December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
Maturities | Notional | Fair value | Maturities | Notional | Fair value | |||||||||||||||||||||
Derivative Assets | ||||||||||||||||||||||||||
Forward sales of Reverse loans | Jan. 2021 | $ | $ | Jan. 2020 | $ | $ | ||||||||||||||||||||
Forward loans IRLCs | Apr. 2021 | Mar. 2020 | ||||||||||||||||||||||||
Reverse loans IRLCs | Jan. 2021 | Jan. 2020 | ||||||||||||||||||||||||
TBA forward MBS trades | N/A | Jan to Mar. 2020 | ||||||||||||||||||||||||
Interest rate swap futures | Mar. 2021 | N/A | ||||||||||||||||||||||||
Other | N/A | |||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative Liabilities | ||||||||||||||||||||||||||
Forward sales of Reverse loans | Jan. 2021 | $ | $ | ( | Jan. 2020 | $ | $ | ( | ||||||||||||||||||
TBA forward MBS trades | Jan. 2021 | ( | N/A | |||||||||||||||||||||||
Borrowings - Interest rate caps | N/A | May 2020 | ||||||||||||||||||||||||
Other | N/A | N/A | ( | |||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( |
Year Ended December 31, 2020 | Year Ended December 31, 2019 | ||||||||||||||||
Gain / (Loss) | Gain / (Loss) | ||||||||||||||||
Amount | Financial Statement Line | Amount | Financial Statement Line | ||||||||||||||
Derivative Instruments | |||||||||||||||||
Forward loans IRLCs | $ | Gain on loans held for sale, net | $ | Gain on loans held for sale, net | |||||||||||||
Reverse loans IRLCs | Reverse mortgage revenue, net | Reverse mortgage revenue, net | |||||||||||||||
Forward LHFS trades | ( | Gain on loans held for sale, net (Economic hedge) | |||||||||||||||
Interest rate swap futures and TBA forward MBS trades | ( | Gain on loans held for sale, net (Economic hedge) | Gain on loans held for sale, net (Economic hedge) | ||||||||||||||
Interest rate swap futures and TBA forward MBS trades | MSR valuation adjustments, net | MSR valuation adjustments, net | |||||||||||||||
Forward sales of Reverse loans | ( | Reverse mortgage revenue, net | Reverse mortgage revenue, net | ||||||||||||||
Borrowings - interest rate caps | Other, net | ( | Other, net | ||||||||||||||
Other | Gain on loans held for sale, net | Gain on loans held for sale, net (Economic hedge) | |||||||||||||||
$ | $ | ( |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Loans held for sale | $ | $ | $ | ||||||||||||||
Interest earning cash deposits and other | |||||||||||||||||
$ | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Senior notes | $ | $ | $ | ||||||||||||||
Advance match funded liabilities | |||||||||||||||||
Other secured borrowings | |||||||||||||||||
Other | |||||||||||||||||
$ | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Domestic | $ | ( | $ | ( | $ | ||||||||||||
Foreign | ( | ( | |||||||||||||||
$ | ( | $ | ( | $ | ( |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Current: | |||||||||||||||||
Federal | $ | ( | $ | $ | ( | ||||||||||||
State | |||||||||||||||||
Foreign | |||||||||||||||||
( | |||||||||||||||||
Deferred: | |||||||||||||||||
Federal | ( | ( | |||||||||||||||
State | ( | ( | |||||||||||||||
Foreign | ( | ( | |||||||||||||||
Provision for (reversal of) valuation allowance on deferred tax assets | ( | ||||||||||||||||
( | ( | ||||||||||||||||
Total | $ | ( | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Expected income tax expense (benefit) at statutory rate | $ | ( | $ | ( | $ | ( | |||||||||||
Differences between expected and actual income tax expense: | |||||||||||||||||
CARES Act | ( | ||||||||||||||||
Provision for (reversal of) valuation allowance on deferred tax assets (1) | ( | ||||||||||||||||
Provision for (reversal of) liability for uncertain tax positions | ( | ( | |||||||||||||||
Other provision to return differences | ( | ( | |||||||||||||||
Foreign tax differential including effectively connected income (2) | ( | ||||||||||||||||
State tax, after Federal tax benefit | ( | ( | |||||||||||||||
Executive compensation disallowance | |||||||||||||||||
Excess tax benefits from share-based compensation | ( | ||||||||||||||||
Other permanent differences | |||||||||||||||||
Foreign tax credit (generation) utilization | ( | ( | |||||||||||||||
Revaluation of deferred tax assets related to legal entity mergers | ( | ( | |||||||||||||||
U.S. Tax Reform - Global Intangible Low-Taxed Income (GILTI) inclusion | |||||||||||||||||
U.S. Tax Reform - Change in Federal rate | ( | ||||||||||||||||
U.S. Tax Reform - Transition Tax | |||||||||||||||||
U.S. Tax Reform - BEAT Tax | ( | ||||||||||||||||
Reduction in tax attributes for Section 382 & 383 limitations | |||||||||||||||||
Bargain purchase gain disallowance | ( | ||||||||||||||||
Subpart F income | |||||||||||||||||
Other | |||||||||||||||||
Actual income tax expense (benefit) | $ | ( | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Deferred tax assets | |||||||||||
Net operating loss carryforwards - federal and foreign | $ | $ | |||||||||
Net operating loss carryforwards and credits - state and local | |||||||||||
Interest expense disallowance | |||||||||||
Reserve for servicing exposure | |||||||||||
Accrued legal settlements | |||||||||||
Partnership losses | |||||||||||
Stock-based compensation expense | |||||||||||
Accrued incentive compensation | |||||||||||
Accrued other liabilities | |||||||||||
Lease liabilities | |||||||||||
Intangible asset amortization | |||||||||||
Foreign deferred assets | |||||||||||
Tax residuals and deferred income on tax residuals | |||||||||||
Foreign tax credit | |||||||||||
Bad debt and allowance for loan losses | |||||||||||
Deferred income | |||||||||||
Other | |||||||||||
Deferred tax liabilities | |||||||||||
Mortgage servicing rights amortization | |||||||||||
Bad debt and allowance for loan losses | |||||||||||
Foreign undistributed earnings | |||||||||||
Other | |||||||||||
Valuation allowance | ( | ( | |||||||||
Deferred tax assets, net | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Additions for tax positions of current year | |||||||||||||||||
Additions for tax positions of prior years | |||||||||||||||||
Reductions for tax positions of prior years | ( | ( | |||||||||||||||
Reductions for settlements | ( | ( | ( | ||||||||||||||
Lapses in statute of limitations | ( | ( | ( | ||||||||||||||
Additions - PHH acquisition | |||||||||||||||||
Ending balance (1) | $ | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Loss from continuing operations, net of tax attributable to Ocwen common stockholders | $ | ( | $ | ( | $ | ( | |||||||||||
Income from discontinued operations, net of tax | |||||||||||||||||
Net loss attributable to Ocwen stockholders | $ | ( | $ | ( | $ | ( | |||||||||||
Weighted average shares of common stock outstanding - Basic and Diluted | |||||||||||||||||
Earnings (loss) per share - Basic and Diluted | |||||||||||||||||
Continuing operations | $ | ( | $ | ( | $ | ( | |||||||||||
Discontinued operations | $ | $ | $ | ||||||||||||||
Total attributable to Ocwen stockholders | $ | ( | $ | ( | $ | ( | |||||||||||
Stock options and common stock awards excluded from the computation of diluted earnings per share | |||||||||||||||||
Anti-dilutive (1) | |||||||||||||||||
Market-based (2) |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Benefit obligation | $ | $ | |||||||||
Fair value of plan assets | |||||||||||
Unfunded status recognized in Other liabilities | $ | ( | $ | ( | |||||||
Amounts recognized in Accumulated other comprehensive income | $ | $ |
December 31, | |||||||||||
2020 | 2019 | ||||||||||
Benefit obligation | $ | $ | |||||||||
Fair value of plan assets | |||||||||||
Unfunded status recognized in Other liabilities | $ | ( | $ | ( | |||||||
Type of Award | Percent of Total Equity Award | Vesting Period | ||||||||||||
2011 - 2014 Awards: | ||||||||||||||
Options: | ||||||||||||||
Servicing Condition - Time-based | % | Ratably over | ||||||||||||
Market Condition: | ||||||||||||||
Market performance-based | Over | |||||||||||||
Extraordinary market performance-based | Over | |||||||||||||
Total Award | % | |||||||||||||
2015 - 2016 Awards: | ||||||||||||||
Options: | ||||||||||||||
Service Condition - Time-based | % | Ratably over | ||||||||||||
2017 - 2020 Awards: | ||||||||||||||
Options: | ||||||||||||||
Service Condition - Time-based | % | Ratably over | ||||||||||||
Stock Units: | ||||||||||||||
Service Condition - Time-based | Over | |||||||||||||
Market Condition: | ||||||||||||||
Time-based vesting schedule and Market performance-based vesting date | Vest over | |||||||||||||
Time-based vesting schedule and Market performance-based vesting date | Cliff-vest | |||||||||||||
Total Award | % |
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
Stock Options | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | ||||||||||||||||||||||||||||||
Outstanding at beginning of year | $ | $ | $ | ||||||||||||||||||||||||||||||||
Granted (1) | — | — | |||||||||||||||||||||||||||||||||
Exercised | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Forfeited / Expired (2) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Outstanding at end of year (3)(4) | $ | $ | $ | ||||||||||||||||||||||||||||||||
Exercisable at end of year (3)(4)(5) | $ | $ | $ |
Years Ended December 31, | |||||||||||||||||||||||||||||||||||
Stock Units - Equity Awards | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
Number of Stock Units | Weighted Average Grant Date Fair Value | Number of Stock Units | Weighted Average Grant Date Fair Value | Number of Stock Units | Weighted Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
Unvested at beginning of year | $ | $ | $ | ||||||||||||||||||||||||||||||||
Granted (1)(2) | |||||||||||||||||||||||||||||||||||
Vested (3)(4) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Forfeited/Cancelled (1) | ( | ( | ( | ||||||||||||||||||||||||||||||||
Unvested at end of year (5)(6) | $ | $ | $ |
Years Ended December 31, | |||||||||||
Stock Units - Liability Awards | 2020 | 2019 | |||||||||
Unvested units at beginning of year | |||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited/Cancelled | ( | ( | |||||||||
Conversion of fractional stock units on reverse stock split | |||||||||||
Unvested units at end of year |
Years Ended December 31, | |||||||||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||||||||
Monte Carlo | Black-Scholes | Monte Carlo | Black-Scholes | Monte Carlo | |||||||||||||||||||
Risk-free interest rate | |||||||||||||||||||||||
Expected stock price volatility (1) | |||||||||||||||||||||||
Expected dividend yield | —% | —% | —% | —% | —% | ||||||||||||||||||
Expected life (in years) (2) | (3) | (3) | (3) | ||||||||||||||||||||
Contractual life (in years) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
Fair value | $ | $ | $ | $ | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Compensation expense - Equity awards | |||||||||||||||||
Stock option awards | $ | ( | $ | ( | $ | ( | |||||||||||
Stock awards | |||||||||||||||||
$ | $ | $ | |||||||||||||||
Compensation expense - Liability awards | |||||||||||||||||
(Tax deficiency) excess tax benefit related to share-based awards | ( | ( |
Results of Operations | Servicing | Originations | Corporate Items and Other | Business Segments Consolidated | ||||||||||||||||||||||
Year Ended December 31, 2020 | ||||||||||||||||||||||||||
Revenue (1) | $ | $ | $ | $ | ||||||||||||||||||||||
MSR valuation adjustments, net (1) | ( | ( | ( | |||||||||||||||||||||||
Operating expenses (2) | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Pledged MSR liability expense | ( | ( | ||||||||||||||||||||||||
Other, net | ( | |||||||||||||||||||||||||
Other expense, net | ( | ( | ( | ( | ||||||||||||||||||||||
Income (loss) before income taxes | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
Year Ended December 31, 2019 | ||||||||||||||||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
MSR valuation adjustments, net | ( | ( | ( | |||||||||||||||||||||||
Operating expenses (2)(3) | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Pledged MSR liability expense | ( | ( | ||||||||||||||||||||||||
Gain on repurchase of senior secured notes | ||||||||||||||||||||||||||
Bargain purchase gain | ( | ( | ||||||||||||||||||||||||
Other, net | ( | |||||||||||||||||||||||||
Other expense, net | ( | ( | ( | ( | ||||||||||||||||||||||
Loss before income taxes | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Results of Operations | Servicing | Originations | Corporate Items and Other | Business Segments Consolidated | ||||||||||||||||||||||
Year Ended December 31, 2018 | ||||||||||||||||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
MSR valuation adjustments, net | ( | ( | ||||||||||||||||||||||||
Operating expenses (2) | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Pledged MSR liability expense | ( | ( | ||||||||||||||||||||||||
Bargain purchase gain | ||||||||||||||||||||||||||
Other, net | ( | ( | ( | |||||||||||||||||||||||
Other income (expense), net | ( | ( | ( | |||||||||||||||||||||||
Loss from continuing operations before income taxes | $ | ( | $ | ( | $ | ( | $ | ( |
Total Assets | Servicing | Originations | Corporate Items and Other | Business Segments Consolidated | ||||||||||||||||||||||
December 31, 2020 | $ | $ | $ | $ | ||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||
December 31, 2018 |
Depreciation and Amortization Expense | Servicing | Originations | Corporate Items and Other | Business Segments Consolidated | ||||||||||||||||||||||
Year Ended December 31, 2020: | ||||||||||||||||||||||||||
Depreciation expense | $ | $ | $ | $ | ||||||||||||||||||||||
Amortization of debt discount and issuance costs | ||||||||||||||||||||||||||
Year Ended December 31, 2019: | ||||||||||||||||||||||||||
Depreciation expense | $ | $ | $ | $ | ||||||||||||||||||||||
Amortization of debt discount and issuance costs | ||||||||||||||||||||||||||
Year Ended December 31, 2018: | ||||||||||||||||||||||||||
Depreciation expense | $ | $ | $ | $ | ||||||||||||||||||||||
Amortization of debt discount and issuance costs | ||||||||||||||||||||||||||
Year Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||
Active | Inactive | Total | |||||||||||||||||||||||||||||||||
Number | Amount | Number | Amount | Number | Amount | ||||||||||||||||||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||||||||||||||||||||
Additions (1) | |||||||||||||||||||||||||||||||||||
Recoveries, net (2) | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Transfers | ( | ( | |||||||||||||||||||||||||||||||||
Changes in value | ( | ( | |||||||||||||||||||||||||||||||||
Ending balance | $ | $ | $ |
2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Thereafter | |||||
Less: Adjustment to present value | ( | ||||
Total lease payments, net | $ |
Years Ended December 31, | |||||||||||||||||
2020 | 2019 | 2018 | |||||||||||||||
Beginning balance (1) | $ | $ | $ | ||||||||||||||
Provision (reversal) for representation and warranty obligations | ( | ( | |||||||||||||||
New production reserves | |||||||||||||||||
Obligation assumed in connection with the acquisition of PHH | |||||||||||||||||
Charge-offs and other (2) (3) | ( | ( | |||||||||||||||
Ending balance (1) | $ | $ | $ |
Quarters Ended | |||||||||||||||||||||||
December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | ||||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
MSR valuation adjustments, net (1) | ( | ( | ( | ( | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Other income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax expense (benefit) | ( | ( | ( | ||||||||||||||||||||
Net income (loss) attributable to Ocwen stockholders | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Earnings (loss) per share attributable to Ocwen stockholders (2) | |||||||||||||||||||||||
Basic | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Diluted | ( | ( | ( | ||||||||||||||||||||
Quarters Ended | |||||||||||||||||||||||
December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | ||||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
MSR valuation adjustments, net (1) | ( | ( | |||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Other income (expense), net | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) before income taxes | ( | ( | ( | ||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Net income (loss) attributable to Ocwen stockholders | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Earnings (loss) per share attributable to Ocwen stockholders (2) | |||||||||||||||||||||||
Basic | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
Diluted | ( | ( | ( |
OCWEN FINANCIAL CORPORATION | ||||||||
By: | ||||||||
Name: | ||||||||
Title: |
NAME OF ASSIGNEE: | ADDRESS/FAX NUMBER: | |||||||||||||
Number of shares: | Signature: | |||||||||||||
Dated: | Witness: |
Address: | |||||
Name | State or Other Jurisdiction of Organization | |||||||
PHH Mortgage Corporation (1) | New Jersey | |||||||
PHH Corporation (1) | Maryland | |||||||
Ocwen Financial Solutions Private Limited (1) | India | |||||||
Ocwen Advance Facility Transferor, LLC (2) | Delaware | |||||||
Ocwen Master Advance Receivables Trust (2) | Delaware | |||||||
CR Limited (1) | Vermont | |||||||
MSR Asset Vehicle LLC (1) | California | |||||||
Ocwen Business Solutions, Inc. (1) | Philippines | |||||||
Ocwen USVI Services, LLC (1) | U.S. Virgin Islands |
Date: February 19, 2021 | /s/ Glen A. Messina | |||||||
Glen A. Messina, President and Chief Executive Officer |
Date: February 19, 2021 | /s/ June C. Campbell | |||||||
June C. Campbell, Executive Vice President and Chief Financial Officer |
Name: | /s/ Glen A. Messina | ||||
Title: | President and Chief Executive Officer | ||||
Date: | February 19, 2021 |
Name: | /s/ June C. Campbell | ||||
Title: | Executive Vice President and Chief Financial Officer | ||||
Date: | February 19, 2021 |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (40,178) | $ (142,125) | $ (70,596) |
Other comprehensive income (loss), net of income taxes | |||
Reclassification adjustment for losses on cash flow hedges included in net income | (158) | (147) | (149) |
Reclassification adjustment for losses on cash flow hedges included in net income | 1,620 | 3,442 | 3,219 |
Other | (39) | (42) | 61 |
Comprehensive loss | (41,679) | (145,462) | (73,605) |
Comprehensive income attributable to non-controlling interests | 0 | 0 | (176) |
Comprehensive loss attributable to Ocwen stockholders | $ (41,679) | $ (145,462) | $ (73,781) |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands |
Total |
Cumulative Effect Of Fair Value Election - MSRs, net of Income Taxes |
Accounting Standards Update 2016-16 |
Accounting Standards Update 2016-02 |
Accounting Standards Update 2016-13 |
Common Stock |
Additional Paid-in Capital |
Retained Earnings (Accumulated Deficit) |
Retained Earnings (Accumulated Deficit)
Cumulative Effect Of Fair Value Election - MSRs, net of Income Taxes
|
Retained Earnings (Accumulated Deficit)
Accounting Standards Update 2016-16
|
Retained Earnings (Accumulated Deficit)
Accounting Standards Update 2016-02
|
Retained Earnings (Accumulated Deficit)
Accounting Standards Update 2016-13
|
Accumulated Other Comprehensive Income (Loss), Net of Taxes |
Non-controlling Interest in Subsidiaries |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at (in shares) at Dec. 31, 2017 | 8,765,604 | |||||||||||||
Balance at at Dec. 31, 2017 | $ 546,874 | $ 88 | $ 548,284 | $ (2,083) | $ (1,249) | $ 1,834 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net income (loss) | (70,596) | (70,772) | 176 | |||||||||||
Cumulative-effect adjustments | $ 82,043 | $ (5,621) | $ 82,043 | $ (5,621) | ||||||||||
Issuance of common stock (in shares) | 125,000 | |||||||||||||
Issuance of common stock | 5,719 | $ 1 | 5,718 | |||||||||||
Equity-based compensation and other (in shares) | 36,891 | |||||||||||||
Equity-based compensation and other | 1,304 | $ 0 | 1,304 | |||||||||||
Capital distribution to non-controlling interest | (822) | (822) | ||||||||||||
Purchase of non-controlling interest | (1,188) | (1,188) | ||||||||||||
Other comprehensive income (loss), net of income taxes | (3,008) | (3,008) | ||||||||||||
Balance at (in shares) at Dec. 31, 2018 | 8,927,495 | |||||||||||||
Balance at at Dec. 31, 2018 | 554,705 | $ 89 | 555,306 | 3,567 | (4,257) | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net income (loss) | (142,125) | (142,125) | 0 | |||||||||||
Cumulative-effect adjustments | $ 16 | $ 16 | ||||||||||||
Equity-based compensation and other (in shares) | 63,321 | |||||||||||||
Equity-based compensation and other | 2,752 | $ 1 | 2,751 | |||||||||||
Other comprehensive income (loss), net of income taxes | $ (3,337) | (3,337) | ||||||||||||
Balance at (in shares) at Dec. 31, 2019 | 8,990,816 | 8,990,816 | ||||||||||||
Balance at at Dec. 31, 2019 | $ 412,011 | $ 90 | 558,057 | (138,542) | (7,594) | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net income (loss) | $ (40,178) | (40,178) | 0 | |||||||||||
Cumulative-effect adjustments | $ 47,038 | $ 47,038 | ||||||||||||
Repurchase of common stock, shares | (377,484) | (377,484) | ||||||||||||
Repurchase of common stock, value | $ (4,605) | $ (4) | (4,601) | |||||||||||
Additional shares issued on reverse stock split rounding | 4,692 | |||||||||||||
Equity-based compensation and other (in shares) | 69,726 | |||||||||||||
Equity-based compensation and other | $ 2,607 | $ 1 | 2,606 | |||||||||||
Other comprehensive income (loss), net of income taxes | $ (1,501) | (1,501) | ||||||||||||
Balance at (in shares) at Dec. 31, 2020 | 8,687,750 | 8,687,750 | ||||||||||||
Balance at at Dec. 31, 2020 | $ 415,372 | $ 87 | $ 556,062 | $ (131,682) | $ (9,095) | $ 0 |
Organization, Basis of Presentation and Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Organization, Basis of Presentation and Significant Accounting Policies | Note 1 — Organization, Basis of Presentation and Significant Accounting Policies Organization Ocwen Financial Corporation (NYSE: OCN) (Ocwen, we, us and our) is a non-bank mortgage servicer and originator providing solutions to homeowners, investors and others through its primary operating subsidiary, PHH Mortgage Corporation (PMC). We are headquartered in West Palm Beach, Florida with offices and operations in the United States (U.S.), the United States Virgin Islands (USVI), India and the Philippines. Ocwen is a Florida corporation organized in February 1988. Ocwen directly or indirectly owns all of the outstanding common stock of its operating subsidiaries, including PMC since its acquisition on October 4, 2018, Ocwen Financial Solutions Private Limited (OFSPL) and Ocwen USVI Services, LLC (OVIS). On March 13, 2020, as part of Ocwen's legal entity restructuring, Ocwen’s wholly-owned subsidiary Liberty Home Equity Solutions, Inc. (Liberty) and PMC entered into an asset purchase agreement pursuant to which Liberty transferred substantially all of its assets, liabilities, contracts and employees to PMC effective March 15, 2020. We continue to originate and service reverse mortgage loans under the brand name Liberty Reverse Mortgage. We perform servicing activities related to our own MSR portfolio (primary) and on behalf of other servicers (subservicing), the largest being New Residential Investment Corp. (NRZ), and investors (primary and master servicing), including the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the GSEs), the Government National Mortgage Association (Ginnie Mae) and private-label securitizations (PLS, or non-Agency). As a subservicer or primary servicer, we may be required to make advances for certain property tax and insurance premium payments, default and property maintenance payments and principal and interest payments on behalf of delinquent borrowers to mortgage loan investors before recovering them from borrowers. Most, but not all, of our subservicing agreements provide for us to be reimbursed for any such advances by the owner of the servicing rights. Advances made by us as primary servicer are generally recovered from the borrower or the mortgage loan investor. As master servicer, we collect mortgage payments from primary servicers and distribute the funds to investors in the mortgage-backed securities. To the extent the primary servicer does not advance the scheduled principal and interest, as master servicer we are responsible for advancing the shortfall, subject to certain limitations. We source our servicing portfolio through multiple channels, including recapture, retail, wholesale, correspondent, flow MSR purchase agreements, the GSE Cash Window programs and bulk MSR purchases. We originate, sell and securitize conventional (conforming to the underwriting standards of Fannie Mae or Freddie Mac; collectively referred to as Agency or GSE) loans and government-insured (Federal Housing Administration (FHA) or Department of Veterans Affairs (VA)) forward mortgage loans, generally servicing retained. The GSEs or Ginnie Mae guarantee these mortgage securitizations. We originate Home Equity Conversion Mortgage (HECM) loans, or reverse mortgages, that are mostly insured by the FHA and we are an approved issuer of Home Equity Conversion Mortgage-Backed Securities (HMBS) that are guaranteed by Ginnie Mae. In addition to our originated MSRs, we acquire MSRs through flow purchase agreements, the GSE Cash Window programs and bulk MSR purchases, and we acquire new subservicing through our enterprise sales. We had a total of approximately 5,000 employees at December 31, 2020 of which approximately 3,100 were located in India and approximately 400 were based in the Philippines. Our operations in India and the Philippines primarily provide internal support services, principally to our loan servicing business and our corporate functions. Of our foreign-based employees, more than 70% were engaged in supporting our loan servicing operations as of December 31, 2020. Basis of Presentation and Significant Accounting Policies Consolidation and Basis of Presentation Principles of Consolidation Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (GAAP). Our consolidated financial statements include the accounts of Ocwen, its wholly-owned subsidiaries and any variable interest entity (VIE) for which we have determined that we are the primary beneficiary. We apply the equity method of accounting to investments where we are able to exercise significant influence, but not control, over the policies and procedures of the entity but own 50% or less of the voting securities. Our statements of operations and consolidated balance sheets include the accounts and results of PHH Corporation (PHH) and its subsidiaries since acquisition on October 4, 2018. See Note 2 — Business Acquisition for additional information. We have eliminated intercompany accounts and transactions in consolidation. Foreign Currency Translation The functional currency of each of our foreign subsidiaries is the U.S. dollar. Re-measurement adjustments of foreign-denominated amounts to U.S. dollars are included in Other, net in our consolidated statements of operations. Reverse Stock Split In August 2020, Ocwen implemented a reverse stock split of its shares of common stock in a ratio of one-for-15. The number of shares, loss per share amounts, repurchase price per share amounts, and Common stock and Additional paid-in capital balances have been retroactively adjusted for all periods presented in these consolidated financial statements to give effect to the reverse stock split as if it occurred at the beginning of the first period presented. See Note 16 — Stockholders’ Equity for additional information. Reclassifications In our consolidated balance sheet at December 31, 2019, and our consolidated statements of cash flows for 2019 and 2018, we have made the following changes to conform to the current presentation: •Within the Total assets section of our consolidated balance sheet, we combined Match funded advances and Advances to present all servicing-related advances as a single line item. •Within the Cash flows from financing activities section of our consolidated statements of cash flows, we now separately present proceeds and repayments on mortgage loan warehouse facilities, net, MSR financing facilities and other financing liabilities. These amounts were previously reported as Proceeds from (Repayment of) mortgage loan warehouse facilities and other secured borrowings. The above presentation changes had no impact on total assets or total liabilities in our consolidated balance sheet and no impact on operating, investing and financing cash flows in our consolidated statements of cash flows. Use of Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include, but are not limited to fair value measurements, allowance for losses, income taxes, indemnification obligations, litigation-related obligations, and our going concern evaluation. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ from those estimates and assumptions. Significant Accounting Policies Cash and cash equivalents Cash and cash equivalents includes both interest-bearing and non-interest-bearing demand deposits with financial institutions that have original maturities of 90 days or less. Restricted Cash Restricted cash includes amounts specifically designated to repay debt, to provide over-collateralization for secured borrowings and match funded debt facilities, and to provide additional collateral to support certain obligations, including letters of credit. Mortgage Servicing Rights MSRs are assets representing our right to service portfolios of mortgage loans. We recognize MSRs when originated or purchased loans are securitized or sold in the secondary market. We also acquire MSRs through flow purchase agreements, GSE Cash Window programs, and bulk acquisition transactions, or through asset purchases or business combination transactions. The unpaid principal balance (UPB) of the loans underlying the MSRs is not included on our consolidated balance sheets. For servicing retained in connection with the securitization of reverse mortgage loans accounted for as secured financings, we do not recognize an MSR. All newly acquired or retained MSRs are initially measured at fair value. To the extent any portfolio contract is not expected to compensate us adequately for performing the servicing, we would recognize a servicing liability. We define contracts as Agency, government-insured or non-Agency (commonly referred to as non-prime, subprime or private-label loans) based on applicable servicing guidelines, underwriting standards and borrower risk characteristics. Servicing assets are not recognized for subservicing arrangements entered into with the entity that owns the MSRs. We account for servicing assets and servicing liabilities at fair value, and report changes in fair value in earnings (MSR valuation adjustments, net) in the period in which the changes occur. Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. Effective with this election, our entire portfolio of MSRs is accounted for using the fair value measurement method. We recorded a cumulative-effect adjustment of $82.0 million to retained earnings as of January 1, 2018 to reflect the excess of the fair value over the carrying amount. See Note 9 — Mortgage Servicing for additional information. We earn fees for servicing and subservicing mortgage loans. We collect servicing and subservicing fees, generally expressed as a percent of UPB or fee per loan by loan performing status, from the borrowers’ payments. In addition to servicing and subservicing fees, we also report late fees, prepayment penalties, float earnings and other ancillary fees as revenue in Servicing and subservicing fees in our consolidated statements of operations. We recognize servicing and subservicing fees as revenue when the fees are earned, which is generally when the borrowers’ payments are collected or when loans are modified or liquidated through the sale of the underlying real estate collateral or otherwise. Advances During any period in which a borrower does not make payments, servicing and subservicing agreements may require that we advance our own funds to meet contractual principal and interest remittance requirements for the investors, to pay property taxes and insurance premiums and to process foreclosures. We also advance funds to maintain, repair and market foreclosed real estate properties on behalf of investors. These advances are made pursuant to the terms of each servicing and subservicing contract. Each servicing and subservicing contract is associated with specific loans, identified as a pool. When we make an advance on a loan under each servicing or subservicing contract, we are entitled to recover that advance either from the borrower, for reinstated and performing loans, or from guarantors (GSEs), insurers (FHA/VA) and investors, for modified and liquidated loans. Most of our servicing and subservicing contracts provide that the advances made under the respective agreement have priority over all other cash payments from the proceeds of the loan, and in the majority of cases, the proceeds of the pool of loans that are the subject of that servicing or subservicing contract. As a result, we are entitled to repayment from loan proceeds before any interest or principal is paid on the bonds, and in the majority of cases, advances in excess of loan proceeds may be recovered from pool level proceeds. Servicing advances are financial assets subject to the credit loss allowance model under ASC 326: Financial Instruments - Credit Losses (CECL), effective January 1, 2020. The allowance for expected credit losses is estimated based on relevant qualitative and quantitative information about past events, including historical collection and loss experience, current conditions, and reasonable and supportable forecasts that affect collectability. Expected credit losses on advances are expected to be nil, or de minimis, as advances are generally fully reimbursable or recoverable under the terms of the servicing agreements. GSE and government-insured advances are subject to implicit and government guarantees, respectively, regarding advance reimbursement and the non-Agency pooling and servicing agreement terms regarding advance recovery, the credit loss history and the expectation over the remaining life of the advance portfolio support a zero allowance for credit loss. Servicing advances may also include claimable (with investors) but nonrecoverable expenses, for example due to servicer error, such as lack of reasonable documentation as to the type and amount of advances. Such servicer errors result in the determination that the advance is uncollectible and represent operational losses resulting from not complying with servicing guidelines as established by the respective party (i.e., trustee, master servicer, investor, mortgage insurer). We establish an allowance for such operational losses through a charge to earnings (Servicing and origination expense) to the extent that a portion of advances are uncollectible taking into consideration, among other factors, probability of cure or modification, length of delinquency and the amount of the advance. We also assess collectability using proprietary cash flow projection models that incorporate a number of different factors, depending on the characteristics of the mortgage loan or pool, including, for example, estimated time to a foreclosure sale, estimated costs of foreclosure action, estimated future property tax payments and the estimated value of the underlying property net of estimated carrying costs, commissions and closing costs. Under the terms of our subservicing agreements, we are generally reimbursed by our subservicing clients on a monthly or more frequent basis. For those advances that have been reimbursed, i.e., that are off-balance sheet, if a loss contingency is probable and reasonably estimable, we recognize a loss contingency accrual for the amount of advances deemed uncollectible caused by our failure to comply with the subservicing agreements or our servicing practices. We report such loss contingency within Other liabilities - Liability for indemnification obligations. Loans Held for Sale Loans held for sale include forward and reverse mortgage loans that we do not intend to hold until maturity. We report loans held for sale at either fair value or the lower of cost or fair value computed on an aggregate basis. Residential forward and reverse mortgage loans that we intend to sell are carried at fair value as a result of a fair value election. In addition, effective January 1, 2020, repurchased loans by our Servicing business, including those loans we repurchase from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines, are accounted for under the fair value election. For loans that we elected to measure at fair value on a recurring basis, we report changes in fair value in Gain on loans held for sale, net in the consolidated statements of operations in the period in which the changes occur. These loans are expected to be sold into the secondary market to the GSEs, into Ginnie Mae guaranteed securitizations or to third-party investors. For the legacy portfolio of loans measured at the lower of cost or fair value, we account for any excess of cost over fair value as a valuation allowance and include changes in the valuation allowance in Other, net, in the consolidated statements of operations in the period in which the change occurs. We report any gain or loss on the transfer of loans held for sale in Gain on loans held for sale, net in the consolidated statements of operations along with the changes in fair value of the loans and the gain or loss on any related derivatives. When loans are sold or securitized with servicing retained, the gain on sale includes the MSR retained as non-cash proceeds at the date of sale. We include all changes in loans held for sale and related derivative balances in operating activities in the consolidated statements of cash flows. We accrue interest income as earned. We place loans on non-accrual status after any portion of principal or interest has been delinquent for more than 89 days, or earlier if management determines the borrower is unable to continue performance. When we place a loan on non-accrual status, we reverse the interest that we have accrued but not yet received. We return loans to accrual status only when we reinstate the loan and there is no significant uncertainty as to collectability. Loans Held for Investment Newly originated reverse mortgage loans that are insured by the FHA and pooled into Ginnie Mae guaranteed securities that we sell into the secondary market with servicing rights retained are classified as loans held for investment. We have elected to measure these loans at fair value, with changes in fair value reported in Reverse mortgage revenue, net in the consolidated statements of operations. Loan transfers in these Ginnie Mae securitizations do not meet the definition of a participating interest and as a result, the transfers of the reverse mortgages do not qualify for sale accounting. Therefore, we account for these transfers as financings, with the reverse mortgages classified as Loans held for investment, at fair value, on our consolidated balance sheets, with no gain or loss recognized on the transfer. Effective January 1, 2019, we elected to fair value future draw commitments for HECM loans purchased or originated after December 31, 2018. The value of future draw commitments for HECM loans purchased or originated before January 1, 2019 were recognized as the draws were securitized or sold. Effective January 1, 2020, in connection with the adoption of Accounting Standard Update (ASU) 2016-13 and ASU 2019-04: Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (CECL), we made an irrevocable fair value election on all future draw commitments for HECM loans that were purchased or originated before January 1, 2019. We recorded cumulative-effect adjustments of $47.0 million to retained earnings as of January 1, 2020, to reflect the excess of the fair value over the carrying amount. Upfront costs and fees related to loans held for investment, including broker fees, are recognized in Reverse mortgage revenue, net in the statement of operations as incurred and are not capitalized. Premiums on loans purchased via the correspondent channel are capitalized upon origination because they represent part of the purchase price. However, the loans are subsequently measured at fair value on a recurring basis. We record the proceeds from the transfer of assets as secured borrowings (HMBS-related borrowings) in Financing liabilities and recognize no gain or loss on the transfer. We measure the HECM loans and HMBS-related borrowings at fair value on a recurring basis. The changes in fair value of the HECM loans and HMBS-related borrowings are included in Reverse mortgage revenue, net in our consolidated statements of operations. Included in net fair value changes on the HECM loans and related HMBS borrowings are the net interest income that we expect to be collected on the HECM loans and the interest expense on the HMBS-related borrowings. In addition, reverse mortgage revenue, net includes the fair value changes of the interest rate lock commitments related to reverse mortgage loans. We report originations and collections of HECM loans in investing activities in the consolidated statements of cash flows. We report net fair value gains on HECM loans and the related HMBS borrowings as an adjustment to the net cash provided by or used in operating activities in the consolidated statements of cash flows. Proceeds from securitizations of HECM loans and payments on HMBS-related borrowings are included in financing activities in the consolidated statements of cash flows. Transfers of Financial Assets and MSRs We securitize, sell and service forward and reverse residential mortgage loans. Securitization transactions typically involve the use of VIEs and are accounted for either as sales or as secured financings. We typically retain economic interests in the securitized assets in the form of servicing rights and obligations. In order to efficiently finance our assets and operations and create liquidity, we may sell servicing advances, MSRs or the right to receive certain servicing fees relating to MSRs (Rights to MSRs). In order to determine whether or not a VIE is required to be consolidated, we consider our ongoing involvement with the VIE. In circumstances where we have both the power to direct the activities that most significantly impact the performance of the VIE and the obligation to absorb losses or the right to receive benefits that could be significant, we would conclude that we would consolidate the entity, which precludes us from recording an accounting sale in connection with the transfer of the financial assets. In the case of a consolidated VIE, we continue to report the underlying residential mortgage loans or servicing advances, and we record the securitized debt on our consolidated balance sheet. In the case of transfers where either one or both of the power or economic criteria above are not met, we evaluate whether a sale has occurred for accounting purposes. In order to recognize a sale, the transferred assets must be legally isolated, not be constrained by restrictions from further transfer and be deemed to be beyond our control. If the transfer does not meet any of these three criteria, the transaction is accounted for consistent with a secured financing. In certain situations, we may have continuing involvement in transferred loans through our retained servicing. Transactions involving retained servicing would still be eligible for sale accounting, as we have ceded effective control of these loans to the purchaser. Subsequent to the determination that a transaction does not meet the accounting sale criteria, we may determine that we meet the criteria. In the event we subsequently meet the accounting sale criteria, we derecognize the transferred assets and related liabilities. In connection with the Ginnie Mae early buyout program, our agreements provide either that: (a) we have the right, but not the obligation, to repurchase previously transferred mortgage loans under certain conditions, including the mortgage loans becoming eligible for pooling under a program sponsored by Ginnie Mae; or (b) we have the obligation to repurchase previously transferred mortgage loans that have been subject to a successful trial modification before any permanent modification is made. Once these conditions are met, we have effectively regained control over the mortgage loan(s), and under GAAP, must re-recognize the loans on our consolidated balance sheets and establish a corresponding repurchase liability. With respect to those loans that we have the right, but not the obligation, to repurchase under the applicable agreement, this requirement applies regardless of whether we have any intention to repurchase the loan. We re-recognize the loans in Other assets and a corresponding liability in Other liabilities. In the case of transfers of MSRs and Rights to MSRs where we retain the right to subservice, we defer any related gain or loss and amortize the balance over the life of the subservicing agreement. Gains or losses on off-balance sheet securitizations take into consideration any retained interests, including servicing rights and representation and warranty obligations, both of which are initially recorded at fair value at the date of sale in Gain on loans held for sale, net, in our consolidated statements of operations. Derivative Financial Instruments We use derivative instruments to manage the fair value changes in our MSRs, interest rate lock commitments and loan portfolios which are exposed to interest rate risk. We do not use derivative instruments for trading or speculative purposes. We recognize all derivative instruments at fair value on our consolidated balance sheets in Other assets and Other liabilities. Derivative instruments are generally entered into as economic hedges against changes in the fair value of a recognized asset or liability and are not designated as hedges for accounting purposes. We generally report the changes in fair value of such derivative instruments in the same line item in the consolidated statement of operations as the changes in fair value of the related asset or liability. For all other derivative instruments not designated as a hedging instrument, we report changes in fair value in Other, net. Premises and Equipment, Leases We report premises and equipment at cost and, except for land, depreciate them over their estimated useful lives on a straight-line basis as follows:
Our leases include non-cancelable operating leases for premises and equipment. At lease commencement and renewal date, we estimate the ROU assets and lease liability at present value using our estimated incremental borrowing rate. We amortize the balance of the ROU assets and recognize interest on the lease liability. Our lease liability represents the present value of the lease payments and is reduced as we make cash payments on our lease obligations. Our ROU lease assets are evaluated for impairment in accordance with ASC 360, Premises and Equipment. Litigation We monitor our legal matters, including advice from external legal counsel, and periodically perform assessments of these matters for potential loss accrual and disclosure. We establish a liability for settlements, judgments on appeal and filed and/or threatened claims for which we believe that it is probable that a loss has been or will be incurred and the amount can be reasonably estimated. We recognize legal costs associated with loss contingencies in Professional services expense in the consolidated statement of operations as incurred. Stock-Based Compensation We initially measure the cost of employee services received in exchange for a stock-based award as the fair value of the award on the grant date. For awards which must be settled in cash and are therefore classified as liabilities rather than equity in the consolidated balance sheet, fair value is subsequently remeasured and fair value changes are reported as compensation expense at each reporting date. For equity awards with a service condition, we recognize the cost as compensation expense ratably over the vesting period. For equity awards with a market condition, we recognize the cost as compensation expense ratably over the expected life of the option that is derived from an options pricing model. When equity awards with a market condition meet their vesting requirements, any unrecognized compensation at the vesting date is recognized ratably over the vesting period. For equity awards with both a market condition and a service condition for vesting, we recognize cost as compensation expense over the requisite service period for each tranche of the award using the graded-vesting method. Income Taxes We file consolidated U.S. federal income tax returns. We allocate consolidated income tax among all subsidiaries included in the consolidated return as if each subsidiary filed a separate return or, in certain cases, a consolidated return. We account for income taxes using the asset and liability method, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Additionally, we adjust deferred taxes to reflect estimated tax rate changes. We conduct periodic evaluations to determine whether it is more likely than not that some or all of our deferred tax assets will not be realized. Among the factors considered in this evaluation are estimates of future earnings, the future reversal of temporary differences and the impact of tax planning strategies that we can implement if warranted. We provide a valuation allowance for any portion of our deferred tax assets that, more likely than not, will not be realized. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit, based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We recognize interest and penalties related to income tax matters in Income tax expense. In December 2017, the Securities and Exchange Commission Staff issued Staff Accounting Bulletin (SAB) 118 (as further clarified by FASB ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118), which provides guidance on accounting for the income tax effects of the Tax Cuts and Jobs Act (Tax Act) signed into law by the President of the United States on December 22, 2017. We adopted the guidance of SAB 118 as of December 31, 2017 and finalized our provisional amounts recognized under SAB 118 in the fourth quarter of 2018. See Note 20 — Income Taxes for additional information. Basic and Diluted Earnings per Share We calculate basic earnings per share based upon the weighted average number of shares of common stock outstanding during the year. We calculate diluted earnings per share based upon the weighted average number of shares of common stock outstanding and all dilutive potential common shares outstanding during the year. The computation of diluted earnings per share includes the estimated impact of the exercise of the outstanding options to purchase common stock using the treasury stock method. Going Concern In accordance with FASB ASC 205-40, Presentation of Financial Statements - Going Concern, we evaluate whether there are conditions that are known or reasonably knowable that raise substantial doubt about our ability to continue as a going concern within one year after the date that our financial statements are issued. Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The assessment of our ability to meet our future obligations is inherently judgmental, subjective and susceptible to change. Our assessment considers information including, but not limited to, our financial condition, liquidity sources, obligations coming due within one year after the financial statements are issued, funds necessary to maintain current operations and any negative financial trends or other indicators of possible financial difficulty, including adverse regulatory or legal proceedings, adverse counterparty actions or rating agency decisions, and our client concentration. Based on our evaluation, we have determined that there are no conditions that are known or reasonably knowable that raise substantial doubt about our ability to continue as a going concern within one year after the date that our financial statements for the year ended December 31, 2020 are issued. Accounting Standards Adopted in 2020 Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04) This standard provides for optional expedients and other guidance regarding the accounting related to modifications of contracts, hedging relationships and other transactions affected by the expected phase-out of the London Inter-bank Offered Rate (LIBOR) by the end of 2021 (or June 30, 2023 for U.S. dollar LIBOR of certain tenors). This guidance is effective upon issuance in March 2020 through December 31, 2022 and allows for retrospective application to contract modifications as early as January 1, 2020. We elected to retrospectively adopt this ASU as of January 1, 2020 which resulted in no immediate impact on our consolidated financial statements. Although we do not have any hedge accounting relationships, many of our debt facilities and loan agreements incorporate LIBOR as the referenced interest rate. Some of these facilities and loan agreements either mature prior to the end of 2021 (or June 30, 2023) or have terms in place that provide for an alternative to LIBOR upon its phase-out. We do not anticipate that this standard will have a material impact on our consolidated financial statements. Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13 and ASU 2019-04) This ASU requires the remeasurement and recording of expected lifetime credit losses on loans and other financial instruments measured at amortized cost and replaces the existing incurred loss model for credit losses. The new guidance requires an organization to measure all current expected credit losses (CECL) for financial assets held and certain off-balance sheet credit exposures at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This standard requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. Additionally, the new guidance amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. We adopted this standard on January 1, 2020 by applying the guidance at the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings. We used the modified retrospective method for all financial assets in scope of the standard. Our statements of operations for reporting periods beginning after January 1, 2020 are presented under the new guidance, while prior period amounts continue to be reported in accordance with previously applicable GAAP. As permitted by this standard, we made an irrevocable fair value election for certain financial instruments within the scope of the standard. We elected the fair value option for the future draw commitments for HECM loans purchased or originated before January 1, 2019. For the HECM loan future draw commitments, we recorded a $47.0 million cumulative-effect transition gain adjustment (before income taxes) to retained earnings as of January 1, 2020 to recognize the fair value as of that date. We did not record any significant net tax effect related to this adjustment as the increase in the deferred tax liability was offset by a corresponding decrease to the valuation allowance. The transition adjustment related to financial instruments for which we are not electing the fair value option did not result in any significant adjustment to the opening balance of retained earnings. Our measurement of lifetime expected credit losses is based on relevant qualitative and quantitative information about past events, including historical loss experience, current conditions, and reasonable and supportable forecasts that affect collectability. Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15) This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this ASU. The amendments in this ASU require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this ASU require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments in this ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of operations as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. Upon adoption of this standard on January 1, 2020, we elected to apply the amendments in this ASU prospectively to all implementation costs incurred subsequent to that date. Our adoption of this standard did not have a material impact on our consolidated financial statements. Compensation - Retirement Benefits - Defined Benefit Plans: Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14) This ASU modifies the disclosure requirements for defined benefit plans in FASB ASC Subtopic 715-20, Compensation-Retirement Benefits-Defined Benefit Plans-General. The main provisions in this ASU include removal of the following disclosure requirements: 1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, 2) the amount and timing of plan assets expected to be returned to the employer, 3) related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan, and 4) the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits. This ASU adds disclosure requirements to report 1) the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and 2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The ASU clarifies disclosure requirements in paragraph 715-20-50-3, which state that the 1) projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets and 2) accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets should be disclosed for defined benefit plans. Our adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements. Upon adoption, we elected to apply the amendments in this ASU prospectively. Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) This ASU modifies the disclosure requirements for fair value measurements in FASB ASC Topic 820, Fair Value Measurement. The main provisions in this ASU include removal of the following disclosure requirements: 1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, 2) the policy for timing of transfers between levels and 3) the valuation processes for Level 3 fair value measurements. This standard adds disclosure requirements to report the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and for certain unobservable inputs an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. Our adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements. Accounting Standards Issued but Not Adopted in 2020 Income Taxes: Simplifying the Accounting for Income Taxes (ASU 2019-12) On December 18, 2019, the FASB issued this ASU to ASC Topic 740, Income Taxes, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include the removal of certain exceptions to the general principles of ASC 740 in such areas as intraperiod tax allocation, year to date losses in interim periods and deferred tax liabilities related to outside basis differences. Amendments also include simplification in other areas such as interim recognition of enactment of tax laws or rate changes and accounting for a franchise tax (or similar tax) that is partially based on income. Our adoption of this standard was effective for us on January 1, 2021 and did not have a material impact on our consolidated financial statements.
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Business Acquisition |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition | Note 2 — Business Acquisition On October 4, 2018, we completed our acquisition of PHH, a non-bank servicer with established servicing and origination recapture capabilities. As a result of the acquisition, PHH became a wholly owned subsidiary of Ocwen. The acquisition has been accounted for under the acquisition method of accounting pursuant to ASC 805, Business Combinations. Assets acquired and liabilities assumed are recorded at their fair value as of the date of acquisition based on management’s estimates using currently available information. The results of PHH operations are included in Ocwen’s consolidated statements of operations from the date of acquisition. For U.S. income tax purposes, the acquisition of PHH is treated as a stock purchase. The aggregate consideration paid to the former holders of PHH common stock was $358.4 million in cash and was funded by a combination of PHH cash on hand of $325.0 million and Ocwen cash on hand of $33.4 million. At the closing, there were 32,581,485 shares of PHH common stock, par value $0.01, outstanding, all of which were converted into the right to receive $11.00 in cash per share. In connection with the acquisition, all outstanding options to purchase PHH common stock and all PHH equity awards with performance-based vesting conditions were cancelled without any consideration or cash payment. All other PHH equity awards were cancelled in exchange for a cash payment equal to $11.00 per share underlying the award. We recognized a bargain purchase gain, net of tax, of $63.7 million ($64.0 million in 2018) in connection with the acquisition. The bargain purchase gain results from the fair value of PHH’s net assets exceeding the purchase price we paid. The purchase price we negotiated contemplated that PHH would incur losses after the acquisition date. To the extent those losses are realized, they are included in our consolidated statements of operations. Costs incurred in connection with the transaction are expensed as incurred and are reported in Professional services in the consolidated statements of operations. Such costs were $13.7 million during 2018. Operations The following table presents the results of operations of PHH that are included in our consolidated statements of operations from the acquisition date of October 4, 2018 through December 31, 2018:
Pro Forma Results of Operations (Unaudited) The following table presents supplemental pro forma information for Ocwen as if the PHH Acquisition occurred on January 1, 2017. Pro forma adjustments for 2018 include: •Increase in MSR valuation adjustments, net of $24.4 million to conform the accounting for MSRs to the valuation policies of Ocwen related to acquired MSRs; •Adjust interest expense for a total net impact of $30.6 million. The pro forma adjustments primarily pertain to fair value adjustments of $31.4 million related to the assumed MSR secured liability using valuation assumptions consistent with Ocwen's methodology; •Adjust depreciation expense to amortize internally developed software acquired from PHH on a straight-line basis based on a useful life of years; •Adjust revenue for a total net increase of $120.6 million which primarily include adjusting servicing and subservicing fees for $127.7 million to gross up activity related to PHH MSRs sold accounted for as secured borrowings consistent with Ocwen’s presentation. The offset to these adjustments are interest income and interest expense, with no net effect on earnings. •Income tax benefit of $0.3 million to record lower 2018 current federal tax under the new base erosion and anti-abuse tax (BEAT) provision of the Tax Act assuming Ocwen and PHH would file a consolidated federal tax return beginning January 1, 2017 and the benefit of the additional acquisition-related charges as if they had been incurred in 2017, based on management’s estimate of the blended applicable statutory tax rates and observing the continued need for a valuation allowance. The following proforma adjustments were reported as if the acquisition had occurred in 2017 rather than 2018: •Report the bargain purchase gain of $63.7 million as if the acquisition had occurred in 2017 rather than 2018; •Report Ocwen and PHH acquisition-related charges of $18.5 million for professional services as if they had been incurred in 2017 rather than 2018;
The pro forma consolidated results presented above are not indicative of what Ocwen’s consolidated results would have been had we completed the acquisition on the date indicated due to a number of factors, including but not limited to expected reductions in servicing, origination and overhead costs through the realization of targeted cost synergies and improved economies of scale, the impact of incremental costs to integrate the two companies and differences in servicing practices and cost structures between Ocwen and PHH. In addition, the pro forma consolidated results do not purport to project combined future operating results of Ocwen and PHH nor do they reflect the expected realization of any cost savings associated with the acquisition of PHH.
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Severance and Restructuring Charges |
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Severance and Restructuring Charges | Note 3 — Severance and Restructuring Charges In 2020, we executed certain cost re-engineering initiatives to generate further cost savings, some of which qualify as restructuring charges under GAAP, including the partial abandonment of certain leased properties and additional severance costs. As a result of these initiatives, we accelerated the depreciation of facility lease ROU assets and leasehold improvements by $3.3 million, recorded $6.3 million of facility and other related exit costs, and accrued $3.4 million of employee severance costs. At December 31, 2020, our remaining facility exit cost liability and employee severance cost liability are $3.5 million and $0.2 million, respectively, and are included in Other accrued expenses, a component of Other liabilities. The majority of expenses were incurred within the Corporate Items and Other segment. In February 2019, we announced our intention to execute cost re-engineering opportunities in order to drive stronger financial performance and, in the longer term, simplify our operations. Our cost re-engineering plan extended beyond eliminating redundant costs through the PHH integration process and addressed organizational, process and control redesign and automation, human capital planning, off-shore utilization, strategic sourcing and facilities rationalization. Costs for this plan included severance, retention and other incentive awards, facilities-related costs and other costs to execute the reorganization. While we continue to pursue additional cost re-engineering initiatives, this $65.0 million cost re-engineering plan announced in February 2019 was completed by December 31, 2019. Our remaining liability at December 31, 2020 and 2019 is $2.0 million and $11.9 million, respectively, and is included in Other accrued expenses, a component of Other liabilities. The following table provides a summary of the aggregate activity of the liability for the re-engineering plan costs incurred in the year ended December 31, 2019:
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Securitizations and Variable Interests Entities |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securitizations and Variable Interest Entities | Note 4 — Securitizations and Variable Interest Entities We securitize, sell and service forward and reverse residential mortgage loans and regularly transfer financial assets in connection with asset-backed financing arrangements. We have aggregated these transfers of financial assets and asset-backed financing arrangements using special purpose entities (SPEs) or VIEs into three groups: (1) securitizations of residential mortgage loans, (2) financings of advances and (3) MSR financings. Financing transactions that do not use SPEs or VIEs are disclosed in Note 14 — Borrowings. From time to time, we may acquire beneficial interests issued in connection with mortgage-backed securitizations where we may also be the master and/or primary servicer. These beneficial interests consist of subordinate and residual interests acquired from third-parties in market transactions. We consolidate the VIE when we conclude we are the primary beneficiary. Securitizations of Residential Mortgage Loans Transfers of Forward Loans We sell or securitize forward loans that we originate or purchase from third parties, generally in the form of mortgage-backed securities guaranteed by the GSEs or Ginnie Mae. Securitization typically occurs within 30 days of loan closing or purchase. We act only as a fiduciary and do not have a variable interest in the securitization trusts. As a result, we account for these transactions as sales upon transfer. The following table presents a summary of cash flows received from and paid to securitization trusts related to transfers of loans accounted for as sales that were outstanding:
(1)We receive servicing fees based upon the securitized loan balances and certain ancillary fees, all of which are reported in Servicing and subservicing fees in the consolidated statements of operations. In connection with these transfers, we retained MSRs of $68.7 million, $7.5 million and $8.3 million during 2020, 2019 and 2018, respectively. We securitize forward and reverse residential mortgage loans involving the GSEs and loans insured by the FHA or VA through Ginnie Mae. Certain obligations arise from the agreements associated with our transfers of loans. Under these agreements, we may be obligated to repurchase the loans, or otherwise indemnify or reimburse the investor or insurer for losses incurred due to material breach of contractual representations and warranties. The following table presents the carrying amounts of our assets that relate to our continuing involvement with forward loans that we have transferred with servicing rights retained as well as an estimate of our maximum exposure to loss including the UPB of the transferred loans:
At December 31, 2020 and 2019, 6.8% and 7.7%, respectively, of the transferred residential loans that we service were 60 days or more past due. Transfers of Reverse Mortgages We pool HECM loans into HMBS that we sell into the secondary market with servicing rights retained or we sell the loans to third parties with servicing rights released. We have determined that loan transfers in the HMBS program do not meet the definition of a participating interest because of the servicing requirements in the product that require the issuer/servicer to absorb some level of interest rate risk, cash flow timing risk and incidental credit risk. As a result, the transfers of the HECM loans do not qualify for sale accounting, and therefore, we account for these transfers as financings. Under this accounting treatment, the HECM loans are classified as Loans held for investment, at fair value, on our consolidated balance sheets. Holders of participating interests in the HMBS have no recourse against the assets of Ocwen, except with respect to standard representations and warranties and our contractual obligation to service the HECM loans and the HMBS. Financings of Advances using SPEs Match funded advances, i.e., advances that are pledged as collateral to our advance facilities, result from our transfers of residential loan servicing advances to SPEs in exchange for cash. We consolidate these SPEs because we have determined that Ocwen is the primary beneficiary of the SPEs. These SPEs issue debt supported by collections on the transferred advances, and we refer to this debt as Advance match funded liabilities. We make transfers to these SPEs in accordance with the terms of our advance financing facility agreements. Debt service accounts require us to remit collections on pledged advances to the trustee within days of receipt. Collected funds that are not applied to reduce the related Advance match funded debt until the payment dates specified in the indenture are classified as debt service accounts within Restricted cash in our consolidated balance sheets. The balances also include amounts that have been set aside from the proceeds of our match funded advance facilities to provide for possible shortfalls in the funds available to pay certain expenses and interest, as well as amounts set aside as required by our warehouse facilities as security for our obligations under the related agreements. The funds are held in interest earning accounts and those amounts related to match funded advance facilities are held in the name of the SPE created in connection with the facility. We classify the transferred advances on our consolidated balance sheets as a component of Advances, net and the related liabilities as Advance match funded liabilities. The SPEs use collections of the pledged advances to repay principal and interest and to pay the expenses of the SPE. Holders of the debt issued by these entities have recourse only to the assets of the SPE for satisfaction of the debt. The assets and liabilities of the advance financing SPEs are comprised solely of Advances, Restricted cash (debt service accounts), Advance match funded liabilities and amounts due to affiliates. Amounts due to affiliates are eliminated in consolidation in our consolidated balance sheets. MSR Financings using SPEs On July 1, 2019, we entered into a $300.0 million financing facility with a third-party secured by certain Fannie Mae and Freddie Mac MSRs (Agency MSRs). Two SPEs (trusts) were established in connection with this facility. On July 1, 2019, we also entered into an MSR Excess Spread Participation Agreement under which we created a 100% participation interest in the Portfolio Excess Servicing Fees, pursuant to which the holder of the participation interest is entitled to receive certain funds collected on the related portfolio of mortgage loans (other than ancillary income and advance reimbursement amounts) with respect to such Portfolio Excess Servicing Fees. This participation interest has been contributed to the trusts. On May 7, 2020 we renewed the facility through June 30, 2021 and reduced the borrowing capacity from $300.0 million to $250.0 million. We pledged the membership interest of the depositor for our OMART advance financing facility as additional collateral to this facility. In connection with this facility, we entered into repurchase agreements with a third-party pursuant to which we sold trust certificates of the trusts representing certain indirect economic interests in the Agency MSRs and agreed to repurchase such certificates at a future date at the repurchase price set forth in the repurchase agreements. Our obligations under the facility are secured by a lien on the related Agency MSRs. In addition, Ocwen guarantees the obligations under the facility. We determined that the trusts are VIEs for which we are the primary beneficiary. Therefore, we have included the trusts in our consolidated financial statements effective July 1, 2019. We have the power to direct the activities of the VIEs that most significantly impact the VIE’s economic performance given that we are the servicer of the Agency MSRs that result in cash flows to the trusts. In addition, we have designed the trusts at inception to facilitate the third-party funding facility under which we have the obligation to absorb the losses of the VIEs that could be potentially significant to the VIEs. The table below presents the carrying value and classification of the assets and liabilities of the Agency MSR financing facility:
On November 26, 2019, we issued $100.0 million Ocwen Excess Spread-Collateralized Notes, Series 2019-PLS1 Class A (PLS Notes) secured by certain of PMC’s private label MSRs (PLS MSRs). PMC PLS ESR Issuer LLC (PLS Issuer) was established in this connection as a wholly owned subsidiary of PMC. PMC entered into an MSR Excess Spread Participation Agreement with PLS Issuer. PMC created a participation interest in the Excess Servicing Fees, related float and REO fees pursuant to which the holder of the participation interest will be entitled to receive such Excess Servicing Fees, related float and REO fees. PMC holds the MSRs and services the loans which create the related excess cash flows pledged under the MSR Excess Spread Participation Agreement. PLS Issuer’s obligations under the facility are secured by a lien on the related PLS MSRs. PMC sold a participation certificate representing certain economic interests in the PLS MSRs and in order to secure its obligations under the participation certificate, it granted a security interest to PLS Issuer in the PLS MSRs. The PLS Issuer assigned the security interest in the PLS MSRs to the collateral agent for the noteholders. Ocwen guarantees the obligations of PLS Issuer under the facility. We determined that PLS Issuer is a VIE for which we are the primary beneficiary. Therefore, we have included PLS Issuer in our consolidated financial statements effective November 26, 2019. We have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance given that we are the servicer of the MSRs that result in cash flows to PLS Issuer. In addition, PMC has designed PLS Issuer at inception to facilitate the funding for general corporate purposes. Separately, in return for the participation interests, PMC received the proceeds from issuance of the PLS Notes. PMC is the sole member of PLS Issuer, thus PMC has the obligation to absorb the losses of the VIE that could be potentially significant to the VIE. The table below presents the carrying value and classification of the assets and liabilities of the PLS Notes facility:
Mortgage-Backed Securitizations The table below presents the carrying value and classification of the assets and liabilities of consolidated mortgage-backed securitization trusts included in our consolidated balance sheets as a result of residual securities issued we acquired in 2018 which were issued by the trusts.
We concluded we are the primary beneficiary of certain residential mortgage-backed securitizations as a result of beneficial interests consisting of residual securities, which expose us to the expected losses and residual returns of the trust, and our role as master servicer, where we have the ability to direct the activities that most significantly impact the performance of the trust. Holders of the debt issued by the consolidated securitization trust entities have recourse only to the assets of the SPE for satisfaction of the debt and have no recourse against the assets of Ocwen. Similarly, the general creditors of Ocwen have no claim on the assets of the trusts. Our exposure to loss as a result of our continuing involvement is limited to the carrying values of our investments in the residual securities of the trusts, our MSRs and related advances. In June 2020, we sold beneficial interests consisting of residual securities with a fair value of $1.2 million that we held in one of the consolidated securitization trusts. Effective with the sale, Ocwen deconsolidated the trust as it is no longer the primary beneficiary.
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Note 5 — Fair Value Fair value is estimated based on a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs to valuation techniques into three broad levels whereby the highest priority is given to Level 1 inputs and the lowest to Level 3 inputs. Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. We classify assets in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying amounts and the estimated fair values of our financial instruments and certain of our nonfinancial assets measured at fair value on a recurring or non-recurring basis or disclosed, but not measured, at fair value are as follows:
(a)Measured at fair value on a recurring basis. (b)Measured at fair value on a non-recurring basis. (c)Disclosed, but not measured, at fair value. (d)The carrying values are net of unamortized debt issuance costs and discount. See Note 14 — Borrowings for additional information. (e)Loans repurchased from Ginnie Mae securitizations with a fair value of $51.1 million at December 31, 2020 are classified as Level 3. The remaining balance of loans held for sale at fair value at December 31, 2020 is classified as Level 2. The entire balance of Loans held for sale at fair value at December 31, 2019 was classified as Level 2. (f)Level 3 at December 31, 2020 and Level 2 at December 31, 2019. The following tables present a reconciliation of the changes in fair value of Level 3 assets and liabilities that we measure at fair value on a recurring basis:
The methodologies that we use and key assumptions that we make to estimate the fair value of financial instruments and other assets and liabilities measured at fair value on a recurring or non-recurring basis and those disclosed, but not carried, at fair value are described below. Loans Held for Sale Residential forward and reverse mortgage loans that we intend to sell are carried at fair value as a result of a fair value election. Such loans are subject to changes in fair value due to fluctuations in interest rates from the closing date through the date of the sale of the loan into the secondary market. These loans are generally classified within Level 2 of the valuation hierarchy because the primary component of the price is obtained from observable values of mortgage forwards for loans of similar terms and characteristics. We have the ability to access this market, and it is the market into which conventional and government-insured mortgage loans are typically sold. We purchase certain loans from Ginnie Mae guaranteed securitizations in connection with loan modifications, strategic early buyouts (EBO) and loan resolution activity as part of our contractual obligations as the servicer of the loans. Effective January 1, 2020, we elected to classify any repurchased loans as loans held for sale at fair value as we expect to redeliver (sell) the loans into new Ginnie Mae guaranteed securitizations (in the case of modified loans) or sell the loans to a private investor (in the case of EBO loans). Modified and EBO loans purchased before January 1, 2020 are classified as loans held for sale at the lower of cost or fair value. The fair value of these loans is estimated using both observable and unobservable inputs, including published forward Ginnie Mae prices or existing sale contracts, as well as estimated default, prepayment, and discount rates. The significant unobservable input in estimating fair value is the estimated default rate. Accordingly, these repurchased Ginnie Mae loans are classified as Level 3 within the valuation hierarchy. Loans repurchased in connection with loan resolution activities are classified as receivables. Because these loans are insured or guaranteed by the FHA or VA, the fair value of these loans represents the net recovery value taking into consideration the insured or guaranteed claim. When we enter into an agreement to sell a loan or pool of loans to an investor at a set price, we value the loan or loans at the commitment price, unless facts and circumstances exist that could impact deal economics, at which point we use judgment to determine appropriate adjustments to recorded fair value, if any. We determine the fair value of loans for which we have no agreement to sell on the expected future cash flows discounted at a rate commensurate with the risk of the estimated cash flows. Loans Held for Investment Loans Held for Investment - Reverse Mortgages We measure these loans at fair value based on the expected future cash flows discounted over the expected life of the loans at a rate commensurate with the risk of the estimated cash flows, including future draw commitments for HECM loans. Inputs of the discounted cash flows of these assets include future draws and tail spread gains, voluntary prepayments, defaults, and discount rate. On January 1, 2019, we made an irrevocable fair value election on all future draw commitments for HECM loans that were purchased or originated on or after January 1, 2019. In connection with our adoption of ASU 2016-13 on January 1, 2020, we made an irrevocable fair value election on all future draw commitments for HECM loans that were purchased or originated before January 1, 2019. We engage third-party valuation experts to support our valuation and provide observations and assumptions related to market activities. We evaluate the reasonableness of our fair value estimate and assumptions using historical experience, or cash flow backtesting, adjusted for prevailing market conditions and benchmarks with third-party expert valuations. Significant unobservable assumptions include voluntary prepayment speeds, defaults and discount rate. The conditional prepayment speed assumption displayed in the table below is inclusive of voluntary (repayment or payoff) and involuntary (inactive/delinquent status and default) prepayments. The discount rate assumption is primarily based on an assessment of current market yields on reverse mortgage loan and tail securitizations, expected duration of the asset and current market interest rates.
(1)Includes voluntary and involuntary prepayments. Significant increases or decreases in any of these assumptions in isolation could result in a significantly lower or higher fair value, respectively. The effects of changes in the assumptions used to value the loans held for investment, excluding future draw commitments, are partially offset by the effects of changes in the assumptions used to value the HMBS-related borrowings that are associated with these loans. Loans Held for Investment – Restricted for securitization investors We have elected to measure loans held by consolidated mortgage-backed securitization trusts at fair value. The loans are secured by first liens on single family residential properties. Fair value is based on proprietary cash flow modeling processes from a third-party broker/dealer and a third-party valuation expert. Significant assumptions used in the valuation include projected monthly payments, projected prepayments and defaults, property liquidation values and discount rates. MSRs We determine the fair value of MSRs primarily using discounted cash flow methodologies. The significant components of the estimated future cash inflows for MSRs include servicing fees, late fees, float earnings and other ancillary fees. Significant cash outflows include the cost of servicing, the cost of financing servicing advances and compensating interest payments. We engage third-party valuation experts who generally utilize: (a) transactions involving instruments with similar collateral and risk profiles, adjusted as necessary based on specific characteristics of the asset or liability being valued; and/or (b) industry-standard modeling, such as a discounted cash flow model and prepayment model, in arriving at their estimate of fair value. The prices provided by the valuation experts reflect their observations and assumptions related to market activity, incorporating available industry survey results and client feedback, and including risk premiums and liquidity adjustments. While the models and related assumptions used by the valuation experts are proprietary to them, we understand the methodologies and assumptions used to develop the prices based on our ongoing due diligence, which includes regular discussions with the valuation experts. We believe that the procedures executed by the valuation experts, supported by our verification and analytical procedures, provide reasonable assurance that the prices used in our consolidated financial statements comply with the accounting guidance for fair value measurements and disclosures and reflect the assumptions that a market participant would use. We evaluate the reasonableness of our third-party experts’ assumptions using historical experience adjusted for prevailing market conditions. Assumptions used in the valuation of MSRs include:
MSRs are carried at fair value and classified within Level 3 of the valuation hierarchy. The fair value is determined using the mid-point of the range of prices provided by third-party valuation experts, without adjustment, except in the event we have a potential or completed sale, including transactions where we have executed letters of intent, in which case the fair value of the MSRs is recorded at the estimated sale price. Fair value reflects actual Ocwen sale prices for orderly transactions where available in lieu of independent third-party valuations. Our valuation process includes discussions of bid pricing with the third-party valuation experts and are contemplated along with other market-based transactions in their model validation. A change in the valuation inputs or assumptions may result in a significantly higher or lower fair value measurement. Changes in market interest rates predominantly impact the fair value for Agency MSRs via prepayment speeds by altering the borrower refinance incentive and the non-Agency MSRs due to the impact on advance costs. The significant unobservable assumptions used in the valuation of these MSRs include prepayment speeds, delinquency rates, cost to service and discount rates.
Because the mortgages underlying these MSRs permit the borrowers to prepay the loans, the value of the MSRs generally tends to diminish in periods of declining interest rates, an improving housing market or expanded product availability (as prepayments increase) and increase in periods of rising interest rates, a deteriorating housing market or reduced product availability (as prepayments decrease). The following table summarizes the estimated change in the value of the MSRs as of December 31, 2020 given hypothetical shifts in lifetime prepayments and yield assumptions:
The sensitivity analysis measures the potential impact on fair values based on hypothetical changes, which in the case of our portfolio at December 31, 2020 are increased prepayment speeds and an increase in the yield assumption. Advances We value advances at their net realizable value, which generally approximates fair value. Servicing advances have no stated maturity and do not bear interest. Principal and interest advances are generally realized within a relatively short period of time. The timing of recovery of taxes, insurance and other corporate advances depends on the underlying loan attributes, performance, and in many cases, foreclosure or liquidation timeline. The fair value adjustment to servicing advances associated with the estimated time to recover such advances is separately measured and reported as a component of the fair value of the associated MSR, consistent with actual market transactions. Refer to MSRs above for a description of the valuation methodology and assumptions related to the cost of financing servicing advances and discount rate, among other factors. Receivables The carrying value of receivables generally approximates fair value because of the relatively short period of time between their origination and realization. Mortgage-Backed Securities (MBS) Our subordinate and residual securities are not actively traded, and therefore, we estimate the fair value of these securities using a process based upon the use of an independent third-party valuation expert. Where possible, we consider observable trading activity in the valuation of our securities. Key inputs include expected prepayment rates, delinquency and cumulative loss curves and discount rates commensurate with the risks. Where possible, we use observable inputs in the valuation of our securities. However, the subordinate and residual securities in which we have invested trade infrequently and therefore have few or no observable inputs and little price transparency. Additionally, during periods of market dislocation, the observability of inputs is further reduced. We classify subordinate and residual securities as trading securities and account for them at fair value on a recurring basis. Changes in the fair value of our investment in subordinate and residual securities are recognized in Other, net in the consolidated statements of operations. Advance Match Funded Liabilities For advance match funded liabilities that bear interest at a rate that is adjusted regularly based on a market index, the carrying value approximates fair value. For advance match funded liabilities that bear interest at a fixed rate, we determine fair value by discounting the future principal and interest repayments at a market rate commensurate with the risk of the estimated cash flows. We assume the notes are refinanced at the end of their revolving periods, consistent with how we manage our advance facilities. Financing Liabilities HMBS-Related Borrowings We have elected to measure these borrowings at fair value. These borrowings are not actively traded, and therefore, quoted market prices are not available. We determine fair value using a discounted cash flow approach, by discounting the projected recovery of principal and interest over the estimated life of the borrowing at a market rate commensurate with the risk of the estimated cash flows. We engage third-party valuation experts to support our valuation and provide observations and assumptions related to market activities. We evaluate the reasonableness of our fair value estimate and assumptions using historical experience, or cash flow backtesting, adjusted for prevailing market conditions and benchmarks with third-party expert valuations. Significant unobservable assumptions include yield spread and discount rate. The yield spread and discount rate assumption for these liabilities are primarily based on an assessment of current market yields for newly issued HMBS, expected duration and current market interest rates.
Significant increases or decreases in any of these assumptions in isolation could result in a significantly higher or lower fair value, respectively. The effects of changes in the assumptions used to value the HMBS-related borrowings are partially offset by the effects of changes in the assumptions used to value the associated pledged loans held for investment, excluding future draw commitments. MSRs Pledged (Rights to MSRs) We have elected to measure and record these borrowings at fair value. We recognize the proceeds received in connection with Rights to MSRs transactions as a secured borrowing that we account for at fair value. We determine the fair value of the pledged MSR liability following a similar approach as for the associated pledged MSRs. Fair value for the portion of the borrowing attributable to the MSRs underlying the Rights to MSRs is determined using the mid-point of the range of prices provided by third-party valuation experts. Fair value for the portion of the borrowing attributable to any lump sum payments received in connection with the transfer of MSRs underlying such Rights to MSRs to the extent such transfer is accounted for as a financing is determined by discounting the relevant future cash flows that were altered through such transfer using assumptions consistent with the mid-point of the range of prices provided by third-party valuation experts for the related MSR.
Significant increases or decreases in these assumptions in isolation would result in a significantly higher or lower fair value. Financing Liability – Owed to Securitization Investors Consists of securitization debt certificates due to third parties that represent beneficial ownership interests in mortgage-backed securitization trusts that we include in our consolidated financial statements. We determine fair value using the measurement alternative to ASC Topic 820, Fair Value Measurement. In accordance with the measurement alternative, the fair value of the consolidated securitization debt certificates is measured as the fair value of the loans held by the trust less the fair value of the beneficial interests held by us in the form of residual securities. Other Secured Borrowings The carrying value of secured borrowings that bear interest at a rate that is adjusted regularly based on a market index approximates fair value. For other secured borrowings that bear interest at a fixed rate, we determine fair value by discounting the future principal and interest repayments at a market rate commensurate with the risk of the estimated cash flows. For the SSTL, we base the fair value on valuation data obtained from a pricing service. Secured Notes In 2014, we issued Ocwen Asset Servicing Income Series (OASIS), Series 2014-1 Notes secured by Ocwen-owned MSRs relating to Freddie Mac mortgages. In 2019, we issued Ocwen Excess Spread-Collateralized Notes, Series 2019-PLS1 notes secured by certain of PMC’s private label MSRs. We determine the fair value of these notes based on bid prices provided by third parties involved in the issuance and placement of the notes. Senior Notes We base the fair value on quoted prices in a market with limited trading activity, or on valuation data obtained from a pricing service in the absence of trading data. Derivative Financial Instruments Interest rate lock commitments (IRLCs) represent an agreement to purchase loans from a third-party originator or an agreement to extend credit to a mortgage applicant (locked pipeline), whereby the interest rate is set prior to funding. As of December 31, 2019, IRLCs were classified within Level 2 of the valuation hierarchy as the primary component of the price was obtained from observable values of mortgage forwards for loans of similar terms and characteristics. Fair value amounts of IRLCs are adjusted for expected “fallout” (locked pipeline loans not expected to close) using models that consider cumulative historical fallout rates and other factors. As of December 31, 2020, IRLCs are classified as Level 3 assets as fallout rates were determined to be significant unobservable assumptions. We entered into forward MBS trades to provide an economic hedge against changes in the fair value of residential forward and reverse mortgage loans held for sale that we carry at fair value until August 2019 and, beginning in September 2019, to hedge of our net MSR portfolio. We use derivative instruments, including forward trades of MBS or Agency TBAs and exchange-traded interest rate swap futures, as economic hedging instruments. Forward contracts, TBAs and interest rate swap futures are actively traded in the market and we obtain unadjusted market quotes for these derivatives; thus, they are classified within Level 1 of the valuation hierarchy. In addition, we may use interest rate caps to minimize future interest rate exposure on variable rate debt issued on servicing advance financing facilities from increases in one-month or three-month Eurodollar rate (1ML or 3ML, respectively) interest rates. The fair value for interest rate caps is based on counterparty market prices and adjusted for counterparty credit risk.
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Held for Sale | Note 6 — Loans Held for Sale
(1)At December 31, 2020, 2019 and 2018, the balances include $(6.7) million, $(7.8) million and $(7.2) million, respectively, of fair value adjustments. (2)At December 31, 2020, the balances include $51.1 million of loans that we repurchased from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines. As disclosed in Note 5 — Fair Value, effective January 1, 2020, we elected to classify repurchased loans as Loans held for sale at fair value. See table below. We may repurchase loans that have been modified, to facilitate loss reduction strategies, or as otherwise obligated as a Ginnie Mae servicer. Repurchased loans may be modified or otherwise remediated through loss mitigation activities, may be sold to a third party, or are reclassified to Receivables.
(1)We elected the fair value option for all newly repurchased loans after December 31, 2019. (2)At December 31, 2020, 2019 and 2018, the balances include $12.5 million, $60.6 million and $51.8 million, respectively, of loans that we repurchased from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines.
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Reverse Mortgages |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse Mortgages | Note 7 – Reverse Mortgages
(1)The change in fair value adjustments on Loans held for investment for 2020 and 2019 includes $19.8 million and $12.2 million, respectively, in connection with the fair value election for future draw commitments (tails) on HECM reverse mortgage loans purchased or originated after December 31, 2018. (2)In conjunction with the adoption of ASU 2016-13, we elected the fair value option for future draw commitments (tails) on HECM reverse mortgage loans purchased or originated before December 31, 2018, which resulted in the recognition of the fair value of such tails through stockholders’ equity on January 1, 2020.
(1)Includes the changes in fair value of newly originated loans held for investment in the period through securitization date.
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Advances |
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Advances [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advances | Note 8 — Advances
The following table summarizes the activity in net advances:
(1) As disclosed in Note 1, there was no significant adjustment as of January 1, 2020 as a result of the adoption of ASU 2016-13.
(1)Net change for the year ended December 31, 2019 includes $18.0 million allowance related to sold advances presented in Other liabilities (Liability for indemnification obligations).
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Mortgage Servicing |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing | Note 9 — Mortgage Servicing During each period, we remeasure our MSRs at fair value, which contemplates the receipt or nonreceipt of the servicing income for that period. The servicing income, including expectations of future servicing cash flows, are inputs for the measurement of the MSR fair value. The net result on the statement of operations is that we record the contractual cash received in each period as revenue within Servicing and subservicing fees, partially offset by the remeasurement of the MSR fair value within MSR valuation adjustments, net.
(1)Servicing transfers and adjustments include a $263.7 million derecognition of MSRs/Rights to MSRs effective with the February 20, 2020 notice of termination of the PMC subservicing agreement by NRZ. See Note 10 — Rights to MSRs for further information. (2)Changes in fair value are recognized in MSR valuation adjustments, net in the consolidated statements of operations. MSR UPB
(1)MSRs subject to sale agreements with NRZ that do not meet sale accounting criteria. See Note 10 — Rights to MSRs. We purchased MSRs with a UPB of $31.7 billion, $14.6 billion and $144.1 million during 2020, 2019 and 2018, respectively. We sold MSRs with a UPB of $80.0 million, $140.8 million and $901.3 million during 2020, 2019 and 2018, respectively, mostly to Freddie Mac under the Voluntary Partial Cancellation (VPC) program for delinquent loans. We sold non-Agency MSRs with a UPB of $140.8 million during 2019. A significant portion of the servicing agreements for our non-Agency servicing portfolio contain provisions where we could be terminated as servicer without compensation upon the failure of the serviced loans to meet certain portfolio delinquency or cumulative loss thresholds. To date, terminations as servicer as a result of a breach of any of these provisions have been minimal. At December 31, 2020, the S&P Global Ratings, Inc.’s (S&P) servicer ratings outlook for PMC is stable. On March 24, 2020, Fitch Ratings, Inc. (Fitch) placed all U.S Residential Mortgage Backed Securities (RMBS) servicer ratings on Outlook Negative, resulting from a rapidly evolving economic and operating environment due to the sudden impact of the COVID-19 virus. Downgrades in servicer ratings could adversely affect our ability to service loans, sell or finance servicing advances and could impair our ability to consummate future servicing transactions or adversely affect our dealings with lenders, other contractual counterparties, and regulators, including our ability to maintain our status as an approved servicer by Fannie Mae and Freddie Mac. The servicer rating requirements of Fannie Mae do not necessarily require or imply immediate action, as Fannie Mae has discretion with respect to whether we are in compliance with their requirements and what actions it deems appropriate under the circumstances in the event that we fall below their desired servicer ratings. Certain of our servicing agreements require that we maintain specified servicer ratings from rating agencies such as Moody’s and S&P. To date, terminations as servicer as a result of a breach of any of these provisions have been minimal. The geographic concentration of the UPB of residential loans and real estate we serviced at December 31, 2020 was as follows:
(1)The HAMP expired on December 31, 2016. Borrowers who had requested assistance or to whom an offer of assistance had been extended as of that date had until September 30, 2017 to finalize their modification. We continue to earn HAMP success fees for HAMP modifications that remain less than 90 days delinquent at the first-, second- and third-year anniversary of the start of the trial modification. Float balances (balances in custodial accounts, which represent collections of principal and interest that we receive from borrowers) are held in escrow by unaffiliated banks and are excluded from our consolidated balance sheets. Float balances amounted to $1.74 billion, $1.71 billion and $1.68 billion at December 31, 2020, 2019 and 2018, respectively.
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Rights to MSRs Rights to MSRs |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rights to MSRs | Note 10 — Rights to MSRs 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. The following tables present selected assets and liabilities recorded on our consolidated balance sheets as well as the impacts to our consolidated statements of operations in connection with our NRZ agreements.
(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. (2)Balance represented the holdback of proceeds from PMC MSR sales and transfers to address indemnification claims and mortgage loan document deficiencies. These sales were executed by PMC prior to Ocwen’s acquisition of PHH.
(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. As of December 31, 2020, the UPB of loans serviced on behalf of NRZ comprised the following:
(1)The MSR sale transactions did not achieve sale accounting treatment. (2)NRZ’s associated outstanding servicing advances were approximately $575.9 million as of December 31, 2020. Ocwen Transactions 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). 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. Following the Initial Term, NRZ may extend the term of the Subservicing Agreements and Servicing Addendum for additional -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. PMC Transactions 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.
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Receivables | Note 11 — Receivables
At December 31, 2020 and 2019, the allowance for losses primarily related to receivables of our Servicing business. The allowance for losses related to FHA- or VA-insured loans repurchased from Ginnie Mae guaranteed securitizations (government-insured loan claims) was $38.3 million and $56.9 million at December 31, 2020 and 2019, respectively. The government-insured loan claims are guaranteed by the U.S. government.
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Premises and Equipment | Note 12 — Premises and Equipment
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Other Assets |
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Other Assets | Note 13 — Other Assets
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Borrowings |
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Borrowings | Note 14 — Borrowings
(1)The amortization date of our facilities is the date on which the revolving period ends under each advance facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. The maturity date is the date on which all outstanding balances must be repaid. In all of our advance facilities, there are multiple notes outstanding. For each note, after the amortization date, all collections that represent the repayment of advances pledged to the facility must be applied ratably to each outstanding amortizing note to reduce the balance and as such the collection of advances allocated to the amortizing note may not be used to fund new advances. (2)Borrowing capacity under the OMART and OFAF facilities is available to us provided that we have sufficient eligible collateral to pledge. At December 31, 2020, none of the available borrowing capacity of the OMART and OFAF advance financing notes could be used based on the amount of eligible collateral. (3)On May 7, 2020, we renewed this facility through June 30, 2021, and increased the total borrowing capacity of the Series 2015-VF5 variable notes from $200.0 million to $500.0 million, with interest computed based on the lender’s cost of funds plus a margin of 400 bps. On August 17, 2020, we reduced the total borrowing capacity to $250.0 million in conjunction with the issuance of new fixed-rate term notes with a borrowing capacity of $475.0 million, as disclosed in (4) below. (4)On August 12, 2020, we issued fixed-rate term notes with a total borrowing capacity of $475.0 million (Series 2020 T-1). The weighted average rate of the notes at December 31, 2020 is 1.49% with rates on the individual classes of notes ranging from 1.28% to 5.42%. The Series 2019-T1 and 2019-T2 fixed-rate term notes were redeemed on August 17, 2020. (5)On May 7, 2020, we renewed this facility through June 30, 2021 and increased the borrowing capacity from $60.0 million to $70.0 million with interest computed based on the lender’s cost of funds plus a margin of 300 bps.
(1)Represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed HMBS which did not qualify for sale accounting treatment of HECM loans. Under this accounting treatment, the HECM loans securitized with Ginnie Mae remain on our consolidated balance sheet and the proceeds from the sale are recognized as a financing liability, which is recorded at fair value consistent with the related HECM loans. The beneficial interests have no maturity dates, and the borrowings mature as the related loans are repaid. (2)This pledged MSR liability is recognized due to the accounting treatment of MSR sale transactions with NRZ which did not qualify as sales for accounting purposes. Under this accounting treatment, the MSRs transferred to NRZ remain on the consolidated balance sheet and the proceeds from the sale are recognized as a financing liability, which is recorded at fair value consistent with the related MSRs. This financing liability has no contractual maturity or repayment schedule. The PMC liability was derecognized upon termination of the agreement by NRZ on February 20, 2020. See Note 10 — Rights to MSRs for additional information. (3)Represented a liability which arose in connection with lump sum payments received in 2017 upon transfer of legal title of the MSRs related to the Rights to MSRs transactions to NRZ and in 2018 in connection with the execution of the New RMSR Agreements as compensation for foregoing certain payments under the Original Rights to MSRs Agreements. The balance of the liability was adjusted each reporting period to its fair value through the term of the original agreements on April 30, 2020. See Note 10 — Rights to MSRs for additional information. (4)Consists of securitization debt certificates due to third parties that represent beneficial interests in trusts that we include in our consolidated financial statements, as more fully described in Note 4 — Securitizations and Variable Interest Entities. In June 2020, we sold the beneficial interests held in the INDX 2004-AR11 securitization trust and deconsolidated the trust. The certificates in the RAST 2003-A11 Trust pay interest based on fixed rates ranging between 4.25% and 5.75% and a variable rate based on 1ML plus 0.45%. The maturity of the certificates occurs upon maturity of the loans held by the trust. The remaining loans in the RAST 2003-A11 Trust have maturity dates extending through October 2033.
(1)1ML was 0.14% and 1.76% at December 31, 2020 and 2019, respectively. (2)Of the borrowing capacity on mortgage loan warehouse facilities extended on a committed basis, none of the available borrowing capacity could be used at December 31, 2020 based on the amount of eligible collateral that could be pledged. (3)On January 27, 2020, we entered into a Joinder and Second Amendment Agreement (the Amendment) which amends the Amended and Restated SSTL Facility Agreement dated as of December 5, 2016, as amended by a Joinder and Amendment Agreement dated as of March 18, 2019. The Amendment provided for a net prepayment of $126.1 million of the outstanding balance at December 31, 2019 such that the facility has a maximum outstanding balance of $200.0 million. The Amendment also (i) extended the maturity of the remaining outstanding loans under the SSTL to May 15, 2022, (ii) provides that the loans under the SSTL bear interest at the one-month Eurodollar Rate or the Base Rate (as defined in the SSTL), at our option, plus a margin of 6.00% per annum for Eurodollar Rate loans or 5.00% per annum for Base Rate loans (increasing to a margin of 6.50% per annum for Eurodollar Rate loans or 5.50% per annum for Base Rate loans on January 27, 2021), (iii) provides for a prepayment premium of 2.00% until January 27, 2022 and (iv) requires quarterly principal payments of $5.0 million. The applicable interest rate was 7.0% at December 31, 2020. (4)The maximum borrowing under this agreement is $275.0 million, of which $110.0 million is available on a committed basis and the remainder is available at the discretion of the lender. (5)On March 12, 2020, we voluntarily reduced the maximum borrowing capacity from $100.0 million to $1.0 million to in connection with Liberty’s transfer of substantially all of its assets, liabilities, contracts and employees to PMC effective March 15, 2020. On August 10, 2020, the maturity date of this agreement was extended to August 13, 2021. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. (6)The maximum borrowing under this agreement is $250.0 million, of which $200.0 million is available on a committed basis and the remainder is available on an uncommitted basis. The agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. On November 19, 2020, the maturity date was extended to November 18, 2021 and the interest rate was increased to 1ML plus 3.25% for borrowings secured by forward mortgage loans and 1ML plus 3.50% for reverse mortgage loans. (7)This facility expired on January 22, 2020 and was not renewed. (8)The lender provides financing for up to $50.0 million at the discretion of the lender. The agreement has no stated maturity date. Interest on this facility is based on the Secured Overnight Financing Rate (SOFR). (9)Under the original terms, the lender provided $300.0 million of borrowing capacity on an uncommitted basis. On June 25, 2020, this facility was amended to be comprised of two lines, a $120.0 million uncommitted participation agreement and a $90.0 million committed repurchase agreement. The maturity date of the facility was extended to June 24, 2021. The agreements allow the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transactions do not qualify for sale accounting treatment and are accounted for as secured borrowings. The lender earns the stated interest rate of the underlying mortgage loans less 35 bps with a floor of 3.50%, while the loans are financed under both the participation and repurchase agreements. (10)Under this agreement, the lender provides financing for up to $50.0 million on a committed basis. On January 15, 2021, the maturity date of this facility was extended to January 15, 2022. (11)On March 12, 2020, we entered into a mortgage loan warehouse agreement to fund reverse mortgage loan draws by borrowers subsequent to origination. Under this agreement, the lender provides financing for up to $100.0 million on an uncommitted basis. In October 2020, the maturity date was extended to October 24, 2021 and the capacity was temporarily increased to $150.0 million until December 4, 2020 when it was reduced to $100.0 million. On February 1, 2021, the capacity was temporarily increased to $150.0 million until February 28, 2021 when it will be reduced to $100.0 million. (12)On September 30, 2020, we entered into a $100.0 million uncommitted repurchase agreement to finance the purchase of EBO loans from Ginnie Mae. The agreement has no stated maturity date, however each transaction has a maximum duration of four years. The cost of this line is set at each transaction date and is based on the interest rate on the collateral. (13)PMC’s obligations under this facility are secured by a lien on the related MSRs. Ocwen guarantees the obligations of PMC under this facility. On May 7, 2020, we renewed the facility through June 30, 2021 and reduced the maximum amount which we may borrow pursuant to the repurchase agreements from $300.0 million to $250.0 million on a committed basis. We also pledged the membership interest of the depositor for our OMART advance financing facility as additional collateral to this facility. See Note 4 — Securitizations and Variable Interest Entities for additional information. We are subject to daily margining requirements under the terms of our MSR financing facilities. Declines in fair value of our MSRs due to declines in market interest rates, assumption updates or other factors require that we provide additional collateral to our lenders under these facilities. (14)In connection with this facility, PMC entered into a repurchase agreement pursuant to which PMC has sold a participation certificate representing certain economic interests in the Ginnie Mae MSRs and has agreed to repurchase such participation certificate at a future date at the repurchase price set forth in the repurchase agreement. PMC’s obligations under this facility are secured by a lien on the related Ginnie Mae MSRs. Ocwen guarantees the obligations of PMC under the facility. On June 30, 2020, we amended the facility to increase the borrowing capacity from $100.0 million to $127.5 million on an uncommitted basis, accelerate the maturity date to December 27, 2020 and include Ginnie Mae servicing advances as additional collateral. On December 23, 2020, the maturity date was extended to December 27, 2021 and the borrowing capacity was reduced to $125.0 million. See (13) above regarding daily margining requirements. (15) PLS Issuer’s obligations under the facility are secured by a lien on the related PLS MSRs. Ocwen guarantees the obligations of PLS Issuer under the facility. The Class A PLS Notes issued pursuant to the credit agreement had an initial principal amount of $100.0 million and amortize in accordance with a pre-determined schedule subject to modification under certain events. See Note 4 — Securitizations and Variable Interest Entities for additional information. See (13) above regarding daily margining requirements. (16)OASIS noteholders are entitled to receive a monthly payment equal to the sum of: (a) 21 basis points of the UPB of the reference pool of Freddie Mac mortgages; (b) any termination payment amounts; (c) any excess refinance amounts; and (d) the note redemption amounts, each as defined in the indenture supplement for the notes. Monthly amortization of the liability is estimated using the proportion of monthly projected service fees on the underlying MSRs as a percentage of lifetime projected fees, adjusted for the term of the notes. (17)Weighted average interest rate at December 31, 2020, excluding the effect of debt issuance costs and discount. (18)Includes $4.9 million and $2.2 million at December 31, 2020 and 2019, respectively, related to SSTL.
(1)These notes were originally issued by PHH and subsequently assumed by Ocwen in connection with its acquisition of PHH. We are amortizing the fair value purchase accounting adjustments over the remaining term of the notes. We have the option to redeem the notes, in whole or in part, at a redemption price equal to 100.0% of the principal amount plus any accrued and unpaid interest. (2)During July and August 2019, we repurchased a total of $39.4 million of our 8.375% Senior secured notes in the open market for a price of $34.3 million. We recognized a gain of $5.1 million on these repurchases which is reported in Gain on repurchases of senior secured notes in the consolidated statement of operations. (3)See Note 28 — Subsequent Events for information regarding our intention to redeem our senior notes. At any time, we may redeem all or a part of the 8.375% Senior secured notes, upon not less than 30 nor more than 60 days’ notice at a specified redemption price, plus accrued and unpaid interest to the date of redemption. We may redeem all or a part of these notes at the redemption prices (expressed as percentages of principal amount) specified in the Indenture of 102.094% during the twelve-month period beginning on November 15th 2020, and 100% thereafter. Upon a change of control (as defined in the Indenture), we are required to make an offer to the holders of the 8.375% Senior secured notes to repurchase all or a portion of each holder’s notes at a purchase price equal to 101.0% of the principal amount of the notes purchased plus accrued and unpaid interest to the date of purchase. The Indenture contains certain covenants, including, but not limited to, limitations and restrictions on Ocwen’s ability and the ability of its restricted subsidiaries (including PMC as the surviving entity in the merger with OLS) to (i) incur additional debt or issue preferred stock; (ii) pay dividends or make distributions on or purchase equity interests of Ocwen (iii) repurchase or redeem subordinated debt prior to maturity; (iv) make investments or other restricted payments; (v) create liens on assets to secure debt of PMC or any Guarantor; (vi) sell or transfer assets; (vii) enter into transactions with affiliates; and (viii) enter into mergers, consolidations, or sales of all or substantially all of the assets of Ocwen and its restricted subsidiaries, taken as a whole. As of the date of the Indenture, all of Ocwen’s subsidiaries are restricted subsidiaries. The restrictive covenants set forth in the Indenture are subject to important exceptions and qualifications. Many of the restrictive covenants will be suspended if (i) the Senior Secured Notes achieve an investment grade rating from both Moody’s and S&P and (ii) no default or event of default has occurred and is continuing under the Indenture. Covenants that are suspended as a result of achieving these ratings will again apply if one or both of Moody’s and S&P withdraws its investment grade rating or downgrades the rating assigned to the Senior Secured Notes below an investment grade rating. Credit Ratings Credit ratings are intended to be an indicator of the creditworthiness of a company’s debt obligation. At December 31, 2020, the S&P issuer credit rating for Ocwen was “B-”. On April 13, 2020, S&P placed Ocwen’s ratings outlook on CreditWatch with negative implications due to the uncertain economic impact of COVID-19 on liquidity. The CreditWatch was removed on July 23, 2020 and the Outlook was revised to Negative. On August 21, 2020, Moody’s reaffirmed their ratings. It is possible that additional actions by credit rating agencies could have a material adverse impact on our liquidity and funding position, including materially changing the terms on which we may be able to borrow money. Covenants Under the terms of our debt agreements, we are subject to various qualitative and quantitative covenants. Collectively, these covenants include: •Financial covenants; •Covenants to operate in material compliance with applicable laws; •Restrictions on our ability to engage in various activities, including but not limited to incurring additional forms of debt, paying dividends or making distributions on or purchasing equity interests of Ocwen, repurchasing or redeeming capital stock or junior capital, repurchasing or redeeming subordinated debt prior to maturity, issuing preferred stock, selling or transferring assets or making loans or investments or acquisitions or other restricted payments, entering into mergers or consolidations or sales of all or substantially all of the assets of Ocwen and its subsidiaries, creating liens on assets to secure debt of any guarantor, entering into transactions with affiliates; •Monitoring and reporting of various specified transactions or events, including specific reporting on defined events affecting collateral underlying certain debt agreements; and •Requirements to provide audited financial statements within specified timeframes, including requirements that Ocwen’s financial statements and the related audit report be unqualified as to going concern. Many of the restrictive covenants arising from the indenture for the Senior Secured Notes will be suspended if the Senior Secured Notes achieve an investment-grade rating from both Moody’s and S&P and if no default or event of default has occurred and is continuing. Financial covenants in certain of our debt agreements require that we maintain, among other things: •a 40% loan to collateral value ratio (i.e., the ratio of total outstanding loans under the SSTL to certain collateral and other assets as defined under the SSTL) as of the last date of any fiscal quarter; and •specified levels of tangible net worth and liquidity. Certain financial covenants were added as part of the amendment and extension of our SSTL on January 27, 2020. These include i) maintaining a minimum unencumbered asset coverage ratio (i.e., the ratio of unrestricted cash and certain first priority perfected collateral to total outstanding loans under the SSTL) as of the last day of any fiscal quarter of 200% increasing to 225% after December 31, 2020 and ii) maintaining minimum unrestricted cash of $125.0 million as of the last day of each fiscal quarter. As of December 31, 2020, the most restrictive consolidated tangible net worth requirements contained in our debt agreements were for a minimum of $200.0 million in consolidated tangible net worth, as defined, under certain of our advance match funded debt, MSR financing facilities and mortgage warehouse agreements. The most restrictive liquidity requirements were for a minimum of $125.0 million in consolidated liquidity, as defined, under certain of our advance match funded debt and mortgage warehouse agreements. In addition, as amended, the SSTL limits our capacity to repurchase our securities and prepay certain junior debt to a combined total of $10.0 million, among other restrictions. Our current repurchase capacity has been reduced to the extent of repurchases executed under Ocwen’s share repurchase program announced in February 2020. See Note 16 — Stockholders’ Equity for additional information regarding share repurchases. As a result of the covenants to which we are subject, we may be limited in the manner in which we conduct our business and may be limited in our ability to engage in favorable business and investment activities or raise certain types of capital to finance future operations or satisfy future liquidity needs. In addition, breaches or events that may result in a default under our debt agreements include, among other things, nonpayment of principal or interest, noncompliance with our covenants, breach of representations, the occurrence of a material adverse change, insolvency, bankruptcy, certain material judgments and changes of control. Covenants and default provisions of this type are commonly found in debt agreements such as ours. Certain of these covenants and default provisions are open to subjective interpretation and, if our interpretation was contested by a lender, a court may ultimately be required to determine compliance or lack thereof. In addition, our debt agreements generally include cross default provisions such that a default under one agreement could trigger defaults under other agreements. If we fail to comply with our debt agreements and are unable to avoid, remedy or secure a waiver of any resulting default, we may be subject to adverse action by our lenders, including termination of further funding, acceleration of outstanding obligations, enforcement of liens against the assets securing or otherwise supporting our obligations and other legal remedies. Our lenders can waive their contractual rights in the event of a default. We believe we were in compliance with all of the qualitative and quantitative covenants in our debt agreements as of the date of these financial statements. Collateral Our assets held as collateral related to secured borrowings, committed under sale or other contractual obligations and which may be subject to secured liens under the SSTL and Senior Secured Notes are as follows at December 31, 2020:
(1)Sales and Other Commitments include Restricted cash and deposits held as collateral to support certain contractual obligations, and Contingent loan repurchase assets related to the Ginnie Mae EBO program for which a corresponding liability is recognized in Other liabilities. (2)The borrowings under the SSTL are secured by a first priority security interest in substantially all of the assets of Ocwen, PHH, PMC and the other guarantors thereunder, excluding among other things, 35% of the voting capital stock of foreign subsidiaries, securitization assets and equity interests of securitization entities, assets securing permitted funding indebtedness and non-recourse indebtedness, REO assets, as well as other customary carve-outs (collectively, the Collateral). The Collateral is subject to certain permitted liens set forth under the SSTL and related security agreement. The Senior Secured Notes are guaranteed by Ocwen and the other guarantors that guarantee the SSTL, and the borrowings under the Senior Secured Notes are secured by a second priority security interest in the Collateral. Assets securing borrowings under the SSTL and Senior Secured Notes may include amounts presented in Other as well as certain assets presented in Collateral for Secured Borrowings and Sales and Other Commitments, subject to permitted liens as defined in the applicable debt documents. The amounts presented here may differ in their calculation and are not intended to represent amounts that may be used in connection with covenants under the applicable debt documents. (3)MSRs pledged as collateral for secured borrowings in connection with the Rights to MSRs transactions with NRZ which are accounted for as secured financings. Certain MSR cohorts with a negative fair value of $0.6 million that would be presented as Other are excluded from the eligible collateral of the facilities and are comprised of $16.3 million of positive fair value related to RMBS and $16.9 million of negative fair value related to private EBO and PLS MSRs. Maturities of Borrowings and Management’s Plans to Address Maturing Borrowings Certain of our borrowings mature within one year of the date of issuance of these financial statements. Based on management’s evaluation, we expect to renew, replace or extend all such borrowings to the extent necessary to finance our business on or prior to their respective maturities consistent with our historical experience.
(1)Amounts are exclusive of any related discount, unamortized debt issuance costs or fair value adjustment. (2)For match funded liabilities, the Expected Maturity Date is the date on which the revolving period ends for each advance financing facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. (3)Excludes financing liabilities recognized in connection with asset sales transactions accounted for as financings, including $567.0 million recorded in connection with sales of Rights to MSRs and MSRs and $6.8 billion recorded in connection with the securitizations of HMBS. These financing liabilities have no contractual maturity and are amortized over the life of the underlying assets. Our MSR financing facilities provide funding based on an advance rate of MSR value that is subject to periodic mark-to-market valuation adjustments. In the normal course, MSR value is expected to decline over time due to runoff of the loan balances in our servicing portfolio. As a result, we anticipate having to repay a portion of our MSR debt over a given time period. The requirements to repay MSR debt including those due to unfavorable fair value adjustment may require us to allocate a substantial amount of our available liquidity or future cash flows to meet these requirements.
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Other Liabilities |
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Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Note 15 — Other Liabilities
(1)Consists of amounts accrued for probable losses in connection with legal and regulatory settlements and judgments. Such amounts are reported in Professional services expense in the consolidated statements of operations. (2)Includes cash payments made in connection with resolved legal and regulatory matters. (3)See Note 16 — Stockholders’ Equity for additional information.
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Stockholders Equity |
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Stockholders Equity | Note 16 — Stockholders’ Equity Common Stock On February 3, 2020, Ocwen’s Board of Directors authorized a share repurchase program for an aggregate amount of up to $5.0 million of Ocwen’s issued and outstanding shares of common stock. During the three months ended March 31, 2020, we completed the repurchase of 377,484 shares of common stock in the open market under this program at prevailing market prices for a total purchase price of $4.5 million for an average price paid per share of $11.90. In addition, Ocwen paid $0.1 million in commissions. The repurchased shares were formally retired as of March 31, 2020. No additional shares were repurchased prior to the program’s expiration on February 3, 2021. On April 8, 2020, Ocwen was notified by the New York Stock Exchange (the NYSE) that the average per share trading price of its common stock was below the NYSE’s continued listing standard rule relating to minimum average share price. The NYSE generally requires that a company’s common stock trade at a minimum average closing price of $1.00 over a consecutive 30 trading-day period. Effective August 13, 2020, Ocwen implemented a one-for-15 reverse stock split of all outstanding shares of its common stock and reduced the number of authorized shares of common stock by the same proportion. Shareholders entitled to receive fractional shares of common stock received shares rounded up to the nearest whole share in lieu of such fractional shares, with an aggregate 4,692 additional shares issued. The number of outstanding shares was reduced from 130,013,696 to 8,672,272 and the authorized shares from 200,000,000 to 13,333,333 effective August 13, 2020, with giving effect to the rounding up of fractional shares. The $0.01 par value per share of common stock remained unchanged. On September 1, 2020, Ocwen was notified by the NYSE that it has regained compliance with the NYSE’s continued listing standard rule relating to minimum average share price. In 2017, Ocwen agreed to issue an aggregate of 166,667 shares of common stock in connection with a mediated settlement of litigation. Ocwen issued 41,667 of the shares in December 2017 and the remaining 125,000 shares in January 2018. The shares have not been registered under the Securities Act of 1933 and were issued in reliance upon the exemption from registration set forth in Section 3(a)(10) of the Act. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss (AOCL), net of income taxes, were as follows:
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Derivative Financial Instruments and Hedging Activities |
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Derivative Financial Instruments and Hedging Activities | Note 17 — Derivative Financial Instruments and Hedging Activities The table below summarizes the fair value, notional and maturity of our derivative instruments. The notional amount of our contracts does not represent our exposure to credit loss. None of the derivatives were designated as a hedge for accounting purposes as of or during the years ended December 31, 2020 and 2019:
The table below summarizes the net gains and losses of our derivative instruments recognized in our consolidated statement of operations.
Interest Rate Risk MSR Hedging MSRs are carried at fair value with changes in fair value being recorded in earnings in the period in which the changes occur. The fair value of MSRs is subject to changes in market interest rates and prepayment speeds, among other factors. Beginning in September 2019, management implemented a hedging strategy to partially offset the changes in fair value of our net MSR portfolio to interest rate changes. We define our net MSR portfolio exposure as follows: •our more interest rate-sensitive Agency MSR portfolio, •less the Agency MSRs subject to our agreements with NRZ (See Note 10 — Rights to MSRs), •less the asset value for securitized HECM loans, net of the corresponding HMBS-related borrowings, and •less the net value of our held for sale loan portfolio and interest rate lock commitments (pipeline). We determine and monitor daily a hedge coverage based on the duration and interest rate sensitivity measures of our net MSR portfolio exposure, considering market and liquidity conditions. At December 31, 2020, our hedging strategy provides for a partial coverage of our net MSR portfolio exposure. We use forward trades of MBS or Agency TBAs with different banking counterparties and exchange-traded interest rate swap futures as hedging instruments. These derivative instruments are not designated as accounting hedges. TBAs, or To-Be-Announced securities are actively traded, forward contracts to purchase or sell Agency MBS on a specific future date. Interest rate swap futures are exchange-traded and centrally cleared. We report changes in fair value of these derivative instruments in MSR valuation adjustments, net in our consolidated statements of operations. The TBAs and interest rate swap futures are subject to margin requirements. Ocwen may be required to post or may be entitled to receive cash collateral with its counterparties, based on daily value changes of the instruments. Changes in market factors, including interest rates, and our credit rating could require us to post additional cash collateral and could have a material adverse impact on our financial condition and liquidity. Interest Rate Lock Commitments A loan commitment binds us (subject to the loan approval process) to fund the loan at the specified rate, regardless of whether interest rates have changed between the commitment date and the loan funding date. As such, outstanding IRLCs are subject to interest rate risk and related price risk during the period from the date of the commitment through the loan funding date or expiration date. The borrower is not obligated to obtain the loan; thus, we are subject to fallout risk related to IRLCs, which is realized if approved borrowers choose not to close on the loans within the terms of the IRLCs. Our interest rate exposure on these derivative loan commitments had previously been economically hedged with freestanding derivatives such as forward contracts. Beginning in September 2019, this exposure is not individually hedged, but rather used as an offset to our MSR exposure and managed as part of our MSR hedging strategy described above. Loans Held for Sale, at Fair Value Mortgage loans held for sale that we carry at fair value are subject to interest rate and price risk from the loan funding date until the date the loan is sold into the secondary market. Generally, the fair value of a loan will decline in value when interest rates increase and will rise in value when interest rates decrease. To mitigate this risk, we had previously entered into forward MBS trades to provide an economic hedge against those changes in fair value on mortgage loans held for sale. Forward MBS trades were primarily used to fix the forward sales price that would be realized upon the sale of mortgage loans into the secondary market. Beginning in September 2019, this exposure is not individually hedged, but rather used as an offset to our MSR exposure and managed as part of our MSR hedging strategy described above. Advance Match Funded Liabilities When required by our advance financing arrangements, we purchase interest rate caps to minimize future interest rate exposure from increases in the interest on our variable rate debt as a result of increases in the index, such as 1ML, which is used in determining the interest rate on the debt. We currently do not hedge our fixed-rate debt with derivative instruments. Foreign Currency Exchange Rate Risk Our operations in India and the Philippines expose us to foreign currency exchange rate risk to the extent that our foreign exchange positions remain unhedged. Depending on the magnitude and risk of our positions, we may enter into forward exchange contracts to hedge against the effect of changes in the value of the India Rupee or Philippine Peso. We currently do not hedge our foreign currency exposure with derivative instruments. Foreign currency remeasurement exchange losses were $1.0 million, $0.2 million and $3.2 million during the years ended December 31, 2020, 2019 and 2018, respectively, and are reported in Other, net in the consolidated statements of operations.
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Interest Income |
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Interest Income | Note 18 — Interest Income
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Interest Expense |
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Interest Expense | Note 19 — Interest Expense
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Note 20 — Income Taxes On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. The CARES Act includes several significant business tax provisions that, among other things, temporarily repealed the taxable income limitation for certain net operating losses (NOL) and allows businesses to carry back NOLs arising in 2018, 2019, and 2020 tax years to the five prior tax years, accelerated refunds of previously generated corporate Alternative Minimum Tax (AMT) credits, and adjusted the business interest expense limitation under section 163(j) from 30% to 50% of Adjusted Taxable Income (ATI) for 2019 and 2020 tax years. Based on information available at this time, we estimate that modifications to the tax rules for the carryback of NOLs and business interest expense limitations will result in U.S. and USVI federal net tax refunds of approximately $62.6 million and $1.4 million, respectively, and as such we recognized an income tax benefit of $64.0 million in our consolidated financial statements for the year ended December 31, 2020. As of December 31, 2020, we collected $51.4 million, which represents the tax refund associated with the NOLs generated in 2018 carried back to prior tax years, and recognized a $24.0 million receivable which represents the tax refund associated with the NOLs generated in 2019. We collected this $24.0 million tax refund receivable from the U.S. Internal Revenue Service in January 2021. The income tax benefit recognized represents the release of valuation allowances against certain NOL and Section 163(j) deferred tax assets that are now more likely than not to be realizable as a result of certain provisions of the CARES Act as well as a permanent income tax benefit related to the carryback of NOLs created in a tax year that was subject to U.S. federal tax at 21% to a tax year subject to tax at 35%. For income tax purposes, the components of income (loss) from continuing operations before taxes were as follows:
The components of income tax expense (benefit) were as follows:
Ocwen is a global company with operations in the USVI, India and the Philippines, among other jurisdictions. In the effective tax rate reconciliation, we first calculate income tax expense attributable to worldwide continuing operations at the U.S. statutory tax rate. The foreign tax rate differential therefore represents the difference in tax expense between jurisdictional income taxed at the U.S. statutory rate and each respective jurisdictional statutory rate. Income tax expense (benefit) differs from the amounts computed by applying the U.S. Federal corporate income tax rate as follows:
(1)The benefit recorded for the provision for valuation allowance in 2018 relates primarily to a reduction in the valuation allowance necessary as a result of the reduction in tax attributes due to Section 382 & 383 limitations. This benefit is partially offset by an increase in valuation allowance necessary for current year losses and for adjustments to provisional amounts recorded under SAB 118 at December 31, 2017 when accounting for the effects of tax reform passed on December 22, 2017. (2)The foreign tax differential includes expense recognized in 2019 and a benefit recognized in 2018 for taxable income or losses earned by Ocwen Mortgage Servicing, Inc. (OMS) prior to the merger of OMS into OVIS in 2019, which are taxable in the U.S. as effectively connected income (ECI). The impact of ECI to income tax expense (benefit) for 2019 and 2018 was $2.6 million and $(3.3) million, respectively. Net deferred tax assets were comprised of the following:
As of December 31, 2020, we had a deferred tax asset, net of deferred tax liability, including $182.7 million in the U.S. Valuation Allowances We conduct periodic evaluations of positive and negative evidence to determine whether it is more likely than not that the deferred tax asset can be realized in future periods. In these evaluations, we gave more significant weight to objective evidence, such as our actual financial condition and historical results of operations, as compared to subjective evidence, such as projections of future taxable income or losses. Both the U.S. and USVI jurisdictions are in a three-year cumulative loss position as of December 31, 2020. Other factors considered in these evaluations are estimates of future taxable income, future reversals of temporary differences, taxable income in prior carryback years, tax character and the impact of tax planning strategies that may be implemented, if warranted. As a result of these evaluations, we recorded a valuation allowance of $182.7 million and $199.5 million on our U.S. net deferred tax assets at December 31, 2020 and 2019, respectively, and a valuation allowance of $0.4 million and $0.4 million on our USVI net deferred tax assets at December 31, 2020 and 2019, respectively. These U.S. and USVI jurisdictional deferred tax assets are not considered to be more likely than not realizable based on all available positive and negative evidence. We intend to continue maintaining a full valuation allowance on our deferred tax assets in both the U.S. and USVI until there is sufficient evidence to support the reversal of all or some portion of these allowances. Net Operating Loss Carryforwards At December 31, 2020, we had U.S. NOL carryforwards of $190.5 million, and state NOL and tax credit carryforwards valued at $67.3 million. These U.S. federal and state NOL carryforwards will expire beginning 2021 through 2040 with U.S. federal NOLs generated after 2017 never expiring. We believe that it is more likely than not that the benefit from certain U.S. federal and state NOL carryforwards will not be realized. In recognition of this risk, we have provided a total valuation allowance of $40.0 million and $67.3 million on the deferred tax assets relating to the U.S. federal and state NOL carryforwards, respectively. If our assumptions change and we determine we will be able to realize these NOLs, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets as of December 31, 2020 will be accounted for as a reduction of income tax expense. Additionally, $334.5 million of USVI NOLs have been carried back to offset prior period tax due in the USVI and we have, therefore, reflected the tax-effect of this attribute as a $12.9 million income taxes receivable. We also have U.S. capital loss carryforwards of $7.9 million at December 31, 2020 against which a valuation allowance has been recorded. Change of Control: Annual Limitations on Utilization of Tax Attributes NOL carryforwards may be subject to annual limitations under Internal Revenue Code Section 382 (Section 382) (or comparable provisions of foreign or state law) in the event that certain changes in ownership were to occur. We periodically evaluate our NOL carryforwards and whether certain changes in ownership have occurred that would limit our ability to utilize a portion of our NOL and tax credit carryforwards. If it is determined that an ownership change(s) has occurred, there may be annual limitations on the use of these NOL and tax credit carryforwards under Section 382 (or comparable provisions of foreign or state law). Generally, a Section 382 ownership change occurs if, over a rolling three-year period, there has been an aggregate increase of 50 percentage points or more in the percentage of our stock owned by one or more “5-percent shareholders.” We have evaluated whether we experienced an ownership change, as defined under Section 382, and determined that an ownership change did occur in the U.S. jurisdiction in January 2015 and in December 2017, which also results in an ownership change under Section 382 in the USVI jurisdiction. In addition, a Section 382 ownership change occurred at PHH when Ocwen acquired the stock of PHH in October 2018. PHH was a loss corporation as defined under Section 382 at the date of the acquisition. PHH also had an existing Section 382 ownership change on March 31, 2018. For certain states, an additional Section 382 ownership change occurred on August 9, 2017. These Section 382 ownership changes may limit our ability to fully utilize NOLs, tax credit carryforwards, deductions and/or certain built-in losses that existed as of each respective ownership change date in various jurisdictions. Due to the Section 382 and 383 limitations and the maximum carryforward period for our NOLs and tax credits, we will be unable to fully recognize certain deferred tax assets. Accordingly, as of December 31, 2018, we reduced our gross deferred tax asset related to our U.S. federal and USVI NOLs by $160.9 million, our foreign tax credit deferred tax asset by $29.5 million, and corresponding valuation allowance by $55.7 million. The realization of all or a portion of our remaining deferred income tax assets (including NOLs and tax credits) is dependent upon the generation of future taxable income during the statutory carryforward periods. In addition, the limitation on the utilization of our NOL and tax credit carryforwards could result in Ocwen incurring a current tax liability in future tax years. Ocwen is continuing to monitor the ownership in its stock to evaluate information that will become available in 2021 and that may result in a different outcome for Section 382 purposes and our future cash tax obligations. As such, our analysis regarding the amount of tax attributes that may be available to offset taxable income in the future without restrictions imposed by Section 382 may continue to evolve. Uncertain Tax Positions Our major jurisdiction tax years that remain subject to examination are our U.S. federal tax return for the years ended December 31, 2017 through the present, our USVI corporate tax return for the years ended December 31, 2013 through the present, and our India corporate tax returns for the years ended March 31, 2010 through the present. We are currently under audit in the USVI jurisdiction for tax years 2013 - 2016 due to the carryback of losses generated in 2015 and 2016 to tax years 2013 and 2014, respectively. A reconciliation of the beginning and ending amounts of the total unrecognized tax benefits for uncertain tax position is as follows:
(1)$12.8 million of the balance at December 31, 2020 is included in the Liability for uncertain tax positions in Other liabilities, with the remaining $7.8 million balance included as a reduction of Income taxes receivable in Receivables. The balance at December 31, 2019 is included in the Liability for uncertain tax positions in Other liabilities. We recognized total interest and penalties of $(1.6) million, $2.7 million and $2.9 million as income tax expense or (benefit) in 2020, 2019 and 2018, respectively. At December 31, 2020 and 2019, accruals for interest and penalties were $3.4 million and $6.6 million, respectively, and are included in the Liability for uncertain tax positions in Other liabilities. As of December 31, 2020 and 2019, we had unrecognized tax benefits for uncertain tax positions, excluding accrued interest and penalties, of $20.6 million and $10.6 million, respectively, all of which if recognized would affect the effective tax rate. It is reasonably possible that there could be a change in the amount of our unrecognized tax benefits within the next 12 months due to activities of the Internal Revenue Service or other taxing authorities, including proposed assessments of additional tax, possible settlement of audit issues, or the expiration of applicable statutes of limitations. We believe that it is reasonably possible that a decrease of up to $11.6 million in unrecognized tax benefits may be necessary within the next 12 months. Undistributed Foreign Earnings and Non-U.S. Jurisdictions As of December 31, 2020, we have recognized a deferred tax liability of $0.3 million for foreign subsidiary undistributed earnings. We do not consider our foreign subsidiary undistributed earnings to be indefinitely invested outside the U.S.
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Basic and Diluted Earnings (Loss) per Share |
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Basic and Diluted Earnings (Loss) per Share | Note 21 — Basic and Diluted Earnings (Loss) per Share Basic earnings or loss per share excludes common stock equivalents and is calculated by dividing net income or loss attributable to Ocwen common stockholders by the weighted average number of common shares outstanding during the year. We calculate diluted earnings or loss per share by dividing net income or loss attributable to Ocwen by the weighted average number of common shares outstanding including the potential dilutive common shares related to outstanding stock options and restricted stock awards. For 2020, 2019 and 2018, we have excluded the effect of all stock options and common stock awards from the computation of diluted loss per share because of the anti-dilutive effect of our reported net loss.
(1)Includes stock options that are anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock, and stock awards that are anti-dilutive based on the application of the treasury stock method. (2)Shares that are issuable upon the achievement of certain market-based performance criteria related to Ocwen’s stock price. As disclosed in Note 16 — Stockholders’ Equity, Ocwen implemented a reverse stock split in a ratio of one-for-15 effective on August 13, 2020. The above computations of earnings (loss) per share reflect the number of common stock shares after consideration for the reverse stock split. All common share and loss per share amounts have been adjusted retrospectively to give effect to the reverse stock split as if it occurred at the beginning of the first period presented.
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Compensation and Benefit Plans | Note 22 — Employee Compensation and Benefit Plans We maintain defined contribution plans to provide post-retirement benefits to our eligible employees and two non-contributory defined benefit pension plans which are frozen and cover certain eligible active and former employees. We also maintain additional incentive compensation plans for certain employees. We designed these plans to facilitate a pay-for-performance culture, further align the interests of our officers and key employees with the interests of our shareholders and to assist in attracting and retaining employees vital to our long-term success. These plans are summarized below. Defined Contribution Savings Plans We sponsor defined contribution savings plans for eligible employees in the U.S (401(k) plan) and India (Provident Fund). Contributions of participating employees to the plans are matched on the basis specified by these plans. For the 401(k) plans, we match 50% of the first 6% of each eligible participant’s contribution to the 401(k) plans with maximum aggregate matching of $8,550 for 2020. For the Provident Fund, both the employee and the employer are required to make minimum contributions to the fund at a predetermined rate (currently 12%) applied to a portion of the employee's salary. Employers are not required to make contributions beyond this minimum. Our contributions to these plans were $5.2 million, $5.9 million and $4.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. Defined Benefit Pension Plans Ocwen sponsors different non-contributory defined benefit pension plans for which benefits are based on an employee’s years of credited service and a percentage of final average compensation, or as otherwise described by the plan. Both defined benefit pension plans were assumed as part of business acquisitions and are frozen, wherein the plans only accrue additional benefits for a limited number of employees and no additional employees are eligible for participation in the plans. The following table shows the total change in the benefit obligation, plan assets and funded status for the pension plans:
The rate used to discount the projected benefit obligation of the PHH pension plan decreased from 3.25% in 2019 to 2.25% in 2020, resulting in an increase of $6.8 million in the plan’s benefit obligation. The net periodic benefit cost related to the defined benefit pension plans, included in Other expenses, was $(0.2) million, $(2.0) million and $0.4 million for 2020, 2019 and 2018 respectively. As of December 31, 2020, future expected benefit payments to be made from the assets of the defined benefit pension plans is $2.9 million, for each of the years ending December 31, 2021 and 2023, $2.8 million for each of the years ending December 31, 2022 and 2024 and $3.0 million for the year ending December 31, 2025. The expected benefit payments to be made for the subsequent five years ending December 31, 2026 through 2030 are $15.7 million. Ocwen contributes to the defined benefit pension plans amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws as well as additional amounts at their discretion. Our contributions to the defined benefit pension plans were $2.1 million, $0.8 million and $0.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. On October 4, 2018, Ocwen assumed all benefit obligations associated with PHH’s defined benefit pension plan as a result of its completed acquisition of PHH and no contribution was required to be made during the post-acquisition period ended December 31, 2018. Gratuity Plan In accordance with India law, OFSPL provides for a defined benefit retirement plan (Gratuity Plan) covering all of its employees in India. The Gratuity Plan provides a lump-sum payment to vested employees at retirement or termination of employment based upon the respective employee’s salary and years of employment. OFSPL provides for the gratuity benefit through actuarially determined valuations. The following table shows the total change in the benefit obligation, plan assets and funded status for the Gratuity Plan:
During the years ended December 31, 2020, 2019 and 2018, benefits of $0.8 million, $0.9 million, and $0.3 million were paid by OFSPL. As of December 31, 2020, future expected benefit payments to be made from the assets of the Gratuity Plan, which reflect expected future service, is $1.1 million, $1.0 million, $0.8 million, $0.8 million and $0.6 million for the years ending December 31, 2021, 2022, 2023, 2024 and 2025, respectively. The expected benefit payments to be made for the subsequent five years ending December 31, 2026 through 2030 are $2.1 million. Annual Incentive Plan The Ocwen Financial Corporation Amended 1998 Annual Incentive Plan and the 2017 Performance Incentive Plan (the 2017 Equity Plan) are our primary incentive compensation plans for executives and other eligible employees. Previously issued equity awards remain outstanding under the 2007 Equity Incentive Plan (the 2007 Equity Plan). Under the terms of these plans, participants can earn cash and equity-based awards as determined by the Compensation and Human Capital Committee of the Board of Directors (the Committee). The awards are based on objective and subjective performance criteria established by the Committee. The Committee may at its discretion adjust performance measurements to reflect significant unforeseen events. We recognized $25.7 million, $16.6 million and $20.5 million of compensation expense during 2020, 2019 and 2018, respectively, related to annual incentive compensation awarded in cash. The 2007 Equity Plan and the 2017 Equity Plan authorize the grant of stock options, restricted stock, stock units or other equity-based awards, including cash-settled awards, to employees. Effective with the approval of the 2017 Equity Plan by Ocwen shareholders on May 24, 2017, no new awards have been, or will be, granted under the 2007 Equity Plan. The number of remaining shares available for award grants under the 2007 Equity Plan became available for award grants under the 2017 Equity Plan effective upon shareholder approval. At December 31, 2020, there were 249,746 shares of common stock remaining available for future issuance under these plans. Effective August 13, 2020, Ocwen implemented a one-for-15 reverse stock split. The number of units, exercise price, fair value, and market price conditions have been retroactively adjusted for all periods presented to give effect to the reverse stock split as if it occurred at the beginning of the first period presented. See Note 16 — Stockholders’ Equity for additional information. Equity Awards Outstanding equity awards granted under the 2007 Equity Plan and the 2017 Equity Plan had the following characteristics in common:
The contractual term of all options granted is years from the grant date, except where employment terminates by reason of death, disability or retirement, in which case, the agreement may provide for an earlier termination of the options. The terms of the market-based options do not include a retirement provision. Stock units have a three-year or four-year term. If the market conditions are not met by the third or fourth anniversary of the award of stock units, those units terminate on that date.
(1)Stock options granted in 2019 include 2,212 options awarded to Ocwen’s Chief Financial Officer at a strike price of $32.55 equal to the closing price of our common stock on the effective date of her employment. Stock options granted in 2018 include 17,799 options awarded to Ocwen’s current Chief Executive Officer (CEO) at an exercise price of $61.80 equal to the closing price of our common stock on the effective date of his employment, which was the closing date of the PHH acquisition. (2)Includes 0 and 4,913 options which expired unexercised in 2020 and 2019, because their exercise price was greater than the market price of Ocwen’s stock. (3)At December 31, 2020, 5,167 options with a market condition for vesting based on an average common stock trading price of $484.19, had not met their performance criteria. Outstanding and exercisable stock options at December 31, 2020 have a net aggregate intrinsic value of $0. A total of 51,563 market-based options were outstanding at December 31, 2020, of which 46,396 were exercisable. (4)At December 31, 2020, the weighted average remaining contractual term of options outstanding and options exercisable was 3.06 years and 2.66 years, respectively. (5)The total fair value of stock options that vested and became exercisable during 2020, 2019 and 2018, based on grant-date fair value, was $0.3 million, $0.6 million and $0.6 million, respectively.
(1)Upon the resignation of Ocwen’s former CEO on June 30, 2018, 25,168 unvested stock units which would have been forfeited immediately were modified to allow continued vesting in accordance with the original terms. This had the equivalent effect of canceling the original award and granting a new award. (2)Stock units granted in 2020 and 2019 include 150,000 and 75,377 units, respectively, granted to Ocwen’s CEO under the new long-term incentive (LTI) program described below. Stock units granted in 2018 include 65,534 units granted to Ocwen’s current CEO on the effective date of his employment, which was the closing date of the PHH acquisition. (3)The total intrinsic value of stock units vested, which is defined as the market value of the stock on the date of vesting, was $1.0 million, $2.1 million and $3.3 million for 2020, 2019 and 2018, respectively. (4)The total fair value of the stock units that vested during 2020, 2019 and 2018, based on grant-date fair value, was $2.7 million, $3.5 million and $2.2 million, respectively. (5)Excluding the 125,395 market-based stock awards that have not met their performance criteria, the net aggregate intrinsic value of stock awards outstanding at December 31, 2020 was $3.9 million. At December 31, 2020, 2,666, 6,201 and 3,840 stock units with a market condition for vesting based on an average common stock trading price of $175.80, $87.00 and $65.10, respectively, as well as 37,688 stock units requiring an average common stock trading price of $38.34 to vest a minimum of 50% of units, had not yet met the market condition (and time-vesting requirements, where applicable). The performance for 75,000 stock units is measured based on TSR relative to Ocwen’s compensation peer group TSR over the four performance periods. (6)At December 31, 2020, the weighted average remaining contractual term of share units outstanding was 1.4 years. Liability Awards In 2019, Ocwen established an LTI program in connection with changes made by the Committee to the compensation structure of Ocwen’s executives. The LTI program is designed to promote actions and decisions aligned with our strategic objectives and reward our executives and other program participants for long-term value creation for our shareholders in a manner that is consistent with our pay-for-performance philosophy. The awards granted under the LTI program are cash-settled to avoid share dilution, except that awards granted to Ocwen’s Chief Executive Officer will be settled in shares of common stock. The program includes both a time-vesting component for retention purposes and a performance component to align with pay-for-performance objectives, using TSR as the performance metric. In 2019, performance was based on absolute TSR; in 2020, performance is measured based on TSR relative to Ocwen’s compensation peer group. The LTI awards are granted under the 2017 Equity Plan. A total of 326,453 awards were granted in 2019 under the LTI, of which 251,076 were cash-settled awards and 75,377 were equity-settled awards granted to Ocwen’s CEO as disclosed above. A total of 693,896 awards were granted in 2020 under the LTI, of which 543,896 were cash-settled awards and 150,000 were equity-settled awards granted to Ocwen’s CEO. On September 10, 2020, the Committee granted one-time long-term incentive awards to certain Ocwen executives. A total of 57,891 cash-settled time-based awards were granted with a vesting period of 18 months from the date of grant, subject to continued employment and other conditions. Of the awards granted under the LTI program in 2020 and 2019, 50% and 74%, respectively, were performance-based with a market condition and the remaining 50% and 26%, respectively, were time-based. The time-based awards vest equally on the first, second and third anniversaries of the award grant date if the continued employment condition is met. The recurring annual performance-based awards cliff-vest 100% after three years subject to meeting the performance conditions and continuing employment. Certain one-time transitional performance-based awards granted in 2019 vest equally on the first, second and third anniversaries of the award grant date subject to meeting the performance conditions and continuing employment. Because the cash-settled awards must be settled in cash, they are classified as liabilities (Other liabilities) in the consolidated balance sheets and remeasured at fair value at each reporting date with adjustments recorded as Compensation expense in the consolidated statements of operations.
The number of performance-based awards that will vest under the LTI program awards for 2020 is determined by Ocwen’s TSR relative to its compensation peer group (18 companies selected by the Committee) during each performance period. Median (50th percentile) TSR performance will earn the target number of performance-based awards. The award uses four distinct weighted performance periods to measure overall performance – three annual periods ending March 30, 2021, 2022, 2023 and one three-year period ending March 30, 2023. Note that the awards do not vest at the end of each performance period. Vesting of units credited based on the TSR for any performance period is subject to continued service through the third anniversary of the grant date. There is no interim or ratable vesting. The number of performance-based awards that will vest under 2019 annual LTI program is determined by Ocwen’s total TSR over a three-year performance period ending March 29, 2022. The 2019 transitional performance-based awards vest in separate tranches based on the TSR, as defined, over , and three-year annual performance periods ending March 29, 2020, 2021 and 2022. For all performance-based awards, the number of units earned depends on the level of performance achieved (Threshold = 50%; Target = 100%; Maximum = 200%, with results between levels interpolated). No units will be awarded for performance below the Threshold level. TSR is calculated using the average closing stock prices during the 30 trading days up to and including the beginning and end date of each performance period. Compensation expense related to all stock-based awards is initially measured at fair value on the grant date using an appropriate valuation model based on the vesting conditions of the awards. Awards classified as liabilities are subsequently remeasured at fair value at each reporting date, as described above. The fair value of the time-based option awards was determined using the Black-Scholes options pricing model, while a lattice (binomial) model was used to determine the fair value of the market-based option awards. Lattice (binomial) models incorporate ranges of assumptions for inputs. Stock unit awards with only a service condition are valued at their intrinsic value, which is the market value of the stock on the date of the award. The fair value of Stock unit awards with both a service condition and a market-based vesting condition is based on the output of a Monte Carlo simulation. The following assumptions were used to value awards:
(1)We generally estimate volatility based on the historical volatility of Ocwen’s common stock over the most recent period that corresponds with the estimated expected life of the option. For awards valued using a Monte Carlo simulation, volatility is computed as a blend of historical volatility and implied volatility based on traded options on Ocwen’s common stock. (2)For the options valued using the Black-Scholes model we determined the expected life based on historical experience with similar awards, giving consideration to the contractual term, exercise patterns and post vesting forfeitures. The expected term of the options valued using the lattice (binomial) model is derived from the output of the model. The lattice (binomial) model incorporates exercise assumptions based on analysis of historical data. For all options, the expected life represents the period of time that options granted were expected to be outstanding at the date of the award. No option awards were granted during the year ended December 31, 2020. (3)The stock units that contain both a service condition and a market-based condition are valued using the Monte Carlo simulation. The expected term is derived from the output of the simulation and represents the expected time to meet the market-based vesting condition. For equity awards with both service and market conditions, the requisite service period is the longer of the derived or explicit service period. In this case, the explicit service condition (vesting period) is the requisite service period, and the graded vesting method is used for expense recognition. The following table summarizes Ocwen's stock-based compensation expense included as a component of Compensation and benefits expense in the consolidated statements of operations:
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Reporting | Note 23 — Business Segment Reporting Our business segments reflect the internal reporting that we use to evaluate operating performance of services and to assess the allocation of our resources. A brief description of our current business segments is as follows: Servicing. This segment is primarily comprised of our residential mortgage servicing business and accounted for 79% of our total revenues in 2020. We provide residential and commercial mortgage loan servicing, special servicing and asset management services. We earn fees for providing these services to owners of the mortgage loans and foreclosed real estate. In most cases, we provide these services either because we purchased the MSRs from the owner of the mortgage, retained the MSRs on the sale or securitization of residential mortgage loans or because we entered into a subservicing or special servicing agreement with the entity that owns the MSR. Our residential servicing portfolio includes both forward and reverse conventional, government-insured and non-Agency mortgage loans, including the reverse mortgage loans classified as loans held for investment on our balance sheet. Non-Agency loans include subprime loans, which represent residential loans that generally did not qualify under GSE guidelines or have subsequently become delinquent. Effective with the fourth quarter of 2020, we report the results of Reverse Servicing within the Servicing segment. Historically, the Reverse Servicing business was included in the reported results of the Originations segment. This alignment of our business segments is consistent with a change in the management of the business and a change in the internal management reporting to the chief operating decision maker. Segment results for 2019 and 2018 have been recast to conform to the current segment presentation. Reverse Servicing generated Revenue and Income before income taxes of $63.4 million and $53.0 million, respectively, in 2019, and $41.7 million and $33.8 million, respectively in 2018. Reverse Servicing assets consist primarily of securitized Loans held for investment - Reverse Mortgages. Originations. The Originations segment (previously Lending) purchases and originates conventional and government-insured residential forward and reverse mortgage loans through multiple channels. The loans are typically sold shortly after origination on a servicing retained basis. We originate forward mortgage loans directly with customers (recapture channel) as well as through correspondent lending arrangements since the second quarter of 2019. We originate reverse mortgage loans in all three channels through our correspondent lending arrangements, broker relationships (wholesale) and retail channels. In addition to our originated MSRs, we acquire MSRs through multiple channels, including flow purchase agreements, the GSE Cash Window programs and bulk MSR purchases. Accordingly, as part of our internal management reporting we renamed the Lending segment as Originations effective in the first quarter of 2020. Corporate Items and Other. Corporate Items and Other includes revenues and expenses of corporate support services, CR Limited (CRL), our wholly-owned captive reinsurance subsidiary, discontinued operations and inactive entities, business activities that are individually insignificant, revenues and expenses that are not directly related to other reportable segments, interest income on short-term investments of cash and interest expense on unallocated corporate debt. Corporate Items and Other also includes severance, retention, facility-related and other expenses incurred in 2019 and 2020 related to our cost re-engineering initiatives. Our cash balances are included in Corporate Items and Other. CRL provides re-insurance related to coverage on foreclosed real estate properties owned or serviced by us. Revenues and expenses directly associated with each respective business segments are included in determining its results of operations. We allocate certain expenses incurred by corporate support services that are not directly attributable to a segment to each business segment. Beginning in 2020, we updated our methodology to allocate overhead costs incurred by corporate support services to the Servicing and Originations segments, which now incorporates the utilization of various measurements primarily based on time studies, personnel volumes and service consumption levels. In prior periods, corporate support services costs were primarily allocated based on relative segment size. Support services costs not allocated to the Servicing and Originations segments are retained in the Corporate Items and Other segment along with certain other costs including certain litigation and settlement related expenses or recoveries, costs related to our re-engineering plan, and other costs related to operating as a public company. We allocate a portion of interest income to each business segment, including interest earned on cash balances. Interest expense on direct asset-backed financings are recorded in the respective Servicing and Originations segments. Beginning in the third quarter of 2020, we began allocating interest expense on corporate debt, including the SSTL and Senior Notes, used to fund servicing advances and other servicing assets from Corporate Items and Other to Servicing. Amortization of debt issuance costs and discount are excluded from the interest expense allocation. The interest expense related to the corporate debt has been allocated to the Servicing segment for prior periods to conform to the current period presentation. The interest expense allocation for 2020, 2019 and 2018 is $38.2 million, $54.9 million and $49.0 million, respectively. Financial information for our segments is as follows:
(1)Revenue in the Corporate Items and Other segment for 2020 includes an inter-segment derivatives elimination of $17.4 million with a corresponding offset in MSR valuation adjustments, net. (2)Compensation and benefits expense in the Corporate Items and Other segment for 2020, 2019 and 2018 includes $2.7 million, $20.3 million and $11.9 million, respectively, of severance expense attributable to PHH integration-related headcount reductions of primarily U.S.-based employees in 2019, as well as our overall efforts to reduce costs. (3)Included in the Corporate Items and Other segment for 2019, we recorded in Professional services expense a recovery from a service provider of $30.7 million during the first quarter of amounts previously recognized as expense.
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Regulatory Requirements |
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Brokers and Dealers [Abstract] | |
Regulatory Requirements | Note 24 — Regulatory Requirements Our business is subject to extensive regulation and supervision by federal, state and local governmental authorities, including the Consumer Financial Protection Bureau (CFPB), HUD, the SEC and various state agencies that license and conduct examinations of our servicing and lending activities. In addition, we operate under a number of regulatory settlements that subject us to ongoing reporting and other obligations. From time to time, we also receive requests (including requests in the form of subpoenas and civil investigative demands) from federal, state and local agencies for records, documents and information relating to our servicing and lending activities. The GSEs (and their conservator, the Federal Housing Finance Authority (FHFA)), Ginnie Mae, the United States Treasury Department, various investors, non-Agency securitization trustees and others also subject us to periodic reviews and audits. We must comply with a large number of federal, state and local consumer protection and other laws and regulations, including, among others, the CARES Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), the Telephone Consumer Protection Act (TCPA), the Gramm-Leach-Bliley Act, the Fair Debt Collection Practices Act (FDCPA), the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), the Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, as well as individual state and local laws, and federal and local bankruptcy rules. These laws and regulations apply to all facets of our business, including, but not limited to, licensing, loan originations, consumer disclosures, default servicing and collections, foreclosure, filing of claims, registration of vacant or foreclosed properties, handling of escrow accounts, payment application, interest rate adjustments, assessment of fees, loss mitigation, use of credit reports, and safeguarding of non-public personally identifiable information about our customers. These complex requirements can and do change as laws and regulations are enacted, promulgated, amended, interpreted and enforced, and the requirements applicable to our business have been changing especially rapidly in response to the COVID-19 pandemic. In addition, the actions of legislative bodies and regulatory agencies relating to a particular matter or business practice may or may not be coordinated or consistent. The general trend among federal, state and local legislative bodies and regulatory agencies as well as state attorneys general has been toward increasing laws, regulations, investigative proceedings and enforcement actions with regard to residential real estate lenders and servicers. In addition, a number of foreign laws and regulations apply to our operations outside of the U.S., including laws and regulations that govern licensing, privacy, employment, safety, taxes and insurance and laws and regulations that govern the creation, continuation and the winding up of companies as well as the relationships between shareholders, our corporate entities, the public and the government in these countries. Our licensed entities are required to renew their licenses, typically on an annual basis, and to do so they must satisfy the license renewal requirements of each jurisdiction, which generally include financial requirements such as providing audited financial statements and satisfying minimum net worth requirements and non-financial requirements such as satisfactory completion of examinations relating to the licensee’s compliance with applicable laws and regulations. We are also subject to seller/servicer obligations under agreements with the GSEs, HUD, FHA, VA and Ginnie Mae, including capital requirements related to tangible net worth, as defined by the applicable agency, an obligation to provide audited financial statements within 90 days of the applicable entity’s fiscal year end as well as extensive requirements regarding servicing, selling and other matters. We believe our licensed entities were in compliance with all of their minimum net worth requirements at December 31, 2020. Our non-Agency servicing agreements also contain requirements regarding servicing practices and other matters, and a failure to comply with these requirements could have a material adverse impact on our business. The most restrictive of the various net worth requirements for licensing and seller/servicer obligations referenced above is based on the UPB of assets serviced by PMC. Under the applicable formula, the required minimum net worth was $269.8 million at December 31, 2020. PMC’s net worth was $352.9 million at December 31, 2020. The most restrictive of the various liquidity requirements for licensing and seller/servicer obligations referenced above was $27.5 million at December 31, 2020. PMC’s liquid assets were $257.8 million at December 31, 2020. We have faced and expect to continue to face heightened regulatory and public scrutiny as an organization and have entered into a number of significant settlements with federal and state regulators and state attorneys general that have imposed additional requirements on our business. Our failure to comply with our settlement obligations to our regulators or with applicable federal, state and local laws, regulations, licensing requirements and agency guidelines could lead to (i) administrative fines, penalties, sanctions or litigation, (ii) loss of our licenses and approvals to engage in our servicing and lending businesses, (iii) governmental investigations and enforcement actions, (iv) civil and criminal liability, including class action lawsuits and actions to recover incentive and other payments made by governmental entities, (v) breaches of covenants and representations under our servicing, debt or other agreements, (vi) additional costs to address these matters and comply with the terms of any resulting resolutions, (vii) suspension or termination of our approved agency seller/servicer status, (viii) inability to raise capital or otherwise fund our operations and (ix) inability to execute on our business strategy, which could have a material adverse impact on our business, reputation, results of operations, liquidity and financial condition. New York Department of Financial Services (NY DFS). We operate pursuant to certain regulatory requirements with the NY DFS, including obligations arising under a consent order entered into in March 2017 (the NY Consent Order) and the terms of the NY DFS’ conditional approval in September 2018 of our acquisition of PHH. The conditional approval includes reporting obligations and record retention and other requirements relating to the transfer of loans collateralized by New York property (New York loans) onto our servicing system, the Black Knight Financial Services, Inc. (Black Knight) LoanSphere MSP® servicing system (Black Knight MSP), and certain requirements with respect to the evaluation and supervision of management of both Ocwen and PMC. In addition, we were prohibited from boarding any additional loans onto the REALServicing system and we were required to transfer all New York loans off the REALServicing system by April 30, 2020. The conditional approval also restricts our ability to acquire MSRs with respect to New York loans, so that Ocwen may not increase its aggregate portfolio of New York loans serviced or subserviced by Ocwen by more than 2% per year. This restriction will remain in place until the NY DFS determines that all loans serviced on the REALServicing system have been successfully migrated to Black Knight MSP and that Ocwen has developed a satisfactory infrastructure to board sizable portfolios of MSRs. We transferred all loans onto Black Knight MSP in 2019 and no longer service any loans on the REALServicing system. We believe we have complied with all terms of the PHH acquisition conditional approval to date. We continue to work with the NY DFS to address matters they raise with us as well as to fulfill our commitments under the NY Consent Order and PHH acquisition conditional approval. California Department of Business Oversight (CA DBO). In January 2015 and February 2017, OLS entered into consent orders with the CA DBO relating to our alleged failure to produce certain information and documents during a routine licensing examination and relating to alleged servicing practices. We have completed all of our obligations under each of these consent orders. In October 2020, we entered into a consent order with the CA DBO in order to resolve a legacy PHH examination finding and, in conjunction therewith, agreed to pay $62,000 (sixty-two thousand dollars) in penalties. We continue to work with the CA DBO to address matters they raise with us as well as to fulfill our commitments under the consent order.
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Commitments | Note 25 — Commitments Servicer Advance Obligations In the normal course of business as servicer or master servicer, we are required to advance loan principal and interest payments (P&I), property taxes and insurance premiums (T&I) on behalf of the borrower, if delinquent or delinquent and under a forbearance plan. We also advance legal fees, inspection, maintenance, and preservation costs (Corporate advances) on properties that are in default or have been foreclosed. Our obligations to make these advances are governed by servicing agreements or guides, depending on investors or guarantor. For PLS loans, generally, we may stop advancing for P&I once future advances are deemed non-recoverable from the net proceeds of the property, although we are generally obligated to continue T&I and Corporate advances until the loan is brought current or until completion of a foreclosure and sale of the REO, in which case, we generally recover our advances from the net proceeds of the property or the pool level proceeds, i.e., generally after the completion of the foreclosure and sale of the REO. For loans in forbearance, Ocwen provides monthly payment deferrals throughout the forbearance period which advance the due date and move the resulting missed payments to or near the loan’s maturity as a non-interest bearing balance. As such, Ocwen does not expect to be out of pocket cash for P&I and T&I advances for any more than one month for eligible PLS loans in forbearance that were not significantly delinquent at the time forbearance was applied to the account. For Ginnie Mae loans, we are required to make advances for the life of the loan without regard to whether we will be able to recover those payments from cure, liquidation proceeds, insurance proceeds, or late payments. We may stop advancing P&I by purchasing loans out of the pool when they are more than 90 days delinquent. To the extent there are excess funds in the custodial accounts, we are permitted to borrow from these amounts if P&I advances are required for our P&I remittance. We are also required to advance both T&I and Corporate advances until cure or liquidation. For loans in forbearance, we advance P&I while the forbearance plan is active. Reimbursement of such P&I advance is expected after the forbearance period ends, through loan resolution, cure or liquidation. For GSE loans, we are required to advance interest payments until the borrower is 120 days delinquent for Fannie Mae loans and P&I until borrower resolution or liquidation for Freddie Mac loans. For Freddie Mac loans, servicers may submit claims for T&I and Corporate advances upon borrower resolution or liquidation. For Fannie Mae loans, we can submit reimbursement claims for certain T&I and Corporate advances after incurring the expense. T&I and Corporate advancing on GSE loans continues until the completion of the foreclosure sale. For GSE loans in forbearance, once we have advanced four months of missed payments on a loan, we have no further obligation to advance scheduled payments as the loan will be moved into an “Actual/Actual” remittance status. Reimbursement of such P&I advance is expected after the forbearance period ends, through loan resolution, cure or liquidation. We are required to make T&I and Corporate advances for loans in forbearance until the loan is brought current or until completion of a foreclosure, but we can submit reimbursement claims for certain T&I and Corporate advances after incurring the expense on Fannie Mae loans. Freddie Mac requires servicers to wait until borrower resolution or liquidation to submit claims for T&I and Corporate advances. As subservicer, we are required to make P&I, T&I and Corporate advances on behalf of servicers following the servicing agreements or guides. Servicers are generally required to reimburse us within 30 days of our advancing under the terms of the subservicing agreements. We are generally reimbursed by NRZ the same day we fund P&I advances, or within no more than three days for servicing advances and certain P&I advances under the Ocwen agreements. NRZ is obligated to fund new servicing advances with respect to the MSRs underlying the Rights to MSRs (RMSR), pursuant to the 2017 Agreements and New RMSR Agreements. NRZ has the responsibility to fund advances for loans where they own the MSR, i.e., are the servicer of record. We are dependent upon NRZ for funding the servicing advance obligations for Rights to MSRs where we are the servicer of record. As the servicer of record, we are contractually required under our servicing agreements to make certain servicing advances even if NRZ does not perform its contractual obligations to fund those advances. NRZ currently uses advance financing facilities in order to fund a substantial portion of the servicing advances that they are contractually obligated to purchase pursuant to our agreements with them. If NRZ were unable to meet its advance funding obligations, we would remain obligated to meet any future advance financing obligations with respect to the loans underlying these Rights to MSRs, which could materially and adversely affect our liquidity, financial condition, results of operations and servicing business. Unfunded Lending Commitments We have originated reverse mortgage loans under which the borrowers have additional borrowing capacity of $2.0 billion and $1.9 billion at December 31, 2020 and 2019, respectively. This additional borrowing capacity is available on a scheduled or unscheduled payment basis. In 2020, we funded $197.0 million out of this $1.9 billion borrowing capacity as of December 31, 2019. We also had short-term commitments to lend $619.7 million and $11.7 million in connection with our forward and reverse mortgage loan IRLCs, respectively, outstanding at December 31, 2020. 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 assume certain obligations related to each security issued. The most significant obligation is the requirement to purchase loans out of the Ginnie Mae securitization pools once the outstanding principal balance of the related HECM is equal to or greater than 98% of the maximum claim amount (MCA repurchases). Active repurchased loans are assigned to HUD and payment is received from HUD, typically within 60 days of repurchase. HUD reimburses us for the outstanding principal balance on the loan up to the maximum claim amount. We bear the risk of exposure if the amount of the outstanding principal balance on a loan exceeds the maximum claim amount. Inactive repurchased loans (the borrower is deceased, no longer occupies the property or is delinquent on tax and insurance payments) are generally liquidated through foreclosure and subsequent sale of REO, with a claim filed with HUD for recoverable remaining principal and advance balances. The recovery timeline for inactive repurchased loans depends on various factors, including foreclosure status at the time of repurchase, state-level foreclosure timelines, and the post-foreclosure REO liquidation timeline. The timing and amount of our obligation with respect to MCA repurchases is uncertain as repurchase is dependent largely on circumstances outside of our control including the amount and timing of future draws and the status of the loan. MCA repurchases are expected to continue to increase due to the increased flow of HECMs and REO that are reaching 98% of their maximum claim amount. Activity with regard to HMBS repurchases, including MCA repurchases, follows:
(1)Total repurchases during the year ended December 31, 2020, includes 423 loans totaling $95.3 million related to MCA repurchases. (2)Includes amounts received upon assignment of loan to HUD, loan payoff, REO liquidation and claim proceeds less any amounts charged off as unrecoverable. Active loan repurchases are classified as Receivables as reimbursement from HUD is generally received within 60 days and are initially recorded at fair value. Inactive loan repurchases are classified as Loans held for sale and recorded at fair value. Loans are reclassified to REO in Other assets or Receivables as the loans move through the resolution process and permissible claims are submitted to HUD for reimbursement. Receivables are valued at net realizable value. REO is valued at the estimated value of the underlying property less cost to sell. Lease Commitments We lease certain of our premises and equipment under non-cancelable operating leases with terms expiring through 2025 exclusive of renewal option periods. At December 31, 2020, the weighted average remaining term of our leases was 2.4 years. A maturity analysis of our lease liability as of December 31, 2020 is summarized as follows:
(1)At December 31, 2020, the weighted average of the discount rate used to estimate the present value was 7.5% based on our incremental borrowing rate. Operating lease cost for 2020 and 2019 and rent expense for 2018 was $14.6 million, $26.1 million and $16.6 million, respectively. The operating lease cost for 2020 and 2019 includes $1.6 million and $5.4 million, respectively, of variable lease expense. Restricted cash includes a $23.2 million deposit as collateral for an irrevocable standby letter of credit issued in connection with one of our leased facilities. This letter of credit requirement under the terms of the lease agreement is primarily the result of PHH not meeting certain credit rating criteria prior to the acquisition. The required amount of the letter of credit will be reduced each month beginning in January 2021 through the lease expiration on December 31, 2022. NRZ Relationship Our Servicing segment has exposure to concentration risk and client retention risk. As of December 31, 2020, our servicing portfolio included significant client relationships with NRZ which represented 36% and 45% of our servicing portfolio UPB and loan count, respectively, and approximately 62% 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. Because of the large percentage of our servicing business that is represented by agreements with NRZ, if NRZ exercised all or a significant portion of these termination rights, we might need to right-size or restructure certain aspects of our servicing business as well as the related corporate support functions. Selected assets and liabilities recorded on our consolidated balance sheets as well as the impacts to our consolidated statements of operations in connection with our NRZ agreements are disclosed in Note 10 — Rights to MSRs. Oaktree MAV (MSR Asset Vehicle, LLC) Transaction On December 21, 2020, Ocwen entered into a transaction agreement (the Transaction Agreement) with Oaktree Capital Management L.P. and certain affiliates (collectively Oaktree) and OCW MAV Holdings, LLC (OMH), a special purpose entity managed by Oaktree. The Transaction Agreement provides for Ocwen and OMH to form a strategic relationship for the purpose of investing in MSRs pertaining to mortgage loans held or securitized by Fannie Mae and Freddie Mac, subject to certain terms and conditions. The Transaction Agreement includes customary representations, warranties, covenants and closing conditions, including receipt of required regulatory approvals. The closing of the transaction is expected to occur in the first half of 2021. The Transaction Agreement may be terminated on or prior to closing by mutual written agreement of Ocwen and OMH, and upon the occurrence of certain conditions including if the closing has not occurred by July 1, 2021, subject to the ability of either OMH or Ocwen to extend such date for up to an additional 60 days to obtain any outstanding required regulatory approvals. At closing, OMH and Ocwen will initially hold 85% and 15%, respectively, in what is presently a wholly owned subsidiary of OMH. The parties have agreed to invest up to $250.0 million, contributed on a pro rata basis, over a term of three years following closing (subject to extension) for use in connection with eligible MSR investments and operating expenses. Following the execution of the Transaction Agreement and until the parties have contributed their respective aggregate $250.0 million capital contributions, Ocwen has an obligation to provide an indirect subsidiary of OMH with a “first look” at opportunities presented to Ocwen or its affiliates to acquire Fannie Mae and Freddie Mac MSRs that meet certain criteria. Effective as of closing, PMC will enter into a subservicing agreement (Subservicing Agreement) with an indirect subsidiary of OMH to service the mortgage loans underlying the MSRs in exchange for a per-loan subservicing fee and certain other ancillary fees as set forth in the Subservicing Agreement. Upon closing and subject to other customary closing conditions, Ocwen agreed to sell to Oaktree and certain affiliates up to 4.9%, at Oaktree’s sole discretion, of Ocwen’s outstanding common stock at a price of $23.15 per share, and to issue to Oaktree warrants to purchase from Ocwen additional common stock equal to 3% of Ocwen’s outstanding common stock at a purchase price of $24.31 per share (subject to anti-dilution adjustments). The warrants expire four years after their issue date. Ocwen also agreed to grant Oaktree a pre-emptive right, effective from the date of the Transaction Agreement until 90 days after closing, to participate in certain future equity financings of Ocwen in an amount that would allow Oaktree to maintain its fully-diluted ownership percentage of Ocwen as a result of its investment in Ocwen’s common stock and warrants. Ocwen and Oaktree agreed to enter into a securities purchase agreement (the Securities Purchase Agreement) and warrant agreement (Warrant Agreement) at closing to reflect these transactions. The Securities Purchase Agreement and the Warrant Agreement provide that the ownership of Oaktree and its affiliates in Ocwen’s common stock on an as-converted basis may not exceed 19.9% at any time without receipt of shareholder approval subject to applicable NYSE listing rules. See Note 28 — Subsequent Events.
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Contingencies | Note 26 — Contingencies When we become aware of a matter involving uncertainty for which we may incur a loss, we assess the likelihood of any loss. If a loss contingency is probable and the amount of the loss can be reasonably estimated, we record an accrual for the loss. In such cases, there may be an exposure to potential loss in excess of the amount accrued. Where a loss is not probable but is reasonably possible or where a loss in excess of the amount accrued is reasonably possible, we disclose an estimate of the amount of the loss or range of possible losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible loss is not material to our financial position, results of operations or cash flows. If a reasonable estimate of loss cannot be made, we do not accrue for any loss or disclose any estimate of exposure to potential loss even if the potential loss could be material and adverse to our business, reputation, financial condition and results of operations. An assessment regarding the ultimate outcome of any such matter involves judgments about future events, actions and circumstances that are inherently uncertain. The actual outcome could differ materially. Where we have retained external legal counsel or other professional advisers, such advisers assist us in making such assessments. Litigation In the ordinary course of business, we are a defendant in, or a party or potential party to, many threatened and pending legal proceedings, including proceedings brought by regulatory agencies (discussed further under “Regulatory” below), those brought on behalf of various classes of claimants, and those brought derivatively on behalf of Ocwen against certain current or former officers and directors or others. In addition, we may be a party or potential party to threatened or pending legal proceedings brought by fair-housing advocates, commercial counterparties, including claims by parties who provide trustee services, parties to whom we have sold MSRs or other assets, parties on whose behalf we service mortgage loans, and parties who provide ancillary services including property preservation and other post-foreclosure related services. The majority of these proceedings are based on alleged violations of federal, state and local laws and regulations governing our mortgage servicing and lending activities, including, among others, the Dodd-Frank Act, the Gramm-Leach-Bliley Act, the FDCPA, the RESPA, the TILA, the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act, the TCPA, the Equal Credit Opportunity Act, as well as individual state licensing and foreclosure laws and federal and local bankruptcy rules. Such proceedings include wrongful foreclosure and eviction actions, payment misapplication actions, allegations of wrongdoing in connection with lender-placed insurance and mortgage reinsurance arrangements, claims relating to our property preservation activities, claims related to REO management, claims relating to our written and telephonic communications with our borrowers such as claims under the TCPA and individual state laws, claims related to our payment, escrow and other processing operations, claims relating to fees imposed on borrowers relating to payment processing, payment facilitation or payment convenience, claims related to ancillary products marketed and sold to borrowers, claims related to call recordings, and claims regarding certifications of our legal compliance related to our participation in certain government programs. In some of these proceedings, claims for substantial monetary damages are asserted against us. For example, we are currently a defendant in various matters alleging that (1) certain fees imposed on borrowers relating to payment processing, payment facilitation or payment convenience violate the FDCPA and similar state laws, (2) certain fees we assess on borrowers are marked up improperly in violation of applicable state and federal law, (3) we breached fiduciary duties we purportedly owe to benefit plans due to the discretion we exercise in servicing certain securitized mortgage loans and (4) certain legacy mortgage reinsurance arrangements violated RESPA. In the future, we are likely to become subject to other private legal proceedings alleging failures to comply with applicable laws and regulations, including putative class actions, in the ordinary course of our business. In view of the inherent difficulty of predicting the outcome of any threatened or pending legal proceedings, particularly where the claimants seek very large or indeterminate damages, including punitive damages, or where the matters present novel legal theories or involve a large number of parties, we generally cannot predict what the eventual outcome of such proceedings will be, what the timing of the ultimate resolution will be, or what the eventual loss, if any, will be. Any material adverse resolution could materially and adversely affect our business, reputation, financial condition, liquidity and results of operations. Where we determine that a loss contingency is probable in connection with a pending or threatened legal proceeding and the amount of our loss can be reasonably estimated, we record an accrual for the loss. We have accrued for losses relating to threatened and pending litigation that we believe are probable and reasonably estimable based on current information regarding these matters. Where we determine that a loss is not probable but is reasonably possible or where a loss in excess of the amount accrued is reasonably possible, we disclose an estimate of the amount of the loss or range of possible losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible loss is not material to our financial position, results of operations or cash flows. It is possible that we will incur losses relating to threatened and pending litigation that materially exceed the amount accrued. Our accrual for probable and estimable legal and regulatory matters, including accrued legal fees, was $38.9 million at December 31, 2020. We cannot currently estimate the amount, if any, of reasonably possible losses above amounts that have been recorded at December 31, 2020. As previously disclosed, we are subject to individual lawsuits relating to our FDCPA compliance and putative state law class actions based on the FDCPA and state laws similar to the FDCPA. Ocwen has recently agreed to a settlement in principle of a putative class action, Morris v. PHH Mortgage Corp., filed in March 2020 in the United States District Court for the Southern District of Florida, alleging that PMC’s practice of charging a fee to borrowers who voluntarily choose to use certain optional expedited payment options violates the FDCPA and its state law analogs. Several similar putative class actions have been filed against PMC and Ocwen since July 2019. Following mediation, PMC agreed to the terms of a settlement agreement to resolve all claims in the Morris matter. A motion requesting preliminary approval of the settlement was filed on August 25, 2020. Ocwen expects final approval of the Morris settlement will resolve the claims of the substantial majority of the putative class members described in the other similar cases that Ocwen is defending. Several third parties, including a group of State Attorneys General, have filed papers opposing preliminary approval, and these third parties could ultimately file objections to the proposed settlement. Ocwen cannot guarantee that the proposed settlement will receive final approval and in the absence of such approval, Ocwen cannot predict the eventual outcome of the Morris proceeding and similar putative class actions. In addition, we continue to be involved in legacy matters arising prior to Ocwen’s October 2018 acquisition of PHH, including a putative class action filed in 2008 in the United States District Court for the Eastern District of California against PHH and related entities in alleging that PHH’s legacy mortgage reinsurance arrangements between its captive reinsurer, Atrium Insurance Corporation, and certain mortgage insurance providers violated RESPA. Following numerous pre-trial developments, trial in the case, captioned Munoz v. PHH Corp. et al., will likely be scheduled in 2021. PHH accrued $2.5 million when the case was filed in 2008 and that amount is included in the $38.9 million legal and regulatory accrual referenced above. At this time, Ocwen is unable to predict the outcome of this lawsuit or any additional lawsuits that may be filed, the possible loss or range of loss, if any, associated with the resolution of such lawsuits or the potential impact such lawsuits may have on us or our operations. Ocwen intends to vigorously defend against this lawsuit. If our efforts to defend this lawsuit are not successful, our business, reputation, financial condition, liquidity and results of operations could be materially and adversely affected. Ocwen is involved in a TCPA class action that involves claims against trustees of RMBS trusts based on vicarious liability for Ocwen’s alleged non-compliance with the TCPA. The trustees have sought indemnification from Ocwen based on the vicarious liability claims. Additional lawsuits have been and may be filed against us in relation to our TCPA compliance. At this time, Ocwen is unable to predict the outcome of existing lawsuits or any additional lawsuits that may be filed, the possible loss or range of loss, if any, above the amount accrued or the potential impact such lawsuits may have on us or our operations. Ocwen intends to vigorously defend against these lawsuits. If our efforts to defend these lawsuits are not successful, our business, reputation, financial condition, liquidity and results of operations could be materially and adversely affected. In another TCPA action, plaintiffs Saber Ahmed and John Monteleone filed a putative nationwide class action against HSBC Bank USA, N.A. and PHH in California federal court in 2015. See Ahmed v. HSBC Bank USA, N.A. and PHH Mortgage Corp., Case No. 5:16-cv-02057-JGB-DTB. Plaintiffs alleged that PHH and HSBC violated the TCPA by using an automatic telephone dialing system to call borrowers on their cell phones without express consent and/or with consent revoked. The parties agreed to settle the matter for $2.4 million, inclusive of all costs and fees. The settlement received the final approval from the Court on December 30, 2019 and the settlement amount was paid on February 6, 2020. Ocwen is a defendant in a certified class action in the U.S. District Court in the Eastern District of California where the plaintiffs claim Ocwen marked up fees for property valuations and title searches in violation of California state law. See Weiner v. Ocwen Financial Corp., et al.; 2:14-cv-02597-MCE-DB. Ocwen’s motion for summary judgment, filed in June 2019, was denied in May 2020; however, the court did rule that plaintiff’ recoverable damages are limited to out-of-pocket costs, i.e., the amount of marked-up fees actually paid, rather than the entire cost of the valuation that plaintiffs sought. The court has scheduled a jury trial to begin August 30, 2021. At this time, Ocwen is unable to predict the outcome of this lawsuit or any additional lawsuits that may be filed, the possible loss or range of loss, if any, associated with the resolution of such lawsuits or the potential impact such lawsuits may have on us or our operations. Ocwen intends to vigorously defend against this lawsuit. If our efforts to defend this lawsuit are not successful, our business, financial condition liquidity and results of operations could be materially and adversely affected. Ocwen may have affirmative indemnification rights and/or other claims against third parties related to the allegations in the lawsuit. Although we may pursue these claims, we cannot currently estimate the amount, if any, of recoveries from these third parties. From time to time we are also subject to indemnification claims from contractual parties (i) on whose behalf we service or subservice loans, or did so in the past and (ii) to whom we sold loans or MSRs. We are currently involved in a dispute with a former subservicing client, HSBC Bank USA, N.A. (HSBC), which filed a complaint in the Supreme Court of the State of New York against PHH. HSBC’s claims relate to alleged breaches of agreements entered into under a prior subservicing arrangement. We believe we have strong factual and legal defenses to all of HSBC’s claims and are vigorously defending the action. Ocwen is currently unable to predict the outcome of this dispute or estimate the size of any loss which could result from a potential resolution reached through litigation or otherwise. We are also currently involved in a pair of disputes pending in the Supreme Court of the State of New York with a purchaser of MSRs, Mr. Cooper (formerly Nationstar Mortgage Holdings Inc.), who alleges breaches of representations and warranties made by PHH in the MSR sale agreements. The initial complaint filed in the first case was dismissed in its entirety, but Mr. Cooper has since appealed that ruling, filed an amended complaint in that case, and commenced the second litigation. PHH is vigorously defending itself. We have also received demands for indemnification for alleged breaches of representations and warranties from parties to whom we sold loans and we are currently a defendant in an adversary proceeding brought by a bankruptcy plan administrator seeking to enforce its right to contractual indemnification for the sale of allegedly defective mortgage loans. Over the past several years, lawsuits have been filed by RMBS trust investors alleging that the trustees and master servicers breached their contractual and statutory duties by (i) failing to require loan servicers to abide by their contractual obligations; (ii) failing to declare that certain alleged servicing events of default under the applicable contracts occurred; and (iii) failing to demand that loan sellers repurchase allegedly defective loans, among other things. Ocwen has received several letters from trustees and master servicers purporting to put Ocwen on notice that the trustees and master servicers may ultimately seek indemnification from Ocwen in connection with the litigations. Ocwen has not yet been impleaded into any of these cases, but it has produced and continues to produce documents to the parties in response to third-party subpoenas. Ocwen has, however, been impleaded as a third-party defendant into five consolidated loan repurchase cases first filed against Nomura Credit & Capital, Inc. in 2012 and 2013. Ocwen is vigorously defending itself in those cases against allegations by the mortgage loan seller-defendant that Ocwen failed to inform its contractual counterparties that it had discovered defective loans in the course of servicing them and had otherwise failed to service the loans in accordance with accepted standards. Ocwen is unable at this time to predict the ultimate outcome of these matters, the possible loss or range of loss, if any, associated with the resolution of these matters or any potential impact they may have on us or our operations. If, however, we were required to compensate claimants for losses related to the alleged loan servicing breaches, then our business, reputation, financial condition, liquidity and results of operations could be adversely affected. In addition, several RMBS trustees have received notices of events of default alleging material failures by servicers to comply with applicable servicing agreements. Although Ocwen has not been sued by an RMBS trustee in response to an event of default notice, there is a risk that Ocwen could be replaced as servicer as a result of said notices, that the trustees could take legal action on behalf of the trust certificate holders, or, under certain circumstances, that the RMBS investors who issue notices of event of default could seek to press their allegations against Ocwen, independent of the trustees. We are unable at this time to predict what, if any, actions any trustee will take in response to an event of default notice, nor can we predict at this time the potential loss or range of loss, if any, associated with the resolution of any event of default notice or the potential impact on our operations. If Ocwen were to be terminated as servicer, or other related legal actions were pursued against Ocwen, it could have an adverse effect on Ocwen’s business, reputation, financial condition, liquidity and results of operations. Regulatory We are subject to a number of ongoing federal and state regulatory examinations, consent orders, inquiries, subpoenas, civil investigative demands, requests for information and other actions. Where we determine that a loss contingency is probable in connection with a regulatory matter and the amount of our loss can be reasonably estimated, we record an accrual for the loss. Where we determine that a loss is not probable but is reasonably possible or where a loss in excess of the amount accrued is reasonably possible, we disclose an estimate of the amount of the loss or range of possible losses for the claim if a reasonable estimate can be made, unless the amount of such reasonably possible loss is not material to our financial position, results of operations or cash flows. It is possible that we will incur losses relating to regulatory matters that materially exceed any accrued amount. Predicting the outcome of any regulatory matter is inherently difficult and we generally cannot predict the eventual outcome of any regulatory matter or the eventual loss, if any, associated with the outcome. To the extent that an examination, audit or other regulatory engagement results in an alleged failure by us to comply with applicable laws, regulations or licensing requirements, or if allegations are made that we have failed to comply with applicable laws, regulations or licensing requirements or the commitments we have made in connection with our regulatory settlements (whether such allegations are made through administrative actions such as cease and desist orders, through legal proceedings or otherwise) or if other regulatory actions of a similar or different nature are taken in the future against us, this could lead to (i) administrative fines and penalties and litigation, (ii) loss of our licenses and approvals to engage in our servicing and lending businesses, (iii) governmental investigations and enforcement actions, (iv) civil and criminal liability, including class action lawsuits and actions to recover incentive and other payments made by governmental entities, (v) breaches of covenants and representations under our servicing, debt or other agreements, (vi) damage to our reputation, (vii) inability to raise capital or otherwise fund our operations and (viii) inability to execute on our business strategy. Any of these occurrences could increase our operating expenses and reduce our revenues, hamper our ability to grow or otherwise materially and adversely affect our business, reputation, financial condition, liquidity and results of operations. CFPB In April 2017, the CFPB filed a lawsuit in the federal district court for the Southern District of Florida against Ocwen, OMS and OLS alleging violations of federal consumer financial laws relating to our servicing business dating back to 2014. The CFPB’s claims include allegations regarding (1) the adequacy of Ocwen’s servicing system and integrity of Ocwen’s mortgage servicing data, (2) Ocwen’s foreclosure practices and (3) various purported servicer errors with respect to borrower escrow accounts, hazard insurance policies, timely cancellation of private mortgage insurance, handling of customer complaints, and marketing of optional products. The CFPB alleges violations of laws prohibiting unfair, deceptive or abusive acts or practices, as well as violations of other laws or regulations. The CFPB does not claim specific monetary damages, although it does seek consumer relief, disgorgement of allegedly improper gains, and civil money penalties. We believe we have factual and legal defenses to the CFPB’s allegations and are vigorously defending ourselves. In September 2019, the court issued a ruling on our motion to dismiss, granting it in part and denying it in part. The court granted our motion dismissing the entire complaint without prejudice because the court found that the CFPB engaged in impermissible “shotgun pleading,” holding that the CFPB must amend its complaint to specifically allege and distinguish the facts between all claims. The CFPB filed an amended complaint in October 2019, and we filed our answer and affirmative defenses in November 2019. Ocwen and the CFPB completed a summary judgment briefing on September 4, 2020. The parties participated in a mediation session on October 23, 2020, and held additional settlement discussions following the conclusion of the mediation session, however, the parties were unable to reach a resolution of the litigation. We do not anticipate a decision on summary judgment until mid-2021. To the extent the summary judgment ruling does not conclude the case and we do not otherwise resolve the matter before trial, we presently anticipate a trial will take place in the second half of 2021 or later. Prior to the initiation of legal proceedings, we had been engaged with the CFPB in efforts to resolve the matter. We are taking all reasonable and prudent actions to resolve the CFPB matter in the shortest time frame possible that would result in an acceptable financial outcome for our stakeholders. The Court has consolidated both the CFPB and Florida matters for trial, but has removed them from the October 2020 trial calendar and will reset the trial for a later date. As noted below, however, because the Florida matter is now resolved, when the Court schedules the bench trial it will only include the claims of the CFPB. Our current accrual with respect to this matter, which we increased by $13.1 million in the fourth quarter of 2020 in connection with our efforts to resolve the litigation, is included in the $38.9 million legal and regulatory accrual referenced above. The outcome of the matters raised by the CFPB, whether through negotiated settlements, court rulings or otherwise, could potentially involve monetary fines or penalties or additional restrictions on our business and could have a material adverse impact on our business, reputation, financial condition, liquidity and results of operations. State Licensing, State Attorneys General and Other Matters Our licensed entities are required to renew their licenses, typically on an annual basis, and to do so they must satisfy the license renewal requirements of each jurisdiction, which generally include financial requirements such as providing audited financial statements or satisfying minimum net worth requirements and non-financial requirements such as satisfactorily completing examinations as to the licensee’s compliance with applicable laws and regulations. Failure to satisfy any of the requirements to which our licensed entities are subject could result in a variety of regulatory actions ranging from a fine, a directive requiring a certain step to be taken, entry into a consent order, a suspension or ultimately a revocation of a license, any of which could have a material adverse impact on our results of operations and financial condition. In addition, we receive information requests and other inquiries, both formal and informal in nature, from our state financial regulators as part of their general regulatory oversight of our servicing and lending businesses. We also regularly engage with state attorneys general and the CFPB and, on occasion, we engage with other federal agencies, including the Department of Justice and various inspectors general on various matters, including responding to information requests and other inquiries. Many of our regulatory engagements arise from a complaint that the entity is investigating, although some are formal investigations or proceedings. The GSEs (and their conservator, FHFA), HUD, FHA, VA, Ginnie Mae, the United States Treasury Department, and others also subject us to periodic reviews and audits. We have in the past resolved, and may in the future resolve, matters via consent orders, payments of monetary amounts and other agreements in order to settle issues identified in connection with examinations or other oversight activities, and such resolutions could have material and adverse effects on our business, reputation, operations, results of operations and financial condition. In April 2017 and shortly thereafter, mortgage and banking regulatory agencies from 29 states and the District of Columbia took administrative actions against OLS and certain other Ocwen companies that alleged deficiencies in our compliance with laws and regulations relating to our servicing and lending activities. An additional state regulator brought legal action together with that state’s attorney general, as described below. These administrative actions were applicable to OLS, but additional Ocwen entities were named in some actions, including Ocwen Financial Corporation, OMS, Homeward, Liberty, OFSPL and Ocwen Business Solutions, Inc. (OBS). As discussed further below, we have now resolved all of the state regulatory matters arising in April 2017. In resolving these matters, we entered into agreements containing certain restrictions and commitments with respect to the operation of our business and our regulatory compliance activities, including restrictions and conditions relating to acquisitions of MSRs, a transition to an alternate loan servicing system from the REALServicing system, engagement of third-party auditors, escrow and data testing, error remediation, and financial condition reporting. In some instances, we also provided borrower financial remediation and made payments to state regulators. We have taken substantial steps toward fulfilling our commitments under the agreements described above, including completing the transfer of loans to Black Knight MSP, completing pre-transfer and post-transfer data integrity audits, developing and implementing certain enhancements to our consumer complaint process, completing a third-party escrow review and ongoing reporting and information sharing. We continue to be subject to obligations under these agreements, including completing the final phase of a data integrity audit under our agreement with the State of Massachusetts. Concurrent with the initiation of the administrative actions and the filing of the CFPB lawsuit discussed above, the Florida Attorney General, together with the Florida Office of Financial Regulation, filed a lawsuit in the federal district court for the Southern District of Florida against Ocwen, OMS and OLS alleging violations of federal and state consumer financial laws relating to our servicing business. These claims are similar to the claims made by the CFPB. The Florida lawsuit seeks injunctive and equitable relief, costs, and civil money penalties in excess of $10,000 (ten thousand dollars) per confirmed violation of the applicable statute. In September 2019, the court issued its ruling on our motion to dismiss, granting it in part and denying it in part. The court granted our motion dismissing the entire complaint without prejudice because the court found that the plaintiffs engaged in impermissible “shotgun pleading,” holding that the plaintiffs must amend their complaint to specifically allege and distinguish the facts between all claims. The plaintiffs filed an amended complaint in November 2019. We filed a partial motion to dismiss the amended complaint in December 2019. On April 22, 2020, the court granted our motion and dismissed Count V of the amended complaint with prejudice holding the plaintiff failed to plead an actionable claim under the Florida Deceptive and Unfair Trade Practices Act. On May 6, 2020, Ocwen filed its answer and affirmative defenses to the amended complaint. Ocwen and the plaintiffs completed a summary judgment briefing on September 4, 2020. On October 15, 2020, we announced that we had reached an agreement to resolve the Florida plaintiffs’ lawsuit. Pursuant to that agreement, Ocwen was required to pay the State of Florida $5.2 million within 60 days of the Court entering the final consent judgment between the parties. Ocwen then has an additional two years to provide debt forgiveness totaling at least $1.0 million to certain Florida borrowers. If Ocwen is unable to do so, then two years from now it will owe the State of Florida an additional $1.0 million. We anticipate that we will be able to satisfy the debt forgiveness obligation and therefore do not presently anticipate that the additional $1.0 million payment will be required. In addition, Ocwen agreed to certain late fee waivers, a targeted loan modification program for certain eligible Florida borrowers, and certain non-monetary reporting and handling obligations. Ocwen did not admit any fault or liability as part of the settlement. An Amended Final Consent Judgment was entered on October 27, 2020 and Ocwen satisfied the monetary portions of the settlement on December 17, 2020. Although we believe we had strong defenses to all of Florida’s claims, this was an opportunity to resolve one of Ocwen’s remaining significant legacy matters, and to do so without incurring further expense in preparing for trial. Our accrual with respect to the administrative and legal actions initiated in April 2017 is included in the $38.9 million litigation and regulatory matters accrual referenced above. We have also incurred, and will continue to incur costs to comply with the terms of the settlements we have entered into, including the costs of conducting an escrow review, Maryland organizational assessments and Massachusetts data integrity audits, and costs relating to the transition to Black Knight MSP. With respect to the escrow review, the third-party auditor has issued its final report and we have completed all required remediation measures required as part of that review. In addition, it is possible that legal or other actions could be taken against us with respect to such errors, which could result in additional costs or other adverse impacts. If we fail to comply with the terms of our settlements, additional legal or other actions could be taken against us. Such actions could have a materially adverse impact on our business, reputation, financial condition, liquidity and results of operations. Certain of the state regulators’ cease and desist orders referenced a confidential supervisory memorandum of understanding (MOU) that we entered into with the Multistate Mortgage Committee (MMC) and six states relating to a servicing examination from 2013 to 2015. Among other things, the MOU prohibited us from repurchasing stock during the development of a going forward plan and, thereafter, except as permitted by the plan. We submitted a plan in 2016 that contained no stock repurchase restrictions and, therefore, we do not believe we are currently restricted from repurchasing stock. We requested confirmation from the signatories of the MOU that they agree with this interpretation, and received affirmative responses from the MMC and five states, and a response declining to take a legal position from the remaining state. On occasion, we engage with agencies of the federal government on various matters. For example, OLS received a letter from the Department of Justice, Civil Rights Division, notifying OLS that the Department of Justice had initiated a general investigation into OLS’s policies and procedures to determine whether violations of the Servicemembers Civil Relief Act by OLS might exist. The Department of Justice has informed us that it has decided not to take enforcement action related to this matter at this time and has, consequently, closed its investigation. In addition, Ocwen was named as a defendant in a HUD administrative complaint filed by a non-profit organization alleging discrimination in the manner in which Ocwen maintains REO properties in minority communities. In February 2018, this matter was administratively closed, and similar claims were filed in federal court. We believe these claims are without merit and intend to vigorously defend ourselves. In May 2016, Ocwen received a subpoena from the Office of Inspector General of HUD requesting the production of documentation related to HECM loans originated by Liberty. We understand that other lenders in the industry have received similar subpoenas. In April 2017, Ocwen received a subpoena from the Office of Inspector General of HUD requesting the production of documentation related to lender-placed insurance arrangements with a mortgage insurer and the amounts paid for such insurance. We understand that other servicers in the industry have received similar subpoenas. In May 2017, Ocwen received a subpoena from the Office of the Special Inspector General for the Troubled Asset Relief Program requesting documents and information related to Ocwen’s participation from 2009 to the present in the Treasury Department’s Making Home Affordable Program and its HAMP. We have been providing documents and information in response to these subpoenas. In April 2019, PMC received a subpoena from the VA Office of the Inspector General requesting the production of documentation related to the origination and underwriting of loans guaranteed by the Veterans Benefits Administration. We understand that other servicers in the industry have received similar subpoenas. Loan Put-Back and Related Contingencies Our contracts with purchasers of originated loans contain provisions that require indemnification or repurchase of the related loans under certain circumstances. While the language in the purchase contracts varies, they generally contain provisions that require us to indemnify purchasers of related loans or repurchase such loans if: •representations and warranties concerning loan quality, contents of the loan file or loan underwriting circumstances are inaccurate; •adequate mortgage insurance is not secured within a certain period after closing; •a mortgage insurance provider denies coverage; or •there is a failure to comply, at the individual loan level or otherwise, with regulatory requirements. We received origination representations and warranties from our network of approved originators in connection with loans we purchased through our correspondent lending channel. To the extent that we have recourse against a third-party originator, we may recover part or all of any loss we incur. We believe that, as a result of historical actions by investors, many purchasers of residential mortgage loans are particularly aware of the conditions under which originators must indemnify or repurchase loans and under which such purchasers would benefit from enforcing any indemnification rights and repurchase remedies they may have. In our Originations business, we have exposure to indemnification risks and repurchase requests. In our servicing business, claims alleging that we did not comply with our servicing obligations may require us to repurchase mortgage loans, make whole or otherwise indemnify investors or other parties. If home values were to decrease, our realized losses from loan repurchases and indemnifications may increase as well. As a result, our liability for repurchases may increase beyond our current expectations. If we are required to indemnify or repurchase loans that we originate and sell, or where we have assumed this risk on loans that we service, as discussed above, in either case resulting in losses that exceed our related liability, our business, financial condition and results of operations could be adversely affected. We have exposure to origination representation, warranty and indemnification obligations relating to our lending, sales and securitization activities. We initially recognize these obligations at fair value. Thereafter, the estimation of the liability considers probable future obligations based on industry data of loans of similar type segregated by year of origination, to the extent applicable, and estimated loss severity based on current loss rates for similar loans, our historical rescission rates and the current pipeline of unresolved demands. Our historical loss severity considers the historical loss experience that we incur upon loan sale or collateral liquidation as well as current market conditions. We have exposure to servicing representation, warranty and indemnification obligations relating to our servicing practices. We record an accrual for a loss contingency if the loss contingency is probable and the amount can be reasonably estimated. We monitor the adequacy of the overall liability and make adjustments, as necessary, after consideration of our historical losses and other qualitative factors including ongoing dialogue and experience with our counterparties. At December 31, 2020 and 2019, we had outstanding representation and warranty repurchase demands of $41.2 million UPB (250 loans) and $47.0 million UPB (285 loans), respectively. We review each demand and monitor through resolution, primarily through rescission, loan repurchase or make-whole payment. The following table presents the changes in our liability for representation and warranty obligations and similar indemnification obligations:
(1)The liability for representation and warranty obligations and compensatory fees for foreclosures is reported in Other liabilities (a component of Liability for indemnification obligations) on our consolidated balance sheets. (2)Includes principal and interest losses realized in connection with repurchased loans, make-whole, indemnification and fee payments and settlements net of recoveries, if any. (3)Includes $18.0 million liability for representation and warranty obligations related to sold advances previously presented as allowance for losses. See Note 8 — Advances. We believe that it is reasonably possible that losses beyond amounts currently recorded for potential representation and warranty obligations and other claims described above could occur, and such losses could have an adverse impact on our results of operations, financial condition or cash flows. However, based on currently available information, we are unable to estimate a range of reasonably possible losses above amounts that have been recorded at December 31, 2020. Other Ocwen, on its own behalf and on behalf of various mortgage loan investors, is engaged in a variety of activities to seek payments from mortgage insurers for unpaid claims, including claims where the mortgage insurers paid less than the full claim amount. Ocwen believes that many of the actions by mortgage insurers were in violation of the applicable insurance policies and insurance law. In some cases, Ocwen has entered into tolling agreements, initiated arbitration or litigation, engaged in settlement discussions, or taken other similar actions. To date, Ocwen has settled with five mortgage insurers, and expects the ultimate outcome to result in recovery of additional unpaid claims, although we cannot quantify the likely amount at this time. We may, from time to time, have affirmative indemnification and other claims against service providers and parties from whom we purchased MSRs or other assets. Although we pursue these claims, we cannot currently estimate the amount, if any, of further recoveries. Similarly, from time to time, indemnification and other claims are made against us by parties to whom we sold MSRs or other assets or by parties on whose behalf we service mortgage loans. We cannot currently estimate the amount, if any, of reasonably possible loss above amounts recorded.
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Quarterly Results of Operations (Unaudited) |
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Quarterly Results of Operations (Unaudited) | Note 27 — Quarterly Results of Operations (Unaudited)
(1)Positive valuation adjustments indicated in the above table represent fair value gains, and negative valuation adjustments represent fair value losses. (2)Earnings (loss) per share amounts have been adjusted retrospectively to give effect to the one-for-15 reverse stock split effective on August 13, 2020 as if it occurred at the beginning of the first period presented
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Subsequent Events |
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Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 28 — Subsequent Events Notice of early redemption of senior secured notes On February 2, 2021, we gave notice of our intention to redeem on March 4, 2021 the outstanding 6.375% Senior Notes due August 2021 at a price of 100% of the principal amount, plus accrued and unpaid interest, and the 8.375% Senior Secured Second Lien Notes due November 2022 at a price of 102.094% of the principal amount, plus accrued and unpaid interest. The redemption on March 4, 2021 would result in the recognition of an estimated $7.1 million loss on debt extinguishment. Our obligation to redeem the notes is contingent upon our completion of a debt financing that will provide funds sufficient to pay the redemption price in full for the respective notes. Accordingly, the March 4, 2021 redemption date may be extended until the financing conditions are satisfied or waived, in our sole discretion. If the financing conditions are not satisfied, we may elect to rescind the notice of redemption for such notes, terminate the redemption, and return any tendered notes to the holders. Announcement of financing transactions On February 9, 2021, we reached a definitive agreement with certain funds and accounts managed by Oaktree Capital Management, L.P. and affiliates (collectively Oaktree) pursuant to which we agreed to issue, and Oaktree agreed to purchase, in a private placement $285.0 million principal amount of Senior Secured Notes, in two separate tranches. The $199.5 million issuance and sale of the initial Senior Secured Notes to Oaktree is subject to certain conditions, including, but not limited to, the contemporaneous consummation by us or one of our subsidiaries of an additional debt financing not to exceed $450.0 million. The issuance and sale of the additional $85.5 million Senior Secured Notes will occur within one year after the initial Senior Secured Notes issuance, and is subject to certain conditions, including, but not limited to, (i) Ocwen having a book value of common equity of at least $360.0 million and (ii) the closing of the MSR joint venture with affiliates of Oaktree. See Note 25 — Commitments, Oaktree MAV Transaction. Concurrent with the issuance of the initial Senior Secured Notes, we will issue to Oaktree warrants to purchase shares of our common stock equal to 12% of our then outstanding common stock at an exercise price of $26.82 per share, subject to antidilution adjustments. The warrants may not be exercised if the ownership of Oaktree would exceed 19.9% without prior shareholder approval, or 9.9% without prior regulatory approvals. If these limitations apply, Oaktree would have the right to exercise the warrants to purchase shares of non-voting preferred stock of Ocwen. While the warrants will not be registered, we agreed to enter into a registration rights agreement with Oaktree pursuant to which we will to register for resale the shares issuable upon exercise of the warrants. The gross proceeds from the initial Senior Secured Notes and warrants are expected to be approximately $199.5 million, before deducting underwriting discount and other estimated issuance costs. The net proceeds from the initial Senior Secured Notes and warrants, together with the net proceeds from the additional debt financing that is a condition to issuance of the initial Senior Secured Notes, are expected to repay in full an aggregate of $498.1 million of indebtedness, including our Senior Secured Term Loan due May 2022, all of PMC’s outstanding 6.375% senior unsecured notes due August 2021 and PHH’s 8.375% senior secured second lien notes due November 2022. The net proceeds from the additional Senior Secured Notes are expected to be used to fund the Company’s investment in the MSR joint venture. Remaining proceeds are expected to be used for general corporate purposes, including to accelerate growth of our originations and servicing businesses. The early redemption of the SSTL, the 6.375% senior unsecured notes and the 8.375% senior secured second lien notes is expected to result in the recognition of an estimated $15.5 million loss on debt extinguishment. The Senior Secured Notes will include the following additional terms: •The Senior Secured Notes will have a six-year term with no amortization of principal and accrue at the rate of 12% per annum if paid in cash or 13.25% per annum if “paid-in-kind” through an increase in the principal amount or the issuance of additional Senior Secured Notes (PIK Interest). Prior to the first anniversary, all of the interest on the Senior Secured Notes may, at our option, be payable as PIK Interest. After the first anniversary, a minimum amount of interest will be required to be paid in cash equal to the lesser of (i) 7% per annum of the outstanding principal amount of the Senior Secured Notes and (ii) the total amount of unrestricted cash of Ocwen and its subsidiaries less the greater of $125.0 million and the minimum liquidity amounts required by any agency. •We will be permitted to redeem the Senior Secured Notes in whole or in part at any time at a redemption price equal to par, plus accrued and unpaid interest, and, if redeemed prior to the fifth anniversary of their issuance, plus a make-whole premium. Upon a change of control of Ocwen, we will be required to offer to repurchase the Senior Secured Notes at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest. •The Senior Secured Notes will be solely the obligation of Ocwen, with a pledge of substantially all of its assets that is expected to be junior to the lien securing the additional debt financing. The Senior Secured Notes will not be guaranteed by any of the Ocwen’s subsidiaries nor secured by a pledge or lien on any assets of Ocwen’s subsidiaries. •The Senior Secured Notes will have two financial maintenance covenants: (1) a minimum book value of our stockholders’ equity of not less than $275.0 million and (2) a minimum amount of unrestricted cash of not less than $50.0 million at any time. The Senior Secured Notes also will have affirmative and negative covenants and events of default that are customary for debt securities of this type. •We will be required to pay Oaktree a $35.0 million alternate transaction fee if the Initial Senior Secured Notes are not issued by August 9, 2021, or if we incur or issue additional indebtedness or we issue or sell any equity interests in certain alternative transactions to parties other than Oaktree which generate proceeds in excess of $100.0 million. There can be no assurance that the conditions to the issuance and sale of the Senior Secured Notes to Oaktree will be met, or that any additional debt financing will be consummated.
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Organization, Basis of Presentation and Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Consolidation and Basis of Presentation | Consolidation and Basis of Presentation Principles of Consolidation Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (GAAP). Our consolidated financial statements include the accounts of Ocwen, its wholly-owned subsidiaries and any variable interest entity (VIE) for which we have determined that we are the primary beneficiary. We apply the equity method of accounting to investments where we are able to exercise significant influence, but not control, over the policies and procedures of the entity but own 50% or less of the voting securities. Our statements of operations and consolidated balance sheets include the accounts and results of PHH Corporation (PHH) and its subsidiaries since acquisition on October 4, 2018. See Note 2 — Business Acquisition for additional information. We have eliminated intercompany accounts and transactions in consolidation. Foreign Currency Translation The functional currency of each of our foreign subsidiaries is the U.S. dollar. Re-measurement adjustments of foreign-denominated amounts to U.S. dollars are included in Other, net in our consolidated statements of operations. Reverse Stock Split In August 2020, Ocwen implemented a reverse stock split of its shares of common stock in a ratio of one-for-15. The number of shares, loss per share amounts, repurchase price per share amounts, and Common stock and Additional paid-in capital balances have been retroactively adjusted for all periods presented in these consolidated financial statements to give effect to the reverse stock split as if it occurred at the beginning of the first period presented. See Note 16 — Stockholders’ Equity for additional information.
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Reclassifications | Reclassifications In our consolidated balance sheet at December 31, 2019, and our consolidated statements of cash flows for 2019 and 2018, we have made the following changes to conform to the current presentation: •Within the Total assets section of our consolidated balance sheet, we combined Match funded advances and Advances to present all servicing-related advances as a single line item. •Within the Cash flows from financing activities section of our consolidated statements of cash flows, we now separately present proceeds and repayments on mortgage loan warehouse facilities, net, MSR financing facilities and other financing liabilities. These amounts were previously reported as Proceeds from (Repayment of) mortgage loan warehouse facilities and other secured borrowings. The above presentation changes had no impact on total assets or total liabilities in our consolidated balance sheet and no impact on operating, investing and financing cash flows in our consolidated statements of cash flows.
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Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions include, but are not limited to fair value measurements, allowance for losses, income taxes, indemnification obligations, litigation-related obligations, and our going concern evaluation. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ from those estimates and assumptions.
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Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents includes both interest-bearing and non-interest-bearing demand deposits with financial institutions that have original maturities of 90 days or less.
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Restricted Cash | Restricted CashRestricted cash includes amounts specifically designated to repay debt, to provide over-collateralization for secured borrowings and match funded debt facilities, and to provide additional collateral to support certain obligations, including letters of credit. | ||||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing Rights | Mortgage Servicing Rights MSRs are assets representing our right to service portfolios of mortgage loans. We recognize MSRs when originated or purchased loans are securitized or sold in the secondary market. We also acquire MSRs through flow purchase agreements, GSE Cash Window programs, and bulk acquisition transactions, or through asset purchases or business combination transactions. The unpaid principal balance (UPB) of the loans underlying the MSRs is not included on our consolidated balance sheets. For servicing retained in connection with the securitization of reverse mortgage loans accounted for as secured financings, we do not recognize an MSR. All newly acquired or retained MSRs are initially measured at fair value. To the extent any portfolio contract is not expected to compensate us adequately for performing the servicing, we would recognize a servicing liability. We define contracts as Agency, government-insured or non-Agency (commonly referred to as non-prime, subprime or private-label loans) based on applicable servicing guidelines, underwriting standards and borrower risk characteristics. Servicing assets are not recognized for subservicing arrangements entered into with the entity that owns the MSRs. We account for servicing assets and servicing liabilities at fair value, and report changes in fair value in earnings (MSR valuation adjustments, net) in the period in which the changes occur. Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. Effective with this election, our entire portfolio of MSRs is accounted for using the fair value measurement method. We recorded a cumulative-effect adjustment of $82.0 million to retained earnings as of January 1, 2018 to reflect the excess of the fair value over the carrying amount. See Note 9 — Mortgage Servicing for additional information. We earn fees for servicing and subservicing mortgage loans. We collect servicing and subservicing fees, generally expressed as a percent of UPB or fee per loan by loan performing status, from the borrowers’ payments. In addition to servicing and subservicing fees, we also report late fees, prepayment penalties, float earnings and other ancillary fees as revenue in Servicing and subservicing fees in our consolidated statements of operations. We recognize servicing and subservicing fees as revenue when the fees are earned, which is generally when the borrowers’ payments are collected or when loans are modified or liquidated through the sale of the underlying real estate collateral or otherwise.
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Advances | Advances During any period in which a borrower does not make payments, servicing and subservicing agreements may require that we advance our own funds to meet contractual principal and interest remittance requirements for the investors, to pay property taxes and insurance premiums and to process foreclosures. We also advance funds to maintain, repair and market foreclosed real estate properties on behalf of investors. These advances are made pursuant to the terms of each servicing and subservicing contract. Each servicing and subservicing contract is associated with specific loans, identified as a pool. When we make an advance on a loan under each servicing or subservicing contract, we are entitled to recover that advance either from the borrower, for reinstated and performing loans, or from guarantors (GSEs), insurers (FHA/VA) and investors, for modified and liquidated loans. Most of our servicing and subservicing contracts provide that the advances made under the respective agreement have priority over all other cash payments from the proceeds of the loan, and in the majority of cases, the proceeds of the pool of loans that are the subject of that servicing or subservicing contract. As a result, we are entitled to repayment from loan proceeds before any interest or principal is paid on the bonds, and in the majority of cases, advances in excess of loan proceeds may be recovered from pool level proceeds. Servicing advances are financial assets subject to the credit loss allowance model under ASC 326: Financial Instruments - Credit Losses (CECL), effective January 1, 2020. The allowance for expected credit losses is estimated based on relevant qualitative and quantitative information about past events, including historical collection and loss experience, current conditions, and reasonable and supportable forecasts that affect collectability. Expected credit losses on advances are expected to be nil, or de minimis, as advances are generally fully reimbursable or recoverable under the terms of the servicing agreements. GSE and government-insured advances are subject to implicit and government guarantees, respectively, regarding advance reimbursement and the non-Agency pooling and servicing agreement terms regarding advance recovery, the credit loss history and the expectation over the remaining life of the advance portfolio support a zero allowance for credit loss. Servicing advances may also include claimable (with investors) but nonrecoverable expenses, for example due to servicer error, such as lack of reasonable documentation as to the type and amount of advances. Such servicer errors result in the determination that the advance is uncollectible and represent operational losses resulting from not complying with servicing guidelines as established by the respective party (i.e., trustee, master servicer, investor, mortgage insurer). We establish an allowance for such operational losses through a charge to earnings (Servicing and origination expense) to the extent that a portion of advances are uncollectible taking into consideration, among other factors, probability of cure or modification, length of delinquency and the amount of the advance. We also assess collectability using proprietary cash flow projection models that incorporate a number of different factors, depending on the characteristics of the mortgage loan or pool, including, for example, estimated time to a foreclosure sale, estimated costs of foreclosure action, estimated future property tax payments and the estimated value of the underlying property net of estimated carrying costs, commissions and closing costs. Under the terms of our subservicing agreements, we are generally reimbursed by our subservicing clients on a monthly or more frequent basis. For those advances that have been reimbursed, i.e., that are off-balance sheet, if a loss contingency is probable and reasonably estimable, we recognize a loss contingency accrual for the amount of advances deemed uncollectible caused by our failure to comply with the subservicing agreements or our servicing practices. We report such loss contingency within Other liabilities - Liability for indemnification obligations.
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Loans Held for Sale | Loans Held for Sale Loans held for sale include forward and reverse mortgage loans that we do not intend to hold until maturity. We report loans held for sale at either fair value or the lower of cost or fair value computed on an aggregate basis. Residential forward and reverse mortgage loans that we intend to sell are carried at fair value as a result of a fair value election. In addition, effective January 1, 2020, repurchased loans by our Servicing business, including those loans we repurchase from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines, are accounted for under the fair value election. For loans that we elected to measure at fair value on a recurring basis, we report changes in fair value in Gain on loans held for sale, net in the consolidated statements of operations in the period in which the changes occur. These loans are expected to be sold into the secondary market to the GSEs, into Ginnie Mae guaranteed securitizations or to third-party investors. For the legacy portfolio of loans measured at the lower of cost or fair value, we account for any excess of cost over fair value as a valuation allowance and include changes in the valuation allowance in Other, net, in the consolidated statements of operations in the period in which the change occurs. We report any gain or loss on the transfer of loans held for sale in Gain on loans held for sale, net in the consolidated statements of operations along with the changes in fair value of the loans and the gain or loss on any related derivatives. When loans are sold or securitized with servicing retained, the gain on sale includes the MSR retained as non-cash proceeds at the date of sale. We include all changes in loans held for sale and related derivative balances in operating activities in the consolidated statements of cash flows. We accrue interest income as earned. We place loans on non-accrual status after any portion of principal or interest has been delinquent for more than 89 days, or earlier if management determines the borrower is unable to continue performance. When we place a loan on non-accrual status, we reverse the interest that we have accrued but not yet received. We return loans to accrual status only when we reinstate the loan and there is no significant uncertainty as to collectability.
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Loans Held for Investment | Loans Held for Investment Newly originated reverse mortgage loans that are insured by the FHA and pooled into Ginnie Mae guaranteed securities that we sell into the secondary market with servicing rights retained are classified as loans held for investment. We have elected to measure these loans at fair value, with changes in fair value reported in Reverse mortgage revenue, net in the consolidated statements of operations. Loan transfers in these Ginnie Mae securitizations do not meet the definition of a participating interest and as a result, the transfers of the reverse mortgages do not qualify for sale accounting. Therefore, we account for these transfers as financings, with the reverse mortgages classified as Loans held for investment, at fair value, on our consolidated balance sheets, with no gain or loss recognized on the transfer. Effective January 1, 2019, we elected to fair value future draw commitments for HECM loans purchased or originated after December 31, 2018. The value of future draw commitments for HECM loans purchased or originated before January 1, 2019 were recognized as the draws were securitized or sold. Effective January 1, 2020, in connection with the adoption of Accounting Standard Update (ASU) 2016-13 and ASU 2019-04: Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (CECL), we made an irrevocable fair value election on all future draw commitments for HECM loans that were purchased or originated before January 1, 2019. We recorded cumulative-effect adjustments of $47.0 million to retained earnings as of January 1, 2020, to reflect the excess of the fair value over the carrying amount. Upfront costs and fees related to loans held for investment, including broker fees, are recognized in Reverse mortgage revenue, net in the statement of operations as incurred and are not capitalized. Premiums on loans purchased via the correspondent channel are capitalized upon origination because they represent part of the purchase price. However, the loans are subsequently measured at fair value on a recurring basis. We record the proceeds from the transfer of assets as secured borrowings (HMBS-related borrowings) in Financing liabilities and recognize no gain or loss on the transfer. We measure the HECM loans and HMBS-related borrowings at fair value on a recurring basis. The changes in fair value of the HECM loans and HMBS-related borrowings are included in Reverse mortgage revenue, net in our consolidated statements of operations. Included in net fair value changes on the HECM loans and related HMBS borrowings are the net interest income that we expect to be collected on the HECM loans and the interest expense on the HMBS-related borrowings. In addition, reverse mortgage revenue, net includes the fair value changes of the interest rate lock commitments related to reverse mortgage loans. We report originations and collections of HECM loans in investing activities in the consolidated statements of cash flows. We report net fair value gains on HECM loans and the related HMBS borrowings as an adjustment to the net cash provided by or used in operating activities in the consolidated statements of cash flows. Proceeds from securitizations of HECM loans and payments on HMBS-related borrowings are included in financing activities in the consolidated statements of cash flows.
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Transfers of Financial Assets and MSRs | Transfers of Financial Assets and MSRs We securitize, sell and service forward and reverse residential mortgage loans. Securitization transactions typically involve the use of VIEs and are accounted for either as sales or as secured financings. We typically retain economic interests in the securitized assets in the form of servicing rights and obligations. In order to efficiently finance our assets and operations and create liquidity, we may sell servicing advances, MSRs or the right to receive certain servicing fees relating to MSRs (Rights to MSRs). In order to determine whether or not a VIE is required to be consolidated, we consider our ongoing involvement with the VIE. In circumstances where we have both the power to direct the activities that most significantly impact the performance of the VIE and the obligation to absorb losses or the right to receive benefits that could be significant, we would conclude that we would consolidate the entity, which precludes us from recording an accounting sale in connection with the transfer of the financial assets. In the case of a consolidated VIE, we continue to report the underlying residential mortgage loans or servicing advances, and we record the securitized debt on our consolidated balance sheet. In the case of transfers where either one or both of the power or economic criteria above are not met, we evaluate whether a sale has occurred for accounting purposes. In order to recognize a sale, the transferred assets must be legally isolated, not be constrained by restrictions from further transfer and be deemed to be beyond our control. If the transfer does not meet any of these three criteria, the transaction is accounted for consistent with a secured financing. In certain situations, we may have continuing involvement in transferred loans through our retained servicing. Transactions involving retained servicing would still be eligible for sale accounting, as we have ceded effective control of these loans to the purchaser. Subsequent to the determination that a transaction does not meet the accounting sale criteria, we may determine that we meet the criteria. In the event we subsequently meet the accounting sale criteria, we derecognize the transferred assets and related liabilities. In connection with the Ginnie Mae early buyout program, our agreements provide either that: (a) we have the right, but not the obligation, to repurchase previously transferred mortgage loans under certain conditions, including the mortgage loans becoming eligible for pooling under a program sponsored by Ginnie Mae; or (b) we have the obligation to repurchase previously transferred mortgage loans that have been subject to a successful trial modification before any permanent modification is made. Once these conditions are met, we have effectively regained control over the mortgage loan(s), and under GAAP, must re-recognize the loans on our consolidated balance sheets and establish a corresponding repurchase liability. With respect to those loans that we have the right, but not the obligation, to repurchase under the applicable agreement, this requirement applies regardless of whether we have any intention to repurchase the loan. We re-recognize the loans in Other assets and a corresponding liability in Other liabilities. In the case of transfers of MSRs and Rights to MSRs where we retain the right to subservice, we defer any related gain or loss and amortize the balance over the life of the subservicing agreement. Gains or losses on off-balance sheet securitizations take into consideration any retained interests, including servicing rights and representation and warranty obligations, both of which are initially recorded at fair value at the date of sale in Gain on loans held for sale, net, in our consolidated statements of operations.
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Derivative Financial Instruments | Derivative Financial Instruments We use derivative instruments to manage the fair value changes in our MSRs, interest rate lock commitments and loan portfolios which are exposed to interest rate risk. We do not use derivative instruments for trading or speculative purposes. We recognize all derivative instruments at fair value on our consolidated balance sheets in Other assets and Other liabilities. Derivative instruments are generally entered into as economic hedges against changes in the fair value of a recognized asset or liability and are not designated as hedges for accounting purposes. We generally report the changes in fair value of such derivative instruments in the same line item in the consolidated statement of operations as the changes in fair value of the related asset or liability. For all other derivative instruments not designated as a hedging instrument, we report changes in fair value in Other, net.
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Premises and Equipment, Leases | Premises and Equipment, Leases We report premises and equipment at cost and, except for land, depreciate them over their estimated useful lives on a straight-line basis as follows:
Our leases include non-cancelable operating leases for premises and equipment. At lease commencement and renewal date, we estimate the ROU assets and lease liability at present value using our estimated incremental borrowing rate. We amortize the balance of the ROU assets and recognize interest on the lease liability. Our lease liability represents the present value of the lease payments and is reduced as we make cash payments on our lease obligations. Our ROU lease assets are evaluated for impairment in accordance with ASC 360, Premises and Equipment.
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Litigation | LitigationWe monitor our legal matters, including advice from external legal counsel, and periodically perform assessments of these matters for potential loss accrual and disclosure. We establish a liability for settlements, judgments on appeal and filed and/or threatened claims for which we believe that it is probable that a loss has been or will be incurred and the amount can be reasonably estimated. We recognize legal costs associated with loss contingencies in Professional services expense in the consolidated statement of operations as incurred. | ||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation We initially measure the cost of employee services received in exchange for a stock-based award as the fair value of the award on the grant date. For awards which must be settled in cash and are therefore classified as liabilities rather than equity in the consolidated balance sheet, fair value is subsequently remeasured and fair value changes are reported as compensation expense at each reporting date. For equity awards with a service condition, we recognize the cost as compensation expense ratably over the vesting period. For equity awards with a market condition, we recognize the cost as compensation expense ratably over the expected life of the option that is derived from an options pricing model. When equity awards with a market condition meet their vesting requirements, any unrecognized compensation at the vesting date is recognized ratably over the vesting period. For equity awards with both a market condition and a service condition for vesting, we recognize cost as compensation expense over the requisite service period for each tranche of the award using the graded-vesting method.
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Income Taxes | Income Taxes We file consolidated U.S. federal income tax returns. We allocate consolidated income tax among all subsidiaries included in the consolidated return as if each subsidiary filed a separate return or, in certain cases, a consolidated return. We account for income taxes using the asset and liability method, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Additionally, we adjust deferred taxes to reflect estimated tax rate changes. We conduct periodic evaluations to determine whether it is more likely than not that some or all of our deferred tax assets will not be realized. Among the factors considered in this evaluation are estimates of future earnings, the future reversal of temporary differences and the impact of tax planning strategies that we can implement if warranted. We provide a valuation allowance for any portion of our deferred tax assets that, more likely than not, will not be realized. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit, based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. We recognize interest and penalties related to income tax matters in Income tax expense. In December 2017, the Securities and Exchange Commission Staff issued Staff Accounting Bulletin (SAB) 118 (as further clarified by FASB ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118), which provides guidance on accounting for the income tax effects of the Tax Cuts and Jobs Act (Tax Act) signed into law by the President of the United States on December 22, 2017. We adopted the guidance of SAB 118 as of December 31, 2017 and finalized our provisional amounts recognized under SAB 118 in the fourth quarter of 2018. See Note 20 — Income Taxes for additional information.
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Basic and Diluted Earnings per Share | Basic and Diluted Earnings per ShareWe calculate basic earnings per share based upon the weighted average number of shares of common stock outstanding during the year. We calculate diluted earnings per share based upon the weighted average number of shares of common stock outstanding and all dilutive potential common shares outstanding during the year. The computation of diluted earnings per share includes the estimated impact of the exercise of the outstanding options to purchase common stock using the treasury stock method. | ||||||||||||||||||||||||||||||||||||||||||
Going Concern | Going Concern In accordance with FASB ASC 205-40, Presentation of Financial Statements - Going Concern, we evaluate whether there are conditions that are known or reasonably knowable that raise substantial doubt about our ability to continue as a going concern within one year after the date that our financial statements are issued. Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The assessment of our ability to meet our future obligations is inherently judgmental, subjective and susceptible to change. Our assessment considers information including, but not limited to, our financial condition, liquidity sources, obligations coming due within one year after the financial statements are issued, funds necessary to maintain current operations and any negative financial trends or other indicators of possible financial difficulty, including adverse regulatory or legal proceedings, adverse counterparty actions or rating agency decisions, and our client concentration.Based on our evaluation, we have determined that there are no conditions that are known or reasonably knowable that raise substantial doubt about our ability to continue as a going concern within one year after the date that our financial statements for the year ended December 31, 2020 are issued.
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Recently Adopted Accounting Standards | Accounting Standards Adopted in 2020 Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04) This standard provides for optional expedients and other guidance regarding the accounting related to modifications of contracts, hedging relationships and other transactions affected by the expected phase-out of the London Inter-bank Offered Rate (LIBOR) by the end of 2021 (or June 30, 2023 for U.S. dollar LIBOR of certain tenors). This guidance is effective upon issuance in March 2020 through December 31, 2022 and allows for retrospective application to contract modifications as early as January 1, 2020. We elected to retrospectively adopt this ASU as of January 1, 2020 which resulted in no immediate impact on our consolidated financial statements. Although we do not have any hedge accounting relationships, many of our debt facilities and loan agreements incorporate LIBOR as the referenced interest rate. Some of these facilities and loan agreements either mature prior to the end of 2021 (or June 30, 2023) or have terms in place that provide for an alternative to LIBOR upon its phase-out. We do not anticipate that this standard will have a material impact on our consolidated financial statements. Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13 and ASU 2019-04) This ASU requires the remeasurement and recording of expected lifetime credit losses on loans and other financial instruments measured at amortized cost and replaces the existing incurred loss model for credit losses. The new guidance requires an organization to measure all current expected credit losses (CECL) for financial assets held and certain off-balance sheet credit exposures at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This standard requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. Additionally, the new guidance amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. We adopted this standard on January 1, 2020 by applying the guidance at the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings. We used the modified retrospective method for all financial assets in scope of the standard. Our statements of operations for reporting periods beginning after January 1, 2020 are presented under the new guidance, while prior period amounts continue to be reported in accordance with previously applicable GAAP. As permitted by this standard, we made an irrevocable fair value election for certain financial instruments within the scope of the standard. We elected the fair value option for the future draw commitments for HECM loans purchased or originated before January 1, 2019. For the HECM loan future draw commitments, we recorded a $47.0 million cumulative-effect transition gain adjustment (before income taxes) to retained earnings as of January 1, 2020 to recognize the fair value as of that date. We did not record any significant net tax effect related to this adjustment as the increase in the deferred tax liability was offset by a corresponding decrease to the valuation allowance. The transition adjustment related to financial instruments for which we are not electing the fair value option did not result in any significant adjustment to the opening balance of retained earnings. Our measurement of lifetime expected credit losses is based on relevant qualitative and quantitative information about past events, including historical loss experience, current conditions, and reasonable and supportable forecasts that affect collectability. Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (ASU 2018-15) This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this ASU. The amendments in this ASU require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments in this ASU require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The amendments in this ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of operations as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. Upon adoption of this standard on January 1, 2020, we elected to apply the amendments in this ASU prospectively to all implementation costs incurred subsequent to that date. Our adoption of this standard did not have a material impact on our consolidated financial statements. Compensation - Retirement Benefits - Defined Benefit Plans: Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14) This ASU modifies the disclosure requirements for defined benefit plans in FASB ASC Subtopic 715-20, Compensation-Retirement Benefits-Defined Benefit Plans-General. The main provisions in this ASU include removal of the following disclosure requirements: 1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, 2) the amount and timing of plan assets expected to be returned to the employer, 3) related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan, and 4) the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits. This ASU adds disclosure requirements to report 1) the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and 2) an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The ASU clarifies disclosure requirements in paragraph 715-20-50-3, which state that the 1) projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets and 2) accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets should be disclosed for defined benefit plans. Our adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements. Upon adoption, we elected to apply the amendments in this ASU prospectively. Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) This ASU modifies the disclosure requirements for fair value measurements in FASB ASC Topic 820, Fair Value Measurement. The main provisions in this ASU include removal of the following disclosure requirements: 1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, 2) the policy for timing of transfers between levels and 3) the valuation processes for Level 3 fair value measurements. This standard adds disclosure requirements to report the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, and for certain unobservable inputs an entity may disclose other quantitative information in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. Our adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements. Accounting Standards Issued but Not Adopted in 2020 Income Taxes: Simplifying the Accounting for Income Taxes (ASU 2019-12) On December 18, 2019, the FASB issued this ASU to ASC Topic 740, Income Taxes, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Amendments include the removal of certain exceptions to the general principles of ASC 740 in such areas as intraperiod tax allocation, year to date losses in interim periods and deferred tax liabilities related to outside basis differences. Amendments also include simplification in other areas such as interim recognition of enactment of tax laws or rate changes and accounting for a franchise tax (or similar tax) that is partially based on income. Our adoption of this standard was effective for us on January 1, 2021 and did not have a material impact on our consolidated financial statements.
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Organization, Basis of Presentation and Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment Useful Lives | We report premises and equipment at cost and, except for land, depreciate them over their estimated useful lives on a straight-line basis as follows:
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Business Acquisition (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Post Acquisition Results of Operations | The following table presents the results of operations of PHH that are included in our consolidated statements of operations from the acquisition date of October 4, 2018 through December 31, 2018:
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Schedule of Pro Forma Results of Operations |
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Severance and Restructuring Charges (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following table provides a summary of the aggregate activity of the liability for the re-engineering plan costs incurred in the year ended December 31, 2019:
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Securitizations and Variable Interests Entities (Tables) |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash Flows Received from and Paid to Securitization Trusts Related to Transfers Accounted for as Sales Outstanding | The following table presents a summary of cash flows received from and paid to securitization trusts related to transfers of loans accounted for as sales that were outstanding:
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Schedule of Carrying Amounts of Assets that Relate to Continuing Involvement with Transferred Forward Loans | The following table presents the carrying amounts of our assets that relate to our continuing involvement with forward loans that we have transferred with servicing rights retained as well as an estimate of our maximum exposure to loss including the UPB of the transferred loans:
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Carrying Value And Classification Of Assets And Liabilities Of Agency MSR Financing Facility | The table below presents the carrying value and classification of the assets and liabilities of the Agency MSR financing facility:
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Carrying Value And Classification Of Assets And Liabilities Of PLS Notes Facility | The table below presents the carrying value and classification of the assets and liabilities of the PLS Notes facility:
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Schedule of Carrying Value of Assets and Liabilities of Consolidated Mortgage-backed Securitization Trusts | The table below presents the carrying value and classification of the assets and liabilities of consolidated mortgage-backed securitization trusts included in our consolidated balance sheets as a result of residual securities issued we acquired in 2018 which were issued by the trusts.
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Fair Value (Tables) |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments and Nonfinancial Assets Measured at Fair Value on a Recurring or Non-recurring basis or Disclosed, but not Carried, at Fair Value | The carrying amounts and the estimated fair values of our financial instruments and certain of our nonfinancial assets measured at fair value on a recurring or non-recurring basis or disclosed, but not measured, at fair value are as follows:
(a)Measured at fair value on a recurring basis. (b)Measured at fair value on a non-recurring basis. (c)Disclosed, but not measured, at fair value. (d)The carrying values are net of unamortized debt issuance costs and discount. See Note 14 — Borrowings for additional information. (e)Loans repurchased from Ginnie Mae securitizations with a fair value of $51.1 million at December 31, 2020 are classified as Level 3. The remaining balance of loans held for sale at fair value at December 31, 2020 is classified as Level 2. The entire balance of Loans held for sale at fair value at December 31, 2019 was classified as Level 2. (f)Level 3 at December 31, 2020 and Level 2 at December 31, 2019.
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Summary of Reconciliation of the Changes in Fair Value of Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables present a reconciliation of the changes in fair value of Level 3 assets and liabilities that we measure at fair value on a recurring basis:
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Summary of Estimated Change in the Value of MSRs Carried at Fair Value | The following table summarizes the estimated change in the value of the MSRs as of December 31, 2020 given hypothetical shifts in lifetime prepayments and yield assumptions:
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Significant Assumptions used in Valuation |
(1)Includes voluntary and involuntary prepayments.
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Fair Value Mortgage Servicing Rights | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Significant Assumptions used in Valuation |
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HMBS - Related Borrowings | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Significant Assumptions used in Valuation |
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Mortgage Servicing Rights Pledged | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Significant Assumptions used in Valuation |
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Loans Held for Sale (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity in Balance of Loans Held for Sale, at Fair Value |
(1)At December 31, 2020, 2019 and 2018, the balances include $(6.7) million, $(7.8) million and $(7.2) million, respectively, of fair value adjustments. (2)At December 31, 2020, the balances include $51.1 million of loans that we repurchased from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines. As disclosed in Note 5 — Fair Value, effective January 1, 2020, we elected to classify repurchased loans as Loans held for sale at fair value. See table below. We may repurchase loans that have been modified, to facilitate loss reduction strategies, or as otherwise obligated as a Ginnie Mae servicer. Repurchased loans may be modified or otherwise remediated through loss mitigation activities, may be sold to a third party, or are reclassified to Receivables.
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Summary of Activity in Balance of Loans Held for Sale, at Lower of Cost or Fair Value |
(1)We elected the fair value option for all newly repurchased loans after December 31, 2019. (2)At December 31, 2020, 2019 and 2018, the balances include $12.5 million, $60.6 million and $51.8 million, respectively, of loans that we repurchased from Ginnie Mae guaranteed securitizations pursuant to Ginnie Mae servicing guidelines.
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Summary of Changes in Valuation Allowance of Loans Held for Sale |
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Summary of Activity in Gain on Loans Held for Sale, Net |
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Reverse Mortgages (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Held For Investment and HMBS Related Borrowings |
(1)The change in fair value adjustments on Loans held for investment for 2020 and 2019 includes $19.8 million and $12.2 million, respectively, in connection with the fair value election for future draw commitments (tails) on HECM reverse mortgage loans purchased or originated after December 31, 2018. (2)In conjunction with the adoption of ASU 2016-13, we elected the fair value option for future draw commitments (tails) on HECM reverse mortgage loans purchased or originated before December 31, 2018, which resulted in the recognition of the fair value of such tails through stockholders’ equity on January 1, 2020.
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Schedule of Reverse Mortgage Revenue, Net |
(1)Includes the changes in fair value of newly originated loans held for investment in the period through securitization date.
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Advances (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advances [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Advance Payments by Financial Institution on Foreclosed Properties |
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Schedule of Activity in Advances | The following table summarizes the activity in net advances:
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Schedule of Change in Allowance for Losses |
(1)Net change for the year ended December 31, 2019 includes $18.0 million allowance related to sold advances presented in Other liabilities (Liability for indemnification obligations).
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Mortgage Servicing (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity Related to Fair Value Servicing Assets |
(1)Servicing transfers and adjustments include a $263.7 million derecognition of MSRs/Rights to MSRs effective with the February 20, 2020 notice of termination of the PMC subservicing agreement by NRZ. See Note 10 — Rights to MSRs for further information. (2)Changes in fair value are recognized in MSR valuation adjustments, net in the consolidated statements of operations.
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Schedule of Composition of Primary Servicing and Subservicing Portfolios by Type of Property Serviced as Measured by UPB |
(1)MSRs subject to sale agreements with NRZ that do not meet sale accounting criteria. See Note 10 — Rights to MSRs.
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Summary of Geographic Distributions of UPB and Count of Residential Loans and Real Estate Serviced | The geographic concentration of the UPB of residential loans and real estate we serviced at December 31, 2020 was as follows:
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Schedule of Components of Servicing and Subservicing Fees |
(1)The HAMP expired on December 31, 2016. Borrowers who had requested assistance or to whom an offer of assistance had been extended as of that date had until September 30, 2017 to finalize their modification. We continue to earn HAMP success fees for HAMP modifications that remain less than 90 days delinquent at the first-, second- and third-year anniversary of the start of the trial modification.
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Rights to MSRs (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Expense Related to Financial Liability | The following tables present selected assets and liabilities recorded on our consolidated balance sheets as well as the impacts to our consolidated statements of operations in connection with our NRZ agreements.
(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. (2)Balance represented the holdback of proceeds from PMC MSR sales and transfers to address indemnification claims and mortgage loan document deficiencies. These sales were executed by PMC prior to Ocwen’s acquisition of PHH.
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Schedule of Activity Related to Rights to Mortgage Servicing Rights |
(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.
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UPB of Loans Serviced on behalf of NRZ | As of December 31, 2020, the UPB of loans serviced on behalf of NRZ comprised the following:
(1)The MSR sale transactions did not achieve sale accounting treatment. (2)NRZ’s associated outstanding servicing advances were approximately $575.9 million as of December 31, 2020.
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Receivables (Tables) |
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Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Receivables |
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Schedule of Changes in Allowance For Losses |
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Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Allowance For Losses |
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Premises and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Premises and Equipment |
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Other Assets (Tables) |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets |
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Borrowings (Tables) |
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Schedule of Match Funded Liabilities |
(1)The amortization date of our facilities is the date on which the revolving period ends under each advance facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. The maturity date is the date on which all outstanding balances must be repaid. In all of our advance facilities, there are multiple notes outstanding. For each note, after the amortization date, all collections that represent the repayment of advances pledged to the facility must be applied ratably to each outstanding amortizing note to reduce the balance and as such the collection of advances allocated to the amortizing note may not be used to fund new advances. (2)Borrowing capacity under the OMART and OFAF facilities is available to us provided that we have sufficient eligible collateral to pledge. At December 31, 2020, none of the available borrowing capacity of the OMART and OFAF advance financing notes could be used based on the amount of eligible collateral. (3)On May 7, 2020, we renewed this facility through June 30, 2021, and increased the total borrowing capacity of the Series 2015-VF5 variable notes from $200.0 million to $500.0 million, with interest computed based on the lender’s cost of funds plus a margin of 400 bps. On August 17, 2020, we reduced the total borrowing capacity to $250.0 million in conjunction with the issuance of new fixed-rate term notes with a borrowing capacity of $475.0 million, as disclosed in (4) below. (4)On August 12, 2020, we issued fixed-rate term notes with a total borrowing capacity of $475.0 million (Series 2020 T-1). The weighted average rate of the notes at December 31, 2020 is 1.49% with rates on the individual classes of notes ranging from 1.28% to 5.42%. The Series 2019-T1 and 2019-T2 fixed-rate term notes were redeemed on August 17, 2020. (5)On May 7, 2020, we renewed this facility through June 30, 2021 and increased the borrowing capacity from $60.0 million to $70.0 million with interest computed based on the lender’s cost of funds plus a margin of 300 bps.
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Schedule of Financing Liabilities |
(1)Represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed HMBS which did not qualify for sale accounting treatment of HECM loans. Under this accounting treatment, the HECM loans securitized with Ginnie Mae remain on our consolidated balance sheet and the proceeds from the sale are recognized as a financing liability, which is recorded at fair value consistent with the related HECM loans. The beneficial interests have no maturity dates, and the borrowings mature as the related loans are repaid. (2)This pledged MSR liability is recognized due to the accounting treatment of MSR sale transactions with NRZ which did not qualify as sales for accounting purposes. Under this accounting treatment, the MSRs transferred to NRZ remain on the consolidated balance sheet and the proceeds from the sale are recognized as a financing liability, which is recorded at fair value consistent with the related MSRs. This financing liability has no contractual maturity or repayment schedule. The PMC liability was derecognized upon termination of the agreement by NRZ on February 20, 2020. See Note 10 — Rights to MSRs for additional information. (3)Represented a liability which arose in connection with lump sum payments received in 2017 upon transfer of legal title of the MSRs related to the Rights to MSRs transactions to NRZ and in 2018 in connection with the execution of the New RMSR Agreements as compensation for foregoing certain payments under the Original Rights to MSRs Agreements. The balance of the liability was adjusted each reporting period to its fair value through the term of the original agreements on April 30, 2020. See Note 10 — Rights to MSRs for additional information. (4)Consists of securitization debt certificates due to third parties that represent beneficial interests in trusts that we include in our consolidated financial statements, as more fully described in Note 4 — Securitizations and Variable Interest Entities. In June 2020, we sold the beneficial interests held in the INDX 2004-AR11 securitization trust and deconsolidated the trust. The certificates in the RAST 2003-A11 Trust pay interest based on fixed rates ranging between 4.25% and 5.75% and a variable rate based on 1ML plus 0.45%. The maturity of the certificates occurs upon maturity of the loans held by the trust. The remaining loans in the RAST 2003-A11 Trust have maturity dates extending through October 2033.
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Schedule of Other Secured Borrowings |
(1)1ML was 0.14% and 1.76% at December 31, 2020 and 2019, respectively. (2)Of the borrowing capacity on mortgage loan warehouse facilities extended on a committed basis, none of the available borrowing capacity could be used at December 31, 2020 based on the amount of eligible collateral that could be pledged. (3)On January 27, 2020, we entered into a Joinder and Second Amendment Agreement (the Amendment) which amends the Amended and Restated SSTL Facility Agreement dated as of December 5, 2016, as amended by a Joinder and Amendment Agreement dated as of March 18, 2019. The Amendment provided for a net prepayment of $126.1 million of the outstanding balance at December 31, 2019 such that the facility has a maximum outstanding balance of $200.0 million. The Amendment also (i) extended the maturity of the remaining outstanding loans under the SSTL to May 15, 2022, (ii) provides that the loans under the SSTL bear interest at the one-month Eurodollar Rate or the Base Rate (as defined in the SSTL), at our option, plus a margin of 6.00% per annum for Eurodollar Rate loans or 5.00% per annum for Base Rate loans (increasing to a margin of 6.50% per annum for Eurodollar Rate loans or 5.50% per annum for Base Rate loans on January 27, 2021), (iii) provides for a prepayment premium of 2.00% until January 27, 2022 and (iv) requires quarterly principal payments of $5.0 million. The applicable interest rate was 7.0% at December 31, 2020. (4)The maximum borrowing under this agreement is $275.0 million, of which $110.0 million is available on a committed basis and the remainder is available at the discretion of the lender. (5)On March 12, 2020, we voluntarily reduced the maximum borrowing capacity from $100.0 million to $1.0 million to in connection with Liberty’s transfer of substantially all of its assets, liabilities, contracts and employees to PMC effective March 15, 2020. On August 10, 2020, the maturity date of this agreement was extended to August 13, 2021. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. (6)The maximum borrowing under this agreement is $250.0 million, of which $200.0 million is available on a committed basis and the remainder is available on an uncommitted basis. The agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transaction does not qualify for sale accounting treatment and is accounted for as a secured borrowing. On November 19, 2020, the maturity date was extended to November 18, 2021 and the interest rate was increased to 1ML plus 3.25% for borrowings secured by forward mortgage loans and 1ML plus 3.50% for reverse mortgage loans. (7)This facility expired on January 22, 2020 and was not renewed. (8)The lender provides financing for up to $50.0 million at the discretion of the lender. The agreement has no stated maturity date. Interest on this facility is based on the Secured Overnight Financing Rate (SOFR). (9)Under the original terms, the lender provided $300.0 million of borrowing capacity on an uncommitted basis. On June 25, 2020, this facility was amended to be comprised of two lines, a $120.0 million uncommitted participation agreement and a $90.0 million committed repurchase agreement. The maturity date of the facility was extended to June 24, 2021. The agreements allow the lender to acquire a 100% beneficial interest in the underlying mortgage loans. The transactions do not qualify for sale accounting treatment and are accounted for as secured borrowings. The lender earns the stated interest rate of the underlying mortgage loans less 35 bps with a floor of 3.50%, while the loans are financed under both the participation and repurchase agreements. (10)Under this agreement, the lender provides financing for up to $50.0 million on a committed basis. On January 15, 2021, the maturity date of this facility was extended to January 15, 2022. (11)On March 12, 2020, we entered into a mortgage loan warehouse agreement to fund reverse mortgage loan draws by borrowers subsequent to origination. Under this agreement, the lender provides financing for up to $100.0 million on an uncommitted basis. In October 2020, the maturity date was extended to October 24, 2021 and the capacity was temporarily increased to $150.0 million until December 4, 2020 when it was reduced to $100.0 million. On February 1, 2021, the capacity was temporarily increased to $150.0 million until February 28, 2021 when it will be reduced to $100.0 million. (12)On September 30, 2020, we entered into a $100.0 million uncommitted repurchase agreement to finance the purchase of EBO loans from Ginnie Mae. The agreement has no stated maturity date, however each transaction has a maximum duration of four years. The cost of this line is set at each transaction date and is based on the interest rate on the collateral. (13)PMC’s obligations under this facility are secured by a lien on the related MSRs. Ocwen guarantees the obligations of PMC under this facility. On May 7, 2020, we renewed the facility through June 30, 2021 and reduced the maximum amount which we may borrow pursuant to the repurchase agreements from $300.0 million to $250.0 million on a committed basis. We also pledged the membership interest of the depositor for our OMART advance financing facility as additional collateral to this facility. See Note 4 — Securitizations and Variable Interest Entities for additional information. We are subject to daily margining requirements under the terms of our MSR financing facilities. Declines in fair value of our MSRs due to declines in market interest rates, assumption updates or other factors require that we provide additional collateral to our lenders under these facilities. (14)In connection with this facility, PMC entered into a repurchase agreement pursuant to which PMC has sold a participation certificate representing certain economic interests in the Ginnie Mae MSRs and has agreed to repurchase such participation certificate at a future date at the repurchase price set forth in the repurchase agreement. PMC’s obligations under this facility are secured by a lien on the related Ginnie Mae MSRs. Ocwen guarantees the obligations of PMC under the facility. On June 30, 2020, we amended the facility to increase the borrowing capacity from $100.0 million to $127.5 million on an uncommitted basis, accelerate the maturity date to December 27, 2020 and include Ginnie Mae servicing advances as additional collateral. On December 23, 2020, the maturity date was extended to December 27, 2021 and the borrowing capacity was reduced to $125.0 million. See (13) above regarding daily margining requirements. (15) PLS Issuer’s obligations under the facility are secured by a lien on the related PLS MSRs. Ocwen guarantees the obligations of PLS Issuer under the facility. The Class A PLS Notes issued pursuant to the credit agreement had an initial principal amount of $100.0 million and amortize in accordance with a pre-determined schedule subject to modification under certain events. See Note 4 — Securitizations and Variable Interest Entities for additional information. See (13) above regarding daily margining requirements. (16)OASIS noteholders are entitled to receive a monthly payment equal to the sum of: (a) 21 basis points of the UPB of the reference pool of Freddie Mac mortgages; (b) any termination payment amounts; (c) any excess refinance amounts; and (d) the note redemption amounts, each as defined in the indenture supplement for the notes. Monthly amortization of the liability is estimated using the proportion of monthly projected service fees on the underlying MSRs as a percentage of lifetime projected fees, adjusted for the term of the notes. (17)Weighted average interest rate at December 31, 2020, excluding the effect of debt issuance costs and discount. (18)Includes $4.9 million and $2.2 million at December 31, 2020 and 2019, respectively, related to SSTL.
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Schedule of Senior Notes |
(1)These notes were originally issued by PHH and subsequently assumed by Ocwen in connection with its acquisition of PHH. We are amortizing the fair value purchase accounting adjustments over the remaining term of the notes. We have the option to redeem the notes, in whole or in part, at a redemption price equal to 100.0% of the principal amount plus any accrued and unpaid interest. (2)During July and August 2019, we repurchased a total of $39.4 million of our 8.375% Senior secured notes in the open market for a price of $34.3 million. We recognized a gain of $5.1 million on these repurchases which is reported in Gain on repurchases of senior secured notes in the consolidated statement of operations. (3)See Note 28 — Subsequent Events for information regarding our intention to redeem our senior notes.
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Schedule of Assets Held as Collateral Related to Secured Borrowings | Our assets held as collateral related to secured borrowings, committed under sale or other contractual obligations and which may be subject to secured liens under the SSTL and Senior Secured Notes are as follows at December 31, 2020:
(1)Sales and Other Commitments include Restricted cash and deposits held as collateral to support certain contractual obligations, and Contingent loan repurchase assets related to the Ginnie Mae EBO program for which a corresponding liability is recognized in Other liabilities. (2)The borrowings under the SSTL are secured by a first priority security interest in substantially all of the assets of Ocwen, PHH, PMC and the other guarantors thereunder, excluding among other things, 35% of the voting capital stock of foreign subsidiaries, securitization assets and equity interests of securitization entities, assets securing permitted funding indebtedness and non-recourse indebtedness, REO assets, as well as other customary carve-outs (collectively, the Collateral). The Collateral is subject to certain permitted liens set forth under the SSTL and related security agreement. The Senior Secured Notes are guaranteed by Ocwen and the other guarantors that guarantee the SSTL, and the borrowings under the Senior Secured Notes are secured by a second priority security interest in the Collateral. Assets securing borrowings under the SSTL and Senior Secured Notes may include amounts presented in Other as well as certain assets presented in Collateral for Secured Borrowings and Sales and Other Commitments, subject to permitted liens as defined in the applicable debt documents. The amounts presented here may differ in their calculation and are not intended to represent amounts that may be used in connection with covenants under the applicable debt documents. (3)MSRs pledged as collateral for secured borrowings in connection with the Rights to MSRs transactions with NRZ which are accounted for as secured financings. Certain MSR cohorts with a negative fair value of $0.6 million that would be presented as Other are excluded from the eligible collateral of the facilities and are comprised of $16.3 million of positive fair value related to RMBS and $16.9 million of negative fair value related to private EBO and PLS MSRs.
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Schedule of Aggregate Long-term Borrowings | Certain of our borrowings mature within one year of the date of issuance of these financial statements. Based on management’s evaluation, we expect to renew, replace or extend all such borrowings to the extent necessary to finance our business on or prior to their respective maturities consistent with our historical experience.
(1)Amounts are exclusive of any related discount, unamortized debt issuance costs or fair value adjustment. (2)For match funded liabilities, the Expected Maturity Date is the date on which the revolving period ends for each advance financing facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. (3)Excludes financing liabilities recognized in connection with asset sales transactions accounted for as financings, including $567.0 million recorded in connection with sales of Rights to MSRs and MSRs and $6.8 billion recorded in connection with the securitizations of HMBS. These financing liabilities have no contractual maturity and are amortized over the life of the underlying assets.
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Other Liabilities (Tables) |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Liabilities |
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Schedule of Accrued Legal Fees and Settlements |
(1)Consists of amounts accrued for probable losses in connection with legal and regulatory settlements and judgments. Such amounts are reported in Professional services expense in the consolidated statements of operations. (2)Includes cash payments made in connection with resolved legal and regulatory matters. (3)See Note 16 — Stockholders’ Equity for additional information.
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Stockholders Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss (AOCL), Net of Income Taxes | The components of accumulated other comprehensive loss (AOCL), net of income taxes, were as follows:
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Derivative Financial Instruments and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Notional Balances of Holdings of Derivatives | The table below summarizes the fair value, notional and maturity of our derivative instruments. The notional amount of our contracts does not represent our exposure to credit loss. None of the derivatives were designated as a hedge for accounting purposes as of or during the years ended December 31, 2020 and 2019:
The table below summarizes the net gains and losses of our derivative instruments recognized in our consolidated statement of operations.
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Interest Income (Tables) |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Interest Income |
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Interest Expense (Tables) |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Interest Expense |
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Before Taxes | For income tax purposes, the components of income (loss) from continuing operations before taxes were as follows:
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Schedule of Components of Income Tax Expense (Benefit) | The components of income tax expense (benefit) were as follows:
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Schedule of Effective Income Tax Reconciliation | Income tax expense (benefit) differs from the amounts computed by applying the U.S. Federal corporate income tax rate as follows:
(1)The benefit recorded for the provision for valuation allowance in 2018 relates primarily to a reduction in the valuation allowance necessary as a result of the reduction in tax attributes due to Section 382 & 383 limitations. This benefit is partially offset by an increase in valuation allowance necessary for current year losses and for adjustments to provisional amounts recorded under SAB 118 at December 31, 2017 when accounting for the effects of tax reform passed on December 22, 2017. (2)The foreign tax differential includes expense recognized in 2019 and a benefit recognized in 2018 for taxable income or losses earned by Ocwen Mortgage Servicing, Inc. (OMS) prior to the merger of OMS into OVIS in 2019, which are taxable in the U.S. as effectively connected income (ECI). The impact of ECI to income tax expense (benefit) for 2019 and 2018 was $2.6 million and $(3.3) million, respectively.
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Schedule of Deferred Tax Assets and Liabilities | Net deferred tax assets were comprised of the following:
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Schedule of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amounts of the total unrecognized tax benefits for uncertain tax position is as follows:
(1)$12.8 million of the balance at December 31, 2020 is included in the Liability for uncertain tax positions in Other liabilities, with the remaining $7.8 million balance included as a reduction of Income taxes receivable in Receivables. The balance at December 31, 2019 is included in the Liability for uncertain tax positions in Other liabilities.
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Basic and Diluted Earnings (Loss) per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of the Calculation of Basic EPS to Diluted EPS |
(1)Includes stock options that are anti-dilutive because their exercise price was greater than the average market price of Ocwen’s stock, and stock awards that are anti-dilutive based on the application of the treasury stock method. (2)Shares that are issuable upon the achievement of certain market-based performance criteria related to Ocwen’s stock price.
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Employee Compensation and Benefit Plans (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Benefit Obligation, Plan Assets and Funded Status for Pension Plans | The following table shows the total change in the benefit obligation, plan assets and funded status for the pension plans:
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Change in Benefit Obligation, Plan Assets and Funded Status for Gratuity Plan | The following table shows the total change in the benefit obligation, plan assets and funded status for the Gratuity Plan:
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Schedule of Stock Options Vesting | Outstanding equity awards granted under the 2007 Equity Plan and the 2017 Equity Plan had the following characteristics in common:
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Schedule of Stock Option Activity |
(1)Stock options granted in 2019 include 2,212 options awarded to Ocwen’s Chief Financial Officer at a strike price of $32.55 equal to the closing price of our common stock on the effective date of her employment. Stock options granted in 2018 include 17,799 options awarded to Ocwen’s current Chief Executive Officer (CEO) at an exercise price of $61.80 equal to the closing price of our common stock on the effective date of his employment, which was the closing date of the PHH acquisition. (2)Includes 0 and 4,913 options which expired unexercised in 2020 and 2019, because their exercise price was greater than the market price of Ocwen’s stock. (3)At December 31, 2020, 5,167 options with a market condition for vesting based on an average common stock trading price of $484.19, had not met their performance criteria. Outstanding and exercisable stock options at December 31, 2020 have a net aggregate intrinsic value of $0. A total of 51,563 market-based options were outstanding at December 31, 2020, of which 46,396 were exercisable. (4)At December 31, 2020, the weighted average remaining contractual term of options outstanding and options exercisable was 3.06 years and 2.66 years, respectively. (5)The total fair value of stock options that vested and became exercisable during 2020, 2019 and 2018, based on grant-date fair value, was $0.3 million, $0.6 million and $0.6 million, respectively.
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Schedule of Stock Unit Activity |
(1)Upon the resignation of Ocwen’s former CEO on June 30, 2018, 25,168 unvested stock units which would have been forfeited immediately were modified to allow continued vesting in accordance with the original terms. This had the equivalent effect of canceling the original award and granting a new award. (2)Stock units granted in 2020 and 2019 include 150,000 and 75,377 units, respectively, granted to Ocwen’s CEO under the new long-term incentive (LTI) program described below. Stock units granted in 2018 include 65,534 units granted to Ocwen’s current CEO on the effective date of his employment, which was the closing date of the PHH acquisition. (3)The total intrinsic value of stock units vested, which is defined as the market value of the stock on the date of vesting, was $1.0 million, $2.1 million and $3.3 million for 2020, 2019 and 2018, respectively. (4)The total fair value of the stock units that vested during 2020, 2019 and 2018, based on grant-date fair value, was $2.7 million, $3.5 million and $2.2 million, respectively. (5)Excluding the 125,395 market-based stock awards that have not met their performance criteria, the net aggregate intrinsic value of stock awards outstanding at December 31, 2020 was $3.9 million. At December 31, 2020, 2,666, 6,201 and 3,840 stock units with a market condition for vesting based on an average common stock trading price of $175.80, $87.00 and $65.10, respectively, as well as 37,688 stock units requiring an average common stock trading price of $38.34 to vest a minimum of 50% of units, had not yet met the market condition (and time-vesting requirements, where applicable). The performance for 75,000 stock units is measured based on TSR relative to Ocwen’s compensation peer group TSR over the four performance periods. (6)At December 31, 2020, the weighted average remaining contractual term of share units outstanding was 1.4 years.
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Stock Units Liability Awards |
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Schedule of Assumptions used to Value Stock Option Awards Granted | The following assumptions were used to value awards:
(1)We generally estimate volatility based on the historical volatility of Ocwen’s common stock over the most recent period that corresponds with the estimated expected life of the option. For awards valued using a Monte Carlo simulation, volatility is computed as a blend of historical volatility and implied volatility based on traded options on Ocwen’s common stock. (2)For the options valued using the Black-Scholes model we determined the expected life based on historical experience with similar awards, giving consideration to the contractual term, exercise patterns and post vesting forfeitures. The expected term of the options valued using the lattice (binomial) model is derived from the output of the model. The lattice (binomial) model incorporates exercise assumptions based on analysis of historical data. For all options, the expected life represents the period of time that options granted were expected to be outstanding at the date of the award. No option awards were granted during the year ended December 31, 2020. (3)The stock units that contain both a service condition and a market-based condition are valued using the Monte Carlo simulation. The expected term is derived from the output of the simulation and represents the expected time to meet the market-based vesting condition. For equity awards with both service and market conditions, the requisite service period is the longer of the derived or explicit service period. In this case, the explicit service condition (vesting period) is the requisite service period, and the graded vesting method is used for expense recognition.
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Schedule of Equity-based Compensation Expense Related to Stock Options and Stock Awards and Related Excess Tax Benefit | The following table summarizes Ocwen's stock-based compensation expense included as a component of Compensation and benefits expense in the consolidated statements of operations:
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Business Segment Reporting (Tables) |
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information | Financial information for our segments is as follows:
(1)Revenue in the Corporate Items and Other segment for 2020 includes an inter-segment derivatives elimination of $17.4 million with a corresponding offset in MSR valuation adjustments, net. (2)Compensation and benefits expense in the Corporate Items and Other segment for 2020, 2019 and 2018 includes $2.7 million, $20.3 million and $11.9 million, respectively, of severance expense attributable to PHH integration-related headcount reductions of primarily U.S.-based employees in 2019, as well as our overall efforts to reduce costs. (3)Included in the Corporate Items and Other segment for 2019, we recorded in Professional services expense a recovery from a service provider of $30.7 million during the first quarter of amounts previously recognized as expense.
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Commitments (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity Related to HMBS Repurchases | Activity with regard to HMBS repurchases, including MCA repurchases, follows:
(1)Total repurchases during the year ended December 31, 2020, includes 423 loans totaling $95.3 million related to MCA repurchases. (2)Includes amounts received upon assignment of loan to HUD, loan payoff, REO liquidation and claim proceeds less any amounts charged off as unrecoverable.
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Schedule of Future Minimum Rental Commitments under Non-cancelable Operating Leases | We lease certain of our premises and equipment under non-cancelable operating leases with terms expiring through 2025 exclusive of renewal option periods. At December 31, 2020, the weighted average remaining term of our leases was 2.4 years. A maturity analysis of our lease liability as of December 31, 2020 is summarized as follows:
(1)At December 31, 2020, the weighted average of the discount rate used to estimate the present value was 7.5% based on our incremental borrowing rate.
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Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Liability for Representation and Warrant Obligations, Compensatory Fees for Foreclosures that may Ultimately Exceed Investor Timelines and Related Indemnification Obligations | The following table presents the changes in our liability for representation and warranty obligations and similar indemnification obligations:
(1)The liability for representation and warranty obligations and compensatory fees for foreclosures is reported in Other liabilities (a component of Liability for indemnification obligations) on our consolidated balance sheets. (2)Includes principal and interest losses realized in connection with repurchased loans, make-whole, indemnification and fee payments and settlements net of recoveries, if any. (3)Includes $18.0 million liability for representation and warranty obligations related to sold advances previously presented as allowance for losses. See Note 8 — Advances.
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Quarterly Results of Operations (Unaudited) (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Results of Operations (Unaudited) |
(1)Positive valuation adjustments indicated in the above table represent fair value gains, and negative valuation adjustments represent fair value losses. (2)Earnings (loss) per share amounts have been adjusted retrospectively to give effect to the one-for-15 reverse stock split effective on August 13, 2020 as if it occurred at the beginning of the first period presented
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Organization, Basis of Presentation and Significant Accounting Policies - Schedule of Property and Equipment Useful Lives (Details) |
12 Months Ended |
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Dec. 31, 2020 | |
Computer Hardware and Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 2 years |
Computer Hardware and Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Buildings | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
Leasehold Improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | Term of the lease not to exceed useful life |
Right of Use (ROU) Assets | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | Term of the lease not to exceed useful life |
Furniture and Fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Office Equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Business Acquisition - Schedule of Post-Acquisition Results of Operations (Details) - PHH Corporation $ in Thousands |
3 Months Ended |
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Dec. 31, 2018
USD ($)
| |
Business Acquisition [Line Items] | |
Revenues | $ 72,487 |
Expenses | 84,877 |
Other income (expense) | (19,132) |
Income tax benefit | (6,711) |
Net loss from continuing operations | $ (24,811) |
Business Acquisition - Schedule of Pro Forma Results of Operations (Details) $ in Thousands |
12 Months Ended |
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Dec. 31, 2018
USD ($)
| |
Business Acquisition, Pro Forma Information [Abstract] | |
Revenues | $ 1,305,972 |
Loss from continuing operations, net of tax attributable to Ocwen common stockholders | $ (201,382) |
Severance and Restructuring Charges - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Restructuring Cost and Reserve [Line Items] | |||
Accelerated depreciation related to facility lease right of use | $ 3,300 | ||
Other accrued expenses | 16,652 | $ 12,450 | |
Restructuring charges | 64,970 | ||
Restructuring reserves | 1,980 | 11,905 | $ 0 |
Facility-related | |||
Restructuring Cost and Reserve [Line Items] | |||
Facility and other related exit costs | 6,300 | ||
Facility exit cost liability and employee severance cost liability | 3,500 | ||
Restructuring charges | 10,133 | ||
Restructuring reserves | 1,971 | 2,931 | 0 |
Employee-related | |||
Restructuring Cost and Reserve [Line Items] | |||
Other accrued expenses | 3,400 | ||
Facility exit cost liability and employee severance cost liability | 200 | ||
Restructuring charges | 35,704 | ||
Restructuring reserves | $ 8 | $ 6,255 | $ 0 |
Severance and Restructuring Charges - Schedule of Plan Costs Incurred (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
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Restructuring Reserve [Roll Forward] | ||
Beginning balance | $ 11,905 | $ 0 |
Charges | 64,970 | |
Payments / Other | (9,925) | (53,065) |
Ending balance | 1,980 | 11,905 |
Employee-related | ||
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 6,255 | 0 |
Charges | 35,704 | |
Payments / Other | (6,247) | (29,449) |
Ending balance | 8 | 6,255 |
Facility-related | ||
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 2,931 | 0 |
Charges | 10,133 | |
Payments / Other | (960) | (7,202) |
Ending balance | 1,971 | 2,931 |
Other | ||
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 2,719 | 0 |
Charges | 19,133 | |
Payments / Other | (2,719) | (16,414) |
Ending balance | $ 0 | $ 2,719 |
Securitizations and Variable Interests Entities - Summary of Cash Flows Received from and Paid to Securitization Trusts Related to Transfers Accounted for as Sales Outstanding (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Transfers and Servicing [Abstract] | |||
Proceeds received from securitizations | $ 7,533,284 | $ 1,248,837 | $ 1,290,682 |
Servicing fees collected | 47,230 | 50,326 | 45,046 |
Purchases of previously transferred assets, net of claims reimbursed | (6,933) | (4,602) | (4,395) |
Cash flows between transferor and transferee proceeds and payment related to transfers accounted for sales | $ 7,573,581 | $ 1,294,561 | $ 1,331,333 |
Securitizations and Variable Interests Entities - Schedule of Carrying Amounts of Assets that Relate to Continuing Involvement with Transferred Forward Loans (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
UPB of loans transferred | $ 18,062,856 | $ 14,490,984 |
Maximum exposure to loss | 18,343,246 | 14,742,394 |
Mortgage Servicing Rights | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | 137,029 | 109,581 |
Advances and Match Funded Advances | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | $ 143,361 | $ 141,829 |
Securitizations and Variable Interests Entities - Schedule of Carrying Value of Assets and Liabilities of Consolidated Mortgage-backed Securitization Trusts (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Loans held for investment | $ 7,006,897 | $ 6,292,938 |
Other financing liabilities | 576,722 | 972,595 |
Residential Mortgage Backed Securitization Trusts | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Loans held for investment | 9,770 | 23,342 |
Other financing liabilities | $ 9,770 | $ 22,002 |
Fair Value - Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments and Nonfinancial Assets Measured at Fair Value on a Recurring or Non-recurring basis or Disclosed, but not Carried, at Fair Value (Footnote) (Details) $ in Millions |
12 Months Ended |
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Dec. 31, 2020
USD ($)
| |
Ginnie Mae | Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Loans repurchased | $ 51.1 |
Fair Value - Sensitivity Analysis (Details) $ in Thousands |
Dec. 31, 2020
USD ($)
|
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Fair Value Disclosures [Abstract] | |
Weighted average prepayment speeds, 10% | $ (39,478) |
Weighted average prepayment speeds, 20% | (76,100) |
Discount rate (Option-adjusted spread), 10% | (24,362) |
Discount rate (Option-adjusted spread), 20% | $ (47,227) |
Loans Held for Sale - Summary of Activity in Balance of Loans Held for Sale, at Fair Value (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Movement In Loans Held For Sale At Fair Value [Roll Forward] | |||
Beginning balance | $ 208,752 | $ 176,525 | $ 214,262 |
Originations and purchases | 7,552,026 | 1,168,885 | 944,627 |
Proceeds from sales | (7,344,151) | (1,124,247) | (1,019,211) |
Principal collections | (25,976) | (23,116) | (20,774) |
Acquired in connection with the acquisition of PHH | 0 | 0 | 42,324 |
Loans held for investment, at fair value | 3,084 | 1,892 | 1,038 |
Receivables | (85,001) | (2,480) | (1,132) |
Real estate owned (Other assets) | (3,657) | (2,520) | (1,886) |
Gain on sale of loans | 50,248 | 25,253 | 34,724 |
(Decrease) increase in fair value of loans | 1,075 | (589) | (13,435) |
Other | 9,964 | (10,851) | (4,012) |
Ending balance | $ 366,364 | $ 208,752 | $ 176,525 |
Loans Held for Sale - Summary of Activity in Balance of Loans Held for Sale, at Fair Value (Footnote) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Increase (decrease) in fair value of loans held for sale | $ (6,700) | $ (7,800) | $ (7,200) | |
Loans held for sale, at fair value | 366,364 | $ 208,752 | $ 176,525 | $ 214,262 |
Repurchased Ginnie Mae Loans | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Loans held for sale, at fair value | $ 51,100 |
Loans Held for Sale - Summary of Activity in Balance of Loans Held for Sale, at Lower of Cost or Fair Value (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Movement In Loans Held For Sale At Fair Value [Roll Forward] | |||
Beginning balance | $ 66,517 | $ 66,097 | $ 24,096 |
Purchases | 0 | 320,089 | 770,563 |
Proceeds from sales | (58,575) | (221,471) | (569,718) |
Principal collections | (1,842) | (11,304) | (15,413) |
Receivables, net | 61 | (104,635) | (155,586) |
REO (Other assets) | 0 | (4,116) | (2,355) |
Gain on sale of loans | 11,189 | 4,974 | 3,659 |
Decrease (increase) in valuation allowance | 463 | 4,926 | (4,251) |
Other | 3,659 | 11,957 | 15,102 |
Ending balance | $ 21,472 | $ 66,517 | $ 66,097 |
Loans Held for Sale - Summary of Activity in Balance of Loans Held for Sale, at Lower of Cost or Fair Value (Footnote) (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Ginnie Mae | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans held for sale, at lower of cost or fair value | $ 12.5 | $ 60.6 | $ 51.8 |
Loans Held for Sale - Summary of Changes in Valuation Allowance of Loans Held for Sale (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Allowance for Loan and Lease Losses [Roll Forward] | |||
Beginning balance | $ 6,643 | $ 11,569 | $ 7,318 |
Provision | 1,144 | 2,537 | 4,033 |
Transfer from Liability for indemnification obligations (Other liabilities) | 68 | 403 | 2,021 |
Sales of loans | (1,675) | (7,866) | (1,824) |
Other | 0 | 0 | 21 |
Ending balance | $ 6,180 | $ 6,643 | $ 11,569 |
Loans Held for Sale - Summary of Activity in Gain on Loans Held for Sale, Net (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Gain on sales of loans, net | $ 130,140 | $ 37,532 | $ 45,287 |
Change in fair value of IRLCs | 17,479 | 756 | 3,809 |
Change in fair value of loans held for sale | 2,280 | 3,005 | (11,569) |
Loss on economic hedge instruments | (10,069) | (2,689) | 136 |
Other | (2,594) | (304) | (327) |
Gain on loans held for sale, net | 137,236 | 38,300 | 37,336 |
MSRs Retained on Transfers of Forward Loans | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Gain on sales of loans, net | 68,734 | 7,458 | 7,412 |
Forward Mortgage Loans | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Gain on sales of loans, net | 45,459 | 25,310 | 34,216 |
Repurchased Ginnie Mae Loans | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Gain on sales of loans, net | $ 15,947 | $ 4,764 | $ 3,659 |
Reverse Mortgages - Schedule of Reverse Mortgage Revenue, Net (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Receivables [Abstract] | |||
Gain on new originations | $ 46,326 | $ 17,849 | $ 13,064 |
Change in fair value of securitized loans held for investment and HMBS-related borrowings, net | 7,573 | 63,459 | 44,119 |
Loan fees and other | 6,827 | 5,001 | 3,054 |
Reverse mortgage revenue, net | $ 60,726 | $ 86,309 | $ 60,237 |
Advances - Schedule of Advance Payments by Financial Institution on Foreclosed Properties (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Advances On Behalf of Borrowers [Line Items] | ||||
Advances | $ 834,512 | $ 1,066,448 | ||
Allowance for losses | (6,273) | (9,925) | $ (23,259) | $ (16,465) |
Advances, net | 828,239 | 1,056,523 | $ 1,186,676 | $ 1,389,150 |
Principal and interest | ||||
Advances On Behalf of Borrowers [Line Items] | ||||
Advances | 277,132 | 414,846 | ||
Taxes and insurance | ||||
Advances On Behalf of Borrowers [Line Items] | ||||
Advances | 364,593 | 422,383 | ||
Foreclosures, bankruptcy, REO and other | ||||
Advances On Behalf of Borrowers [Line Items] | ||||
Advances | $ 192,787 | $ 229,219 |
Advances - Schedule of Activity in Advances (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Advances [Roll Forward] | |||
Advances, beginning balance | $ 1,056,523 | $ 1,186,676 | $ 1,389,150 |
Asset acquisition | 14 | 1,457 | 0 |
Acquired in connection with the acquisition of PHH | 0 | 0 | 96,163 |
Transfer to Other assets | 0 | 0 | (36,896) |
New advances | 890,389 | 671,673 | 684,538 |
Sales of advances | (834) | (11,791) | (32,081) |
Collections of advances and other | (1,121,505) | (804,826) | (910,039) |
Net decrease (increase) in allowance for losses | 3,652 | 13,334 | (4,159) |
Advances, ending balance | $ 828,239 | $ 1,056,523 | $ 1,186,676 |
Advances - Schedule of Change in Allowance for Losses (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Beginning balance | $ 9,925 | $ 23,259 | $ 16,465 |
Provision | 7,790 | 3,220 | 5,732 |
Net charge-offs and other | (11,442) | (16,554) | 1,062 |
Ending balance | $ 6,273 | 9,925 | $ 23,259 |
Sold Advances | |||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Provision | $ 18,000 |
Mortgage Servicing - Summary of Activity Related to Fair Value Servicing Assets (Footnotes) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Feb. 20, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Servicing Assets at Fair Value [Line Items] | ||||
Servicing transfers and adjustments | $ 265,845 | $ 7,309 | $ 5,880 | |
NRZ | ||||
Servicing Assets at Fair Value [Line Items] | ||||
Servicing transfers and adjustments | $ 263,700 |
Mortgage Servicing - Schedule of Composition of Servicing UPB (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Transfers and Servicing [Abstract] | |||
Owned MSRs | $ 90,174,495 | $ 70,973,496 | $ 68,236,270 |
NRZ pledged MSRs | 64,061,198 | 108,837,877 | 126,643,940 |
Total MSR UPB | $ 154,235,693 | $ 179,811,373 | $ 194,880,210 |
Mortgage Servicing - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Servicing Asset at Amortized Cost [Line Items] | |||
UPB of portfolio loans acquired | $ 31,700.0 | $ 14,600.0 | $ 144.1 |
Float balances | 1,740.0 | 1,710.0 | 1,680.0 |
Agency and Non-Agency Mortgage Servicing Rights | |||
Servicing Asset at Amortized Cost [Line Items] | |||
UPB of MSRs sold | $ 80.0 | $ 140.8 | $ 901.3 |
Mortgage Servicing - Schedule of Components of Servicing and Subservicing Fees (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Transfers and Servicing [Abstract] | |||
Servicing | $ 216,263 | $ 227,490 | $ 227,639 |
Subservicing | 28,886 | 15,459 | 8,904 |
NRZ | 383,685 | 577,015 | 539,039 |
Servicing and Subservicing fees, total | 628,834 | 819,964 | 775,582 |
Late charges | 47,687 | 57,194 | 61,453 |
Home Affordable Modification Program (HAMP) fees | 565 | 5,538 | 14,312 |
Custodial accounts (float earnings) | 9,939 | 47,562 | 40,115 |
Loan collection fees | 12,919 | 15,539 | 18,392 |
Other | 37,376 | 29,710 | 27,229 |
Servicing and subservicing fees | 737,320 | 975,507 | 937,083 |
Fees, total | $ 108,486 | $ 155,543 | $ 161,501 |
Rights to MSRs - UPB of Loans Serviced on behalf of NRZ (Details) $ in Thousands |
Dec. 31, 2020
USD ($)
|
---|---|
Servicing Assets at Fair Value [Line Items] | |
UPB of loans serviced on behalf of NRZ | $ 67,100,000 |
NRZ | |
Servicing Assets at Fair Value [Line Items] | |
UPB of loans serviced on behalf of NRZ | 67,111,388 |
Outstanding servicing advances | 575,900 |
NRZ | Mortgage Servicing Rights Title Retained | |
Servicing Assets at Fair Value [Line Items] | |
UPB of loans serviced on behalf of NRZ | 14,114,602 |
NRZ | Mortgage Servicing Rights Title Transferred | |
Servicing Assets at Fair Value [Line Items] | |
UPB of loans serviced on behalf of NRZ | 49,866,082 |
NRZ | Subservicing Assets | |
Servicing Assets at Fair Value [Line Items] | |
UPB of loans serviced on behalf of NRZ | $ 3,130,704 |
Receivables - Schedule of Receivables (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Receivables [Abstract] | ||
Government-insured loan claims - Forward | $ 103,058 | $ 122,557 |
Government-insured loan claims - Reverse | 32,887 | 14,123 |
Due from custodial accounts | 19,393 | 27,175 |
Reimbursable expenses | 4,970 | 13,052 |
Advance funding, subservicing fees and reimbursable expenses - Due from NRZ | 4,611 | 9,197 |
Sales and transfers of MSRs - Due from NRZ | 0 | 24,167 |
Other | 1,087 | 4,970 |
Servicing | 166,006 | 215,241 |
Income taxes receivable | 57,503 | 37,888 |
Other receivables | 3,200 | 5,963 |
Other receivables, gross | 226,709 | 259,092 |
Allowance for losses | (39,044) | (57,872) |
Receivables, total | $ 187,665 | $ 201,220 |
Receivables - Narrative (Details) - USD ($) $ in Millions |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Delinquent FHA or VA Insured Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for losses related to defaulted FHA or VA insured loans | $ 38.3 | $ 56.9 |
Receivables Schedule of Changes in Allowance for Loan Losses (Details) - Government Insured Loans Claims - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Allowance for Loan and Lease Losses [Roll Forward] | |||
Beginning balance | $ 56,868 | $ 52,497 | $ 53,340 |
Provision | 18,145 | 29,034 | 37,352 |
Net charge-offs and other | (36,674) | (24,663) | (38,195) |
Ending balance | $ 38,339 | $ 56,868 | $ 52,497 |
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Assets [Abstract] | ||
Contingent loan repurchase asset | $ 480,221 | $ 492,900 |
Derivatives, at fair value | 23,246 | 6,007 |
Prepaid expenses | 21,176 | 21,996 |
Prepaid representation, warranty and indemnification claims - Agency MSR sale | 15,173 | 15,173 |
Prepaid lender fees, net | 9,556 | 8,647 |
REO | 7,771 | 8,556 |
Deferred tax assets, net | 3,543 | 2,169 |
Security deposits | 2,222 | 2,163 |
Mortgage-backed securities, at fair value | 2,019 | 2,075 |
Other | 6,556 | 3,554 |
Other assets | $ 571,483 | $ 563,240 |
Borrowings - Schedule of Financing Liabilities (Footnote) (Details) - Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Minimum | |
Debt Instrument [Line Items] | |
Debt instrument, interest rate (percentage) | 4.25% |
Maximum | |
Debt Instrument [Line Items] | |
Debt instrument, interest rate (percentage) | 5.75% |
LIBOR | |
Debt Instrument [Line Items] | |
Interest rate (percentage) | 0.45% |
Borrowings - Schedule of Senior Notes (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Senior Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Purchase accounting fair value adjustments | $ (186) | $ (497) |
Senior Unsecured Notes | 6.375% Senior Notes, Due 2021 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (percentage) | 6.375% | |
Long-term debt, gross | $ 21,543 | 21,543 |
Other Secured Borrowings | 8.375% Senior Secured Notes Due In 2022 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate (percentage) | 8.375% | |
Long-term debt, gross | $ 291,509 | 291,509 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 313,052 | 313,052 |
Unamortized debt issuance costs | (968) | (1,470) |
Senior notes | $ 311,898 | $ 311,085 |
Borrowings - Schedule of Senior Notes (Footnote) (Details) - USD ($) $ in Thousands |
2 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Debt Instrument [Line Items] | ||||
Gain on repurchase of debt | $ 0 | $ 5,099 | $ 0 | |
8.375% Senior Secured Notes Due In 2022 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument stated percentage of interest (percentage) | 8.375% | |||
Senior Unsecured Notes | ||||
Debt Instrument [Line Items] | ||||
Redemption price (percentage) | 100.00% | |||
Secured Debt | 8.375% Senior Secured Notes Due In 2022 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, repurchased amount | $ 39,400 | |||
Debt instrument stated percentage of interest (percentage) | 8.375% | |||
Debt instrument, repurchase price | 34,300 | |||
Gain on repurchase of debt | $ 5,100 |
Borrowings - Schedule of Aggregate Long-term Borrowings (Details) $ in Thousands |
Dec. 31, 2020
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
2021 | $ 948,972 |
2022 | 973,171 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
Thereafter | 47,476 |
Long-term debt, gross | 1,969,619 |
Fair value | 1,946,088 |
Match Funded Liabilities | |
Debt Instrument [Line Items] | |
2021 | 106,288 |
2022 | 475,000 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
Thereafter | 0 |
Long-term debt, gross | 581,288 |
Fair value | 581,997 |
Secured Debt | |
Debt Instrument [Line Items] | |
2021 | 821,141 |
2022 | 206,662 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
Thereafter | 47,476 |
Long-term debt, gross | 1,075,279 |
Fair value | 1,043,212 |
Senior Notes | |
Debt Instrument [Line Items] | |
2021 | 21,543 |
2022 | 291,509 |
2023 | 0 |
2024 | 0 |
2025 | 0 |
Thereafter | 0 |
Long-term debt, gross | 313,052 |
Fair value | $ 320,879 |
Borrowings - Schedule of Aggregate Long-term Borrowings (Footnote) (Details) - Financing Liabilities - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 7,349,433 | $ 7,036,030 |
Sale of MSRs and Rights To MSRs | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 567,000 | |
HMBS - Related Borrowings | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 6,800,000 |
Other Liabilities - Schedule of Other Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Contingent loan repurchase liability | $ 480,221 | $ 492,900 |
Due to NRZ - Advance collections and servicing fees | 94,691 | 63,596 |
Other accrued expenses | 87,898 | 67,241 |
Liability for indemnification obligations | 41,920 | 52,785 |
Accrued legal fees and settlements | 38,932 | 30,663 |
Checks held for escheat | 35,654 | 31,959 |
Servicing-related obligations | 35,237 | 88,167 |
Lease liability | 27,393 | 44,488 |
MSR purchase price holdback | 20,923 | 9,129 |
Liability for uncertain tax positions | 16,188 | 17,197 |
Liability for unfunded pension obligation | 12,662 | 13,383 |
Liability for unfunded India gratuity plan | 6,051 | 5,331 |
Accrued interest payable | 4,915 | 5,964 |
Derivatives, at fair value | 4,638 | 100 |
Liability for mortgage insurance contingency | 0 | 6,820 |
Other | 16,652 | 12,450 |
Other liabilities | $ 923,975 | $ 942,173 |
Other Liabilities Schedule of Changes in Liability for Legal Fees and Settlements (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Other Liabilities Disclosure [Abstract] | |||
Beginning balance | $ 30,663 | $ 62,763 | $ 51,057 |
Accrual for probable losses | 26,468 | 3,011 | 19,774 |
Payments | (14,826) | (30,356) | (12,983) |
Assumed in connection with the acquisition of PHH | 0 | 0 | 9,960 |
Issuance of common stock in settlement of litigation | 0 | 0 | (5,719) |
Net increase (decrease) in accrued legal fees | (3,433) | (4,884) | (1,917) |
Other | 60 | 129 | 2,591 |
Ending balance | $ 38,932 | $ 30,663 | $ 62,763 |
Stockholders Equity - Schedule of Accumulated Other Comprehensive Loss (AOCL), Net of Income Taxes (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Equity [Abstract] | ||
Unfunded pension plan obligation | $ 8,409 | $ 6,789 |
Unrealized losses on cash flow hedges, net | 674 | 832 |
Other | 12 | (27) |
Accumulated other comprehensive loss | $ 9,095 | $ 7,594 |
Derivative Financial Instruments and Hedging Activities - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Foreign currency re-measurement exchange gains (losses) | $ (1.0) | $ (0.2) | $ (3.2) |
Interest Income - Schedule of Components of Interest Income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Other Income and Expenses [Abstract] | |||
Loans held for sale | $ 13,929 | $ 14,669 | $ 10,756 |
Interest earning cash deposits and other | 2,070 | 2,435 | 3,270 |
Interest and Other Income | $ 15,999 | $ 17,104 | $ 14,026 |
Interest Expense - Schedule of Components of Interest Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Debt securities: | |||
Interest expense | $ 109,367 | $ 114,129 | $ 103,371 |
Senior Notes | |||
Debt securities: | |||
Interest expense | 26,634 | 31,804 | 31,280 |
Match Funded Liabilities | |||
Debt securities: | |||
Interest expense | 24,122 | 26,902 | 31,870 |
Other Secured Borrowings | |||
Debt securities: | |||
Interest expense | 51,589 | 46,278 | 35,412 |
Other | |||
Debt securities: | |||
Interest expense | $ 7,022 | $ 9,145 | $ 4,809 |
Income Taxes - Schedule of Income Before Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||||||||||
Domestic | $ (118,043) | $ (93,487) | $ 11,477 | ||||||||
Foreign | 12,359 | (33,004) | (82,953) | ||||||||
Loss from continuing operations before income taxes | $ (809) | $ (11,374) | $ (6,156) | $ (87,345) | $ 37,243 | $ (38,317) | $ (84,333) | $ (41,084) | $ (105,684) | $ (126,491) | $ (71,476) |
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Current: | |||||||||||
Federal | $ (67,080) | $ 873 | $ (7,670) | ||||||||
State | 348 | 4,460 | 356 | ||||||||
Foreign | 2,600 | 7,181 | 11,132 | ||||||||
Current Income tax expense (benefit) | (64,132) | 12,514 | 3,818 | ||||||||
Deferred: | |||||||||||
Federal | (25,762) | (40,429) | 23,991 | ||||||||
State | (2,047) | (914) | 319 | ||||||||
Foreign | (1,445) | 11,993 | (4,252) | ||||||||
Provision for (reversal of) valuation allowance on deferred tax assets | 27,880 | 32,470 | (23,347) | ||||||||
Deferred income tax expense (benefit) | (1,374) | 3,120 | (3,289) | ||||||||
Total | $ 6,414 | $ (1,954) | $ (8,110) | $ (61,856) | $ 2,370 | $ 4,450 | $ 5,404 | $ 3,410 | $ (65,506) | $ 15,634 | $ 529 |
Income Taxes - Schedule of Effective Income Tax Reconciliation (Footnote) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Increase decrease in income tax expense as result of effectively connected income | $ 2.6 | $ (3.3) |
Income Taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Reconciliation of Unrecognized Tax Benefits [Roll Forward] | |||
Beginning balance | $ 10,589 | $ 9,622 | $ 2,281 |
Additions for tax positions of current year | 0 | 207 | 412 |
Additions for tax positions of prior years | 15,242 | 3,110 | 1,354 |
Reductions for tax positions of prior years | (219) | 0 | (236) |
Reductions for settlements | (3,067) | (1,293) | (3,188) |
Lapses in statute of limitations | (1,907) | (1,057) | (4,109) |
Additions - PHH acquisition | 0 | 0 | 13,108 |
Ending balance (1) | $ 20,638 | $ 10,589 | $ 9,622 |
Income Taxes - Schedule of Unrecognized Tax Benefits (Footnote) (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Income Tax Contingency [Line Items] | ||||
Unrecognized Tax Benefits | $ 20,638 | $ 10,589 | $ 9,622 | $ 2,281 |
Income Tax Receivables | ||||
Income Tax Contingency [Line Items] | ||||
Unrecognized Tax Benefits | 7,800 | |||
Other Liabilities | ||||
Income Tax Contingency [Line Items] | ||||
Unrecognized Tax Benefits | $ 12,800 |
Employee Compensation and Benefit Plans - Schedule of Change in Benefit Obligation, Plan Assets and Funded Status for Pension Plans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Pension Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Benefit obligation | $ 58,965 | $ 54,603 |
Fair value of plan assets | 46,303 | 41,220 |
Unfunded status recognized in Other liabilities | (12,662) | (13,383) |
Amounts recognized in Accumulated other comprehensive income | 8,484 | 6,864 |
Gratuity Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Benefit obligation | 6,091 | 5,370 |
Fair value of plan assets | 40 | 39 |
Unfunded status recognized in Other liabilities | $ (6,051) | $ (5,331) |
Employee Compensation and Benefit Plans - Schedule of Stock Option Activity (Details) - Stock Options - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding (in shares) | 131,962 | 139,507 | 447,244 |
Granted (in shares) | 3,427 | 23,226 | |
Forfeited / Expired (in shares) | (7,096) | (10,972) | (330,963) |
Outstanding (in shares) | 124,866 | 131,962 | 139,507 |
Exercisable at end of year (in shares) | 110,484 | 105,384 | 101,336 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Outstanding (in dollars per share) | $ 282.30 | $ 288.30 | $ 149.55 |
Granted (in dollars per share) | 31.20 | 54.90 | |
Forfeited / Expired (in dollars per share) | 423.80 | 280.35 | 84.30 |
Outstanding (in dollars per share) | 274.30 | 282.30 | 288.30 |
Exercisable at end of year (in dollars per share) | $ 283.08 | $ 302.40 | $ 319.35 |
Employee Compensation and Benefit Plans - Schedule of Liability Award Activity (Details) - Long-Term Incentive (LTI) Program - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Unvested at beginning of year (in shares) | 243,441 | 0 |
Granted (in shares) | 601,787 | 251,076 |
Vested (in shares) | (21,909) | 0 |
Forfeited/Cancelled (in shares) | (94,954) | (7,635) |
Conversion of fractional stock units on reverse stock split | 8 | 0 |
Unvested at end of year (in shares) | 728,373 | 243,441 |
Employee Compensation and Benefit Plans - Schedule of Equity-based Compensation Expense Related to Stock Options and Stock Awards and Related Excess Tax Benefit (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Equity-based compensation expense: | |||
Awards | $ 2,401 | $ 2,697 | $ 2,366 |
(Tax deficiency) excess tax benefit related to share-based awards | (424) | (381) | 294 |
Stock Options | |||
Equity-based compensation expense: | |||
Awards | (431) | (121) | (368) |
Stock Awards | |||
Equity-based compensation expense: | |||
Awards | 2,832 | 2,818 | 2,734 |
Liability Awards | |||
Equity-based compensation expense: | |||
Awards | $ 5,642 | $ 1,082 | $ 0 |
Business Segment Reporting - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 231,011 | $ 249,035 | $ 227,024 | $ 253,842 | $ 261,634 | $ 283,515 | $ 274,338 | $ 303,888 | $ 960,912 | $ 1,123,375 | $ 1,063,045 |
Income (loss) before taxes | $ (809) | $ (11,374) | $ (6,156) | $ (87,345) | $ 37,243 | $ (38,317) | $ (84,333) | $ (41,084) | (105,684) | (126,491) | (71,476) |
Interest expense related to fund servicing advances and other servicing assets | $ 38,200 | 54,900 | 49,000 | ||||||||
Reverse Servicing | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 63,400 | 41,700 | |||||||||
Income (loss) before taxes | $ 53,000 | $ 33,800 |
Business Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Results of Operations | |||||||||||
Revenue | $ 231,011 | $ 249,035 | $ 227,024 | $ 253,842 | $ 261,634 | $ 283,515 | $ 274,338 | $ 303,888 | $ 960,912 | $ 1,123,375 | $ 1,063,045 |
MSR valuation adjustments, net | (20,553) | (33,814) | (23,434) | (174,120) | 829 | 134,561 | (147,268) | (108,998) | (251,921) | (120,876) | (153,457) |
Operating expenses | 144,159 | 149,522 | 144,809 | 137,214 | 139,321 | 179,285 | 184,226 | 171,107 | 575,704 | 673,939 | 779,039 |
Other income (expense): | |||||||||||
Interest income | 15,999 | 17,104 | 14,026 | ||||||||
Interest expense | (109,367) | (114,129) | (103,371) | ||||||||
Pledged MSR liability expense | (152,334) | (372,172) | (171,670) | ||||||||
Gain on repurchase of senior secured notes | 0 | 5,099 | 0 | ||||||||
Bargain purchase gain | 0 | (381) | 64,036 | ||||||||
Other, net | 6,731 | 9,428 | (5,046) | ||||||||
Total other expense, net | (67,108) | (77,073) | (64,937) | (29,853) | (85,899) | (277,108) | (27,177) | (64,867) | (238,971) | (455,051) | (202,025) |
Loss from continuing operations before income taxes | (809) | $ (11,374) | $ (6,156) | (87,345) | 37,243 | $ (38,317) | $ (84,333) | $ (41,084) | (105,684) | (126,491) | (71,476) |
Total Assets | |||||||||||
Balance | 10,651,127 | 10,406,199 | 10,651,127 | 10,406,199 | 9,394,216 | ||||||
Corporate Items and Other | |||||||||||
Other income (expense): | |||||||||||
Severance costs | 2,700 | 20,300 | 11,900 | ||||||||
Recovery of direct costs | $ 30,700 | ||||||||||
Operating Segments | Servicing | |||||||||||
Results of Operations | |||||||||||
Revenue | 757,665 | 1,048,490 | 992,913 | ||||||||
MSR valuation adjustments, net | (276,252) | (120,864) | (153,457) | ||||||||
Operating expenses | 331,885 | 547,976 | 628,613 | ||||||||
Other income (expense): | |||||||||||
Interest income | 7,061 | 10,085 | 7,079 | ||||||||
Interest expense | (90,671) | (102,525) | (90,787) | ||||||||
Pledged MSR liability expense | (152,454) | (372,172) | (172,342) | ||||||||
Gain on repurchase of senior secured notes | 0 | ||||||||||
Bargain purchase gain | 0 | 0 | |||||||||
Other, net | 10,752 | 12,294 | (1,858) | ||||||||
Total other expense, net | (225,312) | (452,318) | (257,908) | ||||||||
Loss from continuing operations before income taxes | (75,784) | (72,668) | (47,065) | ||||||||
Total Assets | |||||||||||
Balance | 9,847,603 | 9,580,466 | 9,847,603 | 9,580,466 | 8,762,681 | ||||||
Operating Segments | Originations | |||||||||||
Results of Operations | |||||||||||
Revenue | 179,298 | 61,698 | 51,983 | ||||||||
MSR valuation adjustments, net | 41,699 | (12) | 0 | ||||||||
Operating expenses | 114,357 | 72,457 | 73,303 | ||||||||
Other income (expense): | |||||||||||
Interest income | 7,008 | 5,243 | 4,365 | ||||||||
Interest expense | (9,837) | (7,590) | (7,311) | ||||||||
Pledged MSR liability expense | 0 | 0 | 672 | ||||||||
Gain on repurchase of senior secured notes | 0 | ||||||||||
Bargain purchase gain | 0 | 0 | |||||||||
Other, net | 351 | 892 | 908 | ||||||||
Total other expense, net | (2,478) | (1,455) | (1,366) | ||||||||
Loss from continuing operations before income taxes | 104,162 | (12,226) | (22,686) | ||||||||
Total Assets | |||||||||||
Balance | 379,233 | 257,416 | 379,233 | 257,416 | 147,008 | ||||||
Operating Segments | Corporate Items and Other | |||||||||||
Results of Operations | |||||||||||
Revenue | 23,949 | 13,187 | 18,149 | ||||||||
MSR valuation adjustments, net | (17,368) | 0 | 0 | ||||||||
Operating expenses | 129,462 | 53,506 | 77,123 | ||||||||
Other income (expense): | |||||||||||
Interest income | 1,930 | 1,776 | 2,582 | ||||||||
Interest expense | (8,859) | (4,014) | (5,273) | ||||||||
Pledged MSR liability expense | 120 | 0 | 0 | ||||||||
Gain on repurchase of senior secured notes | 5,099 | ||||||||||
Bargain purchase gain | (381) | 64,036 | |||||||||
Other, net | (4,372) | (3,758) | (4,096) | ||||||||
Total other expense, net | (11,181) | (1,278) | 57,249 | ||||||||
Loss from continuing operations before income taxes | (134,062) | (41,597) | (1,725) | ||||||||
Total Assets | |||||||||||
Balance | $ 424,291 | $ 568,317 | 424,291 | $ 568,317 | $ 484,527 | ||||||
Intersegment Eliminations | |||||||||||
Other income (expense): | |||||||||||
Derivative, Gain on Derivative | $ (17,400) |
Business Segment Reporting - Schedule of Depreciation and Amortization by Segment (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Segment Reporting Information [Line Items] | |||
Depreciation expense | $ 19,121 | $ 31,911 | $ 27,202 |
Amortization of debt discount and issuance costs | 6,992 | 4,512 | 4,104 |
Amortization of debt issuance costs | 6,992 | 4,512 | 4,104 |
Servicing | |||
Segment Reporting Information [Line Items] | |||
Depreciation expense | 857 | 1,925 | 4,601 |
Amortization of debt discount and issuance costs | 470 | 71 | 0 |
Originations | |||
Segment Reporting Information [Line Items] | |||
Depreciation expense | 128 | 93 | 103 |
Amortization of debt discount and issuance costs | 0 | 0 | 0 |
Corporate Items and Other | |||
Segment Reporting Information [Line Items] | |||
Depreciation expense | 18,136 | 29,893 | 22,498 |
Amortization of debt discount and issuance costs | $ 6,522 | $ 4,441 | $ 4,104 |
Regulatory Requirements - Narrative (Details) - USD ($) |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Oct. 31, 2020 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items] | |||
Number of days from fiscal year end that servicer is obliged to provide audited financial statements | 90 days | ||
Covenant liquidity requirement | $ 27,500,000 | ||
Capital | $ 352,900,000 | ||
Percentage portfolio of loans serviced or subserviced | 2.00% | ||
Cash and cash equivalents | $ 284,802,000 | $ 428,339,000 | |
Fannie Mae | |||
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items] | |||
Capital requirement based on outstanding UPB of owned and subserviced portfolio | 269,800,000 | ||
California Department of Business Oversight | |||
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items] | |||
Litigation settlement expense | $ 62,000 | ||
PMC | |||
Compliance with Regulatory Capital Requirements for Mortgage Companies [Line Items] | |||
Cash and cash equivalents | $ 257,800,000 |
Commitments - Schedule of NRZ UPB (Details) $ in Thousands |
Dec. 31, 2020
USD ($)
|
---|---|
Servicing Assets at Fair Value [Line Items] | |
UPB of rights to MSRs sold | $ 67,100,000 |
NRZ | |
Servicing Assets at Fair Value [Line Items] | |
UPB of rights to MSRs sold | 67,111,388 |
NRZ | Mortgage Servicing Rights Title Retained | |
Servicing Assets at Fair Value [Line Items] | |
UPB of rights to MSRs sold | 14,114,602 |
NRZ | Mortgage Servicing Rights Title Transferred | |
Servicing Assets at Fair Value [Line Items] | |
UPB of rights to MSRs sold | 49,866,082 |
NRZ | Subservicing Assets | |
Servicing Assets at Fair Value [Line Items] | |
UPB of rights to MSRs sold | $ 3,130,704 |
Commitments - Schedule of Activity Related to HMBS Repurchases (Footnote) (Details) - Maximum Claim Amount $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2020
USD ($)
loan
| |
Long-term Purchase Commitment [Line Items] | |
Number of maximum claim amount repurchases loans | loan | 423 |
Amount of maximum claim amount repurchases | $ | $ 95.3 |
Commitments - Schedule of Future Minimum Rental Commitments under Non-cancelable Operating Leases (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
2021 | $ 14,618 | |
2022 | 10,960 | |
2023 | 1,969 | |
2024 | 697 | |
2025 | 654 | |
Thereafter | 0 | |
Total minimum lease payments, gross | 28,898 | |
Less: Adjustment to present value | (1,505) | |
Total lease payments, net | $ 27,393 | $ 44,488 |
Contingencies - Schedule of Changes in Liability for Representation and Warrant Obligations, Compensatory Fees for Foreclosures that may Ultimately Exceed Investor Timelines and Related Indemnification Obligations (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Indemnification Obligations Liability [Roll Forward] | |||
Beginning balance | $ 50,838 | $ 49,267 | $ 19,229 |
Provision (reversal) for representation and warranty obligations | (7,783) | (11,701) | 4,649 |
New production reserves | 2,596 | 304 | 7,437 |
Obligation assumed in connection with the acquisition of PHH | 0 | 0 | 27,736 |
Charge-offs and other | (5,277) | 12,968 | (9,784) |
Ending balance | $ 40,374 | $ 50,838 | $ 49,267 |
Quarterly Results of Operations (Unaudited) - Schedule of Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 231,011 | $ 249,035 | $ 227,024 | $ 253,842 | $ 261,634 | $ 283,515 | $ 274,338 | $ 303,888 | $ 960,912 | $ 1,123,375 | $ 1,063,045 |
MSR valuation adjustments, net | (20,553) | (33,814) | (23,434) | (174,120) | 829 | 134,561 | (147,268) | (108,998) | (251,921) | (120,876) | (153,457) |
Expenses | 144,159 | 149,522 | 144,809 | 137,214 | 139,321 | 179,285 | 184,226 | 171,107 | 575,704 | 673,939 | 779,039 |
Other expense, net | (67,108) | (77,073) | (64,937) | (29,853) | (85,899) | (277,108) | (27,177) | (64,867) | (238,971) | (455,051) | (202,025) |
Loss from continuing operations before income taxes | (809) | (11,374) | (6,156) | (87,345) | 37,243 | (38,317) | (84,333) | (41,084) | (105,684) | (126,491) | (71,476) |
Income tax expense (benefit) | 6,414 | (1,954) | (8,110) | (61,856) | 2,370 | 4,450 | 5,404 | 3,410 | (65,506) | 15,634 | 529 |
Loss from continuing operations, net of tax | (40,178) | (142,125) | (72,005) | ||||||||
Income from discontinued operations, net of tax | $ 0 | $ 0 | $ 1,409 | ||||||||
Net loss attributable to Ocwen common stockholders | $ (7,223) | $ (9,420) | $ 1,954 | $ (25,489) | $ 34,873 | $ (42,767) | $ (89,737) | $ (44,494) | |||
Earnings (loss) per share attributable to Ocwen stockholders | |||||||||||
Basic | $ (0.83) | $ (1.09) | $ 0.23 | $ (2.84) | $ 3.88 | $ (4.77) | $ (10.01) | $ (4.98) | |||
Diluted | $ (0.83) | $ (1.09) | $ 0.23 | $ (2.84) | $ 3.87 | $ (4.77) | $ (10.01) | $ (4.98) |
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