QUARTERLY 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 | |||||||||||
Consolidated Balance Sheets at March 31, 2024 and December 31, 2023 | |||||||||||
Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 | |||||||||||
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023 | |||||||||||
Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2024 and 2023 | |||||||||||
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 | |||||||||||
March 31, 2024 | December 31, 2023 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash ($ | |||||||||||
Mortgage servicing rights (MSRs), at fair value | |||||||||||
Advances, net ($ | |||||||||||
Loans held for sale ($ | |||||||||||
Loans held for investment, at fair value ($ | |||||||||||
Receivables, net ($ | |||||||||||
Investment in equity method investee | |||||||||||
Premises and equipment, net | |||||||||||
Other assets ($ | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholder’s Equity | |||||||||||
Liabilities | |||||||||||
Home Equity Conversion Mortgage-Backed Securities (HMBS) related borrowings, at fair value | $ | $ | |||||||||
Other financing liabilities, at fair value ($ | |||||||||||
Advance match funded liabilities ($ | |||||||||||
Mortgage loan financing facilities, net ($ | |||||||||||
MSR financing facilities, net | |||||||||||
Senior notes, net ($ | |||||||||||
Other liabilities ($ | |||||||||||
Total liabilities | $ | ||||||||||
Commitments and Contingencies (Notes 20 and 21) | |||||||||||
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 Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Revenue | |||||||||||
Servicing and subservicing fees | $ | $ | |||||||||
Gain on reverse loans held for investment and HMBS-related borrowings, net | |||||||||||
Gain on loans held for sale, net | |||||||||||
Other revenue, net | |||||||||||
Total revenue | |||||||||||
MSR valuation adjustments, net | ( | ( | |||||||||
Operating expenses | |||||||||||
Compensation and benefits | |||||||||||
Servicing and origination | |||||||||||
Technology and communications | |||||||||||
Professional services | |||||||||||
Occupancy, equipment and mailing | |||||||||||
Other expenses | |||||||||||
Total operating expenses | |||||||||||
Other income (expense) | |||||||||||
Interest income | |||||||||||
Interest expense ($ | ( | ( | |||||||||
Pledged MSR liability expense ($ | ( | ( | |||||||||
Earnings of equity method investee | |||||||||||
Gain on extinguishment of debt | |||||||||||
Other, net | ( | ||||||||||
Other income (expense), net | ( | ( | |||||||||
Income (loss) before income taxes | ( | ||||||||||
Income tax expense | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Earnings (loss) per share | |||||||||||
Basic | $ | $ | ( | ||||||||
Diluted | $ | $ | ( | ||||||||
Weighted average common shares outstanding | |||||||||||
Basic | |||||||||||
Diluted | |||||||||||
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Other comprehensive income (loss), net of income taxes: | |||||||||||
Change in unfunded pension plan obligation liability | |||||||||||
Other | |||||||||||
Comprehensive income (loss) | $ | $ | ( | ||||||||
Common Stock | Additional Paid-in Capital | (Accumulated Deficit) Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net of Income Taxes | Total | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Equity-based compensation and other | — | — | — | ||||||||||||||||||||||||||||||||
Other comprehensive income, net of income taxes | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Equity-based compensation and other | ( | — | — | ( | |||||||||||||||||||||||||||||||
Other comprehensive income, net of income taxes | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | ( | $ | ( | $ |
For the Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
MSR valuation adjustments, net | |||||||||||
Provision for bad debts (advances and receivables) | |||||||||||
Provision for indemnification obligations | |||||||||||
Depreciation | |||||||||||
Amortization of debt issuance costs and discount | |||||||||||
Amortization of intangibles | |||||||||||
Gain on extinguishment of debt | ( | ||||||||||
Equity-based compensation expense | |||||||||||
Gain on reverse loans held for investment and HMBS-related borrowings, net | ( | ( | |||||||||
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 | |||||||||||
Decrease (increase) in receivables and other assets | ( | ||||||||||
Increase in derivatives | ( | ( | |||||||||
Decrease in other liabilities | ( | ( | |||||||||
Other, net | ( | ( | |||||||||
Net cash used in 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 | |||||||||||
Proceeds from sale of advances | |||||||||||
Purchase of real estate | ( | ( | |||||||||
Proceeds from sale of real estate | |||||||||||
Additions to premises and equipment | ( | ( | |||||||||
Proceeds from sale of premises and equipment | |||||||||||
Distribution from (investment in) equity method investee, net | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Repayment of advance match funded liabilities, net | ( | ( | |||||||||
Proceeds from mortgage loan financing facilities, net | |||||||||||
Proceeds from MSR financing facilities | |||||||||||
Repayment of MSR financing facilities | ( | ( | |||||||||
Repurchase of Senior notes | ( | ||||||||||
Payment of debt issuance costs | ( | ||||||||||
Proceeds from other financing liabilities - Sale of MSRs accounted for as secured financing | |||||||||||
Proceeds from other financing liabilities - Excess Servicing Spread (ESS) liability | |||||||||||
Repayment of other financing liabilities | ( | ( | |||||||||
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 | ( | ( | |||||||||
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 period | $ | $ | |||||||||
Supplemental non-cash investing and financing activities: | |||||||||||
Recognition of gross right-of-use asset and lease liability: | |||||||||||
Right-of-use asset | $ | $ | |||||||||
Lease liability | |||||||||||
Transfer from loans held for investment to loans held for sale | |||||||||||
Transfers of loans held for sale to real estate owned (REO) | |||||||||||
March 31, 2024 | March 31, 2023 | ||||||||||
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 | $ | $ |
Note 1 - Organization and Basis of Presentation |
Note 2 – Securitizations and Variable Interest Entities |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Proceeds received from securitizations | $ | $ | |||||||||
Servicing fees collected (1) | |||||||||||
Purchases of previously transferred assets, net of claims reimbursed | ( | ( | |||||||||
$ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
Carrying value of assets | |||||||||||
MSRs, at fair value | $ | $ | |||||||||
Advances | |||||||||||
UPB of loans transferred (1) | |||||||||||
Maximum exposure to loss (2) | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
Mortgage loans (Loans held for sale) | $ | $ | |||||||||
Receivables, net | |||||||||||
REO (Other assets) | |||||||||||
Debt service and Interest reserve accounts (Restricted cash) | |||||||||||
Total assets | $ | $ | |||||||||
Outstanding borrowings (Mortgage loan financing facilities, net) | |||||||||||
Unamortized discount and debt issuance costs (Mortgage loan financing facilities, net) | ( | ( | |||||||||
Accrued expenses and Accrued interest (Other liabilities) | |||||||||||
Total liabilities | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
Match funded advances (Advances, net) | $ | $ | |||||||||
Debt service accounts (Restricted cash) | |||||||||||
Advance match funded liabilities | |||||||||||
March 31, 2024 | December 31, 2023 | ||||||||||
MSRs pledged (MSRs, at fair value) | $ | $ | |||||||||
Debt service account (Restricted cash) | |||||||||||
Outstanding borrowings (MSR financing facilities, net) | |||||||||||
Unamortized debt issuance costs (MSR financing facilities, net) | ( | ( | |||||||||
Note 3 – Fair Value |
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||
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, at fair value | |||||||||||||||||||||||||||||
Loans held for investment - Reverse mortgages (a) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Loans held for investment - Restricted for securitization investors (a) | 3 | ||||||||||||||||||||||||||||
Total Loans held for investment, at fair value | $ | $ | $ | $ | |||||||||||||||||||||||||
Advances, net (c) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Receivables, net (c) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Financial liabilities | |||||||||||||||||||||||||||||
Advance match funded liabilities (c) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Financing liabilities, at fair value: | |||||||||||||||||||||||||||||
HMBS-related borrowings (a) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Other financing liabilities | 3 | ||||||||||||||||||||||||||||
Mortgage loan financing facilities (c) (d) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
MSR financing facilities (c) (d) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Senior notes | |||||||||||||||||||||||||||||
PMC Senior secured notes due 2026 (c) (d) | 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
OFC Senior secured notes due 2027 (c) (d) | 3 | ||||||||||||||||||||||||||||
Total Senior notes | $ | $ | $ | $ | |||||||||||||||||||||||||
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||
Level | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
Derivative financial instrument assets (liabilities), net | |||||||||||||||||||||||||||||
Interest rate lock commitments (IRLCs) (a) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Forward sales of loans (a) | 1 | ( | ( | ( | ( | ||||||||||||||||||||||||
TBA / Forward mortgage-backed securities (MBS) trades (a) | 1 | ||||||||||||||||||||||||||||
Interest rate swap futures (a) | 1 | ( | ( | ||||||||||||||||||||||||||
TBA forward pipeline trades (a) | 1 | ( | ( | ( | ( | ||||||||||||||||||||||||
Option contracts (a) | 1 | ||||||||||||||||||||||||||||
Other (a) | 3 | ( | ( | ||||||||||||||||||||||||||
MSRs (a) | 3 | $ | $ | $ | $ | ||||||||||||||||||||||||
Loans Held for Sale - Fair Value | ESS Financing Liability | IRLCs | |||||||||||||||
Three months ended March 31, 2024 | |||||||||||||||||
Beginning balance | $ | $ | ( | $ | |||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||
Purchases and other | — | — | |||||||||||||||
Issuances (1) | — | — | |||||||||||||||
Sales | ( | — | — | ||||||||||||||
Settlements (2) | ( | — | |||||||||||||||
Transfers from (to) | |||||||||||||||||
Loans held for investment, at fair value | — | — | |||||||||||||||
Loans held for sale, at fair value (1) | — | — | ( | ||||||||||||||
REO (Other assets) | ( | — | — | ||||||||||||||
Receivables, net | ( | — | — | ||||||||||||||
Advances - (capitalization upon Ginnie Mae modification) | — | — | |||||||||||||||
Net addition (disposition/derecognition) | |||||||||||||||||
Included in earnings: | |||||||||||||||||
Change in fair value (1) | ( | ( | |||||||||||||||
Ending balance | $ | $ | ( | $ |
Loans Held for Sale - Fair Value | ESS Financing Liability | IRLCs | |||||||||||||||
Three months ended March 31, 2023 | |||||||||||||||||
Beginning balance | $ | $ | ( | $ | ( | ||||||||||||
Purchases, issuances, sales and settlements | |||||||||||||||||
Purchases and other | — | — | |||||||||||||||
Issuances (1) | — | ( | |||||||||||||||
Sales | ( | — | — | ||||||||||||||
Settlements (2) | — | — | |||||||||||||||
Transfers from (to): | |||||||||||||||||
Loans held for sale, at fair value (1) | — | — | ( | ||||||||||||||
Receivables, net | ( | — | — | ||||||||||||||
Net addition (disposition/derecognition) | ( | ( | ( | ||||||||||||||
Included in earnings: | |||||||||||||||||
Change in fair value (1) | ( | ( | |||||||||||||||
Ending balance | $ | $ | ( | $ |
Significant unobservable assumptions | March 31, 2024 | December 31, 2023 | |||||||||
Life in years | |||||||||||
Range | |||||||||||
Weighted average | |||||||||||
Conditional prepayment rate, including voluntary and involuntary prepayments | |||||||||||
Range | |||||||||||
Weighted average | % | % | |||||||||
Discount rate | % | % |
Significant unobservable assumptions | March 31, 2024 | December 31, 2023 | |||||||||||||||||||||
Agency | Non-Agency | Agency | Non-Agency | ||||||||||||||||||||
Weighted average prepayment speed | % | % | % | % | |||||||||||||||||||
Weighted average lifetime delinquency rate | % | % | % | % | |||||||||||||||||||
Weighted average discount rate | % | % | % | % | |||||||||||||||||||
Weighted average cost to service (in dollars) | $ | $ | $ | $ |
Adverse change in fair value | 10% | 20% | |||||||||
Change in weighted average prepayment speeds (in percentage points) | |||||||||||
Change in fair value due to change in weighted average prepayment speeds | $ | ( | $ | ( | |||||||
Change in weighted average discount rate (in percentage points) | |||||||||||
Change in fair value due to change in weighted average discount rate | $ | ( | $ | ( |
Significant unobservable assumptions | March 31, 2024 | December 31, 2023 | |||||||||
Life in years | |||||||||||
Range | |||||||||||
Weighted average | |||||||||||
Conditional prepayment rate | |||||||||||
Range | |||||||||||
Weighted average | % | % | |||||||||
Discount rate | % | % |
Significant unobservable assumptions | March 31, 2024 | December 31, 2023 | |||||||||
Weighted average prepayment speed | % | % | |||||||||
Weighted average delinquency rate | % | % | |||||||||
Weighted average subservicing life (in years) | |||||||||||
Weighted average discount rate | % | % | |||||||||
Weighted average cost to service (in dollars) | $ | $ |
Note 4 – Loans Held for Sale - Fair Value |
March 31, 2024 | December 31, 2023 | ||||||||||
Unpaid principal balance | $ | $ | |||||||||
Premium (discount) | ( | ( | |||||||||
Unrealized gain (loss) | ( | ( | |||||||||
Total fair value | $ | $ | |||||||||
March 31, 2024 | December 31, 2023 | ||||||||||
GSE loans | $ | $ | |||||||||
Government- Forward loans | |||||||||||
Forward loans repurchased from Ginnie Mae guaranteed securitization (1) | |||||||||||
Reverse loans (2) | |||||||||||
Other residential mortgage loans | |||||||||||
Total | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Beginning balance | $ | $ | |||||||||
Originations and purchases | |||||||||||
Proceeds from sales | ( | ( | |||||||||
Principal collections | ( | ( | |||||||||
Transfers from (to): | |||||||||||
Loans held for investment, at fair value | |||||||||||
Receivables, net | ( | ||||||||||
REO (Other assets) | ( | ( | |||||||||
Advances (capitalization upon Ginnie Mae modifications) | |||||||||||
Fair value gain (loss) on loans held for sale, at fair value (1) | ( | ( | |||||||||
Other | |||||||||||
Ending balance | $ | $ | |||||||||
Gain (Loss) on Loans Held for Sale, Net | Three Months Ended March 31, | ||||||||||
2024 | 2023 | ||||||||||
MSRs retained on transfers of forward mortgage loans | $ | $ | |||||||||
Gain (loss) on sale of forward mortgage loans (1) | ( | ( | |||||||||
Gain (loss) on sale of repurchased Ginnie Mae loans (1) | ( | ||||||||||
Change in fair value of loans held for sale | ( | ||||||||||
Gain on loans held for sale, at fair value | |||||||||||
Gain (loss) on economic hedge derivative instruments | ( | ||||||||||
Change in fair value of IRLCs | ( | ||||||||||
Provision for representation and warranty obligations | ( | ( | |||||||||
$ | $ |
Note 5 - Reverse Mortgages |
March 31, 2024 | December 31, 2023 | ||||||||||
Unpaid principal balance | $ | $ | |||||||||
Fair value adjustments | |||||||||||
Total fair value | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||
HECM loans - securitized, pledged to HMBS-related borrowings (1) | $ | $ | |||||||||
New HECM loan originations and HECM loan tails (2) - unsecuritized | |||||||||||
Total fair value | $ | $ |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||
Loans Held for Investment - Reverse Mortgages | HMBS - Related Borrowings | Loans Held for Investment - Reverse Mortgages | HMBS - Related Borrowings | ||||||||||||||||||||
Beginning balance | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Originations | — | — | |||||||||||||||||||||
Securitization of HECM loans accounted for as a financing | — | ( | — | ( | |||||||||||||||||||
Additional proceeds from securitization of HECM loans and tails | — | ( | — | ( | |||||||||||||||||||
Repayments (principal payments received) | ( | ( | |||||||||||||||||||||
Transfers to: | |||||||||||||||||||||||
Loans held for sale, at fair value | ( | — | ( | — | |||||||||||||||||||
Receivables, net | ( | — | ( | — | |||||||||||||||||||
Fair value gains (losses) included in earnings (1) | ( | ( | |||||||||||||||||||||
Ending balance | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Gain (Loss) on Reverse Loans Held for Investment and HMBS-related Borrowings, Net | Three Months Ended March 31, | ||||||||||
2024 | 2023 | ||||||||||
Gain on new originations (1) | $ | $ | |||||||||
Net interest income (servicing fee) (2) | |||||||||||
Other change in fair value of securitized loans held for investment and HMBS-related borrowings, net (3) | |||||||||||
Fair value gains (losses) included in earnings (3) (4) | |||||||||||
Loan fees and other | |||||||||||
$ | $ |
Note 6 – Advances |
March 31, 2024 | December 31, 2023 | ||||||||||
Principal and interest | $ | $ | |||||||||
Taxes and insurance | |||||||||||
Foreclosures, bankruptcy, REO and other | |||||||||||
Allowance for losses | ( | ( | |||||||||
Advances, net | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Beginning balance - before Allowance for Losses | $ | $ | |||||||||
New advances | |||||||||||
Transfer from (to) Receivables | |||||||||||
Sales of advances | ( | ( | |||||||||
Collections of advances and other | ( | ( | |||||||||
Ending balance - before Allowance for Losses | |||||||||||
Beginning balance - Allowance for Losses | ( | $ | ( | ||||||||
Provision expense | ( | ( | |||||||||
Net charge-offs and other | |||||||||||
Ending balance - Allowance for Losses | ( | ( | |||||||||
Ending balance, net | $ | $ |
Note 7 – Mortgage Servicing |
MSR UPB and Fair Value | March 31, 2024 | December 31, 2023 | |||||||||||||||
Fair Value | UPB ($ billions) | Fair Value | UPB ($ billions) | ||||||||||||||
Owned MSRs | $ | $ | $ | $ | |||||||||||||
Rithm and others transferred MSRs (1) (2) | |||||||||||||||||
MAV transferred MSRs (1) | |||||||||||||||||
Total transferred MSR, subject to Pledged MSR liability, at fair value (1) | |||||||||||||||||
Total MSRs | $ | $ | $ | $ |
Mortgage Servicing Rights – At Fair Value | Three Months Ended March 31, | ||||||||||
2024 | 2023 | ||||||||||
Beginning balance | $ | $ | |||||||||
Sales | |||||||||||
Additions: | |||||||||||
Recognized on the sale of residential mortgage loans | |||||||||||
Purchases of MSRs | |||||||||||
Servicing transfers and adjustments | ( | ||||||||||
Net additions (sales) | |||||||||||
Changes in fair value recognized in earnings: | |||||||||||
Changes in valuation inputs or assumptions | ( | ||||||||||
Realization of cash flows | ( | ( | |||||||||
Fair value gains (losses) recognized in earnings | ( | ||||||||||
Ending balance | $ | $ |
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
Delinquent loans | GSE | GNMA | Non - Agency | Total | GSE | GNMA | Non - Agency | Total | |||||||||||||||||||||||||||||||||||||||
Total MSR UPB (in billions) | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
30 days | % | % | % | % | % | % | % | % | |||||||||||||||||||||||||||||||||||||||
60 days | |||||||||||||||||||||||||||||||||||||||||||||||
90 days or more | |||||||||||||||||||||||||||||||||||||||||||||||
Total 30-60-90 days or more | % | % | % | % | % | % | % | % |
Servicing Revenue | Three Months Ended March 31, | ||||||||||
2024 | 2023 | ||||||||||
Loan servicing and subservicing fees | |||||||||||
Servicing fee | $ | $ | |||||||||
Subservicing fee (4) | |||||||||||
MAV Subservicing fee | |||||||||||
MAV Servicing fee / Transferred MSR (1) | |||||||||||
Rithm and Others Servicing fee / Transferred MSR (1) (3) | |||||||||||
Ancillary income | |||||||||||
Custodial accounts (float earnings) | |||||||||||
Late charges | |||||||||||
Reverse subservicing ancillary fees | |||||||||||
Loan collection fees | |||||||||||
Recording fees | |||||||||||
Boarding and deboarding fees | |||||||||||
GSE forbearance fees | |||||||||||
Other, net | |||||||||||
Total Servicing and subservicing fees | $ | $ | |||||||||
Owned MSR and Subservicing | |||||||||||
Transferred MSR (1) (2) |
Note 8 — Other Financing Liabilities, at Fair Value |
Outstanding Balance | |||||||||||||||||||||||
Borrowing Type | Collateral | Maturity | March 31, 2024 | December 31, 2023 | |||||||||||||||||||
MSR transfers not qualifying for sale accounting (1): | |||||||||||||||||||||||
Pledged MSR liability, at fair value - MAV | MSRs | (1) | $ | $ | |||||||||||||||||||
Rights to MSRs Agreements, at fair value - Rithm | MSRs | (1) | |||||||||||||||||||||
Pledged MSR liability, at fair value - Others | MSRs | (1) | |||||||||||||||||||||
Total Pledged MSR liability, at fair value | |||||||||||||||||||||||
Financing liability - Owed to securitization investors, at fair value: Residential Asset Securitization Trust 2003-A11 (RAST 2003-A11) (2) | Loans held for investment | October 2033 | |||||||||||||||||||||
ESS financing liability, at fair value (3) | MSRs (3) | (3) | |||||||||||||||||||||
Total Other financing liabilities, at fair value | $ | $ |
Three Months Ended March 31, | |||||||||||
Pledged MSR Liability | 2024 | 2023 | |||||||||
Beginning balance | $ | $ | |||||||||
MSR transfers | |||||||||||
MSR transfers to MAV | |||||||||||
MSR transfers to Rithm | ( | ||||||||||
MSR transfers to others | |||||||||||
Total MSR transfers | |||||||||||
Fair value (gain) loss | |||||||||||
Changes in fair value due to inputs and assumptions | ( | ||||||||||
Realization of expected cash flows | ( | ( | |||||||||
Total fair value (gain) loss | ( | ( | |||||||||
Ending balance (1) | $ | $ |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||||||||
Rithm and Others | MAV | Total | Rithm and Others (1) | MAV | Total | ||||||||||||||||||||||||||||||
Servicing fees collected on behalf of MAV, Rithm and others | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Less: Subservicing fee retained by Ocwen | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
Ancillary fee/income and other settlement (including expense reimbursement) | ( | ||||||||||||||||||||||||||||||||||
Transferred MSR net servicing fee remittance | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
ESS servicing spread remittance | |||||||||||||||||||||||||||||||||||
Pledged MSR liability expense | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Total MSRs (1) | $ | $ | ( | ||||||||
Pledged MSR liabilities (2) (3) | |||||||||||
ESS financing liabilities (2) | ( | ||||||||||
Derivative fair value gain (loss) (MSR economic hedges) (4) | ( | ||||||||||
MSR valuation adjustments, net | $ | ( | $ | ( | |||||||
Note 10 – Receivables |
March 31, 2024 | December 31, 2023 | ||||||||||
Servicing-related receivables: | |||||||||||
Government-insured loan claims - Forward | $ | $ | |||||||||
Government-insured loan claims - Reverse | |||||||||||
Due from custodial accounts | |||||||||||
Subservicing fees and reimbursable expenses | |||||||||||
Receivable from sale of MSRs (holdback) | |||||||||||
Subservicing fees, reimbursable expenses and other - Due from MAV | |||||||||||
Other | |||||||||||
Income taxes receivable (1) | |||||||||||
Other receivables | |||||||||||
Allowance for losses | ( | ( | |||||||||
$ | $ |
Allowance for Losses | Three Months Ended March 31, | ||||||||||
2024 | 2023 | ||||||||||
Beginning balance | $ | $ | |||||||||
Provision | |||||||||||
Charge-offs and other, net | ( | ( | |||||||||
Ending balance | $ | $ |
Note 11 - Investment in Equity Method Investee and Related Party Transactions |
Note 12 – Other Assets |
March 31, 2024 | December 31, 2023 | ||||||||||
Contingent loan repurchase asset | $ | $ | |||||||||
REO | |||||||||||
Prepaid expenses | |||||||||||
Derivatives, at fair value | |||||||||||
Prepaid lender fees, net | |||||||||||
Intangible assets, net (net of accumulated amortization of $ | |||||||||||
Prepaid representation, warranty and indemnification claims - Agency MSR sale | |||||||||||
Deferred tax asset, net | |||||||||||
Derivative margin deposit | |||||||||||
Other | |||||||||||
$ | $ |
Note 13 – Borrowings |
Advance Match Funded Liabilities | Available Borrowing Capacity | Outstanding Balance | ||||||||||||||||||||||||||||||
Borrowing Type | Expected Repayment Date (1) | Uncommitted | Committed | March 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||||
$500 million Ocwen Master Advance Receivables Trust (OMART) - Advance Receivables Backed Notes - Series 2015-Variable Funding (VF) 5 (2) | August 2025 | $ | $ | $ | $ | |||||||||||||||||||||||||||
$200 million Ocwen GSE Advance Funding (OGAF) - Advance Receivables Backed Notes, Series 2015-VF1 (2) | August 2025 | |||||||||||||||||||||||||||||||
$14.4 million EBO Advance facility (3) | May 2026 | |||||||||||||||||||||||||||||||
Total Advance match funded liabilities | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Weighted average interest rate (4) | % | % |
Mortgage Loan Financing Facilities | Available Borrowing Capacity | Outstanding Balance | ||||||||||||||||||||||||||||||||||||
Borrowing Type | Collateral | Maturity | Uncommitted | Committed (1) | March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||
$200 million Master repurchase agreement (2) | LHFS, Receivables and REO | April 2024 | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
$204 million Mortgage warehouse agreement (3) | LHFS and LHFI | May 2024 | ||||||||||||||||||||||||||||||||||||
$40 million Mortgage warehouse agreement (4) | LHFI | June 2024 | ||||||||||||||||||||||||||||||||||||
Master repurchase agreement | LHFS | June 2024 | ||||||||||||||||||||||||||||||||||||
$50 million Loan and security agreement (5) | LHFS and Receivables | June 2024 | ||||||||||||||||||||||||||||||||||||
$400 million Participation agreement | LHFS | September 2024 | ||||||||||||||||||||||||||||||||||||
$200 million Master repurchase agreement | LHFS, LHFI and Receivables | September 2024 | ||||||||||||||||||||||||||||||||||||
$30 million Loan and security agreement | LHFI | September 2024 | ||||||||||||||||||||||||||||||||||||
$175 million Master repurchase agreement | Loans held for sale (LHFS), Receivables and REO | October 2024 | ||||||||||||||||||||||||||||||||||||
$500 million Master repurchase agreement (6) | LHFS and LHFI | January 2025 |
Mortgage Loan Financing Facilities | Available Borrowing Capacity | Outstanding Balance | ||||||||||||||||||||||||||||||||||||
Borrowing Type | Collateral | Maturity | Uncommitted | Committed (1) | March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||
OLIT Asset-Backed Notes, Series 2023-HB1 (7) | Reverse LHFS, Receivables and REO | June 2036 | ||||||||||||||||||||||||||||||||||||
OLIT Asset-Backed Notes, Series 2024-HB1 (7) | Reverse LHFS, Receivables and REO | February 2037 | ||||||||||||||||||||||||||||||||||||
$350 million Mortgage warehouse agreement (8) | LHFS | N/A | ||||||||||||||||||||||||||||||||||||
$230 million Mortgage warehouse agreement (9) | LHFS and Receivables | (9) | ||||||||||||||||||||||||||||||||||||
Master repurchase agreement (10) | LHFS | (10) | ||||||||||||||||||||||||||||||||||||
Total Mortgage loan financing facilities | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Unamortized discount and debt issuance costs - OLIT Notes | ( | ( | ||||||||||||||||||||||||||||||||||||
Total Mortgage loan financing facilities, net | $ | $ | ||||||||||||||||||||||||||||||||||||
Weighted average interest rate (11) | % | % |
MSR Financing Facilities | Available Borrowing Capacity | Outstanding Balance | ||||||||||||||||||||||||||||||||||||
Borrowing Type | Collateral | Maturity | Uncommitted | Committed (1) | March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||
$365 million GSE MSR financing facility (2) | MSRs | June 2024 | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
$300 million Ginnie Mae MSR financing facility (3) | MSRs, Advances | February 2025 | ||||||||||||||||||||||||||||||||||||
Ocwen Excess Spread-Collateralized Notes, Series 2022-PLS1 (4) | MSRs | February 2025 | ||||||||||||||||||||||||||||||||||||
2022-PLS1 Notes Issuer Membership Interest Master repurchase agreement (5) | MSRs | February 2025 | ||||||||||||||||||||||||||||||||||||
$400 million GSE MSR financing facility (6) | MSRs | December 2025 | ||||||||||||||||||||||||||||||||||||
Secured Notes, Ocwen Asset Servicing Income Series Notes, Series 2014-1 | MSRs | February 2028 | ||||||||||||||||||||||||||||||||||||
Total MSR financing facilities | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Unamortized debt issuance costs - PLS Notes (7) | ( | ( | ||||||||||||||||||||||||||||||||||||
Total MSR financing facilities, net | $ | $ | ||||||||||||||||||||||||||||||||||||
Weighted average interest rate (8) |
Senior Notes | Interest Rate (1) | Maturity | Outstanding Balance | |||||||||||||||||
March 31, 2024 | December 31, 2023 | |||||||||||||||||||
PMC Senior Secured Notes (2) | March 2026 | $ | $ | |||||||||||||||||
OFC Senior Secured Notes (due to related parties) (3) | March 2027 | |||||||||||||||||||
Principal balance | ||||||||||||||||||||
Unamortized discount | ( | ( | ||||||||||||||||||
Unamortized debt issuance costs | ( | ( | ||||||||||||||||||
PMC Senior Secured Notes | ( | ( | ||||||||||||||||||
Unamortized discount | ( | ( | ||||||||||||||||||
Unamortized debt issuance costs | ( | ( | ||||||||||||||||||
OFC Senior Secured Notes | ( | ( | ||||||||||||||||||
$ | $ |
Assets | Pledged Assets | Collateralized Borrowings | Unencumbered Assets (1) | ||||||||||||||||||||
Cash | $ | $ | $ | $ | |||||||||||||||||||
Restricted cash | |||||||||||||||||||||||
Loans held for sale | |||||||||||||||||||||||
Loans held for investment - securitized (2) | |||||||||||||||||||||||
Loans held for investment - unsecuritized | |||||||||||||||||||||||
MSRs (3) | |||||||||||||||||||||||
Advances, net | |||||||||||||||||||||||
Receivables, net | |||||||||||||||||||||||
REO | |||||||||||||||||||||||
Total (4) | $ | $ | $ | $ |
March 31, 2024 | |||||
Specified net servicing advances | $ | ||||
Specified deferred servicing fee | |||||
Specified MSR value less borrowings | |||||
Specified unrestricted cash balances | |||||
Specified advance facility reserves | |||||
Specified loan value | |||||
Specified residual value | |||||
Total | $ |
Note 14 – Other Liabilities |
March 31, 2024 | December 31, 2023 | ||||||||||
Contingent loan repurchase liability | $ | $ | |||||||||
Other accrued expenses | |||||||||||
Checks held for escheat | |||||||||||
Due to Rithm - Advance collections and servicing fees | |||||||||||
Servicing-related obligations | |||||||||||
Liability for indemnification obligations | |||||||||||
Liability for uncertain tax positions | |||||||||||
Liability for unfunded pension obligation and India gratuity plan | |||||||||||
Lease liability | |||||||||||
Accrued legal fees and settlements | |||||||||||
Accrued interest payable | |||||||||||
Income taxes payable | |||||||||||
Derivatives, at fair value | |||||||||||
Derivative related payables | |||||||||||
Mortgage insurance premium payable | |||||||||||
MSR purchase price holdback | |||||||||||
Excess servicing fee spread payable | |||||||||||
Other | |||||||||||
$ | $ |
Note 15 – Derivative Financial Instruments and Hedging Activities |
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
Maturities | Notional | Fair value | Maturities | Notional | Fair value | ||||||||||||||||||
Derivative Assets (Other assets) | |||||||||||||||||||||||
Forward sales of Reverse loans | April 2024 | $ | $ | N/A | $ | $ | |||||||||||||||||
Forward loans IRLCs | April - July 2024 | January - May 2024 | |||||||||||||||||||||
Reverse loans IRLCs | May 2024 | February 2024 | |||||||||||||||||||||
TBA forward MBS trades | April - June 2024 | January - March 2024 | |||||||||||||||||||||
Forward sales of Forward loans | April 2024 | January 2024 | |||||||||||||||||||||
Interest rate swap futures | June 2024 | March 2024 | |||||||||||||||||||||
Interest rate option contracts | N/A | January 2024 | |||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Derivative Liabilities (Other liabilities) | |||||||||||||||||||||||
Forward sales of Reverse loans | N/A | January 2024 | ( | ||||||||||||||||||||
TBA forward MBS trades | April - June 2024 | ( | January - March 2024 | ( | |||||||||||||||||||
Forward sales of Forward loans | April 2024 | ( | N/A | ||||||||||||||||||||
Interest rate swap futures | June 2024 | ( | N/A | ||||||||||||||||||||
Other | N/A | N/A | ( | ||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Three Months Ended March 31, | Financial Statement Line | ||||||||||||||||
Gain (Loss) | 2024 | 2023 | |||||||||||||||
Derivative Instruments | |||||||||||||||||
Forward loans IRLCs | $ | ( | $ | Gain on loans held for sale, net | |||||||||||||
Reverse loans IRLCs | ( | Gain on reverse loans held for investment and HMBS-related borrowings, net | |||||||||||||||
Forward trades (economically hedging forward pipeline trades and EBO pipeline) | ( | Gain on loans held for sale, net (Economic hedge) | |||||||||||||||
TBA trades (economically hedging forward pipeline trades and EBO pipeline) | ( | Gain on loans held for sale, net (Economic hedge) | |||||||||||||||
Interest rate swap futures, TBA trades and interest rate option contracts (economically hedging MSR) | ( | MSR valuation adjustments, net | |||||||||||||||
Forward sales of Reverse loans | Gain on reverse loans held for investment and HMBS-related borrowings, net | ||||||||||||||||
Other | Other, net | ||||||||||||||||
Total | $ | ( | $ | ||||||||||||||
Note 16 – Interest Expense |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Mortgage loan financing facilities | $ | $ | |||||||||
MSR financing facilities | |||||||||||
OFC Senior Secured Notes (1) | |||||||||||
Advance match funded liabilities | |||||||||||
PMC Senior Secured Notes | |||||||||||
Escrow | |||||||||||
$ | $ |
Note 17 – Basic and Diluted Earnings (Loss) per Share |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Basic earnings (loss) per share | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Weighted average shares of common stock outstanding | |||||||||||
Basic earnings (loss) per share | $ | $ | ( | ||||||||
Diluted earnings (loss) per share | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Weighted average shares of common stock outstanding | |||||||||||
Effect of dilutive elements | |||||||||||
Common stock warrants | |||||||||||
Stock option awards | |||||||||||
Common stock awards | |||||||||||
Dilutive weighted average shares of common stock | |||||||||||
Diluted earnings (loss) per share | $ | $ | ( | ||||||||
Stock options and common stock awards excluded from the computation of diluted earnings (loss) per share | |||||||||||
Anti-dilutive (1) | |||||||||||
Market-based (2) |
Note 18 – Business Segment Reporting |
Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||
Results of Operations | Servicing | Originations | Corporate Items and Other | Business Segments Consolidated | ||||||||||||||||||||||
Servicing and subservicing fees | $ | $ | $ | $ | ||||||||||||||||||||||
Gain on reverse loans held for investment and HMBS-related borrowings, net | ||||||||||||||||||||||||||
Gain on loans held for sale, net | ||||||||||||||||||||||||||
Other revenue, net | ||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
MSR valuation adjustments, net | ( | ( | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||
Compensation and benefits | ||||||||||||||||||||||||||
Servicing and origination | ||||||||||||||||||||||||||
Technology and communications | ||||||||||||||||||||||||||
Professional services | ||||||||||||||||||||||||||
Occupancy, equipment and mailing | ||||||||||||||||||||||||||
Corporate overhead allocations | ( | |||||||||||||||||||||||||
Other expenses | ||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Pledged MSR liability expense | ( | ( | ||||||||||||||||||||||||
Earnings of equity method investee | ||||||||||||||||||||||||||
Gain on extinguishment of debt | ||||||||||||||||||||||||||
Other, net | ( | ( | ( | |||||||||||||||||||||||
Other income (expense), net | ( | ( | ( | ( | ||||||||||||||||||||||
Income (loss) before income taxes | $ | $ | $ | ( | $ | |||||||||||||||||||||
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||
Results of Operations | Servicing | Originations | Corporate Items and Other | Business Segments Consolidated | ||||||||||||||||||||||
Servicing and subservicing fees | $ | $ | $ | |||||||||||||||||||||||
Gain on reverse loans held for investment and HMBS-related borrowings, net | ||||||||||||||||||||||||||
Gain (loss) on loans held for sale, net | ( | |||||||||||||||||||||||||
Other revenue, net | ||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
MSR valuation adjustments, net | ( | ( | ||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||
Compensation and benefits | ||||||||||||||||||||||||||
Servicing and origination | ||||||||||||||||||||||||||
Technology and communications | ||||||||||||||||||||||||||
Professional services | ||||||||||||||||||||||||||
Occupancy, equipment and mailing | ||||||||||||||||||||||||||
Corporate overhead allocations | ( | |||||||||||||||||||||||||
Other expenses | ||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Pledged MSR liability expense | ( | ( | ||||||||||||||||||||||||
Earnings of equity method investee | ||||||||||||||||||||||||||
Gain on extinguishment of debt | ||||||||||||||||||||||||||
Other, net | ( | |||||||||||||||||||||||||
Other income (expense), net | ( | ( | ( | ( | ||||||||||||||||||||||
Income (loss) before income taxes | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Total Assets | Servicing | Originations | Corporate Items and Other | Business Segments Consolidated | |||||||||||||||||||
March 31, 2024 | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||
Note 19 – Regulatory Requirements |
Note 20 — Commitments |
Securitized HECM loans at less than 92% MCA | $ | ||||
Securitized HECM loans at equal to or greater than 92% and less than 95% MCA | |||||
Securitized HECM loans at equal to or greater than 95% MCA and less than 98% MCA | |||||
Total Securitized HECM loans UPB | $ |
Active | Inactive | Total | |||||||||||||||
Beginning balance | $ | $ | $ | ||||||||||||||
Additions | |||||||||||||||||
Recoveries, net (1) | ( | ( | ( | ||||||||||||||
Transfers | ( | ||||||||||||||||
Changes in value | ( | ( | |||||||||||||||
Ending balance | $ | $ | $ |
Note 21 – Contingencies |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Beginning balance (1) | $ | $ | |||||||||
Provision for (reversal of) representation and warranty obligations | ( | ||||||||||
Provision for representation and warranty obligations - New production liability | |||||||||||
Charge-offs and other (2) | ( | ||||||||||
Ending balance (1) | $ | $ |
OVERVIEW |
$ In billions | UPB | $ Change | |||||||||||||||||||||||||||
Three Months Ended | Q1 2024 vs Q4 2023 | Q1 2024 vs Q1 2023 | |||||||||||||||||||||||||||
March 31, | December 31, | March 31, | |||||||||||||||||||||||||||
2024 | 2023 | 2023 | |||||||||||||||||||||||||||
Mortgage servicing originations | |||||||||||||||||||||||||||||
Retail - Consumer Direct MSR (1) | $ | 0.1 | $ | 0.1 | $ | 0.1 | $ | — | $ | 0.1 | |||||||||||||||||||
Correspondent MSR (1) | 2.7 | 2.8 | 2.4 | (0.1) | 0.2 | ||||||||||||||||||||||||
Flow and Agency Cash Window MSR purchases (2) | 1.6 | 2.5 | 1.8 | (0.9) | (0.2) | ||||||||||||||||||||||||
Reverse mortgage servicing (3) | 0.2 | 0.2 | 0.1 | — | — | ||||||||||||||||||||||||
Total servicing | 4.6 | 5.6 | 4.5 | (1.0) | 0.1 | ||||||||||||||||||||||||
Bulk purchases (2) | 0.8 | 0.1 | 0.2 | 0.7 | 0.5 | ||||||||||||||||||||||||
Total servicing additions | 5.4 | 5.7 | 4.7 | (0.3) | 0.7 | ||||||||||||||||||||||||
Interim forward subservicing | 1.7 | 1.9 | 1.2 | (0.3) | 0.5 | ||||||||||||||||||||||||
Other new forward subservicing | 16.1 | 1.8 | 11.5 | 14.2 | 4.6 | ||||||||||||||||||||||||
Reverse subservicing | — | 0.1 | 0.1 | (0.1) | — | ||||||||||||||||||||||||
Total Subservicing additions (4) | 17.8 | 3.9 | 12.8 | 13.9 | 5.0 | ||||||||||||||||||||||||
Total servicing and subservicing UPB additions | $ | 23.2 | $ | 9.5 | $ | 17.5 | $ | 13.6 | $ | 5.7 |
$ In billions | Average UPB | $ Change | |||||||||||||||||||||||||||
Three Months Ended | Q1 2024 vs Q4 2023 | Q1 2024 vs Q1 2023 | |||||||||||||||||||||||||||
March 31, | December 31, | March 31, | |||||||||||||||||||||||||||
2024 | 2023 | 2023 | |||||||||||||||||||||||||||
Owned MSR | $ | 123.2 | $ | 121.4 | $ | 127.0 | $ | 1.8 | $ | (3.7) | |||||||||||||||||||
Rithm | 44.6 | 45.5 | 48.6 | (0.9) | (4.0) | ||||||||||||||||||||||||
MAV | 54.6 | 56.3 | 49.3 | (1.7) | 5.4 | ||||||||||||||||||||||||
Subservicing (including reverse subservicing) | 51.6 | 52.0 | 60.6 | (0.5) | (9.0) | ||||||||||||||||||||||||
Reverse mortgage loans (owned) | 8.1 | 7.9 | 7.6 | 0.2 | 0.5 | ||||||||||||||||||||||||
Other servicing (including whole loans) | 0.7 | 0.8 | 0.8 | (0.1) | — | ||||||||||||||||||||||||
Other MSR capital partners | 8.5 | 8.2 | 0.2 | 0.3 | 8.3 | ||||||||||||||||||||||||
Total servicing and subservicing UPB (average) | $ | 291.4 | $ | 292.2 | $ | 294.1 | $ | (0.8) | $ | (2.7) |
Three Months Ended | |||||||||||||||||
March 31, | December 31, | March 31, | |||||||||||||||
2024 | 2023 | 2023 | |||||||||||||||
30-year fixed rate mortgage (1) | |||||||||||||||||
Average | 6.74% | 7.30% | 6.38% | ||||||||||||||
End of period | 6.79% | 6.61% | 6.32% | ||||||||||||||
10-year Treasury rate (end of period) | 4.20% | 3.88% | 3.48% | ||||||||||||||
1-month Term SOFR (average) | 5.33% | 5.34% | 4.61% |
Condensed Statements of Operations | Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | |||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Revenue | $ | 239.1 | $ | 277.3 | (14)% | $ | 261.8 | (9) | % | ||||||||||||||||||||
MSR valuation adjustments, net | (11.6) | (98.0) | (88) | (69.0) | (83) | ||||||||||||||||||||||||
Operating expenses | 104.4 | 103.7 | 1 | 114.1 | (8) | ||||||||||||||||||||||||
Other income (expense), net | (91.3) | (121.2) | (25) | (117.0) | (22) | ||||||||||||||||||||||||
Income (loss) before income taxes | 31.8 | (45.6) | (170) | (38.3) | (183) | ||||||||||||||||||||||||
Income tax expense | 1.7 | 1.8 | (7) | 1.9 | (11) | ||||||||||||||||||||||||
Net income (loss) | $ | 30.1 | $ | (47.4) | (163)% | $ | (40.2) | (175) | % | ||||||||||||||||||||
Segment income (loss) before income taxes | |||||||||||||||||||||||||||||
Servicing | $ | 54.2 | $ | (17.8) | (404)% | $ | (12.0) | (550) | % | ||||||||||||||||||||
Originations | 1.1 | 0.2 | 507 | (2.7) | (139) | ||||||||||||||||||||||||
Corporate Items and Other | (23.4) | (28.0) | (16) | (23.6) | (1) | ||||||||||||||||||||||||
$ | 31.8 | $ | (45.6) | (170)% | $ | (38.3) | (183) | % | |||||||||||||||||||||
Revenue | Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | |||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Servicing | $ | 219.1 | $ | 260.3 | (16) | % | $ | 247.0 | (11) | % | |||||||||||||||||||
Originations | 20.0 | 17.0 | 18 | 14.8 | 35 | ||||||||||||||||||||||||
Corporate | — | — | (100) | — | n/m | ||||||||||||||||||||||||
Total segment revenue | $ | 239.1 | $ | 277.3 | (14) | % | $ | 261.8 | (9) | % | |||||||||||||||||||
n/m: not meaningful |
Three Months Ended | |||||||||||||||||
March 31, 2024 | December 31, 2023 | March 31, 2023 | |||||||||||||||
Realization of expected cash flows (runoff) | $ | (39.9) | $ | (36.6) | $ | (35.7) | |||||||||||
Fair value gains (losses) due to rate and assumption changes | 82.0 | (148.0) | (47.4) | ||||||||||||||
MSR hedging derivative fair value gain (loss) | (53.7) | 86.6 | 14.1 | ||||||||||||||
Sub-total fair value gains (losses) due to rates and assumptions, net of hedging (1) | 28.3 | (61.4) | (33.3) | ||||||||||||||
MSR valuation adjustments, net | $ | (11.6) | $ | (98.0) | $ | (69.0) |
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Compensation and benefits | $ | 53.6 | $ | 57.8 | (7) | % | $ | 58.0 | (8) | % | |||||||||||||||||||
Servicing and origination | 15.0 | 8.5 | 77 | 15.7 | (4) | ||||||||||||||||||||||||
Technology and communications | 12.7 | 13.1 | (3) | 13.4 | (5) | ||||||||||||||||||||||||
Professional services | 12.0 | 12.4 | (3) | 13.3 | (9) | ||||||||||||||||||||||||
Occupancy, equipment and mailing | 7.7 | 7.6 | 1 | 8.8 | (12) | ||||||||||||||||||||||||
Other expenses | 3.4 | 4.3 | (20) | 4.9 | (33) | ||||||||||||||||||||||||
Total operating expenses | $ | 104.4 | $ | 103.7 | 1 | % | $ | 114.1 | (8) | % | |||||||||||||||||||
Average headcount | 4,486 | 4,588 | (2) | % | 4,796 | (6) | % |
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Net interest expense | $ | (49.9) | $ | (50.9) | (2) | % | $ | (48.2) | 4 | % | |||||||||||||||||||
Pledged MSR liability expense | (44.9) | (76.5) | (41) | (70.3) | (36) | ||||||||||||||||||||||||
Earnings of equity method investee | 2.7 | 1.4 | 95 | 0.3 | 978 | ||||||||||||||||||||||||
Gain on extinguishment of debt | 1.4 | 0.1 | n/m | — | n/m | ||||||||||||||||||||||||
Other, net | (0.6) | 4.7 | (112) | 1.2 | (158) | ||||||||||||||||||||||||
Other income (expense), net | $ | (91.3) | $ | (121.2) | (25) | % | $ | (117.0) | (22) | % | |||||||||||||||||||
Three Months Ended | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||
March 31, | December 31, | % Change | % Change | ||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Income tax expense (benefit) | $ | 1.7 | $ | 1.8 | (7) | % | $ | 1.9 | (11) | % | |||||||||||||||||||
Income (loss) before income taxes | $ | 31.8 | $ | (45.6) | (170) | $ | (38.3) | (183) | |||||||||||||||||||||
Effective tax rate | 5.2 | % | (3.9) | % | (234) | % | (5.0) | % | (206) | % |
Financial Condition Summary | March 31, 2024 | December 31, 2023 | $ Change | % Change | |||||||||||||||||||
Cash and cash equivalents | $ | 185.1 | $ | 201.6 | $ | (16.5) | (8) | % | |||||||||||||||
Restricted cash | 66.1 | 53.5 | 12.6 | 24 | |||||||||||||||||||
MSRs, at fair value | 2,374.7 | 2,272.2 | 102.4 | 5 | |||||||||||||||||||
Advances, net | 602.7 | 678.8 | (76.1) | (11) | |||||||||||||||||||
Loans held for sale | 1,028.9 | 677.3 | 351.6 | 52 | |||||||||||||||||||
Loans held for investment, at fair value | 8,130.5 | 7,975.5 | 155.0 | 2 | |||||||||||||||||||
Receivables, net | 152.1 | 154.8 | (2.7) | (2) | |||||||||||||||||||
Investment in equity method investee | 37.6 | 37.8 | (0.2) | — | |||||||||||||||||||
Premises and equipment, net | 11.8 | 13.1 | (1.3) | (10) | |||||||||||||||||||
Other assets | 500.6 | 449.2 | 51.4 | 11 | |||||||||||||||||||
Total assets | $ | 13,090.1 | $ | 12,513.7 | $ | 576.4 | 5 | % | |||||||||||||||
Total Assets by Segment | |||||||||||||||||||||||
Servicing | $ | 12,003.9 | $ | 11,687.6 | $ | 316.3 | 3 | % | |||||||||||||||
Originations | 835.2 | 551.9 | 283.4 | 51 | |||||||||||||||||||
Corporate Items and Other | 250.9 | 274.3 | (23.3) | (9) | |||||||||||||||||||
$ | 13,090.1 | $ | 12,513.7 | $ | 576.4 | 5 | % | ||||||||||||||||
HMBS-related borrowings, at fair value | $ | 7,945.0 | $ | 7,797.3 | $ | 147.7 | 2 | % | |||||||||||||||
Other financing liabilities, at fair value | 906.8 | 900.0 | 6.8 | 1 | |||||||||||||||||||
Advance match funded liabilities | 440.2 | 499.7 | (59.5) | (12) | |||||||||||||||||||
Mortgage loan financing facilities, net | 1,108.9 | 710.6 | 398.3 | 56 | |||||||||||||||||||
MSR financing facilities, net | 964.1 | 916.2 | 47.9 | 5 | |||||||||||||||||||
Senior notes, net | 552.0 | 595.8 | (43.8) | (7) | |||||||||||||||||||
Other liabilities | 741.0 | 692.3 | 48.7 | 7 | |||||||||||||||||||
Total liabilities | 12,658.0 | 12,111.9 | 546.1 | 5 | % | ||||||||||||||||||
Total stockholders’ equity | 432.1 | 401.8 | 30.3 | 8 | |||||||||||||||||||
Total liabilities and equity | $ | 13,090.1 | $ | 12,513.7 | $ | 576.4 | 5 | % | |||||||||||||||
Total Liabilities by Segment | |||||||||||||||||||||||
Servicing | $ | 11,607.1 | $ | 11,276.5 | $ | 330.6 | 3 | % | |||||||||||||||
Originations | 788.3 | 517.5 | 270.9 | 52 | |||||||||||||||||||
Corporate Items and Other | 262.6 | 318.0 | (55.4) | (17) | |||||||||||||||||||
$ | 12,658.0 | $ | 12,111.9 | $ | 546.1 | 5 | % | ||||||||||||||||
Book value per share | $ | 55.51 | $ | 52.29 | $ | 3.23 | 6 | % | |||||||||||||||
SEGMENT RESULTS OF OPERATIONS |
SERVICING |
PHH | |||||||||||||||||
Moody’s | S&P | Fitch | |||||||||||||||
Forward | |||||||||||||||||
Residential Prime Servicer | SQ3+ | Above Average | RPS3+ | ||||||||||||||
Residential Subprime Servicer | SQ3+ | Above Average | RPS3+ | ||||||||||||||
Residential Special Servicer | SQ3+ | Above Average | RSS3 | ||||||||||||||
Residential Second/Subordinate Lien Servicer | SQ3+ | Above Average | RPS3 | ||||||||||||||
Residential Home Equity Servicer | — | — | RPS3 | ||||||||||||||
Residential Alt-A Servicer | — | — | RPS3 | ||||||||||||||
Master Servicer | SQ3+ | Above Average | RMS3 | ||||||||||||||
Ratings Outlook | N/A | Stable | Stable | ||||||||||||||
Date of last action | August 10, 2023 | March 22, 2023 | February 15, 2024 | ||||||||||||||
Reverse | |||||||||||||||||
Residential Reverse Servicer | — | Above Average | — | ||||||||||||||
Ratings Outlook | — | Stable | — | ||||||||||||||
Date of initial rating | — | May 27, 2022 | — |
Selected Operating Statistics | March 31, | December 31, | % Change | March 31, | % Change | ||||||||||||||||||||||||
2024 | 2023 | 2023 | |||||||||||||||||||||||||||
Assets Serviced | |||||||||||||||||||||||||||||
Unpaid principal balance (UPB) in billions: | |||||||||||||||||||||||||||||
Performing loans (1) | $ | 290.8 | $ | 276.5 | 5 | % | $ | 285.3 | 2 | % | |||||||||||||||||||
Non-performing loans | 11.0 | 11.4 | (4) | 12.7 | (13) | ||||||||||||||||||||||||
Non-performing real estate | 0.5 | 0.5 | (4) | 0.5 | (12) | ||||||||||||||||||||||||
Total | $ | 302.3 | $ | 288.4 | 5 | % | $ | 298.5 | 1 | % | |||||||||||||||||||
Non-performing to total % | 3.8 | % | 4.1 | % | (8) | % | 4.4 | % | (14) | % | |||||||||||||||||||
Conventional loans (2) | $ | 200.6 | $ | 187.4 | 7 | % | $ | 192.3 | 4 | % | |||||||||||||||||||
Government-insured loans | 34.5 | 33.3 | 4 | 36.9 | (6) | ||||||||||||||||||||||||
Non-Agency loans | 67.1 | 67.6 | (1) | 69.3 | (3) | ||||||||||||||||||||||||
Total | $ | 302.3 | $ | 288.4 | 5 | % | $ | 298.5 | 1 | % | |||||||||||||||||||
Conventional loans to total % | 66.4 | % | 65.0 | % | 2 | % | 64.4 | % | 3 | % | |||||||||||||||||||
Servicing portfolio (3) | $ | 133.5 | $ | 131.4 | 2 | % | $ | 136.1 | (2) | % | |||||||||||||||||||
Subservicing portfolio | |||||||||||||||||||||||||||||
Subservicing - forward | 47.0 | 30.8 | 53 | % | 40.3 | 17 | % | ||||||||||||||||||||||
Subservicing - reverse | 15.5 | 17.1 | (9) | 21.7 | (28) | ||||||||||||||||||||||||
Total subservicing | 62.5 | 47.9 | 30 | 62.0 | 1 | ||||||||||||||||||||||||
MAV (4) (5) | 53.4 | 55.9 | (4) | 51.8 | 3 | ||||||||||||||||||||||||
Rithm (5) (6) | 44.1 | 45.0 | (2) | 48.1 | (8) | ||||||||||||||||||||||||
Other MSR capital partners (5) | 8.8 | 8.2 | 7 | 0.5 | n/m | ||||||||||||||||||||||||
Total | $ | 302.3 | $ | 288.4 | 5 | % | $ | 298.5 | 1 | % | |||||||||||||||||||
Prepayment speed (CPR) (7): | |||||||||||||||||||||||||||||
% Voluntary CPR | 3.7 | % | 3.5 | % | 5 | % | 3.5 | % | 5 | % | |||||||||||||||||||
% Involuntary CPR | 0.3 | 0.3 | 10 | 0.3 | 10 | ||||||||||||||||||||||||
% Total CPR | 7.3 | % | 7.0 | % | 3 | % | 7.2 | % | 1 | % | |||||||||||||||||||
Number of completed modifications (in thousands) | 3.9 | 3.5 | 13 | % | 3.4 | 15 | % | ||||||||||||||||||||||
Amount of UPB ($ in billions) | Count (000’s) | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Portfolio at January 1 | $ | 288.4 | $ | 289.7 | 1,344.5 | 1,378.9 | |||||||||||||||||
Additions (1) (2) | 23.1 | 17.5 | 74.0 | 59.5 | |||||||||||||||||||
MSR sales | — | — | (0.1) | (0.1) | |||||||||||||||||||
Servicing transfers (1) | (2.6) | (2.2) | (9.7) | (7.7) | |||||||||||||||||||
Runoff | (6.6) | (6.5) | (25.8) | (26.9) | |||||||||||||||||||
Portfolio at March 31 | $ | 302.3 | $ | 298.5 | 1,382.9 | 1,403.7 | |||||||||||||||||
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
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 | $ | 1.9 | $ | 69.8 | $ | 6.1 | $ | 77.7 | $ | 3.5 | $ | 91.2 | $ | 6.2 | $ | 100.8 | |||||||||||||||||||||||||||||||
Government-insured | 2.3 | 34.3 | 20.4 | 57.1 | 3.3 | 37.7 | 19.3 | 60.2 | |||||||||||||||||||||||||||||||||||||||
Non-Agency | 185.7 | 191.1 | 91.2 | 467.9 | 205.5 | 214.3 | 97.9 | 517.7 | |||||||||||||||||||||||||||||||||||||||
Total, net | $ | 189.9 | $ | 295.2 | $ | 117.7 | $ | 602.7 | $ | 212.2 | $ | 343.2 | $ | 123.3 | $ | 678.8 |
March 31, | December 31, | % Change | March 31, | % Change | |||||||||||||||||||||||||
2024 | 2023 | 2023 | |||||||||||||||||||||||||||
Reverse Mortgage Loans | |||||||||||||||||||||||||||||
Unpaid principal balance (UPB) in millions: | |||||||||||||||||||||||||||||
Loans held for investment (1) | $ | 7,700.9 | $ | 7,605.5 | 1 | % | $ | 7,290.7 | 6 | % | |||||||||||||||||||
Active Buyouts (2) | 98.7 | 68.4 | 44 | 83.7 | 18 | ||||||||||||||||||||||||
Inactive Buyouts (2) | 288.2 | 198.1 | 45 | 136.7 | 111 | ||||||||||||||||||||||||
Total | $ | 8,087.8 | $ | 7,872.1 | 3 | % | $ | 7,511.2 | 8 | % | |||||||||||||||||||
Inactive buyouts % to total | 3.6 | % | 2.5 | % | 1.0 | % | 1.8 | % | 1.7 | % | |||||||||||||||||||
Future draw commitments (UPB) in millions: | 1,793.4 | 1,782.0 | 1 | % | 1,769.6 | 1 | % | ||||||||||||||||||||||
Fair value in millions: | |||||||||||||||||||||||||||||
Loans held for investment (1) | $ | 8,018.2 | $ | 7,868.5 | 2 | % | $ | 7,545.2 | 6 | % | |||||||||||||||||||
HMBS related borrowings | 7,945.0 | 7,797.3 | 2 | 7,470.6 | 6 | ||||||||||||||||||||||||
Net asset value (HECM or reverse MSR) | $ | 73.2 | $ | 71.2 | 3 | % | $ | 74.6 | (2) | % | |||||||||||||||||||
Net asset value to UPB | 0.95 | % | 0.94 | % | 1.02 | % |
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Servicing and subservicing fees | $ | 204.2 | $ | 239.3 | (15) | % | $ | 231.8 | (12) | % | |||||||||||||||||||
Gain (loss) on loans held for sale, net | 1.8 | (2.7) | (169) | (1.3) | (241) | ||||||||||||||||||||||||
Gain (loss) on reverse loans held for investment and HMBS-related borrowings, net | 8.6 | 19.6 | (56) | 14.0 | (39) | ||||||||||||||||||||||||
Other revenue, net | 4.5 | 4.1 | 10 | 2.5 | 78 | ||||||||||||||||||||||||
Total revenue | 219.1 | 260.3 | (16) | % | 247.0 | (11) | % | ||||||||||||||||||||||
MSR valuation adjustments, net | (12.5) | (101.5) | (88) | % | (70.9) | (82) | % | ||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||
Compensation and benefits | 25.3 | 25.9 | (3) | % | 29.4 | (14) | % | ||||||||||||||||||||||
Servicing expense | 13.3 | 8.7 | 53 | 15.2 | (13) | ||||||||||||||||||||||||
Professional services | 7.1 | 7.6 | (7) | 7.9 | (11) | ||||||||||||||||||||||||
Occupancy, equipment and mailing | 6.8 | 6.4 | 7 | 7.7 | (11) | ||||||||||||||||||||||||
Technology and communications | 6.1 | 6.0 | 2 | 6.3 | (3) | ||||||||||||||||||||||||
Corporate overhead allocations | 10.9 | 11.5 | (5) | 11.5 | (4) | ||||||||||||||||||||||||
Other expenses | 1.1 | 1.4 | (15) | 2.3 | (54) | ||||||||||||||||||||||||
Total operating expenses | 70.6 | 67.4 | 5 | % | 80.3 | (12) | % | ||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||
Interest income | 6.7 | 5.7 | 18 | % | 4.1 | 61 | % | ||||||||||||||||||||||
Interest expense | (45.8) | (45.2) | 1 | (41.6) | 10 | ||||||||||||||||||||||||
Pledged MSR liability expense | (44.9) | (76.5) | (41) | (70.3) | (36) | ||||||||||||||||||||||||
Earnings of equity method investee | 2.7 | 1.4 | 95 | 0.3 | 978 | ||||||||||||||||||||||||
Other, net | (0.5) | 5.5 | (110) | (0.4) | 23 | ||||||||||||||||||||||||
Other income (expense), net | (81.8) | (109.1) | (25) | % | (107.9) | (24) | % | ||||||||||||||||||||||
Income (loss) before income taxes | $ | 54.2 | $ | (17.8) | (405) | % | $ | (12.0) | (550) | % | |||||||||||||||||||
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | |||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||||
Loan servicing and subservicing fees: | ||||||||||||||||||||||||||
Servicing and subservicing fees | 156.6 | 183.5 | (15) | % | 187.5 | (16) | % | |||||||||||||||||||
Ancillary income | 47.6 | 55.8 | (15) | 44.3 | 7 | |||||||||||||||||||||
Total | $ | 204.2 | $ | 239.3 | (15) | % | $ | 231.8 | (12) | % | ||||||||||||||||
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Servicing Fees | |||||||||||||||||||||||||||||
Average servicing UPB (1) (6) | $ | 170.9 | $ | 204.9 | (17) | % | $ | 202.5 | (16) | % | |||||||||||||||||||
Average servicing fee (2) | 0.30 | 0.32 | (8) | 0.33 | (9) | ||||||||||||||||||||||||
Servicing fees (3) | 127.1 | $ | 165.3 | (23) | 166.0 | (23) | |||||||||||||||||||||||
Subservicing Fees | |||||||||||||||||||||||||||||
Average number of subserviced loans (4) (7) | 547.0 | 282.0 | 94 | 306.0 | 79 | ||||||||||||||||||||||||
Average monthly fee per loan (5) | 18 | 22 | (17) | 23 | (23) | ||||||||||||||||||||||||
Subservicing fees (3) | 29.5 | 18.2 | 62 | 21.5 | 37 | ||||||||||||||||||||||||
Servicing and Subservicing Fees (excluding Ancillary income) | $ | 156.6 | $ | 183.5 | (15) | % | $ | 187.5 | (16) | % |
Ancillary Income | Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | |||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Custodial accounts (float earnings) | $ | 27.2 | $ | 32.8 | (17) | % | $ | 20.2 | 35 | % | |||||||||||||||||||
Late charges | 8.0 | 9.4 | (15) | 9.6 | (16) | ||||||||||||||||||||||||
Reverse subservicing ancillary fees | 6.7 | 7.4 | (9) | 8.1 | (17) | ||||||||||||||||||||||||
Loan collection fees | 1.8 | 2.2 | (20) | 2.6 | (30) | ||||||||||||||||||||||||
Recording fees | 1.1 | 1.1 | 6 | 1.2 | (4) | ||||||||||||||||||||||||
Boarding and deboarding fees | 0.4 | 0.6 | (41) | 0.6 | (35) | ||||||||||||||||||||||||
GSE forbearance fees | 0.1 | 0.1 | (18) | 0.2 | (67) | ||||||||||||||||||||||||
Other | 2.2 | 2.1 | 6 | 1.9 | 19 | ||||||||||||||||||||||||
Ancillary income | $ | 47.6 | $ | 55.8 | (15) | % | $ | 44.3 | 7 | % | |||||||||||||||||||
Three Months Ended | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||
March 31, | December 31, | % Change | % Change | ||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Net interest income (servicing fee) | $ | 6.0 | $ | 5.9 | 1 | % | $ | 5.9 | 2 | % | |||||||||||||||||||
Other fair value gains (losses) | 2.6 | 13.7 | (81) | 8.2 | (68) | ||||||||||||||||||||||||
Gain (loss) on reverse loans held for investment and HMBS-related borrowings, net (Servicing) | $ | 8.6 | $ | 19.6 | (56) | % | $ | 14.0 | (39) | % | |||||||||||||||||||
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Compensation and benefits | $ | 25.3 | $ | 25.9 | (3) | % | $ | 29.4 | (14) | % | |||||||||||||||||||
Average Employment - Servicing | 3,276 | 3,335 | (2) | % | 3,520 | (7) | % | ||||||||||||||||||||||
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Interest Expense | |||||||||||||||||||||||||||||
Advance match funded liabilities | $ | 10.4 | $ | 10.4 | 1 | % | $ | 10.7 | (2) | % | |||||||||||||||||||
Mortgage loan financing facilities | 8.4 | 6.1 | 38 | 3.8 | 120 | ||||||||||||||||||||||||
MSR financing facilities | 17.9 | 18.7 | (4) | 17.5 | 2 | ||||||||||||||||||||||||
Corporate debt interest expense allocation | 7.3 | 7.4 | (1) | 7.7 | (5) | ||||||||||||||||||||||||
Escrow | 1.8 | 2.6 | (32) | 1.9 | (5) | ||||||||||||||||||||||||
Total interest expense | $ | 45.8 | $ | 45.2 | 1 | % | $ | 41.6 | 10 | % | |||||||||||||||||||
Average balances | |||||||||||||||||||||||||||||
Advance match funded liabilities | 442.2 | 425.6 | 4 | % | 460.6 | (4) | % | ||||||||||||||||||||||
Mortgage loan financing facilities | 282.2 | 239.4 | 18 | 221.3 | 28 | ||||||||||||||||||||||||
MSR financing facilities | 861.4 | 901.3 | (4) | 932.2 | (8) | ||||||||||||||||||||||||
Total asset-backed financing | 1,585.9 | 1,566.2 | 1 | % | 1,614.1 | (2) | % | ||||||||||||||||||||||
Effective average interest rate | |||||||||||||||||||||||||||||
Advance match funded liabilities | 9.45% | 9.77% | (3) | % | 9.30% | 2 | % | ||||||||||||||||||||||
Mortgage loan financing facilities | 11.92 | 10.17 | 17 | 6.90 | 73 | ||||||||||||||||||||||||
MSR financing facilities | 8.29 | 8.29 | — | 7.52 | 10 | ||||||||||||||||||||||||
Average 1-month Term SOFR | 5.33% | 5.34% | — | % | 4.61% | 16 | % | ||||||||||||||||||||||
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | |||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||||
Servicing fees collected on behalf of third parties | $ | 36.6 | $ | 78.9 | (54) | % | $ | 76.0 | (52) | % | ||||||||||||||||
Less: Subservicing fee retained | (7.1) | (19.5) | (64) | (19.5) | (64) | |||||||||||||||||||||
Ancillary fee/income and other settlement (including expense reimbursement) | 2.3 | 3.7 | (36) | 3.3 | (28) | |||||||||||||||||||||
Net servicing fee remittance (1) | 31.8 | 63.1 | (50) | 59.8 | (47) | |||||||||||||||||||||
ESS servicing spread remittance | 13.1 | 13.4 | (2) | 10.5 | 24 | |||||||||||||||||||||
Pledged MSR liability expense | $ | 44.9 | $ | 76.5 | (41) | % | $ | 70.3 | (36) | % | ||||||||||||||||
Rithm Servicing and Subservicing Fees | Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | |||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Servicing fees collected on behalf of Rithm | $ | 13.0 | $ | 55.1 | (76) | % | $ | 59.6 | (78) | % | |||||||||||||||||||
Less: Subservicing fee retained | (3.9) | (16.3) | (76) | (17.3) | (78) | ||||||||||||||||||||||||
Pledged MSR liability expense (Net servicing fees remitted to Rithm) (1) (2) | 9.1 | 38.8 | (77) | % | 42.3 | (79) | % | ||||||||||||||||||||||
Average Rithm UPB ($ in billions) | $ | 9.8 | $ | 45.5 | (78) | % | $ | 48.6 | (80) | % | |||||||||||||||||||
Average annualized retained subservicing fees as a % of Rithm UPB | 0.16% | 0.14% | 10 | % | 0.14% | 11 | % | ||||||||||||||||||||||
ORIGINATIONS |
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Loan Production by Channel (in billions) | |||||||||||||||||||||||||||||
Forward loans | |||||||||||||||||||||||||||||
Correspondent | $ | 2.69 | $ | 2.81 | (4) | % | $ | 2.44 | 10 | % | |||||||||||||||||||
Consumer Direct | 0.11 | 0.09 | 20 | 0.06 | 83 | ||||||||||||||||||||||||
$ | 2.80 | $ | 2.90 | (4) | % | $ | 2.50 | 12 | % | ||||||||||||||||||||
% Purchase production | 81 | % | 84 | % | (3) | 85 | % | (5) | |||||||||||||||||||||
% Refinance production | 19 | 16 | 14 | 15 | 29 | ||||||||||||||||||||||||
Reverse loans (1) | |||||||||||||||||||||||||||||
Correspondent | $ | 0.12 | $ | 0.13 | (4) | % | $ | 0.08 | 51 | % | |||||||||||||||||||
Wholesale | 0.02 | 0.03 | (14) | 0.04 | (41) | ||||||||||||||||||||||||
Retail | 0.02 | 0.02 | (2) | 0.02 | (2) | ||||||||||||||||||||||||
$ | 0.17 | $ | 0.18 | (5) | % | $ | 0.14 | 17 | % | ||||||||||||||||||||
MSR Purchases by Channel (in billions) | |||||||||||||||||||||||||||||
Agency Cash Window / Flow MSR | $ | 1.63 | $ | 2.50 | (35)% | $ | 1.81 | (10)% | |||||||||||||||||||||
Bulk purchases | 0.62 | 0.08 | 655 | 0.24 | 160 | ||||||||||||||||||||||||
Bulk reverse purchases | 0.14 | — | n/m | — | n/m | ||||||||||||||||||||||||
$ | 2.39 | $ | 2.58 | (7) | $ | 2.05 | 17 | ||||||||||||||||||||||
Total | $ | 5.36 | $ | 5.66 | (5)% | $ | 4.69 | 14% | |||||||||||||||||||||
Short-term loan commitment (at period end; in millions) | |||||||||||||||||||||||||||||
Forward loans | $ | 1,176.6 | $ | 592.5 | 99 | % | $ | 612.1 | 92 | % | |||||||||||||||||||
Reverse loans | 25.5 | 22.1 | 15 | % | 21.9 | 16 | % | ||||||||||||||||||||||
Average Headcount - Originations | 462 | 497 | (7) | % | 511 | (10) | % | ||||||||||||||||||||||
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Gain on loans held for sale, net | $ | 9.1 | $ | 7.0 | 30 | % | $ | 4.1 | 119 | % | |||||||||||||||||||
Gain on reverse loans held for investment and HMBS-related borrowings, net | 6.8 | 5.6 | 21 | 7.2 | (6) | ||||||||||||||||||||||||
Other revenue, net (1) | 4.1 | 4.4 | (7) | 3.5 | 17 | ||||||||||||||||||||||||
Total revenue | 20.0 | 17.0 | 18 | % | 14.8 | 35 | % | ||||||||||||||||||||||
MSR valuation adjustments, net | 0.9 | 3.5 | (74) | 1.9 | (53) | ||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||
Compensation and benefits | 10.2 | 10.9 | (6) | % | 9.6 | 6 | % | ||||||||||||||||||||||
Technology and communications | 1.7 | 1.6 | 4 | 1.7 | (1) | ||||||||||||||||||||||||
Origination expense | 1.4 | (0.4) | (434) | 0.2 | 640 | ||||||||||||||||||||||||
Occupancy, equipment and mailing | 0.5 | 0.6 | (8) | 0.5 | 4 | ||||||||||||||||||||||||
Professional services | 0.3 | 0.5 | (28) | 0.4 | (13) | ||||||||||||||||||||||||
Corporate overhead allocations | 3.9 | 4.3 | (10) | 4.8 | (19) | ||||||||||||||||||||||||
Other expenses | 1.0 | 1.3 | (21) | 1.5 | (32) | ||||||||||||||||||||||||
Total operating expenses | 19.0 | 18.7 | 2 | % | 18.7 | 2 | % | ||||||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||||
Interest income | 9.7 | 11.0 | (12) | % | 9.0 | 8 | % | ||||||||||||||||||||||
Interest expense | (10.4) | (12.5) | (17) | (9.9) | 5 | ||||||||||||||||||||||||
Other, net | (0.1) | (0.1) | 64 | 0.2 | (142) | ||||||||||||||||||||||||
Other income (expense), net | (0.8) | (1.6) | (50) | % | (0.7) | 15 | % | ||||||||||||||||||||||
Income (loss) before income taxes | $ | 1.1 | $ | 0.2 | 512 | % | $ | (2.7) | (142) | % | |||||||||||||||||||
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Origination UPB (1) (in billions) | |||||||||||||||||||||||||||||
Correspondent | $ | 2.69 | $ | 2.81 | (4) | % | $ | 2.44 | 10 | % | |||||||||||||||||||
Consumer Direct | 0.11 | 0.09 | 20 | 0.06 | 83 | ||||||||||||||||||||||||
$ | 2.80 | $ | 2.90 | (4) | % | $ | 2.50 | 12 | % | ||||||||||||||||||||
% Gain on Sale Margin (2) | |||||||||||||||||||||||||||||
Correspondent | 0.18 | % | 0.15 | % | 18 | % | 0.09 | % | 102 | % | |||||||||||||||||||
Consumer Direct | 3.75 | 2.85 | 31 | 3.18 | 18 | ||||||||||||||||||||||||
0.32 | % | 0.24 | % | 34 | % | 0.17 | % | 96 | % | ||||||||||||||||||||
Gain on Loans Held for Sale | |||||||||||||||||||||||||||||
Correspondent | $ | 4.9 | $ | 4.3 | 12 | % | $ | 2.2 | 122 | % | |||||||||||||||||||
Consumer Direct | 4.2 | 2.7 | 58 | 1.9 | 116 | ||||||||||||||||||||||||
$ | 9.1 | $ | 7.0 | 30 | % | $ | 4.1 | 119 | % | ||||||||||||||||||||
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Origination UPB (1) (in billions) | $ | 0.17 | $ | 0.18 | (5) | % | $ | 0.14 | 17 | % | |||||||||||||||||||
Origination margin (2) | 4.06 | % | 3.17 | % | 28 | 5.02 | % | (19) | |||||||||||||||||||||
Gain on reverse loans held for investment and HMBS-related borrowings, net (Originations) | $ | 6.8 | $ | 5.6 | 21 | % | $ | 7.2 | (6) | % | |||||||||||||||||||
CORPORATE ITEMS AND OTHER |
Three Months Ended | % Change | Three Months Ended March 31, 2023 | % Change | ||||||||||||||||||||||||||
March 31, | December 31, | ||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||
Revenue | $ | — | $ | — | — | $ | — | — | |||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||
Compensation and benefits | 18.1 | 21.0 | (13) | % | 19.0 | (5) | % | ||||||||||||||||||||||
Technology and communications | 4.9 | 5.5 | (10) | 5.4 | (8) | ||||||||||||||||||||||||
Professional services | 4.6 | 4.3 | 6 | 4.9 | (7) | ||||||||||||||||||||||||
Occupancy, equipment and mailing | 0.4 | 0.7 | (44) | 0.6 | (35) | ||||||||||||||||||||||||
Servicing and origination | 0.3 | 0.2 | 21 | 0.3 | 11 | ||||||||||||||||||||||||
Other expenses | 1.3 | 1.7 | (24) | 1.2 | 5 | ||||||||||||||||||||||||
Total operating expenses before corporate overhead allocations | 29.6 | 33.4 | (11) | % | 31.4 | (6) | % | ||||||||||||||||||||||
Corporate overhead allocations | |||||||||||||||||||||||||||||
Servicing segment | (10.9) | (11.5) | (5) | % | (11.5) | (4) | % | ||||||||||||||||||||||
Originations segment | (3.9) | (4.3) | (10) | (4.8) | (19) | ||||||||||||||||||||||||
Total operating expenses | 14.8 | 17.5 | (16) | % | 15.1 | (2) | % | ||||||||||||||||||||||
Other income (expense), net | |||||||||||||||||||||||||||||
Interest income | 1.1 | 1.1 | 1 | % | 1.0 | 18 | % | ||||||||||||||||||||||
Interest expense | (11.2) | (11.0) | 2 | (10.8) | 4 | ||||||||||||||||||||||||
Gain on extinguishment of debt | 1.4 | 0.1 | n/m | — | n/m | ||||||||||||||||||||||||
Other, net | — | (0.7) | (98) | 1.4 | (101) | ||||||||||||||||||||||||
Other income (expense), net | (8.6) | (10.5) | (18) | % | (8.4) | 2 | % | ||||||||||||||||||||||
Income (loss) before income taxes | $ | (23.4) | $ | (28.0) | (16) | % | $ | (23.5) | — | % | |||||||||||||||||||
LIQUIDITY AND CAPITAL RESOURCES |
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
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 | $ | 714 | $ | 211 | $ | 64 | $ | 714 | $ | 151 | $ | 64 | |||||||||||||||||||||||
Mortgage loan financing facilities | 2,530 | 296 | 1,441 | 2,696 | 373 | 1,592 | |||||||||||||||||||||||||||||
MSR financing facilities | 1,099 | 116 | 81 | 1,082 | 128 | 38 | |||||||||||||||||||||||||||||
Total | $ | 4,344 | $ | 622 | $ | 1,585 | $ | 4,493 | $ | 652 | $ | 1,693 | |||||||||||||||||||||||
Capital Structure Summary | March 31, 2024 | December 31, 2023 | $ Change | % Change | |||||||||||||||||||
MSR financing facilities | $ | 964 | $ | 916 | $ | 48 | 5 | % | |||||||||||||||
ESS financing liability, at fair value | 253 | 249 | 4 | 2 | |||||||||||||||||||
$313 million PMC Senior Secured Notes due 2026 | 310 | 356 | (46) | (13) | |||||||||||||||||||
$285 million OFC Senior Secured Notes due 2027 | 242 | 240 | 2 | 1 | |||||||||||||||||||
Total corporate debt and MSR related debt (1) | $ | 1,769 | $ | 1,761 | $ | 8 | — | % | |||||||||||||||
Stockholders’ common equity | $ | 432 | $ | 402 | $ | 30 | 8 | % | |||||||||||||||
Corporate debt to stockholders’ common equity | 1.3x | 1.5x | |||||||||||||||||||||
Corporate and MSR debt to stockholders’ common equity | 4.1x | 4.4x |
Rating Agency | Rated Entity | Long-term Corporate Rating | Review Status / Outlook | Date of last action | ||||||||||||||||||||||
Moody’s | PHH | B3 | Stable | April 12, 2024 | ||||||||||||||||||||||
S&P | Ocwen | B- | Stable | January 25, 2024 | ||||||||||||||||||||||
$ in millions | Three Months Ended March 31, | ||||||||||
2024 | 2023 | ||||||||||
Net cash used in operating activities | $ | (297) | $ | (207) | |||||||
Net cash used in investing activities | (4) | (20) | |||||||||
Net cash provided by financing activities | 297 | 209 | |||||||||
Net decrease in cash, cash equivalents and restricted cash | $ | (4) | $ | (18) | |||||||
Cash, cash equivalents and restricted cash at end of period | $ | 251 | $ | 256 | |||||||
CRITICAL ACCOUNTING POLICIES AND ESTIMATES |
RECENT ACCOUNTING DEVELOPMENTS |
Fair value at March 31, 2024 | Hypothetical change in fair value due to 25 bps rate decrease (1) | Hypothetical change in fair value due to 25 bps rate increase (1) | |||||||||||||||
Agency MSRs - interest rate sensitive (excluding MAV, Rithm and others) | $ | 1,601 | $ | (36) | $ | 30 | |||||||||||
Asset value of securitized HECM loans, net of HMBS-related borrowing (Reverse MSR) | 73 | 4 | (4) | ||||||||||||||
MSR hedging derivative instruments | $ | 4 | 33 | (35) | |||||||||||||
Total hedge position | $ | 37 | $ | (39) | |||||||||||||
Hypothetical hedge coverage ratio (2) | 103 | % | 129 | % | |||||||||||||
Hypothetical residual exposure to changes in interest rates | $ | 1 | $ | (9) |
Change in Fair Value | |||||||||||
Down 25 bps | Up 25 bps | ||||||||||
Asset value of securitized HECM loans, net of HMBS-related borrowing | $ | 4 | $ | (4) | |||||||
Loans held for investment - Unsecuritized HECM loans and tails | — | — | |||||||||
Loans held for sale | 13 | (15) | |||||||||
Derivative instruments | 21 | (21) | |||||||||
Total MSRs - Agency and non-Agency (1) | (36) | 30 | |||||||||
IRLCs | (1) | 1 | |||||||||
Total, net | $ | — | $ | (9) |
4.1 | 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 were formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Equity, (v) Consolidated Statements of Cash Flows, and (v) the Notes to Unaudited Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | |||||||||||||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL (Included as Exhibit 101). |
Ocwen Financial Corporation | ||||||||
By: | /s/ Sean B. O’Neil | |||||||
Sean B. O’Neil | ||||||||
Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as its principal financial officer) | ||||||||
Date: May 2, 2024 |
Measurement Period | Period Dates | Percentage of Stock Units Allocated | ||||||
First Measurement Period | March 29, 2024 through March 29, 2025 | 15% | ||||||
Second Measurement Period | March 29, 2025 through March 29, 2026 | 15% | ||||||
Third Measurement Period | March 29, 2026 through March 29, 2027 | 15% | ||||||
Fourth Measurement Period | March 29, 2024 through March 29, 2027 | 55% |
Relative TSR Achieved for the Measurement Period | Performance Level | Percentage of Allocated Stock Units Vesting | ||||||
<25th percentile | Below Threshold | 0% | ||||||
25th percentile | Threshold | 50% | ||||||
50th percentile | Target | 100% | ||||||
100th percentile | Maximum | 200% |
Measurement Period | Period Dates | Percentage of Stock Units Allocated | ||||||
First Measurement Period | March 29, 2024 through March 29, 2025 | 15% | ||||||
Second Measurement Period | March 29, 2025 through March 29, 2026 | 15% | ||||||
Third Measurement Period | March 29, 2026 through March 29, 2027 | 15% | ||||||
Fourth Measurement Period | March 29, 2024 through March 29, 2027 | 55% |
Relative TSR Achieved for the Measurement Period | Performance Level | Percentage of Allocated Stock Units Vesting | ||||||
<25th percentile | Below Threshold | 0% | ||||||
25th percentile | Threshold | 50% | ||||||
50th percentile | Target | 100% | ||||||
100th percentile | Maximum | 200% |
Date: May 2, 2024 | /s/ Glen A. Messina | |||||||
Glen A. Messina, President and Chief Executive Officer |
May 2, 2024 | /s/ Sean B. O'Neil | |||||||
Sean O'Neil, Executive Vice President and Chief Financial Officer |
Name: | /s/ Glen A. Messina | ||||
Title: | President and Chief Executive Officer | ||||
Date: | May 2, 2024 |
Name: | /s/ Sean B. O'Neil | ||||
Title: | Executive Vice President and Chief Financial Officer | ||||
Date: | May 2, 2024 |
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 30.1 | $ (40.2) |
Other comprehensive income (loss), net of income taxes: | ||
Change in unfunded pension plan obligation liability | 0.0 | 0.0 |
Other | 0.0 | 0.1 |
Comprehensive income (loss) | $ 30.2 | $ (40.1) |
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Interest expense | $ 67.4 | $ 62.3 |
MSR Pledged liability expense | 44.9 | 70.3 |
Affiliated Entity | ||
MSR Pledged liability expense | 15.3 | 14.2 |
OFC Senior Secured Notes | ||
Interest expense | $ 11.2 | $ 10.8 |
Organization and Basis of Presentation |
3 Months Ended | ||||||
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Mar. 31, 2024 | |||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
Organization and Basis of Presentation |
Organization Ocwen Financial Corporation (NYSE: OCN) (Ocwen, OFC, we, us and our) is a non-bank mortgage servicer and originator providing solutions to homeowners, clients, investors and others through its primary operating subsidiary, PHH Mortgage Corporation (PHH, formerly referred to as 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 PHH since its acquisition on October 4, 2018, Ocwen Financial Solutions Private Limited (OFSPL) and Ocwen USVI Services, LLC (OVIS). Effective May 3, 2021, Ocwen holds a 15% equity interest in MAV Canopy HoldCo I, LLC (MAV Canopy) that invests in mortgage servicing assets through its licensed mortgage subsidiary MSR Asset Vehicle LLC (MAV). See Note 11 - Investment in Equity Method Investee and Related Party Transactions for additional information. We perform servicing activities related to our own MSR portfolio (primary) and on behalf of other servicers (subservicing), and investors (primary and master servicing), including the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively referred to as GSEs), the Government National Mortgage Association (Ginnie Mae, and together with the GSEs, the Agencies) and private-label securitizations (PLS, or non-Agency). We source our servicing portfolio through multiple channels, including retail, wholesale, correspondent, flow MSR purchase agreements, the Agency Cash Window programs and bulk MSR purchases. We originate, sell and securitize conventional (conforming to the GSE underwriting standards) loans and government-insured (Federal Housing Administration (FHA), Department of Veterans Affairs (VA) or United States Department of Agriculture (USDA)) forward mortgage loans, generally with servicing retained. The GSEs or Ginnie Mae guarantee these mortgage securitizations. We originate and purchase Home Equity Conversion Mortgage (HECM) loans, or reverse mortgages, which 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. We had a total of approximately 4,400 employees at March 31, 2024 of which approximately 3,000 were located in India and approximately 400 were based in the Philippines. Our operations in India and the Philippines provide internal support services to our loan servicing and originations businesses and our corporate functions. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in conformity with the instructions of the Securities and Exchange Commission (SEC) to Form 10-Q and SEC Regulation S-X, Article 10, Rule 10-01 for interim financial statements. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The results of operations and other data for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024. The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. 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, those that relate to fair value measurements, income taxes and the provision for losses that may arise from contingencies including litigation proceedings. In developing estimates and assumptions, management uses all available information; however, actual results could materially differ from those estimates and assumptions. Recently Adopted Accounting Standards Leases (ASC 842) Common Control Arrangements (ASU 2023-01) Prior to the issuance of this ASU, ASC 842 required all lessees to amortize leasehold improvements over the shorter of their useful life or the remaining term of the lease. For leases between entities under common control, the amendment in this ASU requires amortization of leasehold improvements over the useful life of those assets to the common control group, regardless of the lease term. When the lessee no longer controls the use of the asset underlying the common control lease, the leasehold improvements are accounted for as a transfer between entities under common control whereby the lessee records a distribution to the common control lessor through an adjustment to equity. Our adoption of this standard on January 1, 2024 did not have a material impact on our consolidated financial statements. Accounting Standards Issued but Not Yet Adopted Business Combinations - Joint Venture Formations (ASC 805-60): Recognition and Initial Measurement (ASU 2023-05) The amendments in this ASU require a joint venture to apply a new basis of accounting upon formation for the initial contribution of nonmonetary and monetary assets, initially measured at fair value (with exceptions to fair value measurement consistent with business combinations guidance). This ASU does not amend the definition of a joint venture, the accounting by an equity method investor for its investment in a joint venture, or the accounting by a joint venture for contributions received after its formation. The amendments in this ASU are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. A joint venture formed prior to the adoption date may elect to apply the new guidance retrospectively back to the original formation date. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. Segment Reporting (ASC 280) Improvements to Reportable Segment Disclosures (ASU 2023-07) The amendments in this ASU were issued to improve annual and interim reportable segment disclosure requirements, primarily through enhanced disclosures about expenses that are significant to the segment, regularly provided to or easily computed from information regularly provided to the chief operating decision maker (CODM), and included in the reported measure of segment profit or loss. This ASU also requires disclosure of the title and position of the individual or the name of the group identified as the CODM in the consolidated financial statements, as well as how the CODM uses each reported measure of segment profit or loss to assess performance and allocate resources to the segment. The ASU allows the disclosure of additional optional measures of a segment’s profit or loss for each reportable segment if used by the CODM, subject to additional segment disclosures and the SEC’s non-GAAP financial measures requirements. The amended disclosures in this ASU are effective in the 2024 annual period and in 2025 for interim periods, and shall be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. Income Taxes (ASC 740) Improvements to Income Tax Disclosures (ASU 2023-09) The amendments in this ASU require disaggregated information about a reporting entity’s effective tax rate reconciliation, including a tabular rate reconciliation for specified categories and additional information for reconciling items that meet a quantitative threshold. The ASU also requires additional disaggregated information on income taxes paid to an individual jurisdiction equal to or greater than 5% of total income taxes paid. The amended disclosures are effective in the 2025 annual period and in 2026 for interim periods, and shall be applied on a prospective basis with the option to apply the standard retrospectively.
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Securitizations and Variable Interest Entities |
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Transfers and Servicing [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 variable interest entities (VIEs) into the following groups: (1) securitizations of residential mortgage loans, (2) financings of loans held for sale, (3) financings of advances and (4) MSR financings. Financing transactions that do not use SPEs or VIEs are disclosed in Note 13 – Borrowings. 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 unaudited consolidated statements of operations. In connection with these transfers, we retained MSRs of $34.7 million and $31.1 million during the three months ended March 31, 2024 and 2023, respectively. 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. We receive customary origination representations and warranties from our network of approved correspondent lenders. To the extent that we have recourse against a third-party originator, we may recover part or all of any loss we incur. Also refer to the Loan Put-Back and Related Contingencies section of Note 21 – Contingencies. 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:
(1)Includes $11.3 billion and $10.5 billion of loans delivered to Ginnie Mae as of March 31, 2024 and December 31, 2023, respectively, and includes loan modifications repurchased and delivered through the Ginnie Mae Early Buyout Program (EBO). (2)The maximum exposure to loss in the table above is primarily based on the remaining UPB of loans serviced and assumes all loans were deemed worthless as of the reporting date. It does not take into consideration the proceeds from the underlying collateral liquidation, recoveries or any other recourse available to us, including from mortgage insurance, guarantees or correspondent sellers. We do not believe the maximum exposure to loss from our involvement with these previously transferred loans is representative of the actual loss we are likely to incur based on our contractual rights and historical loss experience and projections. Also, refer to the Loan Put-Back and Related Contingencies section in Note 21 – Contingencies. At March 31, 2024 and December 31, 2023, 2.7% and 2.8%, respectively, of the transferred residential loans that we service were 60 days or more past due, including 60 days or more past due loans under forbearance. This includes 7.6% and 8.0%, respectively, of loans delivered to Ginnie Mae that are 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. As the transfers of the HECM loans do not qualify for sale accounting, we account for these transfers as financings, with the HECM loans classified as Loans held for investment, at fair value, on our unaudited consolidated balance sheets. Financing of Loans Held for Sale, Receivables and Other Assets using SPEs In 2021, we consolidated an SPE (trust) in connection with a warehouse mortgage loan financing facility structured as a gestation repurchase facility whereby Agency mortgage loans are transferred by PHH to the trust for collateralization purposes. As of March 31, 2024 and December 31, 2023, $150.1 million and $150.1 million, respectively, loans held for sale were pledged as collateral for $150.0 million and $150.0 million, respectively, debt certificates issued by the trust. See Note 13 – Borrowings. We finance certain reverse mortgage buyouts that are insured by the FHA, including loans held for sale, receivables and REO properties, through private placement securitizations, referred to as OLIT transactions (Ocwen Loan Investment Trust). The securitization trusts issued senior and mezzanine class Notes to third party investors. We retain certain mezzanine class Notes and ownership interests and service the underlying assets. We determined we were the primary beneficiary, and thus consolidate the securitization trusts and related depositor. Recourse for the Notes is limited to the assets of the respective securitization trusts. We executed our second securitization in the three months ended March 31, 2024. Also refer to Note 13 – Borrowings. The table below presents the carrying value and classification of the assets and liabilities reported on our consolidated balance sheet that are associated with the securitized reverse mortgage loans buyouts and financing liabilities:
Financings of Advances using SPEs We pledged certain servicing advances as collateral to our advance financing facilities, referred to as advance match funded liabilities, with the use of SPEs that we consolidate and include in our consolidated financial statements. The table below presents the carrying value and classification of the assets and liabilities of the advance financing facilities:
MSR Financings using SPEs We consolidate two SPEs (PMC ESR Trusts) in connection with a third-party financing facility secured by certain of PHH’s Fannie Mae and Freddie Mac MSRs (GSE MSRs) and one SPE (PMC PLS ESR Issuer LLC) in connection with our PLS MSR financing facility (Ocwen Excess Spread-Collateralized Notes, Series 2022-PLS1 Class A). On March 4, 2024, PHH entered into a $34.0 million repurchase agreement pursuant to which PHH sold the membership interest certificate representing 100% of the limited liability company interests in PMC PLS ESR Issuer LLC and has agreed to repurchase such membership interest certificate at a specified future date at the price set forth in the repurchase agreement. Ocwen guarantees the obligations of PHH under the facility subject to the terms and conditions set forth in the guaranty. The termination date of the facility is February 25, 2025. Also refer to Note 13 – Borrowings. The table below presents the carrying value and classification of the assets and liabilities of the GSE MSR financing facility and the PLS Notes facility:
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. 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 in our financial statements. (b)Measured at fair value on a non-recurring basis in our financial statements. (c)Disclosed, but not measured at fair value in our financial statements. (d)The carrying values are net of unamortized debt issuance costs and discount. See Note 13 – Borrowings for additional information. (e)The newly originated portfolio of GSE and forward Ginnie Mae loans held for sale pending securitization with the Agencies is classified as Level 2; all other loans are classified as Level 3. The following tables present a reconciliation of the changes in fair value of certain Level 3 assets and liabilities that we measure at fair value on a recurring basis (refer to the respective notes for other Level 3 assets and liabilities):
(1)IRLC activity (issuances and transfers) represent changes in fair value included in earnings. This activity is presented on a gross basis in the table for disclosure purposes. Total net change in fair value included in earnings attributed to IRLCs is a gain (loss) of $(0.6) million and $5.6 million for the three months ended March 31, 2024 and 2023, respectively. See Note 15 – Derivative Financial Instruments and Hedging Activities. (2)ESS financing liability settlement is determined based on collections on reference pools of the related mortgage loans. A reconciliation from the beginning balances to the ending balances of Loans held for investment and HMBS-related borrowings, MSRs and Pledged MSR liabilities that we measure at fair value on a recurring basis is disclosed in Note 5 - Reverse Mortgages, Note 7 – Mortgage Servicing and Note 8 — Other Financing Liabilities, at Fair Value, respectively. The significant unobservable assumptions that we make to estimate the fair value of certain assets and liabilities classified as Level 3 and measured at fair value on a recurring basis are provided below. Loans Held for Sale The fair value of residential forward and reverse mortgage loans we purchased from Ginnie Mae guaranteed securitizations or from third parties (government insured reverse buyouts previously purchased from Ginnie Mae guaranteed securitizations) is estimated using both observable and unobservable inputs, including published Ginnie Mae prices or expected collateral values, as well as estimated default, prepayment, and discount rates. Significant unobservable inputs in estimating fair value include the estimated default rate and, for reverse loans the prepayment rate and liquidation timeline. Accordingly, these repurchased Ginnie Mae forward and reverse loans are classified as Level 3 within the valuation hierarchy. Loans Held for Investment - Reverse Mortgages Reverse mortgage loans held for investment are carried at fair value and classified as Level 3 within the valuation hierarchy. 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. We engage third-party valuation experts in the determination of fair value. Significant unobservable assumptions include conditional prepayment rate and discount rate. The conditional prepayment rate 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.
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 securitized 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. MSRs MSRs are carried at fair value and classified within Level 3 of the valuation hierarchy. The fair value is equal to the fair value mark provided by the 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. 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, generally the bulk market, incorporating available industry survey results, client feedback and our actual trade activity, and including risk premiums and liquidity adjustments. While interest rates are a key value driver, MSR fair value may change for other market-driven factors, including but not limited to the supply and demand of the market or the required yield or perceived value by investors of such MSRs. 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 and benchmarks of assumptions and value estimates. 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 of Agency MSRs via prepayment speeds by altering the borrower refinance incentive and the non-Agency MSRs due to the impact on advance funding costs. In addition, changes in market interest rates impact float income. 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 March 31, 2024 given hypothetical increases in lifetime prepayments and yield assumptions:
Financing Liabilities HMBS-Related Borrowings HMBS-related borrowings are carried at fair value and classified as Level 3 within the valuation hierarchy. 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. The fair value is equal to the fair value mark provided by a third-party valuation expert. 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 of assumptions and value estimates. 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. Pledged MSR Liabilities Pledged MSR liabilities are carried at fair value and classified as Level 3 within the valuation hierarchy. We determine the fair value of the pledged MSR liability following a similar approach as for the associated transferred MSRs. Fair value of the pledged MSR liability in connection with the MSR capital partner transactions (including MAV) is determined using the fair value mark provided by third-party valuation expert, consistent with the associated MSR, using the same methodology and assumptions, while considering cash flows contractually retained by PHH and expected life of subservicing agreement, when applicable. Fair value for the portion of the borrowing attributable to the MSRs underlying the Rights to MSRs in connection with Rithm transactions is determined using the fair value mark provided by the third-party valuation experts.
Significant increases or decreases in these assumptions in isolation would result in a significantly higher or lower fair value. ESS Financing Liability The Excess Servicing Spread (ESS) financing liability consists of the obligation to remit to a third party a specified percentage of future servicing fee collections on reference pools of mortgage loans, which we are entitled to as owner of the related MSRs. We have elected to carry the ESS financing liability at fair value and have classified it as Level 3 within the valuation hierarchy. The fair value represents the net present value of the expected servicing spread cash flows, consistent with the valuation model and behavioral projections of the underlying MSR, as applicable. The fair value of the ESS financing liability is determined using a third-party valuation expert. The significant unobservable assumptions used in the valuation of the ESS financing liability include prepayment speeds, delinquency rates, and discount rates. The discount rate is initially determined based on the expected cash flows and the proceeds from each issuance, and is subsequently updated, at each issuance level, to incorporate discount rate assumption updates for the underlying MSR or other factors, as provided by third-party valuation expert. At March 31, 2024 and December 31, 2023, the weighted average discount rate of the ESS financing liability was 9.4% and 9.4%, respectively. Refer to MSRs above for a description of other significant unobservable assumptions. Also see Note 8 — Other Financing Liabilities, at Fair Value. Derivative Financial Instruments IRLCs are classified as Level 3 assets as fallout rates were determined to be significant unobservable assumptions.
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Loans Held for Sale - Fair Value |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Held for Sale - Fair Value |
The following table presents the estimated fair value of Loans held for sale for which we elected the fair value option:
The following table presents the composition of Loans held for sale, at fair value by type:
(1)Pursuant to Ginnie Mae servicing guidelines. (2)Includes government-insured inactive reverse mortgage loans purchased from Ginnie Mae securitization pools that reached the 98% of maximum claim amount and are generally liquidated through foreclosure and subsequent sale of the REO properties. As of March 31, 2024 and December 31, 2023, the balance includes $241.5 million and $119.5 million, respectively, of loans pledged as collateral for the Asset-Backed Notes issued by OLIT. Also see Note 2 – Securitizations and Variable Interest Entities and Note 13 – Borrowings. The following table presents the activity of Loans held for sale, at fair value:
(1)Excludes retained MSR upon securitization. See below table of gain (loss) on loans held for sale, net. The following table presents the components of Gain (loss) of loans held for sale at fair value, net:
(1)Realized gain (loss) on sale of loans, excluding retained MSRs.
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Reverse Mortgages |
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Reverse Mortgages |
The following table presents the estimated fair value of reverse mortgage loans held for investment for which we elected the fair value option:
The following table presents the composition of reverse mortgage loans held for investment, at fair value by type:
(1)The Ginnie Mae securitization of conventional, HECM loans does not qualify for sale accounting treatment and is accounted for as a secured financing transaction, with the recognition of both loans and HMBS-related borrowing on the consolidated balance sheets. (2)Tails represent the fair value of future scheduled and unscheduled draw commitments for HECM loans, mortgage insurance premium, servicing fee and other advances which we subsequently securitize. The following table summarizes the activity in reverse mortgage loans held for investment and HMBS related borrowings that do not qualify for sale accounting and for which we elected the fair value option:
(1)See further breakdown of the net gain (loss) in the table below.
(1)Includes the changes in fair value of newly originated loans held for investment in the period from interest rate lock commitment date through securitization date. (2)Includes the interest income on loans held for investment less the interest expense on HMBS-related borrowings. The net interest income includes the servicing fee Ocwen is contractually entitled to on securitized loans. (3)Includes the cash realized gains upon securitization of tails (previously reported separately in the table above). (4)See breakdown between Loans held for investment and HMBS-related borrowings in the table above within Fair value gains (losses) included in earnings.
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Advances |
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Advances [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advances |
The following table summarizes the activity in net advances:
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Mortgage Servicing |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Servicing |
The following table presents the composition of our MSR portfolio:
(1)MSRs subject to sale agreements that do not meet sale accounting criteria. See Note 8 — Other Financing Liabilities, at Fair Value. (2)At March 31, 2024, the UPB of MSRs transferred to Rithm for which title is retained by Ocwen was $9.7 billion.
The following table summarizes the delinquency status of the loans underlying our MSRs:
The following table summarizes the components of our servicing and subservicing fee revenue:
(1)Includes servicing fees collected on behalf of respective parties related to transferred MSRs that do not achieve sale accounting. See Note 8 — Other Financing Liabilities, at Fair Value. (2)Includes $3.6 million and $5.2 million of ancillary income in the three months ended March 31, 2024 and 2023, respectively, associated with transferred MSRs that do not achieve sale accounting. (3)Includes $45.7 million of servicing fee in the three months ended March 31, 2023 related to MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023. See Note 8 — Other Financing Liabilities, at Fair Value. (4)Includes $11.9 million of subservicing fee in the three months ended March 31, 2024 related to MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023. See Note 8 — Other Financing Liabilities, at Fair Value. Float balances, on which we earn interest referred to as float earnings (balances in custodial accounts, which represent collections of principal and interest that we receive from borrowers on behalf of investors and tax and insurance payments) are held in escrow by unaffiliated banks and are excluded from our unaudited consolidated balance sheets. Float balances amounted to $1.89 billion and $1.56 billion at March 31, 2024 and December 31, 2023, respectively.
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Other Financing Liabilities, at Fair Value |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financing Liabilities, at Fair Value |
The following table presents financing liabilities carried at fair value which include pledged MSR liabilities recorded in connection with MSR transfers, subservicing retained, that do not qualify for sale accounting, liabilities of consolidated mortgage-backed securitization trusts and MSR excess servicing spread (ESS) financing liability carried at fair value (see Note 13 – Borrowings for ESS financing liability carried at amortized cost).
(1)MSRs transferred, subservicing retained, or sold in transactions which do not qualify for sale accounting treatment are accounted for as secured financings. Until such time as the transaction qualifies as a sale for accounting purposes, we continue to recognize the MSRs and the related financing liability (referred as Pledged MSR liability) on our consolidated balance sheets, as well as the full amount of servicing fee collected as revenue and the servicing fee remitted as Pledged MSR liability expense in our consolidated statements of operations. Fair value gains and losses of the Pledged MSR liability are recognized in MSR valuation adjustments, net in the consolidated statements of operations - See Note 7 – Mortgage Servicing and Note 9 – MSR Valuation Adjustments, Net. (2)Consists of securitization debt certificates due to third parties that represent beneficial interests in trusts that are consolidated. (3)Consists of the obligation to remit to a third party a specified percentage of future servicing fee collections (servicing spread) on reference pools of MSRs, which we are entitled to as owner of the related MSRs. The servicing spread remittance is reported in Pledged MSR liability expense and fair value gains and losses of the ESS financing liability are reported in MSR valuation adjustment, net. $33.4 billion UPB of MSR and Pledged MSR liability associated with Rithm servicing agreements were derecognized on December 31, 2023 as MSR sale accounting criteria were met. Effective January 1, 2024, as PHH continues to subservice the portfolio, the statement of operations reflects subservicing fee revenue as opposed to the gross presentation of servicing fee revenue and separate offsetting presentation of servicing fee remittances within Pledged MSR liability expense prior to January 1, 2024. The following tables present the activity of the pledged MSR liability recorded in connection with the MSR transfer agreements with MAV and other unrelated parties, including Rithm, that do not qualify for sale accounting.
(1)The fair value of the Pledged MSR liability differs from the fair value of the associated transferred MSR asset mostly due to the portion of ancillary income that is contractually retained by PHH (shared between PHH and MAV) and other contractual cash flows. The following table presents the Pledged MSR liability expense recorded in connection with the MSR sale agreements with MAV and other unrelated parties (including Rithm) that do not qualify for sale accounting and the ESS financing liabilities.
(1)Includes $45.7 million of servicing fees collected on behalf of Rithm, $13.1 million of subservicing fee retained and $32.6 million of net servicing fee remittance in the three months ended March 31, 2023 related to MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023. MAV (Related Party) Transactions PHH entered into agreements to sell MSR portfolios to its related party MAV, on a bulk and flow basis, for which PHH has been retained as subservicer. While MSR legal title has transferred to MAV, the transactions do not qualify for sale accounting treatment primarily due to the termination restrictions of the subservicing agreement. See Note 11 - Investment in Equity Method Investee and Related Party Transactions. Accordingly, we continue to report the MSR and an associated Pledged MSR liability on our consolidated balance sheet. Rithm Transactions Starting in 2012, Ocwen and PHH entered into agreements to sell MSRs and the related servicing advances to Rithm, and in all cases have been retained by Rithm as subservicer. As of March 31, 2024, all transactions met sale accounting treatment except for the agreement to sell a $9.7 billion MSR portfolio to Rithm, referred to as Rights to MSRs (or RMSR). While most of the economics and risks of the MSR and related advances have contractually transferred to Rithm, the MSR legal title was retained by Ocwen and the third-party consents required for title transfer were not obtained, causing the transactions to be accounted for as secured financings. Accordingly, we continue to report the MSR and an associated Pledged MSR liability on our consolidated balance sheet. Prior to December 31, 2023, while MSR legal title had transferred to Rithm, other MSR sale transactions with a UPB of $33.4 billion did not qualify for sale accounting treatment, primarily due to the length of the non-cancellable term of the subservicing agreements. On December 31, 2023, we derecognized $421.7 million non-Agency MSRs and Pledged MSR liability associated with Rithm servicing agreements with a UPB of $33.4 billion for which MSR sale accounting criteria was met. Specifically, with the amendments described below, starting on December 31, 2023, the parties have the right to cancel or decline to renew the servicing agreements within a reasonable period of time. On May 2, 2022, Ocwen entered into amendments to its servicing agreements with Rithm to extend their terms to December 31, 2023 and provide for subsequent, automatic one-year renewals, unless Ocwen provides six months’ advance notice of termination (by July 1), or Rithm provides three months’ advance notice of termination (by October 1), among other changes. Ocwen and Rithm did not provide notice of termination in 2023. Accordingly, all servicing agreements with Rithm, including the $9.7 billion of RMSR and $34.4 billion of subservicing, are extended through December 31, 2024, with subsequent, automatic one-year renewals. Rithm has the right to terminate the $9.7 billion RMSRs for convenience, in whole but not in part, subject to three months’ advance notice of termination. If Rithm exercises this termination right, Rithm has the option of seeking (i) the transfer of the MSRs through a sale to a third party of its Rights to MSRs (together with a transfer of Ocwen’s title to those MSRs) or (ii) a substitute RMSR arrangement that substantially replicates the Rights to MSRs structure under which we would transfer title to the MSRs to a successor servicer and Rithm would continue to own the economic rights and obligations related to the MSRs. In the case of option (i), we have a purchase option, as specified in the RMSR Agreements. If Rithm is not able to sell the Rights to MSRs or establish a substitute RMSR arrangement with another servicer, Rithm has the right to revoke its termination notice and re-instate the applicable servicing addendum or to establish a subservicing arrangement whereby the MSRs remaining subject to the 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. Other MSR Capital Partner Transactions PHH entered into agreements to sell MSR portfolios to different unrelated third parties, referred to as MSR capital partners, on a bulk and flow basis, for which PHH has been retained as subservicer. While MSR legal title has transferred to the MSR capital partners, the transactions do not qualify for sale accounting treatment primarily due to the termination restrictions of the subservicing agreements. Accordingly, we continue to report the MSR and an associated Pledged MSR liability on our consolidated balance sheet.
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MSR Valuation Allowance, Net |
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MSR Valuation Adjustments, Net | Note 9 – MSR Valuation Adjustments, Net The table below presents the components of MSR valuation adjustments, net, that include four MSR related instruments which we account for at fair value with changes in fair value recorded in earnings: (i) the fair value changes of the total MSR portfolio (Total MSRs) recorded on our consolidated balance sheets ($2.4 billion fair value asset at March 31, 2024). Total MSRs include owned MSRs and MSRs that have been sold or transferred to third parties in transactions that do not achieve sale accounting criteria. Owned MSRs include MSRs subject to ESS financing transactions; (ii) the fair value changes of the Pledged MSR liabilities recorded as liabilities on our consolidated balance sheets when MSR sale accounting criteria are not achieved ($647.9 million fair value liability at March 31, 2024; (iii) the fair value changes of the ESS financing liabilities for which we elected the fair value option ($253.4 million fair value liability at March 31, 2024; and (iv) the fair value changes of the derivative instruments economically hedging the MSR exposure.
(1)Also refer to Note 7 – Mortgage Servicing. (2)Also refer to Note 8 — Other Financing Liabilities, at Fair Value for additional information related to the ESS financing liability and Pledged MSR liability, including a tabular presentation of activity of the Pledged MSR liability for the reported years. (3)MSR transfers that do not achieve sale accounting. (4)Also refer to Note 15 – Derivative Financial Instruments and Hedging Activities. MSR valuation adjustments, net exclude fair value changes of reverse mortgage loans net of HMBS related-borrowings which are included in our economic MSR interest rate risk hedge strategy (refer to Note 15 – Derivative Financial Instruments and Hedging Activities), and are separately presented as Gain on reverse loans held for investment and HMBS-related borrowings, net within our consolidated statement of operations (refer to Note 5 - Reverse Mortgages).
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Receivables |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables |
(1)Includes $25.6 million and $25.2 million at March 31, 2024 and December 31, 2023, respectively, from the USVI Bureau of Internal Revenue (BIR) for a refund of income taxes paid in prior years. In December 2022, we executed an agreement with the BIR for payment of the income tax refunds related to tax years 2013 through 2015, plus accrued interest, over a two-year period ending December 31, 2024. The BIR did not make the payment that was due on December 31, 2023 pursuant to the agreement. On February 8, 2024, we filed a lawsuit against the USVI for the refund of income taxes paid in prior years and for the USVI’s breach of the above-referenced agreement.
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Investment in Equity Method Investee and Related Party Transactions |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||
Investment in Equity Method Investee and Related Party Transactions |
We account for our 15% investment in MAV Canopy under the equity method. Under the Amended & Restated Limited Liability Company Agreement with MAV Canopy, Ocwen is entitled to receive its 15% percentage interest share of MAV Canopy’s earnings, subject to certain adjustments. In addition, upon MAV Canopy liquidation or upon determination of the MAV Canopy Board of Directors to make advance distributions, Ocwen is entitled to receive a specified portion of the distribution amount available (Promote Distribution), after satisfaction of required distribution thresholds, including a specified internal rate of return threshold on the Oaktree member’s gross adjusted capital contributions. We determined that the Promote Distribution represents an incentive fee under our various service agreements with MAV with a variable consideration and is recognized in earnings when it is probable that a significant reversal will not occur. As of March 31, 2024, Ocwen has not recognized any such Promote Distribution income. PHH entered into a Subservicing Agreement with MAV for exclusive rights to service the mortgage loans underlying MSRs owned by MAV. The Subservicing Agreement will continue until terminated by mutual agreement of the parties or for cause, as defined. MAV is permitted to sell the underlying MSR, in whole or in part, without Ocwen’s consent after May 3, 2024. As of March 31, 2024, PHH subserviced a total of $53.4 billion UPB on behalf of MAV under the Subservicing Agreement, of which $28.4 billion of MSRs were previously sold by PHH to MAV and do not qualify for sale accounting and thus remain reported on the consolidated balance sheet of PHH, with a fair value of $413.6 million MSR and $402.7 million Pledged MSR liability - see Note 8 — Other Financing Liabilities, at Fair Value. The fair value of the Pledged MSR liability is determined using the fair value mark provided by third-party valuation experts, consistent with the associated MSR, using the same methodology and assumptions, while considering cash flows contractually retained by PHH during the expected life of the Subservicing Agreement. We are exposed to a risk of loss of this net $10.9 million asset value if, and to the extent that MAV sells the $28.4 billion MSR portfolio, in whole or in part at a faster pace than anticipated or if prepayments exceeds expectations, among other factors. If MAV sells its whole portfolio, we would be entitled to a Promote Distribution, if any, depending on the then return distribution thresholds, as discussed above. In April 2024, MAV entered into a letter of intent with an unrelated third party to sell approximately $10 billion of its MSR portfolio. During the three months ended March 31, 2024 and 2023, PHH transferred UPB of $18.0 million and $8.0 million under a flow MSR sale agreement (Recapture Agreement), respectively. During the three months ended March 31, 2024 and 2023, PHH transferred no MSRs to MAV under the various MSR purchase and sale agreements. These MSR sale transactions between PHH and MAV do not qualify for sale accounting primarily due to the termination restrictions of the subservicing agreement, and are accounted for as secured financings. See Note 8 — Other Financing Liabilities, at Fair Value. MAV Canopy, MAV and Oaktree are deemed related parties to Ocwen. In addition to the transactions described above and our 15% equity investment in MAV Canopy, Ocwen issued common stock, warrants and senior secured notes to Oaktree in 2021. See also Note 13 – Borrowings and Note 16 – Interest Expense. In the ordinary course, we regularly share information with Oaktree and discuss various aspects of our relationship. At times, we discuss alternatives to the outcomes contemplated under our agreements when they were originally executed as facts and circumstances change over time. We also discuss modifications to our relationship that we believe could be to our mutual benefit as our respective businesses evolve over time, including alternatives to partially repay our senior secured notes.
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Other Assets |
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Other Assets |
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Borrowings |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings |
(1)The Expected Repayment Date of our facilities, as defined, is the date on which the revolving period ends under each advance facility note and repayment of the outstanding balance is required if the note is not renewed or extended. In certain of our advance facilities, there are multiple notes outstanding. (2)The committed borrowing capacity under the OMART and OGAF facilities is available to us provided that we have sufficient eligible collateral to pledge. At March 31, 2024, none of the available borrowing capacity of the OMART and OGAF advance financing notes could be used based on the amount of eligible collateral. (3)At March 31, 2024, none of the available borrowing capacity of the facility could be used based on the amount of eligible collateral. (4)The weighted average interest rate excludes the effect of the amortization of prepaid lender fees. At March 31, 2024 and December 31, 2023, the balance of unamortized prepaid lender fees was $4.6 million and $5.5 million, respectively, and are included in Other assets in our consolidated balance sheets. At March 31, 2024 and December 31, 2023, 1-Month (1M) Term Secured Overnight Financing Rate (SOFR) was 5.33% and 5.35%, respectively.
(1)Of the borrowing capacity on mortgage loan financing facilities extended on a committed basis, $33.9 million of the available borrowing capacity could be used at March 31, 2024 based on the amount of eligible collateral that could be pledged on a committed basis. (2)On April 1, 2024, we voluntarily allowed the facility to mature. (3)In April 2024, the maturity date was extended to May 30, 2024. (4)In April 2024, the maturity date was extended to June 28, 2024. (5)This revolving facility agreement provides committed borrowing capacity secured by eligible HECM loans that are active buyouts, as defined in the agreement. In March 2024, the maturity date was extended to June 30, 2024. (6)In January 2024, the maturity date was extended to January 3, 2025. (7)In June 2023 and February 2024, OLIT issued different classes of Asset-Backed Notes with an initial principal amount of $264.9 million and $$268.6 million, at a discount and a mandatory call date of June 2026 and February 2027, respectively, both with a stated interest rate of 3.0%. Payments of interest and principal are made from available funds from a pool of reverse mortgage buyout loans and REOs in accordance with the indenture priority of payments. Also see Note 2 – Securitizations and Variable Interest Entities. (8)This agreement has no stated maturity date. (9)The agreement has no stated maturity date, however each transaction has a maximum duration of four years. (10)This repurchase agreement provides borrowing at our discretion up to a certain maximum amount of capacity on a rolling 90-day committed basis. This facility is structured as a gestation repurchase facility whereby dry Agency mortgage loans are transferred to a trust which issues a trust certificate that is pledged as the collateral for the borrowings. Each certificate is renewed monthly. In April 2024, we voluntarily increased the trust certificates by $50.0 million to $200.0 million. See Note 2 – Securitizations and Variable Interest Entities for additional information. (11)The weighted average interest rate excludes the effect of the amortization of prepaid lender fees. At March 31, 2024 and December 31, 2023, unamortized prepaid lender fees were $0.6 million and $1.0 million, respectively, and are included in Other assets in our consolidated balance sheets.
(1)Of the borrowing capacity on MSR financing facilities extended on a committed basis, none of the available borrowing capacity could be used at March 31, 2024 based on the amount of eligible collateral that could be pledged on a committed basis. (2)PHH’s obligations under this facility are secured by a lien on certain related MSRs. Ocwen guarantees the obligations of PHH under this facility. See Note 2 – Securitizations and Variable Interest Entities for additional information. We are subject to daily margining requirements under the terms of the facility. (3)PHH’s obligations under this facility are secured by a lien on the related Ginnie Mae MSRs and servicing advances. Ocwen guarantees the obligations of PHH under the facility. We are subject to daily margining requirements under the terms of the facility. In March 2024, the maturity date was extended to February 25, 2025 and the uncommitted borrowing capacity was increased to $300.0 million. (4)The single class PLS Notes are an amortizing debt instrument with an original principal amount of $75.0 million and a fixed interest rate of 5.114%. The PLS Notes are issued by a trust (PLS Issuer) that is included in our consolidated financial statements, and 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 principal balance amortizes in accordance with a predetermined schedule subject to modification under certain events, with a final payment due in February 2025. See Note 2 – Securitizations and Variable Interest Entities for additional information. (5)On March 4, 2024, PHH entered into a $34.0 million repurchase agreement pursuant to which PHH sold the membership interest certificate representing 100% of the limited liability company interests in PLS Issuer and has agreed to repurchase such membership interest certificate at a specified future date at the price set forth in the repurchase agreement. Ocwen guarantees the obligations of PHH under the facility subject to the terms and conditions set forth in the guaranty. We are subject to daily margining requirements under the terms of the facility. Refer to Note 2 – Securitizations and Variable Interest Entities for additional information regarding PLS Issuer and the PLS Notes. (6)This facility is secured by a lien on certain of PHH’s Agency MSRs and is subject to daily margining requirements. Any outstanding borrowings on the revolving loan will convert into a term loan in November 2024. (7)At March 31, 2024 and December 31, 2023, unamortized prepaid lender fees related to revolving-type MSR financing facilities were $3.3 million and $3.6 million, respectively, and are included in Other assets in our consolidated balance sheets. (8)Weighted average interest rate excludes the effect of the amortization of debt issuance costs and prepaid lender fees.
(1)Excludes the effect of the amortization of debt issuance costs and discount. (2)Redeemable at 101.969% before March 15, 2025, at par thereafter. The Indenture contains customary covenants for debt securities of this type that limit the ability of PHH Corporation and its restricted subsidiaries (including PHH) to, among other things, (i) incur or guarantee additional indebtedness, (ii) incur liens, (iii) pay dividends on or make distributions in respect of PHH Corporation’s capital stock or make other restricted payments, (iv) make investments, (v) consolidate, merge, sell or otherwise dispose of certain assets, and (vi) enter into transactions with Ocwen’s affiliates. (3)Redeemable at par plus a make-whole premium prior to March 4, 2026, at par thereafter. The make-whole premium represents the present value of all scheduled interest payments due through March 4, 2026. The Notes are solely the obligation of Ocwen and are secured by a pledge of substantially all of the assets of Ocwen, including a pledge of the equity of Ocwen’s directly held subsidiaries. During March 2024, we repurchased a total of $47.4 million of the PMC Senior Secured Notes in the open market for a price of $45.5 million and recognized a $1.4 million gain on debt extinguishment, net of the respective write-off of unamortized discount and debt issuance costs. Credit Ratings Credit ratings are intended to be an indicator of the creditworthiness of a company’s debt obligations. On January 25, 2024, S&P affirmed the issuer credit rating for Ocwen of “B-” and the “B” rating of the PMC Senior Secured Notes. On April 12, 2024, Moody’s upgraded PHH’s long-term corporate family ratings to “B3" from “Caa1” and revised their outlook to Stable from Positive. Moody’s also affirmed its “B2” rating of the PMC Senior Secured Notes. Covenants Under the terms of our debt agreements, we are subject to various affirmative and negative covenants. Collectively, these covenants include: •Financial covenants, including, but not limited to, specified levels of net worth, liquidity and leverage; •Covenants to operate in material compliance with applicable laws; •Restrictions on our ability to engage in various activities, including but not limited to incurring or guarantying additional forms of debt, paying dividends or making distributions on or purchasing equity interests of Ocwen and its subsidiaries, 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 other restricted payments, entering into mergers or consolidations or sales of all or substantially all of the assets of Ocwen and its subsidiaries or of PHH Corporation or PHH and their respective subsidiaries, creating liens on assets to secure debt, and 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. The most restrictive consolidated net worth requirement contained in our debt agreements with borrowings outstanding at March 31, 2024, excluding additional Agency minimum requirements, is a minimum of $275.0 million and $300.0 million, tangible net worth for Ocwen and PHH, respectively. The most restrictive liquidity requirement under our debt agreements with borrowings outstanding at March 31, 2024, excluding additional Agency minimum requirements, is for a minimum of $75.0 million for both Ocwen and PHH consolidated liquidity. The minimum tangible net worth and liquidity requirements at PHH contained in some debt agreements are also subject to the minimum requirements set forth by the Agencies. See Note 19 – Regulatory Requirements. We believe we were in compliance with all of the covenants in our debt agreements as of the date of these unaudited consolidated financial statements. Collateral Our assets held as collateral for secured borrowings and other unencumbered assets which may be subject to a lien under various collateralized borrowings are as follows at March 31, 2024:
(1)Certain assets are pledged as collateral to the PMC Senior Secured Notes and OFC Senior Secured (second lien) Notes. (2)Reverse mortgage loans and real estate owned are pledged as collateral to the HMBS beneficial interest holders, and are not available to satisfy the claims of our creditors. Ginnie Mae, as guarantor of the HMBS, is obligated to the holders of the HMBS in an instance of PHH’s default on its servicing obligations, or if the proceeds realized on HECMs are insufficient to repay all outstanding HMBS related obligations. Ginnie Mae has recourse to PHH in connection with certain claims relating to the performance and obligations of PHH as both issuer of HMBS and servicer of HECMs underlying HMBS. (3)Excludes MSRs transferred to MAV, Rithm and others, and associated Pledged MSR liability recorded as sale accounting criteria are not met. Pledged assets exceed the MSR asset balance due to the netting of certain PLS MSR portfolios with negative and positive fair values as eligible collateral. (4)The total of selected assets disclosed in the above table does not represent the total consolidated assets of Ocwen. For example, the total excludes premises and equipment and certain other assets. The OFC Senior Secured Notes due 2027 have a second lien priority on specified security interests, as defined under the OFC Senior Secured Note Agreement and summarized in the table below, and have a priority lien on the following assets: investments by OFC in subsidiaries not guaranteeing the PMC Senior Secured Notes, including PHH Corporation and MAV; cash and investment accounts at OFC; and certain other assets, including receivables.
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Other Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities |
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Derivative Financial Instruments and Hedging Activities |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 three months ended March 31, 2024 and 2023.
The table below summarizes the net gains and losses of our derivative instruments recognized in our consolidated statements 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 among other inputs and assumptions. The objective of our MSR interest rate risk management and hedging policy is to protect shareholders’ equity and earnings against the fair value volatility of interest-rate sensitive MSR portfolio exposure, considering market, liquidity, cost and other conditions. The interest-rate sensitive MSR portfolio exposure is defined as follows: •Agency MSR portfolio, •expected Agency MSR bulk transactions subject to letters of intent (LOI), •less the Agency MSRs subject to our sale agreements with MAV, Rithm and others, also referred to as Pledged MSR liabilities (See Note 8 — Other Financing Liabilities, at Fair Value), •less the asset value for securitized HECM loans, net of the corresponding HMBS-related borrowings, •other interest-rate sensitive exposures, including our ESS financing liabilities, as deemed appropriate by the Market Risk Committee. The hedge coverage ratio, defined as the ratio of hedge and asset rate sensitivity (referred to as DV01) is subject to lower and upper target thresholds under our policy. We regularly evaluate the hedge coverage ratio at the intended shock interval to determine if it is relevant or warrants adjustment based on market conditions, symmetry of interest rate risk exposure, liquidity impacts under shock scenarios and other factors. As the market dictates, management may choose to maintain the hedge coverage ratio at different thresholds, with approval of the Market Risk Committee, in order to preserve liquidity and/or optimize asset returns. Effective September 2022, a minimum 25% and 30% hedge coverage ratios were required for interest rate declines less than, and more than 50 basis points, respectively. During the second quarter of 2023, management raised its minimum hedge coverage ratio to 60%. Effective December 2023, we established a targeted hedge coverage ratio range between 95% and 105%. With a partial hedge coverage ratio, the changes in fair value of our hedging instruments may not fully offset the changes in fair value of our net MSR portfolio exposure attributable to interest rate changes. In addition, while DV01 measures may remain within the range of our hedging strategy’s objective, actual changes in fair value of the derivatives and MSR portfolio may not offset to the same extent, due to non-parallel changes in the interest rate curve, the convexity of the MSR, the basis risk inherent in the MSR profile and hedging instruments, and hedge costs among other factors. We continuously evaluate the use of hedging instruments with the objective of enhancing the effectiveness of our interest rate hedging strategy. Our derivative instruments include forward trades of MBS or Agency TBAs with different banking counterparties, exchange-traded interest rate swap futures and interest rate options. 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. From time-to-time, we enter into exchange-traded options contracts with purchased put options financed by written call options. We report changes in fair value of these derivative instruments in MSR valuation adjustments, net in our consolidated statements of operations, within the Servicing segment. We may, from time to time, establish inter-segment derivative instruments between the MSR and pipeline hedging strategies to minimize the use of third-party derivatives. The fair value gains and losses of such inter-segment derivatives effectively reclassify certain derivative gains and losses between MSR valuation adjustments, net within the Servicing segment and Gain on loans held for sale, net within the Originations segment to reflect the performance of these economic hedging strategies in the appropriate segments (see Note 18 – Business Segment Reporting for the amount of such reclassification). Such inter-segment derivatives are eliminated in our consolidated financial statements. The derivative instruments are subject to margin requirements, posted as either initial or variation margin. Ocwen may be required to post or may be entitled to receive cash collateral with its counterparties through margin calls, based on daily value changes of the instruments. Changes in market factors, including interest rates, and our credit rating may require us to post additional cash collateral and could have a material adverse impact on our financial condition and liquidity. Pipeline Hedging - Interest Rate Lock Commitments and Loans Held for Sale, at Fair Value In our Originations business, we are exposed to interest rate risk and related price risk during the period from the date of the interest rate lock commitment through (i) the lock commitment cancellation or expiration date or (ii) through the date of sale or securitization of the resulting loan into the secondary mortgage market. Loan commitments for forward loans generally range from 5 to 75 days, with the majority of our commitments to borrowers for 40 to 60 days and our commitments to correspondent sellers for 5 to 30 days. Loans held for sale are generally funded and sold within 5 to 30 days. This interest rate exposure of loans and IRLCs is economically hedged with derivative instruments, including forward sales of Agency TBAs. The objective of our pipeline hedging strategy is to reduce the volatility of the fair value of IRLCs and loans due to market interest rates, thus to preserve the initial gain on sale margin at lock date. We report changes in fair value of these derivative instruments as gain or loss on economic hedge instruments within either Gain on loans held for sale, net or Gain on reverse loans held for investment and HMBS-related borrowings, net in our consolidated statements of operations.
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Interest Expense |
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Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expense |
(1)Notes issued to Oaktree affiliates, inclusive of amortization of debt issuance costs and discount of $2.7 million and $2.3 million for the three months ended March 31, 2024 and 2023, respectively.
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Basic and Diluted Earnings per Share |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Earnings 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 period. 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 restricted stock awards, stock options and warrants as determined using the treasury stock method. For the three months ended March 31, 2023, we have excluded the effect of all stock options, common stock awards, and warrants from the computation of diluted loss per share because of the anti-dilutive effect of our reported net loss.
(1)Includes stock options 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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Business Segment Reporting |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Reporting |
Our business segments reflect the internal reporting that our Chief Executive Officer uses to evaluate our operating and financial performance and to assess the allocation of our resources. Our current reportable business segments consist of Servicing, Originations, and Corporate Items and Other. During the three months ended March 31, 2024, there have been no changes to our business segments as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023. Effective in the fourth quarter of 2023, the Servicing segment includes CR Limited (CRL), our wholly-owned captive reinsurance subsidiary previously included in the Corporate Items and Other segment. Segment results for the three months ended March 31, 2023 have been recast to conform to the current segment presentation. Financial information for our segments is as follows:
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Regulatory Requirements |
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Mar. 31, 2024 | |||||||
Broker-Dealer [Abstract] | |||||||
Regulatory Requirements |
Our business is subject to extensive regulation and supervision by federal, state, local and foreign governmental authorities, including the Consumer Financial Protection Bureau (CFPB), HUD, the SEC and various state agencies that license our servicing and lending activities. Accordingly, we are regularly subject to examinations, inquiries and requests, including civil investigative demands and subpoenas. The GSEs and their conservator, the Federal Housing Finance Agency (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 Home Mortgage Disclosure Act (HMDA), 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, handling of unclaimed property, safeguarding of non-public personally identifiable information about our customers, and the ability of our employees to work remotely. These complex requirements can and do change as laws and regulations are enacted, promulgated, amended, interpreted and enforced. 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, which could increase the possibility of adverse regulatory action against us. 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, payroll and other 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 foreign subsidiaries are subject to inquiries and examinations from foreign governmental regulators in the countries in which we operate outside of the U.S. 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, liquidity requirements, 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. PHH’s minimum financial eligibility requirements for GSE seller/servicers and Ginnie Mae issuers were updated by the GSEs and Ginnie Mae effective September 30, 2023. We believe our licensed entities were in compliance with all of their minimum net worth and liquidity requirements at March 31, 2024. 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 and liquidity requirements for licensing and seller/servicer obligations referenced above are mostly based on the UPB of assets serviced by PHH. Under the applicable formula, the required minimum net worth was $447.9 million at March 31, 2024. PHH’s adjusted net worth was $546.7 million at March 31, 2024. The most restrictive of the various liquidity requirements for licensing and seller/servicer obligations referenced above pertains to PHH and the required minimum liquidity was $121.1 million at March 31, 2024. PHH’s eligible liquidity, as defined, for licensing and seller/servicer obligations was $233.5 million at March 31, 2024. Ginnie Mae announced a new risk-based capital ratio effective on December 31, 2024 for Ginnie Mae issuers. PHH would not be in compliance with the upcoming risk-based capital requirements if they were in effect as of March 31, 2024. We are currently implementing certain actions intended to achieve compliance with the requirements. We intend to operate our Ginnie Mae issuer activities through a dedicated, wholly owned subsidiary subject to the risk-based capital rules. We are in the process of applying for regulatory approvals necessary to operate. If we are unable to execute this solution in a manner satisfactory to Ginnie Mae and other regulators, we may be required to sell all Ginnie Mae related forward mortgage assets under uncertain conditions before December 31, 2024 and incur transition costs; as a result, our financial results, liquidity, financing activities and reputation could be negatively impacted. In addition, we continuously evaluate our capital allocation based on investment returns and market conditions among other factors; we may determine that the sale of the Ginnie Mae related mortgage portfolio provides the best outcome for our shareholders and we may re-evaluate our participation in the Ginnie Mae lending programs overall. As of March 31, 2024, our forward owned servicing portfolio included government-insured loans with a UPB of $19.5 billion, 11% of our total forward owned MSR servicing portfolio or 6% of our total UPB serviced and subserviced. 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 Corporation. The conditional approval 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 Ocwen legacy 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 have not serviced any loans on the REALServicing system since then. 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 Corporation acquisition conditional approval. We believe we have complied with all terms of the PHH Corporation acquisition conditional approval and the NY Consent Order to date.
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Commitments |
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Commitments |
Unfunded Lending Commitments We have originated floating-rate reverse mortgage loans under which the borrowers have additional borrowing capacity of $1.8 billion at March 31, 2024. This additional borrowing capacity is available on a scheduled or unscheduled payment basis. During the three months ended March 31, 2024, we funded $59.5 million out of the $1.8 billion borrowing capacity as of December 31, 2023. We also had short-term commitments to lend $1.2 billion and $25.5 million in connection with our forward and reverse mortgage loan IRLCs, respectively, outstanding at March 31, 2024. We finance originated and purchased forward and reverse mortgage loans with repurchase and participation agreements, also 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 a reverse mortgage loan is equal to or greater than 98% of the maximum claim amount (MCA repurchases). The table below provides the breakdown of the portfolio UPB with respect to the percentage of the MCA at March 31, 2024.
For the three months ended March 31, 2024 and 2023, we repurchased HECM loans from Ginnie Mae securitizations in the amount of $41.9 million and $91.9 million, respectively. Activity with regard to HMBS repurchases for the three months ended March 31, 2024 is as follows:
(1)Includes amounts received upon assignment of loan to HUD, loan payoff, REO liquidation and claim proceeds less any amounts charged off as unrecoverable. Our subservicing clients bear the financial obligation and risks associated with purchasing loans out of securitization pools within the portfolio of loans we subservice. Client Concentration Our Servicing segment has exposure to concentration risk and client retention risk. For the three months ended March 31, 2024, servicing and subservicing fees from Rithm amounted to $24.9 million, or 16% of total servicing and subservicing fees (excluding ancillary income). As of March 31, 2024, Rithm represented 15% and 25%, respectively, of UPB and loan count of our total servicing and subservicing portfolio, and approximately 66% of all delinquent loans that Ocwen services. Our Subservicing Agreements and Servicing Addendum with Rithm provide for automatic one-year renewals, unless Ocwen or Rithm provide advance notice of termination. Ocwen and Rithm did not provide their respective notice of termination in 2023. Accordingly, the servicing agreements with Rithm are extended through December 31, 2024, with subsequent, automatic one-year renewals. If Rithm exercises its right to terminate all or some of the agreements (for convenience by October 2024 or for cause at any time), we might need to right-size certain aspects of our servicing business as well as the related corporate support functions, and we may need to adjust our daily liquidity management due to the reduction of servicing float balances associated with the Rithm servicing agreements. The impacts to our consolidated statements of operations in connection with our Rithm agreements are disclosed in Note 8 — Other Financing Liabilities, at Fair Value. Other liabilities recorded on our consolidated balance sheets are disclosed in Note 14 – Other Liabilities. In addition, for the three months ended March 31, 2024, servicing and subservicing fees from MAV amounted to $20.0 million or 13% of total servicing and subservicing fees (excluding ancillary income). As of March 31, 2024, our servicing and subservicing portfolio with MAV represented $53.4 billion UPB, or 18% of the UPB and 14% of the loan count in our total servicing and subservicing portfolio. While our servicing agreement with MAV is non-cancellable and provides us with exclusivity, MAV is permitted to sell the underlying MSR without Ocwen’s consent after May 3, 2024. See Note 11 - Investment in Equity Method Investee and Related Party Transactions and Note 8 — Other Financing Liabilities, at Fair Value.
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Contingencies |
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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 borrowers, regulatory agencies (discussed further under “Regulatory” below), current or former employees, 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, and those brought under the False Claims Act by private citizens on behalf of the U.S. In addition, we may be a party or potential party to threatened or pending legal proceedings brought by fair-housing advocates, current and former commercial counterparties and market competitors, including, among others, claims related to the sale or purchase of loans, MSRs or other assets, and breach of contract actions, parties on whose behalf we service or serviced mortgage loans, parties who provide ancillary services including property preservation and other post-foreclosure related services, and parties who provide or provided consulting, subservicing, or other services to Ocwen. 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, federal and local bankruptcy rules, federal and local tax regulations, and state deceptive trade practices laws. Such proceedings include wrongful foreclosure and eviction actions, bankruptcy violation 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 inspection fees, foreclosure attorneys’ fees, reinstatement fees, foreclosure registration fees, payment processing, payment facilitation or payment convenience fees, claims related to ancillary products marketed and sold to borrowers, claims related to loan modifications and loan assumptions, claims related to call recordings, claims regarding certifications of our legal compliance related to our participation in certain government programs, claims related to improper occupancy inspections, and claims related to untimely recording of mortgage satisfactions. 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 improperly assessed and/or 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, (4) certain legacy mortgage reinsurance arrangements violated RESPA, and (5) we failed to subservice loans appropriately pursuant to subservicing and other agreements. 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 $9.2 million at March 31, 2024. We cannot currently estimate the amount, if any, of reasonably possible losses above amounts that have been recorded at March 31, 2024. 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 similar state statutes. We are currently defending a class action lawsuit challenging, under state and federal law, our practice of charging borrowers a fee to use certain optional payment methods, in Jones v. PHH Mortg. Corp., et al. (D. NJ), which we have filed a motion to dismiss. In addition, between November 2022 and June 2023, we settled the previously disclosed cases of Morris v. PHH Mortg. Corp., et al. (S.D. FL), Torliatt v. PHH Mortg. Corp., et al. (N.D. CA), Thacker v. PHH Mortg. Corp., et al. (N.D. WV), Forest v. PHH Mortg. Corp., et al. (D. RI), and Williams v. PHH Mortg. Corp., et al. (S.D. TX). In addition, we continue to be involved in legacy matters arising prior to Ocwen’s October 2018 acquisition of PHH Corporation, 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 alleging that PHH Corporation’s legacy mortgage reinsurance arrangements between its captive reinsurer, Atrium Insurance Corporation, and certain mortgage insurance providers violated RESPA. See Munoz v. PHH Mortgage Corp. et al. (Eastern District of California). In June 2015, the court certified a class of borrowers who obtained loans with private mortgage insurance through PHH’s captive reinsurance arrangement between June 2007 and December 2009. PHH asserted numerous defenses to the merits of the case. Following pre-trial developments in August 2020, the only issues remaining for trial were whether the plaintiffs had standing to bring their claims and whether the reinsurance services provided by PHH Corporation’s captive reinsurance subsidiary, Atrium, were actually provided in order for the safe harbor provision of RESPA to apply. In January 2022, the Court denied a motion by the plaintiffs to enter new evidence and a motion by PHH to decertify the class, which motion PHH may renew if the case ultimately goes to trial. Following the entry of this order, at the request of the parties, the Court dismissed all of the plaintiffs’ claims for lack of standing and entered judgment in favor of PHH. The plaintiffs appealed to the United States Court of Appeals for the Ninth Circuit, and in February 2023 that court reversed and remanded for further proceedings. Ocwen will continue to vigorously defend itself. Our current accrual with respect to this matter is included in the $9.2 million legal and regulatory accrual referenced above. At this time, Ocwen is unable to predict the outcome of this lawsuit or the possible loss or range of loss, if any, associated with the resolution of such 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 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. In May 2020, the court ruled that plaintiff’s 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. In October 2023, the parties reached a tentative settlement to resolve the lawsuit prior to trial. A hearing on the parties’ motion for preliminary approval was scheduled for February 29, 2024, but the court postponed that hearing pending the submission of certain additional briefing, which the parties filed on March 8, 2024. On March 29, 2024, the district court entered an order granting preliminary approval of the parties’ settlement agreement, and directing notice to the settlement class. The notice process will commence 30 days from entry of the March 29 order, and the court also set a Final Fairness Hearing for September 5, 2024. If the proposed settlement is not ultimately approved, Ocwen will vigorously defend itself. Ocwen is unable to predict the outcome of this lawsuit, the possible loss or range of loss, if any, associated with the resolution of such lawsuit or the potential impact on us or our operations. If our efforts to settle or 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. We are currently involved in a dispute with a former subservicing client, HSBC Bank USA, N.A. (HSBC). See HSBC Bank USA, N.A. v. PHH Mortgage Corp. (Supreme Court of the State of New York). HSBC’s claims relate to alleged breaches of agreements entered into under a prior subservicing arrangement and origination assistance agreement. In its complaint, HSBC also asserted a claim for fraud, which was dismissed by the Court. PHH has answered the complaint and has asserted counterclaims against HSBC for breach of contract. We believe we have strong factual and legal defenses to the remaining 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. 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. In September 2023, the Court granted in part Ocwen’s motion for summary judgment, dismissing Nomura’s “failure to notify” claim in its entirety; the Court, however, denied Ocwen’s motion with respect to Nomura’s second claim alleging failure to service loans in accordance with accepted standards. We are currently considering our appellate options. The scope of any resulting trial is uncertain, and thus 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, orders, inquiries, subpoenas, civil investigative demands, requests for information and other actions. We may also on occasion be subject to foreign regulatory actions in the countries where we operate outside the U.S. 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. We regularly 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 licensed servicing and lending businesses, as well as from state attorneys general, the CFPB and other federal agencies, including the Department of Justice and various inspectors general. For example, we have received requests regarding the charging of certain fees to borrowers (including our practice of charging borrowers a fee to use certain optional payment methods); the post-boarding process to verify loan and payment terms are properly implemented, calculated, and applied; bankruptcy practices; COVID-19-related forbearance and post-forbearance options; and Homeowner Assistance Fund participation and implementation. 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, and engage with us on various matters. 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. Loan Put-Back and Related Contingencies We have exposure to representation, warranty and indemnification obligations relating to our lending, loan sales and securitization activities, and servicing practices. 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 may incur. We do not provide or assume any origination representations and warranties in connection with our MSR purchases. At March 31, 2024 and March 31, 2023, we had outstanding representation and warranty repurchase demands of $25.3 million UPB (75 loans) and $31.0 million UPB (127 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 unaudited consolidated balance sheets. (2)Includes reclassification of principal and interest losses in connection with repurchased loans, make-whole, indemnification and fee payments and settlements net of recoveries, if any. 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 March 31, 2024. Other We may, from time to time, have affirmative indemnification and other claims against service providers, parties from whom we purchased MSRs or other assets, investors or other parties. 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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Organization and Basis of Presentation (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in conformity with the instructions of the Securities and Exchange Commission (SEC) to Form 10-Q and SEC Regulation S-X, Article 10, Rule 10-01 for interim financial statements. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete financial statements. In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The results of operations and other data for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024. The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.
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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, those that relate to fair value measurements, income taxes and the provision for losses that may arise from contingencies including litigation proceedings. 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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Recently Adopted Accounting Standards And Accounting Standards Issued but Not Yet Adopted | Recently Adopted Accounting Standards Leases (ASC 842) Common Control Arrangements (ASU 2023-01) Prior to the issuance of this ASU, ASC 842 required all lessees to amortize leasehold improvements over the shorter of their useful life or the remaining term of the lease. For leases between entities under common control, the amendment in this ASU requires amortization of leasehold improvements over the useful life of those assets to the common control group, regardless of the lease term. When the lessee no longer controls the use of the asset underlying the common control lease, the leasehold improvements are accounted for as a transfer between entities under common control whereby the lessee records a distribution to the common control lessor through an adjustment to equity. Our adoption of this standard on January 1, 2024 did not have a material impact on our consolidated financial statements. Accounting Standards Issued but Not Yet Adopted Business Combinations - Joint Venture Formations (ASC 805-60): Recognition and Initial Measurement (ASU 2023-05) The amendments in this ASU require a joint venture to apply a new basis of accounting upon formation for the initial contribution of nonmonetary and monetary assets, initially measured at fair value (with exceptions to fair value measurement consistent with business combinations guidance). This ASU does not amend the definition of a joint venture, the accounting by an equity method investor for its investment in a joint venture, or the accounting by a joint venture for contributions received after its formation. The amendments in this ASU are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted. A joint venture formed prior to the adoption date may elect to apply the new guidance retrospectively back to the original formation date. We do not anticipate that the adoption of this standard will have a material impact on our consolidated financial statements. Segment Reporting (ASC 280) Improvements to Reportable Segment Disclosures (ASU 2023-07) The amendments in this ASU were issued to improve annual and interim reportable segment disclosure requirements, primarily through enhanced disclosures about expenses that are significant to the segment, regularly provided to or easily computed from information regularly provided to the chief operating decision maker (CODM), and included in the reported measure of segment profit or loss. This ASU also requires disclosure of the title and position of the individual or the name of the group identified as the CODM in the consolidated financial statements, as well as how the CODM uses each reported measure of segment profit or loss to assess performance and allocate resources to the segment. The ASU allows the disclosure of additional optional measures of a segment’s profit or loss for each reportable segment if used by the CODM, subject to additional segment disclosures and the SEC’s non-GAAP financial measures requirements. The amended disclosures in this ASU are effective in the 2024 annual period and in 2025 for interim periods, and shall be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. Income Taxes (ASC 740) Improvements to Income Tax Disclosures (ASU 2023-09) The amendments in this ASU require disaggregated information about a reporting entity’s effective tax rate reconciliation, including a tabular rate reconciliation for specified categories and additional information for reconciling items that meet a quantitative threshold. The ASU also requires additional disaggregated information on income taxes paid to an individual jurisdiction equal to or greater than 5% of total income taxes paid. The amended disclosures are effective in the 2025 annual period and in 2026 for interim periods, and shall be applied on a prospective basis with the option to apply the standard retrospectively.
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Securitizations and Variable Interest Entities (Tables) |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flows Related to Transfers Accounted for as Sales | 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 Assets That Relate to Continuing Involvement with Transferred Financial Assets with Servicing Rights and Maximum Exposure to Loss Including the Unpaid Principal Balance | 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:
(1)Includes $11.3 billion and $10.5 billion of loans delivered to Ginnie Mae as of March 31, 2024 and December 31, 2023, respectively, and includes loan modifications repurchased and delivered through the Ginnie Mae Early Buyout Program (EBO). (2)The maximum exposure to loss in the table above is primarily based on the remaining UPB of loans serviced and assumes all loans were deemed worthless as of the reporting date. It does not take into consideration the proceeds from the underlying collateral liquidation, recoveries or any other recourse available to us, including from mortgage insurance, guarantees or correspondent sellers. We do not believe the maximum exposure to loss from our involvement with these previously transferred loans is representative of the actual loss we are likely to incur based on our contractual rights and historical loss experience and projections. Also, refer to the Loan Put-Back and Related Contingencies section in Note 21 – Contingencies.
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Schedule Of Securitization Reverse Mortgage Loans Buyouts And Financing Liabilities | The table below presents the carrying value and classification of the assets and liabilities reported on our consolidated balance sheet that are associated with the securitized reverse mortgage loans buyouts and financing liabilities:
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Carrying Value And Classification Of Assets And Liabilities Of Advance Financing Facilities | The table below presents the carrying value and classification of the assets and liabilities of the advance financing facilities:
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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 GSE MSR financing facility and the PLS Notes facility:
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Fair Value (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Assets and Liabilities | 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 in our financial statements. (b)Measured at fair value on a non-recurring basis in our financial statements. (c)Disclosed, but not measured at fair value in our financial statements. (d)The carrying values are net of unamortized debt issuance costs and discount. See Note 13 – Borrowings for additional information. (e)The newly originated portfolio of GSE and forward Ginnie Mae loans held for sale pending securitization with the Agencies is classified as Level 2; all other loans are classified as Level 3.
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Schedule of Reconciliation of Changes in Fair Value of Level 3 Assets and Liabilities | The following tables present a reconciliation of the changes in fair value of certain Level 3 assets and liabilities that we measure at fair value on a recurring basis (refer to the respective notes for other Level 3 assets and liabilities):
(1)IRLC activity (issuances and transfers) represent changes in fair value included in earnings. This activity is presented on a gross basis in the table for disclosure purposes. Total net change in fair value included in earnings attributed to IRLCs is a gain (loss) of $(0.6) million and $5.6 million for the three months ended March 31, 2024 and 2023, respectively. See Note 15 – Derivative Financial Instruments and Hedging Activities. (2)ESS financing liability settlement is determined based on collections on reference pools of the related mortgage loans.
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Schedule of Significant Assumptions used in Valuation |
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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 March 31, 2024 given hypothetical increases in lifetime prepayments and yield assumptions:
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Loans Held for Sale - Fair Value (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Held for Sale Fair Value | The following table presents the estimated fair value of Loans held for sale for which we elected the fair value option:
The following table presents the composition of Loans held for sale, at fair value by type:
(1)Pursuant to Ginnie Mae servicing guidelines. (2)Includes government-insured inactive reverse mortgage loans purchased from Ginnie Mae securitization pools that reached the 98% of maximum claim amount and are generally liquidated through foreclosure and subsequent sale of the REO properties. As of March 31, 2024 and December 31, 2023, the balance includes $241.5 million and $119.5 million, respectively, of loans pledged as collateral for the Asset-Backed Notes issued by OLIT. Also see Note 2 – Securitizations and Variable Interest Entities and Note 13 – Borrowings. The following table presents the activity of Loans held for sale, at fair value:
(1)Excludes retained MSR upon securitization. See below table of gain (loss) on loans held for sale, net.
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Schedule of Gains on Loans Held for Sale, Net |
(1)Realized gain (loss) on sale of loans, excluding retained MSRs.
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Reverse Mortgages (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Held For Investment and HMBS Related Borrowings | The following table presents the estimated fair value of reverse mortgage loans held for investment for which we elected the fair value option:
The following table presents the composition of reverse mortgage loans held for investment, at fair value by type:
(1)The Ginnie Mae securitization of conventional, HECM loans does not qualify for sale accounting treatment and is accounted for as a secured financing transaction, with the recognition of both loans and HMBS-related borrowing on the consolidated balance sheets. (2)Tails represent the fair value of future scheduled and unscheduled draw commitments for HECM loans, mortgage insurance premium, servicing fee and other advances which we subsequently securitize. The following table summarizes the activity in reverse mortgage loans held for investment and HMBS related borrowings that do not qualify for sale accounting and for which we elected the fair value option:
(1)See further breakdown of the net gain (loss) in the table below.
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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 from interest rate lock commitment date through securitization date. (2)Includes the interest income on loans held for investment less the interest expense on HMBS-related borrowings. The net interest income includes the servicing fee Ocwen is contractually entitled to on securitized loans. (3)Includes the cash realized gains upon securitization of tails (previously reported separately in the table above). (4)See breakdown between Loans held for investment and HMBS-related borrowings in the table above within Fair value gains (losses) included in earnings.
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Advances (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advances [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Advances Paid on Behalf of Borrowers or 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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Mortgage Servicing (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity Related to MSRs - Fair Value Measurement Method | The following table presents the composition of our MSR portfolio:
(1)MSRs subject to sale agreements that do not meet sale accounting criteria. See Note 8 — Other Financing Liabilities, at Fair Value. (2)At March 31, 2024, the UPB of MSRs transferred to Rithm for which title is retained by Ocwen was $9.7 billion.
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Financing Receivable, Past Due | The following table summarizes the delinquency status of the loans underlying our MSRs:
The following table summarizes the components of our servicing and subservicing fee revenue:
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Schedule of Components of Servicing and Subservicing Fees |
(1)Includes servicing fees collected on behalf of respective parties related to transferred MSRs that do not achieve sale accounting. See Note 8 — Other Financing Liabilities, at Fair Value. (2)Includes $3.6 million and $5.2 million of ancillary income in the three months ended March 31, 2024 and 2023, respectively, associated with transferred MSRs that do not achieve sale accounting. (3)Includes $45.7 million of servicing fee in the three months ended March 31, 2023 related to MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023. See Note 8 — Other Financing Liabilities, at Fair Value. (4)Includes $11.9 million of subservicing fee in the three months ended March 31, 2024 related to MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023. See Note 8 — Other Financing Liabilities, at Fair Value.
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Other Financing Liabilities, at Fair Value (Tables) |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity Related to Financing Liability - MSRs Pledged | The following tables present the activity of the pledged MSR liability recorded in connection with the MSR transfer agreements with MAV and other unrelated parties, including Rithm, that do not qualify for sale accounting.
(1)The fair value of the Pledged MSR liability differs from the fair value of the associated transferred MSR asset mostly due to the portion of ancillary income that is contractually retained by PHH (shared between PHH and MAV) and other contractual cash flows.
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Schedule of Assets, Liabilities Related to MSR Transfer Agreements | The following table presents financing liabilities carried at fair value which include pledged MSR liabilities recorded in connection with MSR transfers, subservicing retained, that do not qualify for sale accounting, liabilities of consolidated mortgage-backed securitization trusts and MSR excess servicing spread (ESS) financing liability carried at fair value (see Note 13 – Borrowings for ESS financing liability carried at amortized cost).
(1)MSRs transferred, subservicing retained, or sold in transactions which do not qualify for sale accounting treatment are accounted for as secured financings. Until such time as the transaction qualifies as a sale for accounting purposes, we continue to recognize the MSRs and the related financing liability (referred as Pledged MSR liability) on our consolidated balance sheets, as well as the full amount of servicing fee collected as revenue and the servicing fee remitted as Pledged MSR liability expense in our consolidated statements of operations. Fair value gains and losses of the Pledged MSR liability are recognized in MSR valuation adjustments, net in the consolidated statements of operations - See Note 7 – Mortgage Servicing and Note 9 – MSR Valuation Adjustments, Net. (2)Consists of securitization debt certificates due to third parties that represent beneficial interests in trusts that are consolidated. (3)Consists of the obligation to remit to a third party a specified percentage of future servicing fee collections (servicing spread) on reference pools of MSRs, which we are entitled to as owner of the related MSRs. The servicing spread remittance is reported in Pledged MSR liability expense and fair value gains and losses of the ESS financing liability are reported in MSR valuation adjustment, net.
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Schedule of Results of Operations in Connection With MSR Transfer Agreements that Do Not Qualify for Sale Accounting |
(1)Includes $45.7 million of servicing fees collected on behalf of Rithm, $13.1 million of subservicing fee retained and $32.6 million of net servicing fee remittance in the three months ended March 31, 2023 related to MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023.
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MSR Valuation Allowance, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of MSR Valuation Allowance, Net | The table below presents the components of MSR valuation adjustments, net, that include four MSR related instruments which we account for at fair value with changes in fair value recorded in earnings: (i) the fair value changes of the total MSR portfolio (Total MSRs) recorded on our consolidated balance sheets ($2.4 billion fair value asset at March 31, 2024). Total MSRs include owned MSRs and MSRs that have been sold or transferred to third parties in transactions that do not achieve sale accounting criteria. Owned MSRs include MSRs subject to ESS financing transactions; (ii) the fair value changes of the Pledged MSR liabilities recorded as liabilities on our consolidated balance sheets when MSR sale accounting criteria are not achieved ($647.9 million fair value liability at March 31, 2024; (iii) the fair value changes of the ESS financing liabilities for which we elected the fair value option ($253.4 million fair value liability at March 31, 2024; and (iv) the fair value changes of the derivative instruments economically hedging the MSR exposure.
(1)Also refer to Note 7 – Mortgage Servicing. (2)Also refer to Note 8 — Other Financing Liabilities, at Fair Value for additional information related to the ESS financing liability and Pledged MSR liability, including a tabular presentation of activity of the Pledged MSR liability for the reported years. (3)MSR transfers that do not achieve sale accounting. (4)Also refer to Note 15 – Derivative Financial Instruments and Hedging Activities.
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Receivables (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Receivables |
(1)Includes $25.6 million and $25.2 million at March 31, 2024 and December 31, 2023, respectively, from the USVI Bureau of Internal Revenue (BIR) for a refund of income taxes paid in prior years. In December 2022, we executed an agreement with the BIR for payment of the income tax refunds related to tax years 2013 through 2015, plus accrued interest, over a two-year period ending December 31, 2024. The BIR did not make the payment that was due on December 31, 2023 pursuant to the agreement. On February 8, 2024, we filed a lawsuit against the USVI for the refund of income taxes paid in prior years and for the USVI’s breach of the above-referenced agreement.
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Schedule of Changes in Allowance For Losses |
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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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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Match Funded Liabilities |
(1)The Expected Repayment Date of our facilities, as defined, is the date on which the revolving period ends under each advance facility note and repayment of the outstanding balance is required if the note is not renewed or extended. In certain of our advance facilities, there are multiple notes outstanding. (2)The committed borrowing capacity under the OMART and OGAF facilities is available to us provided that we have sufficient eligible collateral to pledge. At March 31, 2024, none of the available borrowing capacity of the OMART and OGAF advance financing notes could be used based on the amount of eligible collateral. (3)At March 31, 2024, none of the available borrowing capacity of the facility could be used based on the amount of eligible collateral. (4)The weighted average interest rate excludes the effect of the amortization of prepaid lender fees. At March 31, 2024 and December 31, 2023, the balance of unamortized prepaid lender fees was $4.6 million and $5.5 million, respectively, and are included in Other assets in our consolidated balance sheets. At March 31, 2024 and December 31, 2023, 1-Month (1M) Term Secured Overnight Financing Rate (SOFR) was 5.33% and 5.35%, respectively.
(1)Of the borrowing capacity on mortgage loan financing facilities extended on a committed basis, $33.9 million of the available borrowing capacity could be used at March 31, 2024 based on the amount of eligible collateral that could be pledged on a committed basis. (2)On April 1, 2024, we voluntarily allowed the facility to mature. (3)In April 2024, the maturity date was extended to May 30, 2024. (4)In April 2024, the maturity date was extended to June 28, 2024. (5)This revolving facility agreement provides committed borrowing capacity secured by eligible HECM loans that are active buyouts, as defined in the agreement. In March 2024, the maturity date was extended to June 30, 2024. (6)In January 2024, the maturity date was extended to January 3, 2025. (7)In June 2023 and February 2024, OLIT issued different classes of Asset-Backed Notes with an initial principal amount of $264.9 million and $$268.6 million, at a discount and a mandatory call date of June 2026 and February 2027, respectively, both with a stated interest rate of 3.0%. Payments of interest and principal are made from available funds from a pool of reverse mortgage buyout loans and REOs in accordance with the indenture priority of payments. Also see Note 2 – Securitizations and Variable Interest Entities. (8)This agreement has no stated maturity date. (9)The agreement has no stated maturity date, however each transaction has a maximum duration of four years. (10)This repurchase agreement provides borrowing at our discretion up to a certain maximum amount of capacity on a rolling 90-day committed basis. This facility is structured as a gestation repurchase facility whereby dry Agency mortgage loans are transferred to a trust which issues a trust certificate that is pledged as the collateral for the borrowings. Each certificate is renewed monthly. In April 2024, we voluntarily increased the trust certificates by $50.0 million to $200.0 million. See Note 2 – Securitizations and Variable Interest Entities for additional information. (11)The weighted average interest rate excludes the effect of the amortization of prepaid lender fees. At March 31, 2024 and December 31, 2023, unamortized prepaid lender fees were $0.6 million and $1.0 million, respectively, and are included in Other assets in our consolidated balance sheets.
(1)Of the borrowing capacity on MSR financing facilities extended on a committed basis, none of the available borrowing capacity could be used at March 31, 2024 based on the amount of eligible collateral that could be pledged on a committed basis. (2)PHH’s obligations under this facility are secured by a lien on certain related MSRs. Ocwen guarantees the obligations of PHH under this facility. See Note 2 – Securitizations and Variable Interest Entities for additional information. We are subject to daily margining requirements under the terms of the facility. (3)PHH’s obligations under this facility are secured by a lien on the related Ginnie Mae MSRs and servicing advances. Ocwen guarantees the obligations of PHH under the facility. We are subject to daily margining requirements under the terms of the facility. In March 2024, the maturity date was extended to February 25, 2025 and the uncommitted borrowing capacity was increased to $300.0 million. (4)The single class PLS Notes are an amortizing debt instrument with an original principal amount of $75.0 million and a fixed interest rate of 5.114%. The PLS Notes are issued by a trust (PLS Issuer) that is included in our consolidated financial statements, and 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 principal balance amortizes in accordance with a predetermined schedule subject to modification under certain events, with a final payment due in February 2025. See Note 2 – Securitizations and Variable Interest Entities for additional information. (5)On March 4, 2024, PHH entered into a $34.0 million repurchase agreement pursuant to which PHH sold the membership interest certificate representing 100% of the limited liability company interests in PLS Issuer and has agreed to repurchase such membership interest certificate at a specified future date at the price set forth in the repurchase agreement. Ocwen guarantees the obligations of PHH under the facility subject to the terms and conditions set forth in the guaranty. We are subject to daily margining requirements under the terms of the facility. Refer to Note 2 – Securitizations and Variable Interest Entities for additional information regarding PLS Issuer and the PLS Notes. (6)This facility is secured by a lien on certain of PHH’s Agency MSRs and is subject to daily margining requirements. Any outstanding borrowings on the revolving loan will convert into a term loan in November 2024. (7)At March 31, 2024 and December 31, 2023, unamortized prepaid lender fees related to revolving-type MSR financing facilities were $3.3 million and $3.6 million, respectively, and are included in Other assets in our consolidated balance sheets. (8)Weighted average interest rate excludes the effect of the amortization of debt issuance costs and prepaid lender fees.
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Schedule of Senior Notes |
(1)Excludes the effect of the amortization of debt issuance costs and discount. (2)Redeemable at 101.969% before March 15, 2025, at par thereafter. The Indenture contains customary covenants for debt securities of this type that limit the ability of PHH Corporation and its restricted subsidiaries (including PHH) to, among other things, (i) incur or guarantee additional indebtedness, (ii) incur liens, (iii) pay dividends on or make distributions in respect of PHH Corporation’s capital stock or make other restricted payments, (iv) make investments, (v) consolidate, merge, sell or otherwise dispose of certain assets, and (vi) enter into transactions with Ocwen’s affiliates. (3)Redeemable at par plus a make-whole premium prior to March 4, 2026, at par thereafter. The make-whole premium represents the present value of all scheduled interest payments due through March 4, 2026. The Notes are solely the obligation of Ocwen and are secured by a pledge of substantially all of the assets of Ocwen, including a pledge of the equity of Ocwen’s directly held subsidiaries.
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Schedule of Assets Held as Collateral Related to Secured Borrowings | Our assets held as collateral for secured borrowings and other unencumbered assets which may be subject to a lien under various collateralized borrowings are as follows at March 31, 2024:
(1)Certain assets are pledged as collateral to the PMC Senior Secured Notes and OFC Senior Secured (second lien) Notes. (2)Reverse mortgage loans and real estate owned are pledged as collateral to the HMBS beneficial interest holders, and are not available to satisfy the claims of our creditors. Ginnie Mae, as guarantor of the HMBS, is obligated to the holders of the HMBS in an instance of PHH’s default on its servicing obligations, or if the proceeds realized on HECMs are insufficient to repay all outstanding HMBS related obligations. Ginnie Mae has recourse to PHH in connection with certain claims relating to the performance and obligations of PHH as both issuer of HMBS and servicer of HECMs underlying HMBS. (3)Excludes MSRs transferred to MAV, Rithm and others, and associated Pledged MSR liability recorded as sale accounting criteria are not met. Pledged assets exceed the MSR asset balance due to the netting of certain PLS MSR portfolios with negative and positive fair values as eligible collateral. (4)The total of selected assets disclosed in the above table does not represent the total consolidated assets of Ocwen. For example, the total excludes premises and equipment and certain other assets.
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Schedule of Second Lien Priority on Specified Assets Carried on Balance Sheet | The OFC Senior Secured Notes due 2027 have a second lien priority on specified security interests, as defined under the OFC Senior Secured Note Agreement and summarized in the table below, and have a priority lien on the following assets: investments by OFC in subsidiaries not guaranteeing the PMC Senior Secured Notes, including PHH Corporation and MAV; cash and investment accounts at OFC; and certain other assets, including receivables.
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Other Liabilities (Tables) |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Liabilities |
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Derivative Financial Instruments and Hedging Activities (Tables) |
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Activity | 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 three months ended March 31, 2024 and 2023.
The table below summarizes the net gains and losses of our derivative instruments recognized in our consolidated statements of operations.
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Interest Expense (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Interest Expense |
(1)Notes issued to Oaktree affiliates, inclusive of amortization of debt issuance costs and discount of $2.7 million and $2.3 million for the three months ended March 31, 2024 and 2023, respectively.
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Basic and Diluted Earnings per Share (Tables) |
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Calculation of Basic Loss per Share to Diluted Loss per Share |
(1)Includes stock options 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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Business Segment Reporting (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information |
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Commitments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Commitments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity Related to HMBS Repurchases | The table below provides the breakdown of the portfolio UPB with respect to the percentage of the MCA at March 31, 2024.
(1)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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Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Contingency [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of 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 unaudited consolidated balance sheets. (2)Includes reclassification of principal and interest losses in connection with repurchased loans, make-whole, indemnification and fee payments and settlements net of recoveries, if any.
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Organization and Basis of Presentation - Narrative (Details) |
Mar. 31, 2024
numberOfEmployees
employee
|
---|---|
Description of Business and Basis of Presentation [Line Items] | |
Total number of employees | 4,400 |
MAV Canopy HoldCo I, LLC | |
Description of Business and Basis of Presentation [Line Items] | |
Ownership percentage | 15.00% |
INDIA | |
Description of Business and Basis of Presentation [Line Items] | |
Total number of employees | employee | 3,000 |
PHILIPPINES | |
Description of Business and Basis of Presentation [Line Items] | |
Total number of employees | 400 |
Securitizations and Variable Interest Entities - Schedule of Cash Flows Related to Transfers Accounted for as Sales (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Transfers and Servicing [Abstract] | ||
Proceeds received from securitizations | $ 2,558.9 | $ 2,316.8 |
Servicing fees collected | 38.3 | 27.0 |
Purchases of previously transferred assets, net of claims reimbursed | (2.5) | (3.1) |
Cash flows between transferor and transferee proceeds and payment related to transfers accounted for sales | $ 2,594.7 | $ 2,340.6 |
Securitizations and Variable Interest Entities - Schedule of Assets That Relate to Continuing Involvement with Transferred Financial Assets with Servicing Rights and Maximum Exposure to Loss Including the Unpaid Principal Balance (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
UPB of loans transferred | $ 48,788.7 | $ 46,810.1 |
Maximum exposure to loss | 49,583.4 | 47,545.6 |
GinnieMae | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
UPB of loans transferred | 11,300.0 | 10,500.0 |
Mortgage Servicing Rights - Fair Value | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | 699.9 | 636.5 |
Advances | ||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | ||
Carrying value of assets | $ 94.7 | $ 99.0 |
Securitizations and Variable Interest Entities - Schedule Of Carrying Value and Classification of Assets and Liabilities of Advance Financing Facilities (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
---|---|---|---|
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Debt service accounts | $ 37.2 | $ 21.5 | |
Advance match funded liabilities | 440.2 | $ 499.7 | |
Variable Interest Entity, Primary Beneficiary | |||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Advance match funded liabilities | 439.5 | 498.9 | |
Variable Interest Entity, Primary Beneficiary | Advance match funded liabilities | |||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Match funded advances (Advances, net) | 506.5 | 573.0 | |
Debt service accounts | 11.7 | 15.7 | |
Advance match funded liabilities | $ 439.5 | $ 498.9 |
Securitizations and Variable Interest Entities - Schedule Of Carrying Value and Classification of Assets and Liabilities of Agency MSR Financing Facility (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
---|---|---|---|
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Servicing Asset | $ 2,374.7 | $ 2,272.2 | |
Debt service accounts | $ 37.2 | $ 21.5 |
Securitizations and Variable Interest Entities - Carrying Value and Classification of Assets And Liabilities of PLS Notes Facility (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
---|---|---|---|
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Servicing Asset | $ 2,374.7 | $ 2,272.2 | |
Debt service account (Restricted cash) | 37.2 | $ 21.5 | |
Unamortized debt issuance costs | (40.2) | (21.0) | |
Secured Debt | |||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Unamortized debt issuance costs | (0.6) | (0.4) | |
Variable Interest Entity, Primary Beneficiary | Secured Debt | Agency and PLS Mortgage Servicing Rights Financing Facility | |||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Servicing Asset | 494.9 | 449.6 | |
Debt service account (Restricted cash) | 1.6 | 1.7 | |
Short-Term Debt | 327.9 | 282.1 | |
Unamortized debt issuance costs | $ (0.6) | $ (0.4) |
Fair Value - Narrative (Details) |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Discount rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Measurement input | 0.094 | 0.094 |
Loans Held for Sale - Fair Value - Schedule of Gains on Loans Held for Sale, Net (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
MSRs retained on transfers of forward mortgage loans | $ 34.7 | $ 31.1 |
Gain (loss) on sales of loans, net | 7.2 | 13.9 |
Change in fair value of IRLCs | (0.6) | 5.7 |
Change in fair value of loans held for sale | (2.5) | 4.8 |
Gain (loss) on economic hedge instruments | 4.6 | (16.4) |
Other | (0.3) | (0.3) |
Gain on loans held for sale, net | 10.9 | 2.8 |
MSR valuation adjustments, net | (11.6) | (69.0) |
Gain (loss) on Sale of Forward Mortgage Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gain (loss) on sales of loans, net | (24.2) | (22.1) |
Repurchased Ginnie Mae Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gain (loss) on sales of loans, net | $ (0.8) | $ 0.2 |
Reverse Mortgages - Schedule of Reverse Mortgage Revenue, Net (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Receivables [Abstract] | ||
Gain on new originations | $ 5.9 | $ 6.3 |
Net interest income (servicing fee) | 6.0 | 5.9 |
Other change in fair value of securitized loans held for investment and HMBS-related borrowings, net (3) | 2.6 | 8.2 |
Change in fair value included in earnings, net | 14.5 | 20.4 |
Loan fees and other | 0.9 | 0.8 |
Gain on reverse loans held for investment and HMBS-related borrowings, net | $ 15.4 | $ 21.2 |
Advances - Schedule of Advances Paid on Behalf of Borrowers or on Foreclosed Properties (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|
Advances On Behalf of Borrowers [Line Items] | ||||
Advances, gross | $ 610.5 | $ 686.1 | ||
Allowance for losses | (7.7) | (7.3) | $ (6.2) | $ (6.2) |
Advances, net | 602.7 | 678.8 | ||
Principal and interest | ||||
Advances On Behalf of Borrowers [Line Items] | ||||
Advances, gross | 190.1 | 212.5 | ||
Taxes and insurance | ||||
Advances On Behalf of Borrowers [Line Items] | ||||
Advances, gross | 295.2 | 343.3 | ||
Foreclosures, bankruptcy, REO and other | ||||
Advances On Behalf of Borrowers [Line Items] | ||||
Advances, gross | $ 125.1 | $ 130.3 |
Advances - Schedule of Activity in Advances (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Advances [Roll Forward] | ||
Beginning balance - before Allowance for Losses | $ 686.1 | $ 725.1 |
New advances | 199.4 | 188.9 |
Advances Payments On Behalf Of Borrower Transfers To Other Assets | 2.9 | 8.9 |
Sales of advances | (1.0) | (4.2) |
Collections of advances and other | (276.9) | (255.6) |
Ending balance - before Allowance for Losses | 610.5 | 663.1 |
Beginning balance - Allowance for Losses | (7.3) | (6.2) |
Provision expense | (2.9) | (1.7) |
Net charge-offs and other | 2.5 | 1.7 |
Ending balance - Allowance for Losses | (7.7) | (6.2) |
Ending balance, net | $ 602.7 | $ 656.9 |
Mortgage Servicing - Schedule of Composition of Servicing UPB (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|
Servicing Assets at Fair Value [Line Items] | ||||
MSRs, at fair value | $ 2,374.7 | $ 2,272.2 | $ 2,580.6 | $ 2,665.2 |
Assets serviced | 171,300.0 | 169,700.0 | ||
UPB of loans transferred | 48,788.7 | 46,810.1 | ||
Owned MSRs | ||||
Servicing Assets at Fair Value [Line Items] | ||||
MSRs, at fair value | 1,707.3 | 1,604.6 | ||
Assets serviced | 124,500.0 | 122,700.0 | ||
MAV Transferred MSRs | ||||
Servicing Assets at Fair Value [Line Items] | ||||
MSRs, at fair value | 413.6 | 422.8 | ||
Assets serviced | 28,400.0 | $ 28,800.0 | ||
Mortgage Servicing Rights Title Retained | Rithm Transferred Mortgage Servicing Rights | ||||
Servicing Assets at Fair Value [Line Items] | ||||
UPB of loans transferred | $ 9,700.0 |
Mortgage Servicing - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Transfers and Servicing [Abstract] | ||
Float balances | $ 1,890 | $ 1,560 |
Other Financing Liabilities, at Fair Value - Schedule of Assets, Liabilities Related to MSR Transfer Agreements (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Servicing Liabilities at Fair Value [Line Items] | ||
Other financing liabilities, at fair value | $ 906.8 | $ 900.0 |
Receivables - Schedule of Receivables (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Receivables [Abstract] | ||
Government-insured loan claims - Forward | $ 38.9 | $ 43.6 |
Government-insured loan claims - Reverse | 61.3 | 64.5 |
Subservicing fees and reimbursable expenses | 12.8 | 14.3 |
Due from custodial accounts | 14.6 | 13.8 |
Receivable from sale of MSRs (holdback) | 6.7 | 5.1 |
Subservicing fees, reimbursable expenses and other - Due from MAV | 0.6 | 3.4 |
Other | 8.8 | 4.5 |
Servicing receivable, total | 143.7 | 149.2 |
Income taxes receivable | 27.0 | 27.1 |
Other receivables | 4.1 | 3.6 |
Other receivables, gross | 174.8 | 179.9 |
Allowance for losses | (22.7) | (25.1) |
Receivables, net ($44.6 and $19.9 related to VIEs) | $ 152.1 | $ 154.8 |
Receivables - Narrative (Detail) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Income taxes receivable | $ 27.0 | $ 27.1 |
USVI Bureau of Internal Revenue | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Income taxes receivable | 25.6 | 25.2 |
Servicing | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for financing notes | $ 22.1 | $ 24.6 |
Receivables - Schedule of Changes in allowance of Government-Insured Loan Claims (Details) - Government Insured Loans Claims - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Allowance for Losses | ||
Beginning balance | $ 25.1 | $ 34.3 |
Provision | 4.0 | 4.0 |
Charge-offs and other, net | (6.4) | (8.8) |
Ending balance | $ 22.7 | $ 29.5 |
Investment in Equity Method Investee and Related Party Transactions (Narrative) (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Apr. 30, 2024 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Schedule of Equity Method Investments [Line Items] | |||
Subservicing Asset, Net Asset Value | $ 10.9 | ||
MAV Canopy HoldCo I, LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 15.00% | ||
Mortgage Servicing Rights Title Transferred | Subsequent Event | |||
Schedule of Equity Method Investments [Line Items] | |||
Related Party Transaction, Amounts of Transaction | $ 10,000.0 | ||
MSR Asset Vehicle LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Unpaid principal balance of loans subserviced | $ 53,400.0 | ||
UPB of MSRs sold | 18.0 | $ 8.0 | |
MSR Asset Vehicle LLC | Mortgage Servicing Rights Title Transferred | |||
Schedule of Equity Method Investments [Line Items] | |||
UPB of rights to MSRs sold | $ 28,400.0 |
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Other Assets [Abstract] | ||
Accumulated amortization | $ (11.0) | $ (10.1) |
Contingent loan repurchase asset | 416.3 | 343.0 |
Derivative margin deposit | 2.6 | 12.8 |
Derivatives, at fair value | 11.9 | 21.6 |
Prepaid expenses | 21.3 | 24.2 |
Intangible assets, net (net of accumulated amortization of $11.0 million and $10.1 million) | 5.3 | 6.2 |
REO | 21.8 | 18.3 |
Prepaid lender fees, net | 8.5 | 10.1 |
Prepaid representation, warranty and indemnification claims - Agency MSR sale | 5.0 | 5.0 |
Deferred tax asset, net | 3.4 | 3.1 |
Other | 4.6 | 5.0 |
Other Assets, Total | $ 500.6 | $ 449.2 |
Borrowings - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Sep. 27, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Debt Instrument [Line Items] | |||
Gain on extinguishment of debt | $ 1.4 | $ 0.0 | |
PMC Senior Secured Notes | |||
Debt Instrument [Line Items] | |||
Debt instrument, repurchased amount | $ 47.4 | ||
Total repurchase open market price | 45.5 | ||
Gain on extinguishment of debt | $ 1.4 | ||
Minimum | |||
Debt Instrument [Line Items] | |||
Covenant compliance, consolidated tangible net worth at period end | 300.0 | ||
Restrictive liquidity requirements | 75.0 | ||
Minimum | PMC Senior Secured Notes | |||
Debt Instrument [Line Items] | |||
Covenant compliance, consolidated tangible net worth at period end | $ 275.0 |
Borrowings - Schedule of Second Lien Priority on Specified Assets Carried on Balance Sheet (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Debt Instrument [Line Items] | ||
Advances, net | $ 602.7 | $ 678.8 |
Mortgage servicing rights (MSRs), at fair value | 2,374.7 | 2,272.2 |
Cash and cash equivalents | 185.1 | 201.6 |
Total assets | 13,090.1 | $ 12,513.7 |
Second Lien | ||
Debt Instrument [Line Items] | ||
Advances, net | 167.3 | |
Specified deferred servicing fee | 4.2 | |
Mortgage servicing rights (MSRs), at fair value | 631.6 | |
Cash and cash equivalents | 111.1 | |
Specified advance facility reserves | 11.7 | |
Specified loan value | 79.6 | |
Specified residual value | 0.0 | |
Total assets | $ 1,005.5 |
Other Liabilities - Schedule of Other Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Contingent loan repurchase liability | $ 416.3 | $ 343.0 |
Due to Rithm - Advance collections and servicing fees | 50.0 | 50.3 |
Other accrued expenses | 59.0 | 67.5 |
Liability for indemnification obligations | 37.8 | 35.5 |
Checks held for escheat | 53.7 | 52.0 |
Accrued legal fees and settlements | 9.2 | 8.3 |
Servicing-related obligations | 37.1 | 48.4 |
Derivative related payables | 5.7 | 10.7 |
Derivatives, at fair value | 7.1 | 7.0 |
MSR purchase price holdback | 4.4 | 3.8 |
Lease liability | 9.4 | 10.2 |
Liability for uncertain tax positions | 12.5 | 12.2 |
Accrued interest payable | 8.2 | 14.3 |
Income taxes payable | 9.3 | 8.2 |
Liability for unfunded pension obligation and India gratuity plan | 9.5 | 9.2 |
Other | 3.5 | 3.2 |
Mortgage insurance premium payable | 5.0 | 5.0 |
Excess servicing fee spread payable | 3.4 | 3.6 |
Total other liabilities | $ 741.0 | $ 692.3 |
Derivative Financial Instruments and Hedging Activities - Narrative (Details) |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2023 |
Sep. 30, 2022 |
Mar. 31, 2024 |
Jun. 30, 2023 |
|
Derivative [Line Items] | ||||
Change in interest rate | 0.0050 | |||
Minimum | ||||
Derivative [Line Items] | ||||
Loans held-for-sale, period of sale | 5 days | |||
Minimum Hedge Coverage Ratio | 95.00% | 25.00% | 60.00% | |
Minimum | Forward loans IRLCs | ||||
Derivative [Line Items] | ||||
Loan commitment, term | 5 days | |||
Loan commitment, average term | 40 days | |||
Loan Commitment to Correspondents | 5 days | |||
Maximum | ||||
Derivative [Line Items] | ||||
Loans held-for-sale, period of sale | 30 days | |||
Minimum Hedge Coverage Ratio | 105.00% | 30.00% | ||
Maximum | Forward loans IRLCs | ||||
Derivative [Line Items] | ||||
Loan commitment, term | 75 days | |||
Loan commitment, average term | 60 days | |||
Loan Commitment to Correspondents | 30 days |
Interest Expense - Schedule of Components of Interest Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Debt securities: | ||
Interest expense | $ 67.4 | $ 62.3 |
OFC Senior Secured Notes | ||
Debt securities: | ||
Interest expense | 11.2 | 10.8 |
Amortization of Debt Issuance Costs and Discounts | 2.7 | 2.3 |
Senior Notes | ||
Debt securities: | ||
Interest expense | 7.4 | 7.8 |
MSR financing facilities | ||
Debt securities: | ||
Interest expense | 17.9 | 17.5 |
Mortgage loan financing facilities | ||
Debt securities: | ||
Interest expense | 18.7 | 13.6 |
Advance match funded liabilities | ||
Debt securities: | ||
Interest expense | 10.4 | 10.7 |
Escrow | ||
Debt securities: | ||
Interest expense | $ 1.8 | $ 1.9 |
Business Segment Reporting - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Segment Reporting Information [Line Items] | ||
MSR valuation adjustments, net | $ 11.6 | $ 69.0 |
Interest expense | $ 67.4 | $ 62.3 |
Business Segment Reporting - Schedule of Depreciation and Amortization by Segment (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Segment Reporting Information [Line Items] | |||
Amortization of intangibles | $ 0.9 | $ 1.5 | |
Total Assets | 13,090.1 | $ 12,513.7 | |
Servicing | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 12,003.9 | 11,687.6 | |
Originations | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 835.2 | 551.9 | |
Corporate and Other [Member] | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total Assets | $ 250.9 | $ 274.3 |
Regulatory Requirements - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Public Utilities, General Disclosures [Line Items] | ||
Net worth requirement | $ 447.9 | |
Cash and cash equivalents | 185.1 | $ 201.6 |
Assets serviced | $ 171,300.0 | 169,700.0 |
Percentage of portfolio to total forward owned servicing | 11.00% | |
Percentage of government-insured loans UPB to total UPB serviced and sub-serviced | 6.00% | |
Owned MSRs | ||
Public Utilities, General Disclosures [Line Items] | ||
Assets serviced | $ 124,500.0 | $ 122,700.0 |
Owned MSRs | Unpaid Principal Balance | ||
Public Utilities, General Disclosures [Line Items] | ||
Assets serviced | 19,500.0 | |
PHH Mortgage Corporation | ||
Public Utilities, General Disclosures [Line Items] | ||
Net worth | 546.7 | |
Restrictive liquidity requirements | 121.1 | |
Eligible liquidity | $ 233.5 |
Contingencies - Narrative (Details) $ in Millions |
Mar. 31, 2024
USD ($)
case
loan
|
Mar. 31, 2023
USD ($)
loan
|
---|---|---|
Loss Contingency [Abstract] | ||
Accrued penalty | $ 9.2 | |
Number of cases | case | 5 | |
Warranty repurchase demands unpaid principal balance | $ 25.3 | $ 31.0 |
Warranty repurchase demands number of loans | loan | 75 | 127 |
Contingencies - Schedule of Indemnification Obligations (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Indemnification Obligations Liability [Roll Forward] | ||
Beginning balance | $ 32.9 | $ 41.6 |
Provision for (reversal of) representation and warranty obligations | (0.3) | 2.7 |
Provision for representation and warranty obligations - New production liability | 0.3 | 0.3 |
Charge-offs and other | 1.8 | (2.7) |
Ending balance | 34.7 | 41.9 |
Servicing and subservicing fees | $ 204.5 | $ 232.2 |
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