View Filing Data

Total other comprehensive income, net of income taxes

(1,694)

(2,002)

(5,373)

1,072

Comprehensive income

$ 75,027

$ 42,831

$ 116,495

$ 65,254

[1]	Net of income tax benefit of $2.1 million and $1.5 million for the three months ended June 30, 2013 and 2012, respectively, and $4.9million and $2.2 million for the six months ended June 30, 2013 and 2012, respectively.
[2]	Net of income tax expense of $0.6 million and $0.3 million for the three months ended June 30, 2013 and 2012, respectively, and $0.9 million and $2.7 million for the six months ended June 30, 2013 and 2012, respectively.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) (Parentheticals) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement Of Other Comprehensive Income [Abstract]
Other comprehensive income (loss), Unrealized gain (loss) on derivatives, Income tax benefit (expense)	$ 2.1	$ 1.5	$ 4.9	$ 2.2
Other comprehensive income (loss), Reclassification adjustment on derivatives, Income tax benefit (expense)	$ (0.6)	$ (0.3)	$ (0.9)	$ (2.7)

Tax effect of the income statement impact of the reclassification adjustment of accumulated gain (loss) from derivative instruments designated and qualifying as the effective portion of cash flow hedges realized in net income. Also includes reclassification adjustments of an entity's share of an equity investee's deferred hedging gain (loss) realized in net income.

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss, Net of Taxes	Total
Balance at at Dec. 31, 2011	$ 1,299	$ 826,121	$ 523,787	$ (7,896)	$ 1,343,311
Balance at (in shares) at Dec. 31, 2011	129,899,288
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			64,182		64,182
Conversion of 3.25% Convertible Notes	$ 46	56,364			56,410
Conversion of 3.25% Convertible Notes (in shares)	4,635,159
Exercise of common stock options	$ 4	1,220			1,224
Exercise of common stock options (in shares)	342,371
Equity-based compensation		3,374			3,374
Equity-based compensation (in shares)	8,877
Other comprehensive income (loss), net of income taxes				1,072	1,072
Balance at at Jun. 30, 2012	$ 1,349	887,079	587,969	(6,824)	1,469,573
Balance at (in shares) at Jun. 30, 2012	134,885,695
Balance at at Dec. 31, 2012	$ 1,356	911,942	704,565	(6,441)	$ 1,611,422
Balance at (in shares) at Dec. 31, 2012	135,637,932				135,637,932
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			121,868		$ 121,868
Preferred stock dividends ($18.54 per share)			(3,004)		(3,004)
Deemed dividend related to beneficial conversion feature of preferred stock			(2,172)		(2,172)
Exercise of common stock options	$ 2	569			571
Exercise of common stock options (in shares)	105,029
Equity-based compensation		2,886			2,886
Equity-based compensation (in shares)	12,031
Other comprehensive income (loss), net of income taxes				(5,373)	(5,373)
Balance at at Jun. 30, 2013	$ 1,358	$ 915,397	$ 821,257	$ (11,814)	$ 1,726,198
Balance at (in shares) at Jun. 30, 2013	135,754,992				135,754,992

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) (Parentheticals) - $ / shares	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Statement Of Stockholders' Equity [Abstract]
Stated percentage of convertible notes		3.25%
Preferred stock dividends per share	$ 18.54

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) $ in Thousands	6 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)
Cash flows from operating activities
Net income	$ 121,868	$ 64,182
Adjustments to reconcile net income to net cash provided by operating activities
Amortization of mortgage servicing rights	118,252	33,411
Amortization of debt discount	752	1,480
Amortization of debt issuance costs - senior secured term loans	2,086	1,843
Depreciation	10,455	1,937
Gain on sales of loans	(25,267)
Realized and unrealized (gains) losses on derivative financial instruments, net	(22,286)	2,255
Loss on extinguishment of debt	13,838
Origination and purchase of loans held for sale	(5,019,833)
Proceeds from sale and collection of loans held for sale	5,095,388	949
Changes in assets and liabilities:
Decrease in advances and match funded advances	429,151	774,643
Decrease in receivables and other assets, net	112,113	23,812
Increase in servicer liabilities	3,259	7,250
Increase (decrease) in other liabilities	42,754	(19,068)
Other, net	(5,503)	7,928
Net cash provided by operating activities	877,027	900,622
Cash flows from investing activities
Cash paid to acquire ResCap Servicing Operations (a component of Residential Capital, LLC)	(2,097,821)
Cash paid to acquire Liberty Home Equity Solutions, Inc.	(26,568)
Purchase of mortgage servicing rights, net	(543,621)	(169,411)
Acquisition of advances in connection with the purchase of mortgage servicing rights	(73,523)	(1,833,485)
Origination of loans held for investment	(63,029)
Principal payments received on loans held for investment	871
Proceeds from sale of advance financing subsidiary and special purpose entity		76,334
Proceeds from sale of match funded advances	1,079,777	92,593
Proceeds from sale of diversified fee businesses to Altisource Portfolio Solution, S.A.	215,700
Net cash acquired in step acquisition of Correspondent One S.A.	22,108
Distributions of capital from unconsolidated entities	1,300	2,839
Additions to premises and equipment	(19,413)	(16,720)
Other	478	2,348
Net cash used in investing activities	(1,503,741)	(1,845,502)
Cash flows from financing activities
Net proceeds from (repayment of) match funded liabilities	(140,913)	904,348
Net proceeds from other borrowings	6,342,432	29,784
Repayment of other borrowings	(5,555,805)	(74,270)
Payment of debt issuance costs - senior secured term loan	(24,931)
Proceeds from sale of mortgage servicing rights accounted for as a financing	162,434	73,691
Proceeds from sale of loans accounted for as a financing	65,938
Redemption of 10.875% Capital Securities		(25)
Exercise of common stock options	567	1,200
Payment of preferred stock dividends	(3,088)
Other	(303)	(5,974)
Net cash provided by financing activities	846,331	928,754
Net increase (decrease) in cash	219,617	(16,126)
Cash at beginning of period	220,130	144,234
Cash at end of period	439,747	128,108
Supplemental non-cash investing and financing activities
Conversion of 3.25% Convertible Notes to common stock		56,410
ResCap Servicing Operations
Cash flows from investing activities
Cash paid to acquire ResCap Servicing Operations (a component of Residential Capital, LLC)	(2,097,821)
Fair value of assets acquired
Advances	(1,618,856)
Mortgage servicing rights	(393,891)
Premises and equipment	(16,423)
Goodwill	(210,038)
Receivables and other assets	(2,989)
Fair value of asset acquired, total	(2,242,197)
Fair value of liabilities assumed
Accrued expenses and other liabilities	74,680
Total consideration	(2,167,517)
Amount due to seller for purchase price adjustments	69,696
Cash paid	(2,097,821)
Less cash acquired

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Parentheticals)	6 Months Ended
	Jun. 30, 2012
Statement Of Cash Flows [Abstract]
Redemption of capital securities	10.875%
Conversion of convertible notes	3.25%

NOTE 1 DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

NOTE 1

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

Ocwen Financial Corporation (NYSE: OCN) (Ocwen, OCN, “we”, or “us”) is a financial services holding company which, through its subsidiaries, is engaged in the servicing and origination of mortgage loans. Ocwen is headquartered in Atlanta, Georgia with offices throughout the United States and in the United States Virgin Islands (USVI) with support operations in India and Uruguay. Ocwen is a Florida corporation organized in February 1988. Ocwen owned all of the common stock of one of its primary operating subsidiaries, Ocwen Mortgage Servicing, Inc. (OMS), and directly or indirectly owned all of the outstanding stock of its other primary operating subsidiaries: Ocwen Loan Servicing, LLC (OLS), Ocwen Financial Solutions Private Limited, Homeward Residential, Inc. (Homeward) and Liberty Home Equity Solutions, Inc. (Liberty) (formerly known as Genworth Financial Home Equity Access, Inc.),

We are licensed to service mortgage loans and to originate mortgage loans in all jurisdictions in which we operate.

We purchase existing mortgage servicing rights (MSRs) from market participants and generate new servicing rights through our origination activities. We perform primary and master servicer activities on behalf of investors and other servicers, including the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and Government National Mortgage Association (Ginnie Mae) (collectively, the GSEs). We service prime and non-prime mortgages including mortgages included in private label mortgage-backed securities. As primary servicer, we may make certain payments of property taxes and insurance premiums, default and property maintenance payments, as well as advances of principal and interest payments before collecting them from borrowers. As master servicer, we collect mortgage payments from primary servicers and distribute the funds to investors in the mortgage-backed securities. To the extent that the primary servicer does not advance the scheduled principal and interest, as master servicer we are responsible for advancing the shortfall subject to certain limitations.

We originate, purchase, sell and securitize prime first-lien and reverse mortgages. These loans are insured or guaranteed by the Federal Housing Authority (FHA) or the Department of Veterans Affairs (VA) or conform to the underwriting standards of Fannie Mae or Freddie Mac. The GSEs guarantee these securitizations.

We are actively engaged in identifying and completing asset and other acquisitions in connection with our growth strategy. This could involve the acquisition of domestic and international servicing and/or origination platforms or related assets. See Note 4 – Business Acquisitions for additional information.

On various dates beginning on April 1, 2013 and continuing through June 30, 2013, we completed the acquisition of Fannie Mae and Freddie Mac MSRs and related advances from Ally Bank (Ally MSR Transaction), a wholly-owned subsidiary of Ally Financial Inc. (Ally), the indirect parent of Residential Capital, LLC (ResCap). Prior to the closing, we subserviced the related MSRs on behalf of Ally Bank. We assumed certain origination representation and warranty obligations in connection with the Ally MSR Transaction. This transaction did not involve the transfer of ownership of any legal entities.

On April 1, 2013, we completed the acquisition of Liberty Home Equity Solutions, Inc. (the Liberty Acquisition) through a stock purchase agreement. Liberty is engaged in the origination, purchase, sale and securitization of reverse mortgage loans, both retail and wholesale.

On February 15, 2013, we completed the acquisition of certain assets and operations of ResCap in connection with the asset sale by ResCap and certain of its subsidiaries pursuant to a plan under Chapter 11 of the Bankruptcy Code (the ResCap Acquisition). We purchased MSRs related to “private label,” Freddie Mac and Ginnie Mae residential mortgage loans and certain master and subservicing agreements. The ResCap Acquisition included advances and elements of the servicing platform related to the acquired MSRs.

On December 27, 2012, we completed the merger by and among Ocwen, O&H Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Ocwen, Homeward Residential Holdings, Inc. (Homeward Holding) and WL Ross & Co. LLC, a Delaware limited liability company as shareholder representative. Pursuant to the merger, O&H Acquisition Corp. merged with and into Homeward Holding with Homeward Holding continuing as the surviving corporation and becoming a wholly-owned subsidiary of Ocwen (the Homeward Acquisition). Homeward primarily engages in the origination, purchase, sale and securitization of prime loans and the servicing of residential mortgage loans.

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 accruals, necessary for a fair presentation. The results of operations and other data for the three and six months ended June 30, 2013, are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2013. 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, 2012.

The preparation of financial statements in conformity with GAAP requires that we 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. Actual results could differ materially from those estimates. Material estimates that are particularly significant in the near or medium term relate to fair value measurements, the provision for potential losses that may arise from litigation proceedings, representation and warranty and other indemnification obligations, the amortization of MSRs and the valuation of goodwill and deferred tax assets.

Principles of Consolidation

Our financial statements include the accounts of Ocwen, its majority-owned subsidiaries and any variable interest entity (VIE) where we have determined that we are the primary beneficiary. We apply the equity method of accounting to investments when the entity is not a VIE, and we are able to exercise significant influence, but not control, over the policies and procedures of the entity but own 50% or less of the voting securities. We have eliminated intercompany accounts and transactions in consolidation.

Reclassification

Within the revenue section of the Consolidated Statement of Operations for the three and six months ended June 30, 2012, we reclassified Process management fees of $9.9 million and $18.7 million to Other revenues. In addition, certain other insignificant amounts in the Consolidated Statements of Operations and Cash Flows for prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on our consolidated financial position, cash flows or results of operations.

Significant Accounting Policies

Transfers of Financial Assets

We securitize, sell and service forward and reverse residential mortgage loans. Securitization transactions typically involve the use of VIEs and are accounted for as either sales or secured financings. We typically retain economic interests in the securitized assets in the form of servicing rights and obligations. In order to efficiently finance our assets and operations, we may sell servicing advances and Rights to MSRs. In order to determine whether or not a VIE is required to be consolidated, we consider our ongoing involvement with the VIE. In circumstances where we have both the power to direct the activities that most significantly impact the VIEs performance and the obligation to absorb losses or the right to receive benefits that could be significant, we would conclude that we would consolidate the entity, which precludes us from recording an accounting sale in connection with the transfer of the financial assets. In the case of a consolidated VIE, we continue to record the underlying residential mortgage loans or servicing advances and we record the securitized debt on our consolidated balance sheet.

In the case of transfers where either one or both of the power or economic criteria above are not met, we evaluate whether we achieve a sale for accounting purposes. In order to achieve a sale, the transferred assets must be legally isolated, not be constrained by restrictions from further transfer, and be deemed to be beyond our control. If we fail any of these three criteria, the accounting is consistent with a secured financing as described in the preceding paragraph. Subsequent to the determination that a transaction does not meet the accounting sale criteria, we may determine that we meet the criteria. In the event we subsequently meet the accounting sale criteria, we derecognize the transferred assets and related liabilities.

Gains or losses on off-balance sheet securitizations take into consideration any retained interests, including servicing rights and representation and warranty obligations, both of which are initially recorded at fair value at the date of sale in gain on loans held for sale, net, in our Consolidated Statements of Operations.

Recent Accounting Pronouncements

Accounting Standards Update (ASU) 2011-11, (Accounting Standards Codification (ASC) 210, Balance Sheet): Disclosures about Offsetting Assets and Liabilities and ASU 2013-01: Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This ASU contains new disclosure requirements regarding the nature of an entity’s rights of offset and related arrangements associated with financial and derivative instruments. ASU 2013-01 clarified the scope of transactions that are subject to ASU 2011-11. The new disclosures also provide information about gross and net exposures. Retrospective application is required for all comparative periods presented. Our adoption of these standards on January 1, 2013 did not have a material impact on our unaudited consolidated financial statements, as the requirements relate to disclosures only.

ASU 2013-02 (ASC 220, Comprehensive Income): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (which amends ASC 220, Comprehensive Income). ASC 2013-02 contains new requirements related to the presentation and disclosure of items that are reclassified out of accumulated other comprehensive income. The ASU is required to be applied prospectively. Adoption of this standard on January 1, 2013 did not have a material impact on our unaudited consolidated financial statements, as the requirements relate to disclosures only.

ASU 2013-04 (ASC 405, Liabilities): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date, a consensus of the FASB Emerging Issues Task Force (EITF). On February 28, 2013, the FASB issued ASU 2013-04. The ASU requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following:

The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors, and

Any additional amount the reporting entity expects to pay on behalf of its co-obligors.”

Required disclosures include a description of the joint-and-several arrangement and the total outstanding amount of the obligation for all joint parties. The ASU permits entities to aggregate disclosures (as opposed to providing separate disclosures for each joint-and-several obligation). The ASU is effective for all prior periods in fiscal years beginning on or after December 15, 2013 (and interim reporting periods within those years). The ASU should be applied retrospectively to obligations with joint-and-several liabilities existing at the beginning of an entity’s fiscal year of adoption. Entities that elect to use hindsight in measuring their obligations during the comparative periods must disclose that fact. Early adoption is permitted. We are currently evaluating the effect of adopting this standard effective January 1, 2014, but we do not anticipate that our adoption will have a material impact on our consolidated financial condition or results of operations.

ASU 2013-05 (ASC 830, Foreign Currency Matters): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, a consensus of the FASB Emerging Issues Task Force. On March 4, 2013, the FASB issued ASU 2013-05, which requires that the entire amount of a cumulative translation adjustment (CTA) related to an entity’s investment in a foreign entity should be released when there has been a:

●

sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity,

●

loss of a controlling financial interest in an investment in a foreign entity (i.e., the foreign entity is deconsolidated), or

●

step acquisition for a foreign entity (i.e., when an entity has changed from applying the equity method for an investment in a foreign entity to consolidating the foreign entity).

The ASU does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. The ASU is effective for fiscal years (and interim periods within those fiscal years) beginning on or after December 15, 2013. The ASU should be applied prospectively from the beginning of the fiscal year of adoption. We are currently evaluating the effect of adopting this standard effective January 1, 2014, but we do not anticipate that our adoption will have a material impact on our consolidated financial condition or results of operations.

NOTE 2 SECURITIZATIONS AND VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2013

SECURITIZATIONS AND VARIABLE INTEREST ENTITIES

NOTE 2

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 securitizations and asset-backed financing arrangements into two groups: (1) securitizations of residential mortgage loans and (2) financings of advances on loans serviced for others.

We have determined that the SPEs created in connection with our match funded financing facilities are VIEs of which we are the primary beneficiary. We also determined that we were the primary beneficiary for certain residential mortgage loan securitization trusts which were de-recognized at December 31, 2012, upon sale of our retained interest to a third party.

Securitizations of Residential Mortgage Loans

Currently, we securitize forward and reverse residential mortgage loans involving the GSEs. We retain the right to service these loans and receive servicing fees based upon the securitized loan balances and certain ancillary fees, all of which are reported in servicing and subservicing fees on the Consolidated Statements of Operations. In prior years, we securitized residential mortgage loans through “private label” securitization trusts. We continued to be involved with the securitization trusts, typically by acting as the servicer or sub-servicer for the loans held by the trust and by retaining a beneficial ownership interest in the securitization trust. The beneficial interests that we held consisted of both subordinate and residual securities that were either retained at the time of the securitization or subsequently acquired. We also acquired residual and subordinated interests in trusts where we were not the transferor but were the servicer.

In December 2012, we sold the beneficial interests that we held in the four consolidated securitization trusts and deconsolidated these securitization trusts. All assets and liabilities associated with the trusts were derecognized. We have no obligation to provide financial support to unconsolidated securitization trusts and have provided no such support. The beneficial owners of the trusts can look only to the assets of the securitization trusts for satisfaction of the debt issued by the securitization trusts and have no recourse against the assets of Ocwen. The general creditors of Ocwen have no claim on the assets of the trusts.

Transfers of Forward Loans

As part of our origination activities, we sell or securitize forward loans that we originate or that we purchase from third parties, generally in the form of mortgage-backed securities guaranteed by the GSEs. Securitization usually occurs within 30 days of loan closing or purchase. We retain servicing rights associated with the transferred loans and receive a servicing fee for services provided. 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.

We elected to measure loans held for sale at fair value. We report interest income on loans held for sale in other income (expense). We report the gain or loss on the transfer of the loans held for sale in Gain on loans held for sale, net in the Consolidated Statements of Operations. We also include in Gain on loans held for sale, net changes in fair value of loans and the gain or loss on the related derivatives. See Note 18 – Derivative Financial Instruments and Hedging Activities for information on these derivative financial instruments. We include all changes in loans held for sale and related derivative balances in operating activities in the Consolidated Statements of Cash Flows.

The following table presents a summary of cash flows received from and paid to securitization trusts related to transfers accounted for as sales that were outstanding during the periods ended June 30, 2013:

	Three Months			Six Months
Proceeds received from securitizations	$	1,887,359		$	4,464,151
Servicing fees collected		5,290			6,807
Purchases of previously transferred assets		(4,854	)		(11,790	)
	$	1,887,795		$	4,459,168

In connection with these transfers, we recorded MSRs of $18.2 million and $46.9 million for the three and six months ended June 30, 2013. We initially record the MSRs at fair value and subsequently account for them at amortized cost. See Note 9 – Mortgage Servicing for information relating to MSRs.

Certain guarantees arise from agreements associated with the 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. See Note 16 – Other Liabilities for further information.

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 since the Homeward Acquisition as well as our maximum exposure to loss including the unpaid principal balance of the transferred loans:

	June 30, 2013		December 31, 2012
Carrying value of assets:
Mortgage servicing rights, at amortized cost	$	44,375	$	—
Mortgage servicing rights, at fair value		2,580		2,908
Advances and match funded advances		764		—
Unpaid principal balance of loans transferred (1)		4,458,218		238,010
Maximum exposure to loss	$	4,505,937	$	240,918

(1)

The UPB of the loans transferred is the maximum exposure to loss under our standard representations and warranties obligations.

At June 30, 2013, only 0.05% of the transferred residential loans that we serviced were 60 days or more past due. During the three and six months ended June 30, 2013, there were no charge-offs, net of recoveries associated with these transferred loans.

Transfers of Reverse Mortgages

We are an approved issuer of Ginnie Mae Home Equity Conversion Mortgage-Backed Securities (HMBS) that are guaranteed by Ginnie Mae. With the acquisition of Liberty, we have begun to originate Home Equity Conversion Mortgages (HECMs or reverse mortgages) that are insured by the FHA. We then pool the loans into HMBS that we sell into the secondary market with servicing rights retained. Based upon the structure of the Ginnie Mae securitization program, we have determined that loan transfers in the HMBS program do not meet the definition of a participating interest because of the servicing requirements in the product that require the Issuer/Servicer to absorb some level of interest rate risk, cash flow timing risk and incidental credit risk. As a result, HECMs do not qualify for sale accounting, and we, therefore, account for these transfers as secured borrowings. Under this accounting treatment, the HECMs remain on our Consolidated Balance Sheet as loans held for investment (Loans – Restricted for Securitization Investors) in Other assets. We record the proceeds from the transfer of assets as secured borrowings (Secured borrowing – owed to securitization investors) in Other borrowings and recognize no gain or loss on the transfer. Holders of participating interests in the HMBS have no recourse against Ocwen, except for standard representations and warranties and our contractual obligation to service the HECMs and the HMBS, and have no recourse against the assets of Ocwen.

We have elected to measure the HECMS and HMBS-related borrowings at fair value. The changes in fair value of the HECMs and HMBS-related borrowings are included in other revenues in our Consolidated Statement of Operations. Included in net fair value gains on the HECMs and related HMBS borrowings are the interest income that we expect to be collected on the HECMs and the interest expense that we expect to be paid on the HMBS-related borrowings. We report net fair value gains on HECMs and the related HMBS borrowings as an adjustment to the net cash provided by or used in operating activities in the Consolidated Statements of Cash Flows. Originations of and payments on the HECMs are included in investing activities in the Consolidated Statements of Cash Flows. Proceeds from securitizations of HECMs and payments on HMBS-related borrowings are included in financing activities in the Consolidated Statements of Cash Flows.

We had HMBS-related borrowings of $73.6 million and $76.6 million of HECMs pledged as collateral to the pools at June 30, 2013.

Financings of Advances on Loans Serviced for Others

Match funded advances on loans serviced for others result from our transfers of residential loan servicing advances to SPEs in exchange for cash. We consolidate these SPEs because the transfers do not qualify for sales accounting treatment or because Ocwen is the primary beneficiary of the SPE.

These SPEs issue debt supported by collections on the transferred advances. We made these transfers under the terms of our advance facility agreements. We classify the transferred advances on our Consolidated Balance Sheet as Match funded advances and the related liabilities as Match funded liabilities. The SPEs use collections of the pledged advances to repay principal and interest and to pay the expenses of the SPE. Holders of the debt issued by these entities can look only to the assets of the SPE for satisfaction of the debt and have no recourse against Ocwen. However, Ocwen and OLS have guaranteed the payment of the obligations under the securitization documents of two of the entities. The maximum amounts payable under the guarantees are limited to 10% of the notes outstanding at the end of each facility’s revolving period in April 2014 and December 2014, respectively. The balance of notes outstanding at these two entities as of June 30, 2013 was $131.4 million and $39.2 million, respectively. The assets and liabilities of the advance financing SPEs are comprised solely of Match funded advances, Debt service accounts, Match funded liabilities and amounts due to affiliates. Amounts due to affiliates are eliminated in consolidation.

See Note 8 – Match Funded Advances, Note 12 – Debt Service Accounts and Note 14 – Match Funded Liabilities for additional information.

NOTE 3 TRANSFERS OF FINANCIAL ASSETS

6 Months Ended

Jun. 30, 2013

TRANSFERS OF FINANCIAL ASSETS

Note 3

Transfers of Financial Assets

In order to efficiently finance our assets and operations, we periodically sell the right to receive servicing fees, excluding ancillary income, relating to certain of our mortgage servicing rights (Rights to MSRs) and related advances (collectively, HLSS Transactions) to Home Loan Servicing Solutions, Ltd. and its wholly owned subsidiary, HLSS Holdings, LLC (collectively HLSS). To the extent applicable, HLSS may also acquire certain advance SPEs and the related match funded liabilities. During the six months ended June 30, 2013 and 2012, we completed HLSS Transactions relating to the Rights to MSRs for $26.5 billion and $18.2 billion of UPB, respectively.

As part of the HLSS Transactions, we retain legal ownership of the MSRs and continue to service the related mortgage loans. However, we service the loans for a reduced fee because HLSS has assumed the match funded liabilities as well as the obligation for future servicing advances related to the MSRs. We are obligated to transfer legal ownership of the MSRs to HLSS upon obtaining all required third party consents. At that time, we would subservice the MSRs pursuant to our subservicing agreement with HLSS which was executed on February 10, 2012 and subsequently amended on October 1, 2012. See Note 22 – Related Party Transactions for additional information.

The following table provides a summary of the assets and liabilities sold to HLSS in connection with the HLSS Transactions during the six months ended June 30:

	2013		2012
Sale of MSRs accounted for as a financing	$	148,622	$	73,691
Sale of match funded advances		1,079,777		92,225
Sale of advance SPEs:
Match funded advances		—		413,374
Debt service account		—		14,786
Prepaid lender fees and debt issuance costs		—		5,422
Other prepaid expenses		—		1,928
Match funded liabilities		—		(358,335	)
Accrued interest payable and other accrued expenses		—		(841	)
Net assets of advance SPEs		—		76,334
Sales price, as adjusted		1,228,399		242,250
Amount due to HLSS for post-closing adjustments at June 30		—		368
Cash received	$	1,228,399	$	242,618

We completed an additional transaction with HLSS on July 1, 2013 that resulted in the sale of Rights to MSRs with approximately $83.6 billion in UPB of mortgage loans as of June 30, 2013. The purchase price was approximately $2.7 billion, including $2.4 billion for servicing advances and $241 million for the associated Rights to MSRs. See Note 25 – Subsequent Events for additional information regarding this transaction.

Because we retained legal title to the MSRs, the sales of Rights to MSRs are accounted for as financings. The related advance sales meet the requirements for sale accounting under GAAP. When HLSS acquired advance SPEs from Ocwen, we derecognized the consolidated assets and liabilities of the Advance SPEs at the time of the sale. To the extent that we obtain all third party consents, legal title will transfer to HLSS, at which point we will derecognize the related MSRs. Upon derecognition, any resulting gain or loss will be deferred and amortized over the expected life of the related subservicing agreement. Until such time, we continue to recognize the full amount of servicing revenue and amortization of the MSRs.

NOTE 4 BUSINESS ACQUISITIONS

6 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

BUSINESS ACQUISITIONS

NOTE 4

BUSINESS ACQUISITIONS

We completed the Liberty, ResCap and Homeward acquisitions, respectively, as part of our ongoing strategy to expand our residential origination and servicing businesses. We accounted for these transactions using the acquisition method which requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. In a business combination, the initial allocation of the purchase price is considered preliminary and, therefore, subject to change until the end of the measurement period (up to one year from the acquisition date). Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined business.

The pro forma consolidated results presented below for each business acquisition are not indicative of what our consolidated net earnings would have been had we completed the acquisitions on the dates indicated because of differences in servicing practices and cost structure between Ocwen and each acquiree. In addition, the pro forma consolidated results do not purport to project our combined future results nor do they reflect the expected realization of any cost savings associated with the acquisitions.

The ResCap acquisition was treated as an asset acquisition for U.S. tax purposes. We expect the opening tax basis for the acquired assets and liabilities to be the fair value as shown in the purchase price allocation tables below. We expect MSRs and goodwill to be treated as intangible assets acquired in connection with the purchase of a trade or business and as such, amortized over 15 years for U.S. tax purposes. The acquisitions of Liberty and Homeward were treated as stock purchases for U.S. tax purposes.

Purchase Price Allocation

The following table summarizes the fair values of assets acquired and liabilities assumed as part of the ResCap and Homeward Acquisitions:

	ResCap									Homeward
Purchase Price Allocation	March 31, 2013			Adjustments			Revised			December 31, 2012			Adjustments			Revised
Cash	$	—		$	—		$	—		$	79,511		$	—		$	79,511
Loans held for sale		—			—			—			558,721			—			558,721
Mortgage servicing rights		393,891			—			393,891			358,119			2,225			360,344
Advances and match funded advances		1,622,348			(3,492	)		1,618,856	(1)		2,266,882			—			2,266,882	(1)
Deferred tax assets		—			—			—			47,346			—			47,346	(1)
Premises and equipment		22,398			(5,975	)		16,423	(1)		16,803			—			16,803	(1)
Debt service accounts		—			—			—			69,287			—			69,287
Investment in unconsolidated entities		—			—			—			5,485			—			5,485	(1)
Receivables and other assets		2,989						2,989			56,886			—			56,886
Match funded liabilities		—			—			—			(1,997,459	)		—			(1,997,459	)
Other borrowings		—			—			—			(864,969	)		—			(864,969	)
Other liabilities
Liability for indemnification obligations		(49,500	)		—			(49,500	)		(32,498	)		—			(32,498	) (1)
Liability for certain foreclosure matters		—			—			—			—			(13,602	)		(13,602	) (1)
Accrued bonuses		—			—			—			(35,201	)		—			(35,201	)
Checks held for escheat		—			—			—			(16,418	)		—			(16,418	) (1)
Other		(24,840	)		(340	)		(25,180	)		(47,614	)		—			(47,614	) (1)
Total identifiable net assets		1,967,286			(9,807	)		1,957,479			464,881			(11,377	)		453,504
Goodwill		204,743			5,295			210,038	(1)		300,843			10,477			311,320	(1)
Total consideration	$	2,172,029		$	(4,512	)	$	2,167,517		$	765,724		$	(900	)	$	764,824

(1)

Initial fair value estimate

The estimated fair values of the assets acquired and liabilities assumed at the acquisition date, as set forth in the table above, includes some amounts based on preliminary fair value estimates. The following factors led to certain balances having preliminary fair value estimates:

●

The complex nature of certain acquired assets and assumed liabilities prevents us from completing our valuations and reconciliations;

●

We engaged a third party specialist to assist in valuing certain assets and liabilities and this work is not yet complete; and

●

Underlying information such as unpaid principal balance (UPB) and other loan level details have not yet been boarded and reconciled onto our servicing platform, and therefore, we have not been able to fully validate and reconcile certain asset and liability balances correlated with UPB data.

Because the measurement period is still open, we expect that certain fair value estimates will change once we receive all information necessary to make a final fair value assessment. Any measurement period adjustments that we identify and determine to be material will be applied retrospectively to the period of acquisition, and depending on the nature of the adjustments, other periods subsequent to the period of acquisition could also be affected.

In June 2013, we adjusted the initial purchase price and purchase price allocations related to the Homeward and ResCap Acquisitions as indicated in the table above. These measurement period adjustments were applied retrospectively to the period of acquisition. The December 31, 2012 Consolidated Balance Sheet has been revised to reflect the adjustments attributable to the Homeward Acquisition. None of the adjustments had a material effect on earnings.

ResCap Acquisition

We completed the ResCap Acquisition on February 15, 2013. We acquired MSRs to “private label,” Freddie Mac and Ginnie Mae loans with a UPB of $107.3 billion and master servicing agreements with a UPB of $42.1 billion. We also assumed subservicing contracts with a UPB of $25.9 billion. In addition, until we obtain certain consents and court approvals we will subservice MSRs with a UPB of $9.0 billion on behalf of ResCap. When we obtain such consents and approvals, we will purchase these MSRs and assume the subservicing contracts from ResCap. We also acquired certain diversified fee-based business operations that include recovery, title and closing services.

To finance the ResCap Acquisition, we deployed $840.0 million from the proceeds of a new $1.3 billion senior secured term loan (SSTL) facility and borrowed an additional $1.2 billion pursuant to two new servicing advance facilities and one existing facility.

Ocwen assumed certain limited liabilities as part of the transaction, including certain employee liabilities and certain business payables outstanding at the closing date. Under the agreement with ResCap, Ocwen generally did not assume any contingent obligations, including pending or threatened litigation, financial obligations in connection with any settlements, orders or similar agreements entered into by ResCap or obligations in connection with any representations or warranties associated with loans previously sold by ResCap except for litigation that may arise in the ordinary course of servicing mortgage loans relating to servicing agreements assumed by Ocwen. Ocwen assumed all liabilities related to servicing loans that are guaranteed by Ginnie Mae, whether arising prior to or after the closing date.

On April 12, 2013 in connection with the sale to Altisource of the diversified fee-based business acquired in connection with the ResCap Acquisition, Ocwen agreed to establish additional terms related to existing servicing arrangements between Altisource and Ocwen for mortgage servicing assets acquired from ResCap. The cash consideration paid by Altisource to Ocwen under the Agreement totaled $128.8 million. At the time of the closing, we derecognized goodwill of $128.8 million associated with the diversified fee-based business sold to Altisource. There were no other significant assets or liabilities associated with this business. See Note 21 – Business Segment Reporting for a discussion of the additional terms of the servicing arrangements.

Post-Acquisition Results of Operations

The following table presents the revenue and earnings of the ResCap Business operations that are included in our unaudited Consolidated Statements of Operations from the acquisition date of February 15, 2013 through June 30, 2013:

For the Periods Ended June 30, 2013:	Three Months		Six Months
Revenues	$	193,596	$	266,636
Net income	$	43,646	$	58,525

Pro Forma Results of Operations

The following table presents supplemental pro forma information for Ocwen as if the ResCap Acquisition occurred on January 1, 2012. Pro forma adjustments include:

●

conforming servicing revenues to the revenue recognition policies followed by Ocwen;

●

conforming the accounting for MSRs to the valuation and amortization policies of Ocwen;

●

adjusting interest expense to eliminate the pre-acquisition interest expense of ResCap and to recognize interest expense as if the acquisition-related debt of Ocwen had been outstanding at January 1, 2012; and

●

reporting acquisition-related charges for professional services as if they had been incurred in 2012 rather than 2013.

For the Periods Ended June 30:	Three Months		Six Months
	2012		2013		2012
Revenues	$	348,430	$	987,623	$	652,151
Net income (loss)	$	20,335	$	106,649	$	14,138

Homeward Acquisition

We completed the Homeward Acquisition on December 27, 2012. We acquired the MSRs and subservicing for approximately 421,000 residential mortgage loans with a UPB of $77.0 billion. We also acquired Homeward’s loan origination platform and its diversified fee-based businesses, including property valuation, REO management, title, closing and advisory services.

On March 29, 2013, Ocwen sold the Homeward diversified fee-based businesses to Altisource Solutions S.à r.l. and Altisource Portfolio Solutions, Inc., wholly-owned subsidiaries of Altisource, for an aggregate purchase price of $87.0 million in cash. Ocwen sold its investment in two subsidiaries of Homeward, Beltline Road Insurance Agency, Inc. and Power Default Services, Inc. As part of this transaction, Ocwen also agreed to sell certain designated assets used or usable in the business conducted by another Homeward subsidiary, Power Valuation Services, Inc., as well as certain designated intellectual property and information technology assets that are used or usable in the business conducted by the acquired subsidiaries or by Powerline Valuation Services, Inc. Altisource also assumed certain liabilities of the diversified fee-based business. The carrying value of the net assets sold, including allocated goodwill, approximated the sales price. The assets sold consisted of receivables and other assets of $18.7 million. The liabilities assumed by Altisource of $4.0 million consisted principally of deferred revenue. At the time of the sale, we derecognized goodwill of $72.3 million associated with the sold business. In connection with this transaction, Ocwen entered into amendments to certain of its services and intellectual property agreements with Altisource. See Note 22 – Related Party Transactions for a discussion of these amendments.

Pro Forma Results of Operations

The following table presents supplemental pro forma information for Ocwen as if the acquisition of Homeward occurred on January 1, 2011. Pro forma adjustments include:

●

conforming servicing revenues to the revenue recognition policy followed by Ocwen;

●

conforming the accounting for MSRs to the valuation and amortization policies of Ocwen;

●

reversing depreciation recognized by Homeward and reporting depreciation based on the estimated fair values and remaining lives of the acquired premises and equipment at the date of acquisition;

●

adjusting interest expense to eliminate the pre-acquisition interest expense of Homeward and to recognize interest expense as if the acquisition-related debt of Ocwen had been outstanding at January 1, 2011 and

●

reporting acquisition-related charges for professional services as if they had been incurred in 2011 rather than 2012.

For the Periods Ended June 30, 2012:	Three Months		Six Months
Revenues	$	325,915	$	603,550
Net income	$	53,880	$	76,808

Other Acquisitions

Correspondent One

On March 31, 2013, we increased our ownership in Correspondent One S.A. (Correspondent One), an entity formed with Altisource in March 2011, from 49% to 100%. We acquired the shares of Correspondent One held by Altisource (49% interest) for $12.6 million and acquired the remaining shares held by an unrelated entity for $0.9 million. We accounted for this transaction as a step acquisition and recognized the assets acquired and liabilities assumed at their fair values as of the acquisition date. The acquired net assets were $26.3 million and consisted primarily of cash ($23.0 million) and residential mortgage loans ($1.1 million). We remeasured our previously held investment, which we accounted for using the equity method, at fair value and recognized a loss of $0.4 million. We also recognized goodwill of $0.1 million. We began including the accounts of Correspondent One in our consolidated financial statements effective on the date of acquisition and have eliminated our investment in consolidation. Correspondent One facilitates the purchase of conforming and government-guaranteed residential mortgages from approved mortgage originators and resells the mortgages to secondary market investors. Correspondent One is not material to our financial condition, results of operations or cash flows.

Liberty

On April 1, 2013, we completed the Liberty Acquisition for $22.0 million in cash. In addition, and as part of the closing, Ocwen repaid Liberty’s $9.1 million existing outstanding debt to the sellers. We acquired approximately 420 reverse mortgage loans with a UPB of $55.2 million. We also acquired Liberty’s reverse mortgage origination platform. The acquired net assets were $31.1 million and consisted primarily of residential reverse mortgage loans ($60.0 million), receivables ($11.2 million), loans held for investment ($10.3 million) and cash ($4.6 million) less amounts due under warehouse facilities ($46.3 million) and HMBS-related borrowings ($10.2 million). We did not recognize any goodwill in connection with this acquisition. The acquisition of Liberty did not have a material effect on our financial condition, results of operations or cash flows.

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

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FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

NOTE 5

FAIR VALUE OF FINANCIAL INSTRUMENTS

We estimate fair value based on a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs to valuation techniques into three broad levels whereby the highest priority is given to Level 1 inputs and the lowest to Level 3 inputs.

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

We classify assets in their entirety based on the lowest level of input that is significant to the fair value measurement.

The carrying amounts and the estimated fair values of our financial instruments and our nonfinancial assets measured at fair value are as follows:

		June 30, 2013						December 31, 2012
	Level	Carrying Value			Fair Value			Carrying Value			Fair Value
Financial assets:
Loans held for sale, at fair value (1)	2	$	361,144		$	361,144		$	426,480		$	426,480
Loans held for sale, at lower of cost or fair value (2)	3		33,987			33,987			82,866			82,866
Loans – restricted for securitization investors, at fair value (1)	3		76,649			76,649			—			—
Advances and match funded advances (3)	3		3,405,795			3,405,795			3,233,707			3,233,707
Receivables, net (3)	3		225,011			225,011			167,459			167,459

Financial liabilities:
Match funded liabilities (3)	3	$	2,391,832		$	2,391,832		$	2,532,745		$	2,533,278
Other borrowings:
Secured borrowings – owed to securitization investors, at fair value (1)	3		73,641			73,641			—			—
Other (3)	3		2,098,437			2,082,458			1,096,679			1,101,504
Total Other borrowings			2,172,078			2,156,099			1,096,679			1,101,504

Derivative financial instruments (1):
Interest rate lock commitments (IRLCs)	2	$	(7,064	)	$	(7,064	)	$	5,781		$	5,781
Interest rate swaps	3		—			—			(10,836	)		(10,836	)
Forward MBS trades	1		18,681			18,681			(1,719	)		(1,719	)
U.S. Treasury futures	1		—			—			(1,258	)		(1,258	)
Interest rate caps	3		176			176			168			168

MSRs, at fair value (1)	3	$	97,163		$	97,163		$	85,213		$	85,213

(1)

Measured at fair value on a recurring basis.

(2)

Measured at fair value on a non-recurring basis.

(3)

Financial instruments disclosed, but not carried, at fair value.

The following tables present a reconciliation of the changes in fair value of Level 3 assets that we measure at fair value on a recurring basis:

	Loans – restricted for securitization investors			Secured borrowings – owed to securitization investors			Derivative Financial Instruments			MSRs at Fair Value		Total

Three Months Ended June 30, 2013:
Beginning balance	$	—		$	—		$	(18,635	)	$	84,534	$	65,899

Purchases, issuances, sales and settlements:
Purchases		10,251			(10,179	)		—			—		72
Issuances		63,029			(65,938	)		—			—		(2,909	)
Sales		—			—			24,156			—		24,156
Settlements		(871	)		867			(1,375	)		—		(1,379	)
		72,409			(75,250	)		22,781			—		19,940

Total realized and unrealized gains and (losses) (1):
Included in Other, net		4,240			1,609			1,469			12,629		19,947
Included in Other comprehensive income (loss)		—			—			(5,439	)		—		(5,439	)
		4,240			1,609			(3,970	)		12,629		14,508

Transfers in and / or out of Level 3		—			—			—			—		—
Ending balance	$	76,649		$	(73,641	)	$	176		$	97,163	$	100,347

Three Months Ended June 30, 2012:
Beginning balance	$	—		$	—		$	(12,806	)	$	—	$	(12,806	)

Purchases, issuances, sales and settlements:
Settlements		—			—			65			—		65
		—			—			65			—		65

Total realized and unrealized gains and (losses) (1):
Included in Other, net		—			—			1,843			—		1,843
Included in Other comprehensive income (loss)		—			—			(4,007	)		—		(4,007	)
		—			—			(2,164	)		—		(2,164	)

Transfers in and / or out of Level 3		—			—			—			—		—
Ending balance	$	—		$	—		$	(14,905	)	$	—	$	(14,905	)

	Loans – restricted for securitization investors			Secured borrowings – owed to securitization investors			Derivative Financial Instruments			MSRs at Fair Value		Total

Six Months Ended June 30, 2013:
Beginning balance	$	—		$	—		$	(10,668	)	$	85,213	$	74,545

Purchases, issuances, sales and settlements:
Purchases		10,251			(10,179	)		—			—		72
Issuances		63,029			(65,938	)		—			—		(2,909	)
Sales		—			—			24,156			—		24,156
Settlements		(871	)		867			(1,066	)		—		(1,070	)
		72,409			(75,250	)		23,090			—		20,249

Total realized and unrealized gains and (losses) (1):
Included in Other, net		4,240			1,609			117			11,950		17,916
Included in Other comprehensive income (loss)		—			—			(12,363	)		—		(12,363	)
		4,240			1,609			(12,246	)		11,950		5,553

Transfers in and / or out of Level 3		—			—			—			—		—
Ending balance	$	76,649		$	(73,641	)	$	176		$	97,163	$	100,347

Six Months Ended June 30, 2012:
Beginning balance	$	—		$	—		$	(16,676	)	$	—	$	(16,676	)

Purchases, issuances, sales and settlements:
Settlements		—			—			2,422			—		2,422
		—			—			2,422			—		2,422

Total realized and unrealized gains and (losses) (1):
Included in Other, net		—			—			5,248			—		5,248
Included in Other comprehensive income (loss)		—			—			(5,899	)		—		(5,899	)
		—			—			(651	)		—		(651	)

Transfers in and / or out of Level 3		—			—			—			—		—
Ending balance	$	—		$	—		$	(14,905	)	$	—	$	(14,905	)

(1)

Total net gains (losses) attributable to derivative financial instruments held at June 30, 2013 were $0.1 million for the three months ended June 30, 2013. For derivative financial instruments held at June 30, 2012, total net gains (losses) were $(2.2) million and $(6.4) million for the three and six months ended June 30, 2012, respectively.

The methodologies that we use and key assumptions that we make to estimate the fair value of financial instruments and other assets and liabilities measured at fair value on a recurring or non-recurring basis are described below:

Loans Held for Sale

We originate and purchase residential mortgage loans that we intend to sell to the GSEs. We also own residential mortgage loans that are not eligible to be sold to the GSEs due to delinquency or other factors. Residential forward and reverse mortgage loans that we intend to sell to the GSEs are carried at fair value as a result of a fair value election. Such loans are subject to changes in fair value due to fluctuations in interest rates from the closing date through the date of the sale of the loan into the secondary market. These loans are classified within Level 2 of the valuation hierarchy as the primary component of the price is obtained from observable values of mortgage forwards for loans of similar terms and characteristics. We have the ability to access this market, and it is the market into which conforming mortgage loans are typically sold.

We report all other loans held for sale at the lower of cost or fair value. Current market illiquidity has reduced the availability of observable pricing data for certain of these loans. When we enter into an agreement to sell a loan or pool of loans to an investor at a set price, we value the loan or loans at the commitment price. We base the fair value of uncommitted loans on the expected future cash flows discounted at a rate commensurate with the risk of the estimated cash flows. Assumptions used in the valuation of performing loans include historical default rates, re-performance rates on defaulted loans, loss severity on defaulted loans, average resolution timeline, average coupon rate and a discount rate. Significant assumptions used in the valuation of nonperforming loans include the current market value of the underlying collateral based on third party sources such as appraisals or broker price opinions, resolution timeline, estimated foreclosure and disposition costs that are based on historical experience and a discount rate. The assumptions we used in the valuation of these performing and non-performing loans at June 30, 2013 have not changed significantly from those we used in the December 31, 2012 valuations.

We repurchase certain loans from Ginnie Mae guaranteed securitizations in connection with loan modifications and loan resolution activity as part of our servicing obligations. These are classified as loans held for sale at the lower of cost or fair value, as we expect to redeliver (sell) the loans to new Ginnie Mae guaranteed securitizations in the case of modified loans. The fair value of these loans is estimated using published forward Ginnie Mae prices. Loans repurchased in connection with loan resolution activities are modified or otherwise remediated through loss mitigation activities or are reclassified to receivables. Because these loans are insured or guaranteed by the FHA or VA, the fair value of these loans represents the net recovery value taking into consideration the insured or guaranteed claim.

Loans – Restricted for Securitization Investors

These loans are not traded in an active, open market with readily observable prices. We base the fair value of transferred reverse mortgage loans that do not qualify as sales for accounting purposes 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. Significant assumptions included expected prepayment and delinquency rates and cumulative loss curves. The discount rate assumption for these assets is primarily based on an assessment of current market yields on newly originated reverse mortgage loans, expected duration of the asset, and current market interest rates.

The more significant assumptions used in the June 30, 2013 valuation of our Loans – Restricted for Securitization Investors include:

	●	Weighted average life in years ranging from 3.19 to 23.58 (weighted average of 6.86),

	●	Conditional repayment rate ranging from 5.04% to 64.59% (weighted average of 12.82%), and

●

Discount rate of 2.14%.

Mortgage Servicing Rights

Amortized Cost MSRs

We estimate the fair value of MSRs carried at amortized cost using a combination of internal models and data provided by third-party valuation experts. The most significant assumptions used in the valuation of MSRs are the speed at which mortgages prepay and delinquency experience. Other assumptions typically used in the valuation of MSRs are:

●

Cost of servicing

●

Discount rate

●

Interest rate used for computing the cost of Servicing advances

●

Interest rate used for computing float earnings

●

Compensating interest expense

●

Collection rate of other ancillary fees

The significant components of the estimated future cash inflows for MSRs include servicing fees, late fees, float earnings and other ancillary fees. Significant cash outflows include the cost of servicing, the cost of financing servicing advances and compensating interest payments.

We perform an impairment analysis based on the difference between the carrying amount and fair value after grouping our loans into the applicable strata. As a result of the Homeward and ResCap Acquisitions, management has re-evaluated the portfolio and determined the appropriate strata are Agency and Non-Agency. The Agency stratum includes all GSE MSRs. The Non-Agency stratum includes all private label primary and master MSRs.

We estimate fair value using internal models and with the assistance of third-party valuation experts. Our internal models calculate the present value of expected future cash flows utilizing assumptions that we believe are used by market participants. We derived prepayment speeds and delinquency assumptions from historical experience adjusted for prevailing market conditions. We utilize discount rate provided by third-party valuation experts, and we consider external market-based assumptions in determining the interest rate for the cost of financing advances, the interest rate for float earnings and the cost of servicing.

Third-party valuation experts 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 in arriving at their estimate of fair value. The prices provided by the valuation experts reflect their observations and assumptions related to market activity, including risk premiums and liquidity adjustments. The models and related assumptions used by the valuation experts are owned and managed by them and, in many cases, the significant inputs used in the valuation techniques are not reasonably available to us. However, we have an understanding of the processes 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, combined with our internal verification and analytical procedures, provide 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.

The more significant assumptions used in the June 30, 2013 valuation of our MSRs carried at amortized cost include:

●

Prepayment speeds ranging from 7.22% to 25.92% (weighted average of 14.42%) depending on loan type;

●

Delinquency rates ranging from 3.83% to 25.02% (weighted average of 14.61%) depending on loan type;

●

Interest rate of 1-month LIBOR plus 4% for computing the cost of financing advances;

●

Interest rate of 1-month LIBOR for computing float earnings; and

●

Discount rates ranging from 10.9% to 20.0% (weighted average of 14.65%).

We perform an impairment analysis based on the difference between the carrying amount and fair value after grouping our loans into the applicable strata based on one or more of the predominant risk characteristics of the underlying loans. As a result of the Homeward and ResCap Acquisitions, management has re-evaluated the portfolio and determined the appropriate strata are Agency and Non-Agency. The Agency stratum includes all GSE MSRs. The Non-Agency stratum includes all “private label” primary and master MSRs.

Fair Value MSRs

MSRs carried at fair value are classified within Level 3 of the valuation hierarchy due to the use of third party valuation expert pricing without adjustment. The fair value of these MSRs is within the range of prices provided by the valuation experts, however, a change in the valuation inputs utilized by the valuation expert or a change in the best point price in the range might result in a significantly higher or lower fair value measurement.

The key assumptions (generally unobservable inputs) used in the valuation of these MSRs include:

●

Mortgage prepayment speeds;

●

Delinquency rates, and

●

Discount rates.

The primary assumptions used in the June 30, 2013 valuation include a 9.51% weighted average constant prepayment rate and a discount rate equal to 1-Month LIBOR plus a range of 10.5%.

Advances

We value advances that we make on loans that we service for others at their net realizable value which generally approximates fair value because advances have no stated maturity, generally are realized within a relatively short period of time and do not bear interest.

Receivables

The carrying value of receivables generally approximates fair value because of the relatively short period of time between their origination and realization.

Secured Borrowings – Owed to Securitization Investors

We recognize the proceeds from the transfer of reverse mortgages as a secured borrowing that we account for at fair value. These borrowings are not actively traded and therefore quoted market prices are not available. We determine fair value by discounting the future principal and interest repayments over the estimated life of the borrowing at a market rate commensurate with the risk of the estimated cash flows. Significant assumptions include prepayments, discount rate and borrower mortality rates for reverse mortgages. The discount rate assumption for these liabilities is based on an assessment of current market yields for newly issued HMBS, expected duration, and current market interest rates.

The more significant assumptions used in the June 30, 2013 valuation of our Secured Borrowings – Owed to Securitization Investors include:

	●	Weighted average life in years ranging from 3.15 to 22.84 (weighted average of 6.44),

	●	Conditional repayment rate ranging from 5.01% to 61.69% (weighted average of 10.74%), and

●

Discount rate of 1.27%.

Match Funded Liabilities and Other Borrowings

The carrying value of match funded liabilities and secured borrowings that bear interest at a rate that is adjusted regularly based on a market index approximates fair value. For other match funded or secured borrowings that bear interest at a fixed rate, we determine fair value by discounting the future principal and interest repayments at a market rate commensurate with the risk of the estimated cash flows. We estimate principal repayments of match funded liabilities during the amortization period based on our historical advance collection rates and taking into consideration any plans to refinance the notes. At June 30, 2013, the interest on all borrowings under match funded facilities was based on a variable rate adjusted regularly using a market index and therefore the carrying value approximates fair value. For the SSTL, we used a discount rate of 5.63% and the repayment schedule specified in the loan agreement to determine fair value.

Derivative Financial Instruments

We may execute interest rate swaps to hedge against the effects of changes in interest rates on our borrowings under advance funding facilities. These derivatives are not exchange-traded and, therefore, quoted market prices or other observable inputs are not available. Fair value is based on information provided by third-party pricing sources. Third-party valuations are derived from proprietary models based on inputs that include yield curves and contractual terms such as fixed interest rates and payment dates. Although we have not adjusted the information obtained from the third-party pricing sources, we review this information to ensure that it provides a reasonable basis for estimating fair value. Our review is designed to identify information that appears stale, information that has changed significantly from the prior period and other indicators that the information may not be accurate. For interest rate contracts, significant increases or decreases in the unobservable portion of the yield curves in isolation will result in substantial changes in the fair value measurement. We terminated our outstanding interest rates swaps on May 31, 2013.

In addition, we may use interest rate caps to minimize future interest rate exposures on variable rate debt issued on servicing advance facilities from increases in one-month LIBOR interest rates. The fair value for interest rate caps is based on counterparty market prices and adjusted for counterparty credit risk.

We enter into forward trades to provide an economic hedge against changes in the value of residential forward and reverse mortgage loans held for sale that we carry at fair value. Forward trades are primarily used to fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market. Forward contracts are actively traded in the market and we obtained unadjusted market quotes for these derivatives, thus they are classified within Level 1 of the valuation hierarchy.

IRLCs represent an agreement to purchase loans from a third-party originator, or an agreement to extend credit to a mortgage applicant (locked pipeline), or an agreement to sell a loan to investors, whereby the interest rate is set prior to funding. IRLCs are classified within Level 2 of the valuation hierarchy as the primary component of the price is obtained from observable values of mortgage forwards for loans of similar terms and characteristics. Fair value amounts of IRLCs are adjusted for expected “fallout” (locked pipeline loans not expected to close), using models that consider cumulative historical fallout rates and other factors.

We previously entered into derivative contracts that included interest rate swaps, U.S. Treasury futures and forward contracts to hedge against the effects of changes in the value of the MSRs that we carry at fair value. Effective April 1, 2013, we modified our strategy for managing the risks of the underlying loan portfolios and no longer use derivative contracts to hedge against the effects of changes in the value of MSRs which we carry at fair value. The fair value of interest rate swaps were based upon projected short-term interest rates and volatility based on published market based sources, a Level 3 valuation. Because futures and forward contracts are actively traded in the market, they are classified within Level 1 of the valuation hierarchy.

See Note 18 – Derivative Financial Instruments and Hedging Activities for additional information regarding derivative financial instruments.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Section 50
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Loans Held For Sale At Fair Value [Abstract]

NOTE 6 LOANS HELD FOR SALE, AT FAIR VALUE

6 Months Ended

Jun. 30, 2013

LOANS HELD FOR SALE, AT FAIR VALUE

NOTE 6

LOANS HELD FOR SALE, AT FAIR VALUE

Loans held for sale, at fair value, represent residential forward and reverse mortgage loans originated or purchased and held until sold to secondary market investors, such as GSEs or other third party investors. The following table summarizes the activity in the balance of loans held for sale during the six months ended June 30, 2013:

Balance at December 31, 2012	$	426,480
Originations and purchases (1)		4,511,255
Proceeds from sale		(4,526,875	)
Loss on sale of loans		(37,794	)
Decrease in fair value		(11,821	)
Other		(101	)
Balance at June 30, 2013	$	361,144

(1)

Purchases include $60.0 million of reverse mortgages acquired in the Liberty Acquisition.

The following table summarizes the activity in Gain on loans held for sale, net, during the periods ended June 30:

	Three Months					Six Months
	2013			2012		2013			2012
Gain on sales of loans (1)	$	10,179		$	—	$	9,098		$	—
Changes in fair value of IRLCs		(11,757	)		—		(12,994	)		—
Change in fair value of loans held for sale (2)		(5,216	)		—		(5,656	)		—
Gain on hedge instruments		28,814			—		39,003			—
Provision for representations and warranties		(370	)		—		(883	)		—
Other		(19	)		—		(188	)		—
	$	21,631		$	—	$	28,380		$	—

(1)

Includes gains of $18.2 million and $46.9 million for the three and six months ended June 30, 2013, respectively, representing the value assigned to MSRs retained on sales of loans.

(2)

Includes a gain of $6.2 million recorded during the three months ended June 30, 2013 to adjust Loans – Restricted for Securitization Investors to fair value.

NOTE 7 ADVANCES

6 Months Ended

Jun. 30, 2013

Advances [Abstract]

ADVANCES

NOTE 7

ADVANCES

Advances, representing payments made on behalf of borrowers or on foreclosed properties, consisted of the following at the dates indicated:

	June 30, 2013		December 31, 2012
Servicing:
Principal and interest	$	109,012	$	83,617
Taxes and insurance		215,981		51,447
Foreclosures, bankruptcy and other		108,115		41,296
		433,108		176,360
Lending		353		—
Corporate Items and Other		12,010		8,103
	$	445,471	$	184,463

NOTE 8 MATCH FUNDED ADVANCES

6 Months Ended

Jun. 30, 2013

Match Funded Advances [Abstract]

MATCH FUNDED ADVANCES

NOTE 8

MATCH FUNDED ADVANCES

Match funded advances on residential mortgage loans that we service for others are comprised of the following at the dates indicated:

	June 30, 2013		December 31, 2012
Principal and interest	$	1,931,073	$	1,577,808
Taxes and insurance		765,241		1,148,486
Foreclosures, bankruptcy, real estate and other		264,010		322,950
	$	2,960,324	$	3,049,244

NOTE 9 MORTGAGE SERVICING

6 Months Ended

Jun. 30, 2013

Mortgage Servicing [Abstract]

MORTGAGE SERVICING

NOTE 9

MORTGAGE SERVICING

Mortgage Servicing Rights – Amortization Method

The following table summarizes our activity related to MSRs for the six months ended June 30:

	2013			2012
Balance at December 31	$	678,937		$	293,152
Additions recognized in connection with business and asset acquisitions (1) (2)		1,078,819			175,852
Additions recognized on the sale of residential mortgage loans		46,892			—
Servicing transfers, adjustments and other		1,970			(88	)
Amortization (3)		(118,580	)		(34,348	)
Balance at June 30	$	1,688,038		$	434,568

Estimated fair value at June 30	$	2,269,985		$	470,974

(1)

MSRs purchased during 2013 include $393.9 million acquired in the ResCap Acquisition. See Note 4 – Business Acquisitions for additional information.

(2)

MSRs purchased during 2013 also include $680.0 million of MSRs acquired in the Ally MSR Transaction. The acquired MSRs relate to mortgage loans with a UPB of approximately $87.0 billion owned by Freddie Mac and Fannie Mae. We also acquired servicing advance receivables of $73.5 million. We assumed the origination representation and warranty obligations of approximately $136.4 million in connection with a majority of the acquired MSRs. We had been subservicing these MSRs on behalf of Ally under a subservicing contract assumed by us in connection with the ResCap Acquisition.

(3)

Amortization of mortgage servicing rights is reported net of the amortization of servicing liabilities and includes the amount of charges we recognized to increase servicing liability obligations.

As disclosed in Note 3 – Transfers of Financial Assets, we sold certain Rights to MSRs during 2012 and 2013 as part of the HLSS Transactions. The carrying value of the related MSRs which have not been derecognized at June 30, 2013 was $360.6 million.

Mortgage Servicing Rights—Fair Value Measurement Method

This portfolio comprises servicing rights for which we elected the fair value option and includes prime forward mortgage loans for which we hedged the related market risks. The following table summarizes the activity related to our fair value MSRs for the six months ended June 30, 2013:

Balance at December 31, 2012	$	85,213
Changes in fair value:
Due to changes in market valuation assumptions		20,680
Realization of cash flows and other changes		(8,730	)
Balance at June 30, 2013	$	97,163

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 (as prepayments increase) and increase in periods of rising interest rates (as prepayments decrease). The following table summarizes the estimated change in the value of the MSRs that we carry at fair value as of June 30, 2013 given hypothetical instantaneous parallel shifts in the yield curve:

	Adverse change in fair value
	10%			20%
Weighted average prepayment speeds	$	(3,850	)	$	(7,459	)

Discount rate (Option-adjusted spread)	$	(4,143	)	$	(7,962	)

The sensitivity analysis measures the potential impact on fair values based on hypothetical changes (increases and decreases) in interest rates.

Servicing Revenue

The following table presents the components of servicing and subservicing fees for the periods ended June 30:

	Three Months				Six Months
	2013		2012		2013		2012
Loan servicing and subservicing fees	$	363,739	$	149,384	$	631,767	$	261,973
Home Affordable Modification Program (HAMP) fees		46,792		21,390		86,939		34,074
Late charges		29,589		17,676		55,485		36,521
Loan collection fees		7,755		3,830		14,137		7,169
Custodial accounts (float earnings)		2,110		663		3,790		1,450
Other		32,647		7,392		58,007		14,237
	$	482,632	$	200,335	$	850,125	$	355,424

Portfolio of Assets Serviced

The following table presents the composition of our servicing and subservicing portfolios by type of asset serviced as measured by UPB. The servicing portfolio represents loans for which we own the MSRs while subservicing represents all other loans.

	Residential		Commercial		Total
UPB at June 30, 2013
Servicing (1)	$	344,173,439	$	—	$	344,173,439
Subservicing		92,081,944		452,042		92,533,986
	$	436,255,383	$	452,042	$	436,707,425

UPB at December 31, 2012
Servicing (1)	$	175,762,161	$	—	$	175,762,161
Subservicing		27,903,555		401,031		28,304,586
	$	203,665,716	$	401,031	$	204,066,747

(1)

Includes UPB of $99.8 billion and $79.4 billion at June 30, 2013 and December 31, 2012, respectively, for which the Rights to MSRs have been sold to HLSS.

Residential assets serviced consist principally of residential mortgage loans, but also include foreclosed real estate. Residential assets serviced also include small-balance commercial assets with a UPB of $1.9 billion and $2.1 billion at June 30, 2013 and December 31, 2012, respectively, that are managed using the REALServicing™ application. Commercial assets consist of large-balance foreclosed real estate. The UPB of assets serviced for others are not included on our unaudited Consolidated Balance Sheets.

Custodial accounts, which hold funds representing collections of principal and interest that we receive from borrowers, are held in escrow by an unaffiliated bank and are excluded from our unaudited Consolidated Balance Sheets. Custodial accounts amounted to $7.6 billion and $1.3 billion at June 30, 2013 and December 31, 2012, respectively.

NOTE 10 RECEIVABLES

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

RECEIVABLES

NOTE 10

RECEIVABLES

Receivables consisted of the following at the dates indicated:

	Receivables		Allowance for Losses			Net
June 30, 2013
Servicing (1)	$	157,869	$	(14,202	)	$	143,667
Income taxes receivable		43,851		—			43,851
Due from related parties (2)		21,828		—			21,828
Other		17,622		(1,957	)		15,665
	$	241,170	$	(16,159	)	$	225,011

December 31, 2012
Servicing (1)	$	84,870	$	(1,647	)	$	83,223
Income taxes receivable		55,292		—			55,292
Due from related parties (2)		12,361		—			12,361
Other		18,577		(1,994	)		16,583
	$	171,100	$	(3,641	)	$	167,459

(1)

The receivable balances arise from our Servicing business and include reimbursable expenditures due from investors and amounts to be recovered from the custodial accounts of the trustees.

(2)

See Note 22 – Related Party Transactions for additional information regarding transactions with Altisource and HLSS.

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5066-111524

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.3,4)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5162-111524

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5074-111524

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 01-6
-Paragraph 13
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3, 4
-Article 5

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 7
-Article 9

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph k
-Article 4

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 11 GOODWILL

6 Months Ended

Jun. 30, 2013

GOODWILL

NOTE 11

GOODWILL

The following table provides a summary of activity in the carrying value of goodwill during the six months ended June 30, 2013:

	ResCap Acquisition			Homeward Acquisition			Litton Acquisition		Hom Eq Acquisition		Total
Balance at December 31, 2012	$	—		$	311,320		$	57,430	$	12,810	$	381,560

Derecognition of goodwill in connection with the sale of a business (1) (2)		(128,750	)		(72,309	)		—		—		(201,059	)
ResCap Acquisition (2)		210,038			—			—		—		210,038
Balance at June 30, 2013	$	81,288		$	239,011		$	57,430	$	12,810		390,539
Liberty Acquisition (2)												—
Step acquisition - Correspondent One (2)												101
Balance at June 30, 2013											$	390,640

(1)

On March 29, 2013, we sold the diversified fee-based business acquired in the Homeward Acquisition to Altisource and derecognized the assigned goodwill. On April 12, 2013, we sold the diversified fee-based business acquired in the ResCap Acquisition to Altisource and derecognized the assigned goodwill.

(2)

See Note 4 – Business Acquisitions for additional information regarding this transaction.

For the ResCap Acquisition, the $81.3 million of remaining goodwill is assigned to the Servicing segment. For the Homeward Acquisition, $118.6 million of the remaining goodwill is assigned to the Servicing segment and $120.4 million is assigned to the Lending segment. Subsequent to the initial assignment and prior to the sale to Altisource, $4.7 million of the purchase price allocated to the diversified fee-based business was reallocated to Servicing and Lending. The assignment of goodwill in the ResCap and Homeward Acquisitions is preliminary pending the final purchase price allocation. For the Litton and HomEq Acquisitions, the entire balance of goodwill pertains to the Servicing segment.

NOTE 12 DEBT SERVICE ACCOUNTS

6 Months Ended

Jun. 30, 2013

Debt Service Accounts [Abstract]

DEBT SERVICE ACCOUNTS

NOTE 12

DEBT SERVICE ACCOUNTS

Under our advance funding facilities, we are contractually required to remit collections on pledged advances to the trustee within two days of receipt. The collected funds are not applied to reduce the related match funded debt until the payment dates specified in the indenture. The balances also include amounts that have been set aside from the proceeds of our match funded advance facilities to provide for possible shortfalls in the funds available to pay certain expenses and interest. These funds are held in interest earning accounts in the name of the SPE created in connection with the match funded financing facility. The balance of such debt service accounts at June 30, 2013 and December 31, 2012 was $84.2 million and $88.7 million, respectively.

NOTE 13 OTHER ASSETS

6 Months Ended

Jun. 30, 2013

Other Assets [Abstract]

OTHER ASSETS

NOTE 13

OTHER ASSETS

Other assets consisted of the following at the dates indicated:

	June 30, 2013		December 31, 2012
Loans – restricted for securitization investors, at fair value (1)	$	76,649	$	—
Loans held for sale, at lower of cost or fair value (2)		33,987		82,866
Prepaid lender fees and debt issuance costs, net (3)		32,912		14,389
Prepaid income taxes		23,112		23,112
Derivatives, at fair value (4)		18,857		10,795
Investment in unconsolidated entities (5)		12,886		25,187
Real estate, net		8,028		6,205
Interest earning collateral deposits (6)		5,668		31,710
Acquisition deposits (7)		—		57,000
Prepaid expenses and other		19,125		22,314
	$	231,224	$	273,578

(1)

Loans sold into Ginnie Mae guaranteed securitizations that we include in our Consolidated Financial Statements because the transfers of reverse mortgage loans to the trusts did not qualify for sales accounting treatment.

(2)

The carrying values at June 30, 2013 and December 31, 2012 are net of valuation allowances of $19.4 million and $14.7 million, respectively. The balances include non-performing subprime single-family residential loans that we do not intend to hold to maturity. The balance at June 30, 2013 includes $14.0 million of loans that we were required to repurchase from Ginnie Mae guaranteed securitizations following the ResCap Acquisition in connection with loan modifications and loan resolutions. The balance at December 31, 2012 includes non-performing mortgage loans with a carrying value of $65.4 million that we acquired in December 2012 and sold to Altisource Residential, LP in February 2013 for an insignificant gain.

(3)

These balances relate to match funded liabilities and other secured borrowings.

(4)

See Note 18 – Derivative Financial Instruments and Hedging Activities for additional information.

(5)

The balance at December 31, 2012 includes an investment of $13.4 million that represented our 49% equity interest in Correspondent One. As disclosed in Note 4 – Business Acquisitions, we increased our ownership to 100% on March 31, 2013. Effective on that date, we began including the accounts of Correspondent One in our consolidated financial statements and have eliminated our current investment in consolidation.

(6)

These balances include $1.1 million and $25.8 million of cash collateral held by the counterparties to certain of our derivative agreements at June 30, 2013 and December 31, 2012, respectively.

(7)

The balance at December 31, 2012 represents an earnest money cash deposit we made in connection with the ResCap Acquisition. This deposit was subsequently applied towards the purchase price upon closing of the transaction on February 15, 2013. See Note 4 – Business Acquisitions for additional information.

NOTE 14 MATCH FUNDED LIABILITIES

6 Months Ended

Jun. 30, 2013

Match Funded Liabilities [Abstract]

MATCH FUNDED LIABILITIES

NOTE 14

MATCH FUNDED LIABILITIES

Match funded liabilities are comprised of the following at the dates indicated:

				Available		Balance Outstanding
Borrowing Type	Interest Rate	Maturity (1)	Amortization Date (1)	Borrowing Capacity (2)		June 30, 2013		December 31, 2012
2011-Servicer Advance Revolving Trust 1 (3)	2.23%	May 2043	May 2013	$	—	$	—	$	325,000
2011-Servicer Advance Revolving Trust 1 (3)	3.37 – 5.92%	May 2043	May 2013		—		—		525,000
2012-Servicing Advance Revolving Trust 2 (3)	3.27 – 6.90%	Sep. 2043	Sept. 2013		—		—		250,000
2012-Servicing Advance Revolving Trust 3 (3)	2.98%	Mar. 2043	Mar. 2013		—		—		248,999
2012-Servicing Advance Revolving Trust 3 (3)	3.72 – 7.04%	Mar. 2044	Mar. 2014		—		—		299,278
Total fixed rate					—		—		1,648,277

				Available		Balance Outstanding
Borrowing Type	Interest Rate	Maturity (1)	Amortization Date (1)	Borrowing Capacity (2)		June 30, 2013		December 31, 2012
Advance Receivable Backed Notes (4)	1-month LIBOR (1ML) + 285 bps	Apr. 2015	Apr. 2014		168,640		131,360		205,016
Advance Receivable Backed Notes Series 2012-ADV1	Commercial paper (CP) rate + 225 or 335 bps	Dec. 2043	Dec. 2013		276,618		173,382		232,712
Advance Receivable Backed Notes Series 2012-ADV1	1ML + 250 bps	June 2016	June 2014		25,000		200,000		94,095
Advance Receivable Backed Note	1ML + 300 bps	Dec. 2015	Dec. 2014		10,827		39,173		49,138
2011-Servicing Advance Revolving Trust 1 (3)	1ML + 300 bps	May 2043	May 2013		—		—		204,633
2012-Servicing Advance Revolving Trust 2 (3)	1ML + 315 bps	Sep. 2043	Sept. 2013		—		—		22,003
2012-Servicing Advance Revolving Trust 3 (3)	1ML + 300 bps – 675 bps	Mar. 2044	Mar. 2014		—		—		40,626
2012-Homeward Agency Advance Funding Trust 2012-1	1ML + 300 bps	Sept. 2013	Sept. 2013		3,581		21,419		16,094
2012-Homeward DSF Advance Revolving Trust 2012-1 (3)	1ML + 450 bps	Feb. 2013	Feb. 2013		—		—		20,151
Homeward Residential Bridge Loan Trust – 2013 Series-Bridge-VF1 and VF2 (3)(5)	1ML + 150 bps	Aug. 2043	Aug. 2013		133,162		766,838		—
Ocwen Servicer Advance Receivables Trust – Series 2013-VF1 Class A, B, C and D Notes (5)(6)	1ML + 150 – 525 bps	Feb. 2044	Feb. 2014		351,254		848,746		—
Ocwen Servicer Advance Receivables Trust II – Series 2013-VF1 Class A, B, C and D Notes (5)(6)	1ML + 287.5 bps	Feb. 2044	Feb. 2014		14,086		210,914		—
Total variable rate					983,168		2,391,832		884,468
				$	983,168	$	2,391,832	$	2,532,745

(1)

The amortization date of our facilities is the date on which the revolving period ends under each advance facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. The maturity date is the date on which all outstanding balances must be repaid. In two advance facilities, there are multiple notes outstanding. For each note, after the amortization date, all collections that represent the repayment of advances pledged to the facility must be applied to reduce the balance of the note outstanding, and any new advances are ineligible to be financed.

(2)

Borrowing capacity is available to us provided that we have additional eligible collateral to pledge. Collateral may only be pledged to one facility. At June 30, 2013, none of the available borrowing capacity could be used because we had borrowed the maximum amount against the pledged collateral.

(3)

Facility was repaid in February 2013 from the proceeds of a new $1.4 billion bridge facility (Homeward Residential Bridge Loan Trust – 2013) which has an amortization date of August 14, 2013. On May 24, 2013, the total maximum borrowing capacity for this facility was reduced to $900,000.

(4)

We repaid this facility in full in July 2013.

(5)	On July 1, 2013, we repaid these facilities in full from the proceeds received on the sale of servicing advances to HLSS. See Note 25 – Subsequent Events for additional information regarding this transaction.

(6)	We entered into these facilities in connection with the ResCap Acquisition (See Note 4 – Business Acquisitions).

NOTE 15 OTHER BORROWINGS

6 Months Ended

Jun. 30, 2013

Other Borrowings [Abstract]

OTHER BORROWINGS

NOTE 15

OTHER BORROWINGS

Lines of credit and other secured and unsecured borrowings are comprised of the following at the dates indicated:

				Available		Balance Outstanding
Borrowings	Collateral	Interest Rate	Maturity	Borrowing Capacity		June 30, 2013			December 31, 2012

Servicing:
SSTL (1)	(1)	1ML + 550 bps; LIBOR floor of 150 bps (1)	Sept. 2016	$	—	$	—		$	314,229
SSTL (2)	(2)	(2)	Feb. 2018		—		1,296,750			—

Senior unsecured term loan (3)		1-Month Euro-dollar rate + 675 bps with a Eurodollar floor of 150 bps	Mar. 2017		—		—			75,000
Financing liability – MSRs pledged (4)	MSRs (4)	(4)	(4)		—		428,339			303,705
Financing liability – MSRs pledged (5)	MSRs (5)	(5)	(5)		—		—			2,603
Promissory note (6)	MSRs	1ML + 350 bps	May 2017		—		17,844			18,466
Repurchase agreement	Loans held for sale (LHFS)	1 ML + 250 – 345 bps	Apr. 2014		92,579		7,421			—
					92,579		1,750,354			714,003

Lending:
Master repurchase agreement (7)	LHFS	1ML + 175 bps	Mar. 2014		231,875		68,125			88,122
Participation agreement (8)	LHFS	N/A	May 2014		—		21,742			58,938
Master repurchase agreement (9)	LHFS	1ML + 200 bps	Aug. 2013		143,392		106,608			133,995
Master repurchase agreement	LHFS	1ML + 200 bps	Jul. 2013		216,806		83,194			107,020
Master repurchase agreement	LHFS	1ML + 275 bps	Aug. 2013		39,690		60,310			—
Financing liability – MSRs pledged (5)	MSRs (5)	(5)	(5)		—		10,068			—
Secured borrowings - owed to securitization investors (10)	Loans held for investment	1ML + 220 bps	(10)		—		73,641			—
					631,763		423,688			388,075

Corporate Items and Other
Securities sold under an agreement to repurchase (11)	Ocwen Real Estate Asset Liquidating Trust 2007-1 Notes	Class A-2 notes: 1ML + 200 bps; Class A-3 notes: 1ML + 300 bps	Monthly		—		4,045			2,833
					724,342		2,178,087			1,104,911

Discount (1) (2)					—		(6,009	)		(8,232	)
				$	724,342	$	2,172,078		$	1,096,679

(1)

In February 2013, we repaid this loan in full and wrote off the remaining discount as part of the loss on extinguishment.

(2)

On February 15, 2013, we entered into a new SSTL facility agreement and borrowed $1.3 billion that was used principally to fund the ResCap Acquisition and repay the balance of the previous SSTL. The loan was issued with an original issue discount of $6.5 million that we are amortizing over the term of the loan. We are required to repay the principal amount of the borrowings in consecutive quarterly installments of $3.3 million. In addition, we are required to use the net cash proceeds (as defined) from any asset sale (as defined) to repay loan principal. Generally, this provision applies to non-operating sales of assets, such as the HLSS Transactions, and generally, net cash proceeds represent the proceeds from the sale of the assets, net of the repayment of any debt secured by a lien on the assets sold. The borrowings are secured by a first priority security interest in substantially all of the assets of Ocwen. Borrowings bear interest, at the election of Ocwen, at a rate per annum equal to either (a) the base rate [the greatest of (i) the prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50% and (iii) the one-month Eurodollar rate (1-Month LIBOR)], plus a margin of 2.75% and a base rate floor of 2.25% or (b) the one month Eurodollar rate, plus a margin of 3.75% with a 1-Month LIBOR floor of 1.25%. To date we have elected option (b) to determine the interest rate.

(3)

We repaid this loan in full in February 2013.

(4)

As part of the HLSS Transactions, we transfer certain Rights to MSRs to HLSS. Because we have not yet transferred legal title to the MSRs, we account for these transfers as financings with the proceeds from the sale of the Rights to MSRs recorded as a financing liability. The financing liability is amortized using the interest method with the servicing income that is remitted to HLSS representing payments of principal and interest. The liability has no contractual maturity but is amortized over the estimated life of the transferred Rights to MSRs. The balance of the liability is reduced each month based on the change in the estimated fair value of the transferred rights to MSRs. See Note 3 – Transfers of Financial Assets for additional information.

(5)

We sold MSRs for certain loans to an unrelated third party in December 2012 and June 2013; however, we are required to repurchase the MSRs for any loans that cannot be refinanced by the purchaser under the federal government’s Home Affordable Refinance Program (HARP). As a result, the sale is being accounted for as a financing. The financing liability is being amortized using the interest method with the servicing income that is remitted to the purchaser representing payments of principal and interest. In June 2013, we derecognized a portion of the liability from the December 2012 sale related to loans that had been refinanced under HARP and recognized a $3.2 million gain on the retirement of the financing liability.

(6)

Prepayments of the balance on this note may be required if the borrowing base, as defined, falls below the amount of the note outstanding.

(7)

On March 19, 2013, the maturity date of the Master Repurchase Agreement was extended to March 18, 2014 and the maximum borrowing capacity was increased to $120.0 million to $300.0 million.

(8)

Under this participation agreement, the lender provides financing on an uncommitted basis for up to $100.0 million at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. However, the transaction does not qualify for sales accounting treatment and is, therefore, accounted for as a financing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. In April 2013, we extended the participation agreement maturity date to May 31, 2014.

(9)

On June 12, 2013, the maturity date of the Master Repurchase Agreement was extended to August 2, 2013.

(10)

This represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed securitization that we include in our consolidated financial statements because the transfers of reverse mortgage loans to the trusts did not qualify for sales accounting treatment. There are no maturity dates; the borrowings mature as the related loans are repaid.

(11)

This agreement has no stated credit limit and lending is determined for each transaction based on the acceptability of the securities presented as collateral.

NOTE 16 OTHER LIABILITIES

6 Months Ended

Jun. 30, 2013

Other Liabilities [Abstract]

OTHER LIABILITIES

NOTE 16

OTHER LIABILITIES

Other liabilities are comprised of the following at the dates indicated:

	June 30, 2013		December 31, 2012
Liability for indemnification obligations (1)	$	220,041	$	38,140
Accrued expenses		103,742		70,831
Amount due seller for purchase price adjustments – ResCap Acquisition		69,696		—
Liability for certain foreclosure matters (2)		66,431		13,602
Checks held for escheat		25,448		33,225
Payable to servicing and subservicing investors (3)		23,545		9,973
Liability for selected tax items		22,338		22,702
Due to related parties (4)		19,132		45,034
Servicing liabilities (5)		11,704		9,830
Accrued interest payable		8,874		5,410
Derivatives, at fair value (6)		7,064		18,658
Other		58,613		23,861
	$	636,628	$	291,266

(1)

The balance includes origination representation and warranty obligations and compensatory fees for foreclosures that may ultimately exceed investor timelines. These obligations were primarily assumed in connection with the Ally MSR Transaction, the ResCap Acquisition and the Homeward Acquisition. See Note 4 – Business Acquisitions and Note 9 – Mortgage Servicing for additional information.

(2)

The balance represents a liability established in connection with our ongoing discussions with the Multi-State Mortgage Committee of the Conferences of State Bank Supervisors (MMC), Consumer Finance Protection Bureau (CFPB) and state Attorneys General in connection with certain foreclosure related matters. We recognized $52.8 million of expense in Professional services in the second quarter of 2013 in establishing the liability. We recognized the remaining $13.6 million of the liability as an adjustment to the initial purchase price allocation related to the Homeward Acquisition. We applied this measurement period adjustment retrospectively to our Consolidated Balance Sheet at December 31, 2012 with an offsetting increase in goodwill. See Note 24 – Commitments and Contingencies for additional information.

(3)

The balance represents amounts due to investors in connection with loans we service under servicing and subservicing agreements.

(4)

See Note 22 – Related Party Transactions for additional information.

(5)

During the six months ended June 30, 2013 and 2012, amortization of servicing liabilities exceeded the amount of charges we recognized to increase our servicing liability obligations by $0.3 million and $0.9 million, respectively. Amortization of mortgage servicing rights is reported net of this amount in the unaudited Consolidated Statement of Operations.

(6)

See Note 18 – Derivative Financial Instruments and Hedging Activities for additional information.

NOTE 17 MEZZANINE EQUITY

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

MEZZANINE EQUITY

Note 17

Mezzanine Equity

Preferred Stock

On December 27, 2012, we issued 162,000 shares of Series A Perpetual Convertible Preferred Stock (the Preferred Shares) having a par value of $0.01 per share and paying dividends at a rate of 3.75% on the liquidation preference of $1,000 per share as part of the consideration for the Homeward Acquisition. The dividends are payable quarterly at the end of each calendar quarter.

The Preferred Shares are accounted for as equity and are classified as “mezzanine” equity in the unaudited Consolidated Balance Sheets. The conversion option of the Preferred Shares represents a Beneficial Conversion Feature (BCF) with an intrinsic value of $8.7 million which we accounted for as a discount on the Preferred Shares with an offsetting increase in additional paid in capital upon issuance. The BCF will be amortizing through the second anniversary of the issue date, the first date at which we can redeem the Preferred Shares.

We amortize the BCF discount on the Preferred Shares as a deemed dividend with an offsetting reduction in retained earnings.

The carrying value of our Preferred Shares reflects the following:

Initial issuance price on December 27, 2012	$	162,000
Discount for beneficial conversion feature		(8,688	)
Accretion of BCF discount (Deemed dividend)		60
Carrying value at December 31, 2012		153,372
Accretion of discount (Deemed dividend)		2,172
Carrying value at June 30, 2013	$	155,544

NOTE 18 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 18

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Because many of our current derivative agreements are not exchange-traded, we are exposed to credit loss in the event of nonperformance by the counterparty to the agreements. We control this risk through credit monitoring procedures including financial analysis, dollar limits and other monitoring procedures. The notional amount of our contracts does not represent our exposure to credit loss.

The following table summarizes the changes in the notional balance of our holdings of derivatives during the six months ended June 30, 2013:

	IRLCs			U.S. Treasury Futures			Forward MBS Trades			Interest Rate Caps			Interest Rate Swaps

Balance at December 31, 2012	$	1,112,519		$	109,000		$	1,638,979		$	1,025,000		$	1,495,955
Additions		2,803,364			85,000			6,443,459			—			1,280,000
Amortization		(228,319	)		—			(33,372	)		(24,000	)		—
Maturities		(2,826,503	)		—			(3,094,020	)		—			(295,604	)
Terminations		(207,842	)		(194,000	)		(4,100,120	)		(126,000	)		(2,480,351	)
Balance at June 30, 2013	$	653,219		$	—		$	854,926		$	875,000		$	—

Fair value of net derivative assets (liabilities) at:
June 30, 2013	$	(7,064	)	$	—		$	18,681		$	176		$	—
December 31, 2012	$	5,781		$	(1,258	)	$	(1,719	)	$	168		$	(10,836	)

Maturity		Jul. 2013 – Oct. 2013			—			Jul. 2013 – Sep. 2013			Aug. 2015 – May 2016			—

Interest Rate Management

Match Funded Liabilities

We previously entered into interest rate swaps in order to hedge against the effects of changes in interest rates on our borrowings under our advance funding facilities. These interest rate swap agreements required us to pay a fixed rate and receive a variable interest rate based on one-month LIBOR. At the time that we entered into the agreements, these swaps were designated as hedges for accounting purposes. As disclosed in Note 5 – Fair Value of Financial Instruments, we terminated these interest rate swaps on May 31, 2013 primarily because the custodial account float balances, which earn a variable rate of interest, are well in excess of variable rate borrowings under advance facilities and therefore reduce our exposure to changes in interest rates. We also purchased interest rate caps to minimize future interest rate exposure from increases in one-month LIBOR interest rates, as required by the certain of our advance financing arrangements.

Loans Held for Sale, at Fair Value

The mortgage loans held for sale that we carry at fair value are subject to interest rate and price risk from the loan funding date until the date the loan is sold into the secondary market. Generally, the fair value of a loan will decline in value when interest rates increase and will rise in value when interest rates decrease. To mitigate this risk, we enter into forward trades to provide an economic hedge against those changes in fair value on mortgage loans held for sale. Forward trades are primarily used to fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market.

Interest Rate Lock Commitments

IRLCs represent an agreement to purchase loans from a third-party originator or an agreement to extend credit to a mortgage applicant, whereby the interest rate is set prior to funding. The loan commitment binds us (subject to the loan approval process) to fund the loan at the specified rate, regardless of whether interest rates have changed between the commitment date and the loan funding date. As such, outstanding IRLCs are subject to interest rate risk and related price risk during the period from the date of the commitment through the loan funding date or expiration date. The borrower is not obligated to obtain the loan, thus we are subject to fallout risk related to IRLCs, which is realized if approved borrowers choose not to close on the loans within the terms of the IRLCs. Our interest rate exposure on these derivative loan commitments is hedged with derivatives, including forward contracts. We enter into forward contracts with respect to fixed rate loan commitments.

MSRs at Fair Value

The MSRs which we measure at fair value are subject to interest rate risk as the mortgage loans underlying the MSRs permit the borrowers to prepay the loans. Therefore, the fair value of these MSRs generally tends to diminish in periods of declining interest rates (as prepayments increase) and increase in periods of rising interest rates (as prepayments decrease). Although the level of interest rates is a key driver of prepayment activity, there are other factors that influence prepayments, including home prices, underwriting standards and product characteristics. Effective April 1, 2013, we terminated our hedging program for fair value MSRs. Prior to their termination, we used economic hedges including interest rate swaps, U.S. Treasury futures and forward contracts to minimize the effects of loss in value of these MSRs associated with increased prepayment activity that generally results from declining interest rates.

Asset Acquisitions

In March 2013, we entered into an interest rate swap to hedge the impact on cash flows of changes in the purchase price to be paid for MSRs acquired in the Ally MSR Transaction. This purchase was forecasted to occur in stages with the purchase price subject to adjustment based on changes in the 10-year swap rate between the date of the MSR purchase agreement and the date of each closing. We entered into an interest rate swap with a notional amount sufficient to yield changes in the fair value of the interest rate swap in response to changes in the swap rate that were essentially equal to and offsetting to changes in the purchase price of the MSRs. We designated the swap as a hedge for accounting purposes. We completed the transaction in April 2013 and terminated the swap agreement at the same time. See Note 9 – Mortgage Servicing

for additional information regarding the Ally MSR Transaction.

The following summarizes our use of derivatives at June 30, 2013 and the gains (losses) on those derivatives for the six months then ended. None of these derivatives was designated as a hedge for accounting purposes at June 30, 2013:

Purpose	Expiration Date	Notional Amount		Fair Value (1)			Gains / (Losses)			Consolidated Statement of Operations Caption
Interest rate risk of borrowings
Interest rate caps
Hedge the effects of changes in 1ML on advance funding facilities	2015-2016	$	875,000	$	176		$	9		Other, net

Interest rate risk of mortgage loans held for sale and IRLCs
Forward MBS trades	2013		854,926		18,681			40,293		Loss on loans held for sale, net and Other, net

IRLCs	2013		653,219		(7,064	)		(12,994	)	Loss on loans held for sale, net
Total derivatives				$	11,793		$	27,308

(1)

Derivatives are reported at fair value in Receivables, Other assets or in Other liabilities on our unaudited Consolidated Balance Sheets.

Included in AOCL at June 30, 2013 and December 31, 2012, respectively, were $19.9 million and $9.9 million of deferred unrealized losses, before taxes of $7.6 million and $3.6 million, respectively, on interest rate swaps that we designated as cash flow hedges. Changes in the losses on cash flow hedges included in AOCL during the six months ended June 30, 2013 were as follows:

Accumulated losses on cash flow hedges at December 31, 2012	$	9,878
Additional net losses on cash flow hedges		12,363
Ineffectiveness of cash flow hedges reclassified to earnings		(657	)
Losses on terminated hedging relationships amortized to earnings (1)		(1,654	)
Accumulated losses on cash flow hedges at June 30, 2013	$	19,930

(1)

Where the hedging relationship has been terminated but the hedged transaction is still forecast to occur, losses on the hedging relationship that are included in AOCL are amortized to earnings in the periods in which earnings are affected by the hedged transaction.

The statements of operations include the following related to derivative financial instruments for the periods ended June 30:

	Three Months						Six Months
	2013			2012			2013			2012
Servicing and origination expense
Gains on economic hedges	$	17		$	—		$	1,017		$	—
Loss on loans held for resale, net
Gains (losses) on economic hedges		17,056			—			26,009			—
Other, net
Gains (losses) on economic hedges (1)		2,742			1,843			(2,429	)		5,248
Ineffectiveness of cash flow hedges		—			(64	)		(657	)		(1)
Write-off of losses in AOCL for a discontinued hedge relationship		(1,654	)		(772	)		(1,654	)		(1,544	)
Write-off of losses in AOCL for hedge of a financing facility assumed by HLSS (See Note 3 – Transfers of Financial Assets)		—			—			—			(5,958	)
	$	18,161		$	1,007		$	22,286		$	(2,255	)

(1)

Includes a gain of $3.4 million recognized during the three months ended March 31, 2012 from the termination of foreign exchange forward contracts.

The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

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Earnings Per Share, Basic and Diluted [Abstract]

NOTE 19 INTEREST EXPENSE

6 Months Ended

Jun. 30, 2013

Interest Expense [Abstract]

INTEREST EXPENSE

NOTE 19

INTEREST EXPENSE

The following table presents the components of interest expense for the periods ended June 30:

	Three Months				Six Months
	2013		2012		2013		2012
Match funded liabilities	$	25,078	$	35,920	$	55,429	$	67,035
Other borrowings (1)		72,180		21,060		132,703		35,283
Debt securities:
3.25% Convertible Notes		—		—		—		153
10.875% Capital Trust Securities		—		710		—		1,420
Other		2,610		629		5,152		1,352
	$	99,868	$	58,319	$	193,284	$	105,243

(1)

Includes interest expense of $49.9 million and $10.6 million for the three months ended June 30, 2013 and 2012, respectively, and $94.4 million and $13.5 million for the six months ended June 30, 2013 and 2012, respectively, related to financing liabilities recorded in connection with the HLSS Transactions. See Note 3 – Transfers of Financial Assets and Note 15 – Other Borrowings for additional information.

NOTE 20 BASIC AND DILUTED EARNINGS PER SHARE (EPS)

6 Months Ended

Jun. 30, 2013

BASIC AND DILUTED EARNINGS PER SHARE (EPS)

Note 20

Basic and Diluted Earnings Per Share (EPS)

Basic EPS excludes common stock equivalents and is calculated by dividing net income attributable to Ocwen common stockholders by the weighted average number of common shares outstanding during the year. We calculate diluted EPS by dividing net income attributable to Ocwen, as adjusted to add back preferred stock dividends and interest expense net of income tax on the Convertible Notes, by the weighted average number of common shares outstanding including the potential dilutive common shares related to outstanding stock options, restricted stock awards, the Preferred Shares and the Convertible Notes. The following is a reconciliation of the calculation of basic EPS to diluted EPS for the periods ended June 30:

	Three Months				Six Months
	2013		2012		2013		2012
Basic EPS:
Net income attributable to Ocwen common stockholders	$	74,116	$	44,833	$	116,692	$	64,182

Weighted average shares of common stock		135,690,264		134,856,101		135,664,242		132,752,848

Basic EPS	$	0.55	$	0.33	$	0.86	$	0.48

Diluted EPS:
Net income attributable to Ocwen common stockholders	$	74,116	$	44,833	$	116,692	$	64,182
Preferred stock dividends (1)		2,605		—		—		—
Interest expense on Convertible Notes, net of income tax (2)		—		—		—		98
Adjusted net income attributable to Ocwen	$	76,721	$	44,833	$	116,692	$	64,280

Weighted average shares of common stock		135,690,264		134,856,101		135,664,242		132,752,848
Effect of dilutive elements:
Preferred Shares (1)		5,095,942		—		—		—
Convertible Notes (2)		—		—		—		2,028,868
Stock options		3,924,536		3,297,798		3,913,463		3,317,685
Common stock awards		10,305		1,474		14,253		1,421
Dilutive weighted average shares of common stock		144,721,047		138,155,373		139,591,958		138,100,822

Diluted EPS	$	0.53	$	0.32	$	0.84	$	0.47

Stock options excluded from the computation of diluted EPS:
Anti-dilutive (3)		—		166,250		—		158,750
Market-based (4)		1,530,000		558,750		1,530,000		558,750

(1)

The effect of our Preferred Shares on diluted EPS is computed using the if-converted method. In the three months ended June 30, 2013, the effect of the Preferred Shares was dilutive, and we added back preferred stock dividends, including the deemed dividend related to the BCF of the Preferred Shares, to net income. We assumed no conversion to common shares for the six months ended June 30, 2013 because the effect was anti-dilutive.

(2)

Prior to the redemption of the 3.25% Convertible Notes in March 2012, we also computed their effect on diluted EPS using the if-converted method. Interest expense and related amortization costs applicable to the Convertible Notes, net of income tax, were added back to net income. We assumed the conversion of the Convertible Notes into shares of common stock for purposes of computing diluted EPS unless the effect was anti-dilutive. We issued 4,635,159 shares of common stock upon conversion of $56.4 million of the Convertible Notes.

(3)

These stock options were anti-dilutive because their exercise price was greater than the average market price of our stock.

(4)

Shares that are issuable upon the achievement of certain performance criteria related to OCN’s stock price and an annualized rate of return to investors.

NOTE 21 BUSINESS SEGMENT REPORTING

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

BUSINESS SEGMENT REPORTING

Note 21

Business Segment Reporting

Our business segments reflect the internal reporting that we use to evaluate operating performance of services and to assess the allocation of our resources. A brief description of our current business segments is as follows:

Servicing. This segment is primarily comprised of our core residential servicing business. We provide residential and commercial mortgage loan servicing, special servicing and asset management services. We earn fees for providing these services to owners of the mortgage loans and foreclosed real estate. In most cases, we provide these services either because we purchased the MSRs from the owner of the mortgage, retained the MSRs on the sale of residential mortgage loans or because we entered into a subservicing or special servicing agreement with the entity that owns the MSR. Our residential servicing portfolio includes both agency and non-agency loans. Non-agency loans include prime and subprime loans which represent residential loans that generally did not qualify under GSE guidelines or have subsequently become delinquent.

Lending. The Lending segment is focused on originating and purchasing agency-conforming residential forward and reverse mortgage loans mainly through correspondent lending arrangements. We also commenced a direct lending business to pursue refinancing opportunities from our existing portfolio, where permitted. The loans are typically sold shortly after origination into a liquid market on a servicing retained basis.

Corporate Items and Other. Corporate Items and Other includes items of revenue and expense that are not directly related to a business, business activities that are individually insignificant, interest income on short-term investments of cash, corporate debt and certain corporate expenses. Business activities that are not considered to be of continuing significance include subprime loans held for sale (at lower of cost or fair value), investments in unconsolidated entities and affordable housing investment activities. Corporate Items and Other also included the diversified fee-based businesses that we acquired as part of the Homeward and ResCap Acquisitions and subsequently sold to Altisource.

We allocate interest income and expense to each business segment for funds raised or for funding of investments made, including interest earned on cash balances and short-term investments and interest incurred on corporate debt. We also allocate expenses generated by corporate support services to each business segment.

Financial information for our segments is as follows:

	Servicing			Lending			Corporate Items and Other			Corporate Eliminations			Business Segments Consolidated
Results of Operations

Three Months Ended June 30, 2013:
Revenue	$	495,033		$	33,735		$	1,241		$	(44	)	$	529,965
Operating expenses (1)		282,651			28,941			63,248			(44	)		374,796
Income (loss) from operations		212,382			4,794			(62,007	)		—			155,169
Other income (expense), net:
Interest income		3,485			4,587			1,042			—			9,114
Interest expense (1)		(96,073	)		(4,001	)		206			—			(99,868	)
Other		17,923			4,741			431			—			23,095
Other income (expense), net		(74,665	)		5,327			1,679			—			(67,659	)
Income (loss) before income taxes	$	137,717		$	10,121		$	(60,328	)	$	—		$	87,510

Three Months Ended June 30, 2012:
Revenue	$	210,407		$	—		$	1,204		$	(230	)	$	211,381
Operating expenses (1)		80,936			—			5,099			(131	)		85,904
Income (loss) from operations		129,471			—			(3,895	)		(99	)		125,477
Other income (expense), net:
Interest income		—			—			2,038			—			2,038
Interest expense (1)		(58,139	)		—			(180	)		—			(58,319	)
Other		1,070			—			(201	)		99			968
Other income (expense), net		(57,069	)		—			1,657			99			(55,313	)
Income (loss) before income taxes	$	72,402		$			$	(2,238	)	$	—		$	70,164

	Servicing			Lending			Corporate Items and Other			Corporate Eliminations			Business Segments Consolidated
Six Months Ended June 30, 2013:
Revenue	$	869,300		$	47,643		$	17,954		$	(89	)	$	934,808
Operating expenses (1)		494,262			40,041			84,216			(89	)		618,430
Income (loss) from operations		375,038			7,602			(66,262	)		—			316,378
Other income (expense), net:
Interest income		4,795			9,366			2,062			—			16,223
Interest expense (1)		(186,533	)		(6,829	)		78			—			(193,284	)
Other		(8,162	)		5,008			2,682			—			(472	)
Other income (expense), net		(189,900	)		7,545			4,822			—			(177,533	)
Income (loss) before income taxes	$	185,138		$	15,147		$	(61,440	)	$	—		$	138,845

Six Months Ended June 30, 2012:
Revenue	$	374,586		$	—		$	1,862		$	(535	)	$	375,913
Operating expenses (1)		163,801			—			8,495			(279	)		172,017
Income (loss) from operations		210,785			—			(6,633	)		(256	)		203,896
Other income (expense), net:
Interest income		—			—			4,350			—			4,350
Interest expense (1)		(104,665	)		—			(578	)		—			(105,243	)
Other		759			—			(3,735	)		256			(2,720	)
Other income (expense), net		(103,906	)		—			37			256			(103,613	)
Income (loss) before income taxes	$	106,879		$			$	(6,596	)	$	—		$	100,283

Total Assets
June 30, 2013	$	5,791,710		$	599,870		$	690,700		$	—		$	7,082,280
December 31, 2012	$	4,474,457		$	551,733		$	659,294		$	—		$	5,685,484
June 30, 2012	$	4,978,986		$	—		$	395,876		$	—		$	5,374,862

(1)

Depreciation and amortization expense are as follows:

	Servicing		Lending			Corporate Items and Other		Business Segments Consolidated
Three Months Ended June 30, 2013:
Depreciation expense	$	3,680	$	(160	)	$	2,422	$	5,942
Amortization of MSRs		70,369		—			—		70,369
Amortization of debt discount		328		—			—		328
Amortization of debt issuance costs – SSTL		1,192		—			—		1,192

Three Months Ended June 30, 2012:
Depreciation expense	$	419	$	—		$	686	$	1,105
Amortization of MSRs		19,097		—			—		19,097
Amortization of debt discount		735		—			—		735
Amortization of debt issuance costs – SSTL		923		—			—		923

Six Months Ended June 30, 2013:
Depreciation expense	$	6,378	$	74		$	4,003	$	10,455
Amortization of MSRs		118,252		—			—		118,252
Amortization of debt discount		752		—			—		752
Amortization of debt issuance costs – SSTL		2,086		—			—		2,086

Six Months Ended June 30, 2012:
Depreciation expense	$	674	$	—		$	1,263	$	1,937
Amortization of MSRs		33,411		—			—		33,411
Amortization of debt discount		1,480		—			—		1,480
Amortization of debt issuance costs – SSTL		1,843		—			—		1,843

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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RELATED PARTY TRANSACTIONS

NOTE 22 RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2013

NOTE 22

RELATED PARTY TRANSACTIONS

Relationship with Executive Chairman of the Board of Directors

Ocwen’s Executive Chairman of the Board of Directors, William C. Erbey, also serves as Chairman of the Board of Altisource, HLSS, Altisource Residential Corporation (Residential) and Altisource Asset Management Corporation (AAMC). As a result, he has obligations to Ocwen as well as to Altisource, HLSS, Residential and AAMC. As of June 30, 2013, Mr. Erbey owned or controlled approximately 13% of the common stock of Ocwen, approximately 23% of the common stock of Altisource, approximately 1% of the common stock of HLSS, approximately 9% of the common stock of Residential and approximately 25% of the common stock of AAMC.

Relationship with Altisource

Under the Services Agreement, Altisource provides various business process outsourcing services, such as valuation services and property preservation and inspection services, among other things. Altisource also provides certain technology products and support services to Ocwen under the Technology Products Services Agreement and the Data Center and Disaster Recovery Services Agreement. In addition, under the Data Access and Services Agreement, Ocwen has agreed to make available to Altisource certain data from Ocwen’s servicing portfolio in exchange for a per asset fee. Under the Support Services Agreement, Ocwen and Altisource provide to each other services in such areas as human resources, vendor management, corporate services, accounting, tax matters, risk management, law and consumer psychology.

In connection with the March 29, 2013 sale to Altisource of the diversified fee-based business acquired in connection with the Homeward Acquisition, Ocwen agreed to extend to August 31, 2025 the terms of the Services Agreement, the Technology Products Services Agreement, the Data Center and Disaster Recovery Services Agreement and the Intellectual Property Agreement with Altisource. In addition, Ocwen agreed to expand the terms of the Services Agreement to apply to the services as they relate to the Homeward servicing platform and further to establish Altisource as the exclusive provider of such services as they relate to the Homeward servicing platform. In addition, Ocwen agreed not to establish similar fee-based businesses (or establish relationships with other companies engaged in the line of similar fee-based businesses) that would directly or indirectly compete with diversified fee-based businesses as they relate to the Homeward servicing platform acquired by Altisource.

Certain services provided by Altisource under these contracts are charged to the borrower and/or loan investor. Accordingly, such services, while derived from our loan servicing portfolio, are not reported as expenses by Ocwen. These services include residential property valuation, residential property preservation and inspection services, title services and real estate sales.

Our business is currently dependent on many of the services and products provided under these long-term contracts which include renewal provisions. We believe the rates charged under these agreements are market rates as they are materially consistent with one or more of the following: the fees charged by Altisource to other customers for comparable services and the rates Ocwen pays to or observes from other service providers.

As disclosed in Note 4 – Business Acquisitions, on April 12, 2013 in connection with the sale to Altisource of the diversified fee-based business acquired in connection with the ResCap Acquisition, we agreed to establish additional terms related to existing servicing arrangements between Altisource and Ocwen for mortgage servicing assets acquired from ResCap.

The agreement provides that during the term of the existing servicing arrangements between Altisource and Ocwen (i) Altisource will be the exclusive provider, except as prohibited by applicable law, to Ocwen and all of its subsidiaries and affiliates, of certain services related to the ResCap business; (ii) Ocwen will not establish similar fee-based businesses that would directly or indirectly compete with Altisource services as they relate to the ResCap business; and (iii) Ocwen and all of its subsidiaries and affiliates will market and promote the utilization of Altisource’s services to their various third-party relationships. Additionally, the parties agreed to use commercially reasonable best efforts to ensure that the loans associated with the ResCap business are boarded onto Altisource’s mortgage servicing platform. The cash consideration paid by Altisource to Ocwen under the Agreement totaled $128.8 million.

Also as disclosed in Note 4 – Business Acquisitions, on March 31, 2013 we acquired from Altisource its 49% equity interest in Correspondent One.

On December 27, 2012, we entered into a senior unsecured term loan facility agreement with Altisource and borrowed $75.0 million. The proceeds of this loan were used to fund a portion of the Homeward Acquisition. Borrowings under the Unsecured Loan Agreement bear interest at a rate equal to the one-month Eurodollar Rate (1-Month LIBOR) plus 675 basis points with a Eurodollar Rate floor of 150 basis points. In February 2013, we repaid this loan in full.

Relationship with HLSS

Ocwen and HLSS Management entered into an agreement to provide to each other certain professional services including valuation analysis of potential MSR acquisitions, treasury management services and other similar services, legal, licensing and regulatory compliance support services, risk management services and other similar services.

As disclosed in Note 3 – Transfers of Financial Assets, Ocwen has sold to HLSS certain Rights to MSRs and related servicing advances. OLS also entered into a subservicing agreement with HLSS on February 10, 2012, which was amended on October 1, 2012, under which it will subservice the MSRs after legal ownership of the MSRs has been transferred to HLSS.

Relationship with Residential

On December 21, 2012, OMS entered into a 15-year servicing agreement with Altisource Residential, L.P., the operating partnership of Residential, pursuant to which Ocwen will service residential mortgage loans acquired by Residential and provide loan modification, assisted deed-in-lieu, assisted deed-for-lease and other loss mitigation programs.

On February 14, 2013, OLS sold a pool of non-performing residential mortgage loans to Altisource Residential, L.P. pursuant to a Master Mortgage Loan Sale Agreement. The aggregate purchase price for the pool of loans was $64.4 million.

Relationship with AAMC

On December 11, 2012, Mr. Erbey received 52,589 shares of AAMC restricted stock pursuant to the Altisource Asset Management Corporation 2012 Special Equity Incentive Plan and a Special Restricted Stock Award Agreement in his capacity as Chairman of the Board of AAMC and Altisource.

On December 11, 2012, Ronald M. Faris, our President and Chief Executive Officer and a director of Ocwen, received 29,216 shares of AAMC restricted stock pursuant to the Altisource Asset Management Corporation 2012 Special Equity Incentive Plan and a Special Restricted Stock Award Agreement, in connection with the services he provides AAMC through his employment with Ocwen.

Relationship with Former Owner of Homeward

As consideration for the Homeward Acquisition, Ocwen paid an aggregate purchase price of $766.0 million, of which $604.0 million was paid in cash and $162.0 million was paid in 162,000 Preferred Shares issued to certain private equity firms ultimately controlled by WL Ross & Co. LLC (the Funds), that pay a dividend of 3.75% per annum on a quarterly basis. Each Preferred Share, together with any accrued and unpaid dividends, may be converted at the option of the holder into shares of Ocwen common stock at a conversion price equal to $31.79. Mr. Ross is the Chairman and Chief Executive Officer of WL Ross & Co. LLC and Invesco Private Capital, Inc. and the managing member of El Vedado, LLC, each of which directly or indirectly controls the Funds. Mr. Ross became a director of Ocwen in March 2013.

The following table summarizes our revenues and expenses related to the various service agreements with Altisource and its subsidiaries and HLSS for the periods June 30, and amounts receivable from or payable to at the dates indicated:

	Three Months				Six Months
	2013		2012		2013		2012
Revenues and Expenses:
Altisource:
Revenues	$	5,971	$	4,461	$	10,205	$	8,073
Expenses		11,806		7,182		23,497		13,711
HLSS:
Revenues	$	40	$	30	$	152	$	40
Expenses		738		741		1,228		993

	June 30, 2013			December 31, 2012
Net Payable
Altisource	$	(6,110	)	$	(5,971	)
HLSS		(3,654	)		(25,524	)
	$	(9,764	)	$	(31,495	)

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

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Commitments and Contingencies Disclosure [Abstract]

NOTE 23 REGULATORY REQUIREMENTS

6 Months Ended

Jun. 30, 2013

Regulatory Requirements [Abstract]

REGULATORY REQUIREMENTS

Note 23

Regulatory Requirements

Our business is subject to extensive regulation by federal, state and local governmental authorities, including the CFPB, the Federal Trade Commission (FTC), the SEC and various state agencies that license, audit and conduct examinations of our mortgage originations, servicing and collection activities in a number of states. The CFPB asserts supervisory authority (including the authority to conduct examinations) over Ocwen and its affiliates, including Homeward. From time to time, we also receive requests from federal, state and local agencies for records, documents and information relating to our policies, procedures and practices regarding our loan origination, loan servicing and debt collection business activities. We incur significant ongoing costs to comply with new and existing laws and governmental regulation of our business.

We must comply with a number of federal, state and local consumer protection laws including, among others, the Gramm-Leach-Bliley Act, the Fair Debt Collection Practices Act, the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, Homeowners Protection Act, the Federal Trade Commission Act and, more recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), and state mortgage origination, mortgage servicing and foreclosure laws. These laws apply to loan origination, loan servicing, debt collection, use of credit reports, safeguarding of non−public personally identifiable information about our customers, foreclosure and claims handling, investment of and interest payments on escrow balances and escrow payment features, and mandate certain disclosures and notices to borrowers. These requirements can and do change as statutes and regulations are enacted, promulgated or amended.

There are a number of foreign laws and regulations that are applicable to our operations in India and Uruguay, including acts that govern licensing, employment, safety, taxes, insurance, and the laws and regulations that govern the creation, continuation and the winding up of companies as well as the relationships between the shareholders, the company, the public and the government in both countries.

NOTE 24 COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2013

COMMITMENTS AND CONTINGENCIES

NOTE 24

COMMITMENTS AND CONTINGENCIES

We are subject to various pending legal proceedings, including those subject to loss sharing and indemnification provisions of our various acquisitions. In our opinion, the resolution of those proceedings will not have a material effect on our financial condition, results of operations or cash flows.

Regulatory Contingencies

We are subject to a number of pending federal and state regulatory investigations, examinations, inquiries, requests for information and/or other actions. In July 2010, OLS received two subpoenas from the Federal Housing Finance Agency as conservator for Freddie Mac and Fannie Mae in connection with ten private label mortgage securitization transactions where Freddie Mac and Fannie Mae have invested. The transactions include mortgage loans serviced but not originated by OLS or its affiliates. On November 24, 2010, OLS received a Civil Investigative Demand (CID) from the FTC requesting documents and information regarding various servicing activities. On June 6, 2012, the FTC notified OLS that it had referred this CID to the CFPB. On November 7, 2011, OLS received a CID from the Attorney General’s Office of the Commonwealth of Massachusetts requesting documents and information regarding certain foreclosures executed in Massachusetts. On January 18, 2012, OLS received a subpoena from the New York Department of Financial Services (NY DFS) requesting documents regarding OLS’ policies, procedures and practices regarding lender-placed or “force-placed” insurance which is required to be provided for borrowers who allow their hazard insurance policies to lapse. Separately, on December 5, 2012, we entered into a Consent Order with the NY DFS in which we agreed to the appointment of an independent Monitor to oversee our compliance with the Agreement on Servicing Practices. NY DFS selected the firms that will act as the Monitor, and their formal engagement commenced effective July 1, 2013. The engagement will last until July 1, 2015, and we intend to continue to cooperate with the NY DFS and the Monitor.

As previously reported, on August 13, 2012, OLS received a request from the MMC to provide information and data relating to our loan servicing portfolio, including loan count and volume data, loan modifications, fees assessed, delinquencies, short sales, loan-to-value data and rating agency reports. The MMC, along with the CFPB, certain state Attorneys General and other agencies who were involved in the National Mortgage Settlement executed on February 9, 2012 by the five large banks (collectively, the Regulators), also requested that we indicate our position on behalf of OLS and Litton on the servicing standards and consumer relief provisions contained in that Settlement. In response, we indicated our willingness to adopt the servicing standards set out in the National Mortgage Settlement with certain caveats and to undertake various consumer assistance commitments in the form of loan modifications and other foreclosure avoidance alternatives. On February 26, 2013, the Regulators requested that, in addition to committing to the servicing standards and loan modifications, we also consider a proposal to contribute to a consumer relief fund that would provide cash payments to certain borrowers foreclosed upon by OLS and various entities we have acquired. In subsequent discussions, it was clarified that the Regulators sought our agreement on servicing standards, loan modifications and the proposed consumer relief fund to settle and release various potential legal claims against Ocwen, Litton and Homeward arising out of MMC examinations and potential follow on federal and/or state enforcement actions (the Proposed Regulators’ Settlement). In light of the substantial progress the parties have made toward an agreement in principle regarding the Proposed Regulators’ Settlement, we believe such a settlement is probable. Consummation of a final settlement would be subject to completion of definitive settlement documents acceptable to all parties, the participation of all relevant regulatory agencies, and execution of certain contractual undertakings by the sellers of Litton and Homeward. In the event a final settlement is not concluded, we will defend any ensuing legal proceedings vigorously. As disclosed in Note 16 – Other Liabilities, we have established a liability of $66.4 million for the Proposed Regulators’ Settlement.

As part of the ResCap Acquisition, OLS is required to service the ResCap loans in accordance with the requirements of the National Mortgage Settlement, although OLS is not responsible for any payment, penalty or financial obligation, including but not limited to providing Ally’s share of financial relief to borrowers under that settlement. The Office of Mortgage Settlement Oversight (OMSO) which is responsible for monitoring compliance with obligations under the National Mortgage Settlement, issued a report on February 14, 2013 confirming that Ally/ResCap have completed its minimum consumer relief obligations. On June 19, 2013, OMSO issued a report entitled “Summary of Compliance: A Report from the Monitor of the National Mortgage Settlement” wherein the Monitor certified that the ResCap loans now serviced by OLS did not fail any metric.

One or more of the foregoing regulatory actions or similar actions in the future against Ocwen, OLS, Litton or Homeward could cause us to incur fines, penalties, settlement costs, damages, legal fees or other charges in material amounts, or undertake remedial actions pursuant to administrative orders or court-issued injunctions, any of which could adversely affect our financial results or incur additional significant costs related to our loan servicing operations.

In addition to these matters, Ocwen receives periodic inquires, both formal and informal in nature, from various state and federal agencies as part of those agencies’ oversight of the mortgage servicing sector. Such ongoing inquiries, including those into servicer foreclosure processes, could result in additional actions by state or federal governmental bodies, regulators or the courts that could result in an extension of foreclosure timelines, which may be applicable generally to the servicing industry or to us in particular. In addition, a number of our match funded advance facilities contain provisions that limit the eligibility of advances to be financed based on the length of time that advances are outstanding, and two of our match funded advance facilities have provisions that limit new borrowings if average foreclosure timelines extend beyond a certain time period, either of which, if such provisions applied, could adversely affect liquidity by reducing our average effective advance rate. Increases in the amount of advances and the length of time to recover advances, fines or increases in operating expenses, and decreases in the advance rate and availability of financing for advances could result in increased borrowings, reduced cash and higher interest expense which could negatively impact our liquidity and profitability.

Loan Put-Back and Related Contingencies

In several recent court actions, mortgage loan sellers against whom repurchase claims have been asserted based on alleged breaches of representations and warranties are defending themselves on various grounds including the expiration of statutes of limitation, lack of notice and opportunity to cure and vitiation of the obligation to repurchase as a result of foreclosure or charge off of the loan. Ocwen is not a party to any of the actions, but we are the servicer for certain securitizations involved in such actions. In connection with these actions, Ocwen has entered into tolling agreements with respect to its role as servicer for a very small number of securitizations and may enter into additional tolling agreements in the future. Should Ocwen be made a party to these or similar actions, we may need to defend allegations that we failed to service loans in accordance with applicable agreements and that such failures prejudiced the rights of repurchase claimants against loan sellers. We believe that any such allegations would be without merit and, if necessary, would vigorously defend against them. If, however, we were required to compensate claimants for losses related to seller breaches of representations and warranties in respect of loans we service, then our business, financial condition and results of operations could be adversely affected.

Agreement to Acquire MSRs from OneWest Bank

On June 13, 2013, OLS entered into a mortgage servicing rights purchase and sale agreement (the Purchase Agreement) with OneWest Bank, FSB, a federal savings bank (the “Seller”), pursuant to which OLS agreed to purchase approximately $78 billion in UPB of MSRs and related servicing advance receivables, in each case, measured as of April 30, 2013 (the OneWest MSR Transaction). No operations or other assets are being purchased in the transaction. The aggregate purchase price will be approximately $2.5 billion, with $446 million of the aggregate purchase price paid in respect of the MSRs and approximately $2.1 billion to be paid in respect of the servicing advances, in each case, subject to adjustment for changes in the UPB of the related assets as of the date of closing and other customary post-closing adjustments. Contemporaneously with the execution of the Purchase Agreement, Ocwen executed a guarantee pursuant to which it agreed to guarantee the obligations and performance of OLS under the Purchase Agreement.

Consummation of the OneWest MSR Transaction is subject to, among other things, (i) certain investor and third party consents and (ii) certain customary closing conditions and termination rights, including in respect of any transfer not completed by January 31, 2014. A termination fee equal to $50 million may be payable by either party in certain circumstances. As part of the OneWest MSR Transaction, the Seller and OLS have agreed to indemnification provisions for the benefit of the other party. The OneWest MSR Transaction is expected to close in stages during the second half of 2013, and Ocwen expects that the majority of loans will be boarded onto its primary servicing platform at each respective closing date.

The entire disclosure for commitments and contingencies.

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-Name Statement of Financial Accounting Standard (FAS)
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Transfers of Financial Assets

NOTE 25 SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 25

SUBSEQUENT EVENTS

On July 1, 2013, OLS completed a sale to HLSS Holdings, LLC and Home Loan Servicing Solutions, Ltd. of Rights to MSRs and related servicing advances for a servicing portfolio of subprime and Alt-A residential mortgage loans.

This transaction resulted in the sale of Rights to MSRs with approximately $83.6 billion in UPB of mortgage loans as of June 30, 2013. The purchase price was approximately $2.7 billion, including $2.4 billion for servicing advances and $241 million for the associated Rights to MSRs. Within 90 days of the closing, the purchase price may be adjusted to reflect any adjustments in the calculation of the UPB of the underlying mortgage loans or servicing advance balances acquired in the transaction. Of the $2.4 billion of proceeds received from the sale of servicing advances, $1.8 billion was used to repay match funded liabilities. As a result of the early repayment and termination of the match funded facilities, we wrote off to interest expense prepaid lender fees of $5.7 million.

The mortgage servicing assets were sold to HLSS pursuant to a Sale Supplement to the Master Servicing Rights Purchase Agreement previously entered into by OLS and HLSS Holdings, LLC. In addition to the sale of OLS’ right, title and interest to the Rights to MSRs and the associated servicing advances, HLSS Holdings, LLC also committed to purchase servicing advances that arise under the related pooling and servicing agreements after the closing date. In return, OLS continues to subservice the related mortgage loans, receives a monthly base fee equal to 12% of the servicing fees collected in any given month and retains any ancillary income payable to the servicer (excluding investment income earned on any custodial accounts) pursuant to the related pooling and servicing agreements. OLS also earns a monthly performance based incentive fee based on the servicing fees collected. If the targeted advance ratio in any month exceeds the predetermined level for that month set forth in the Sale Supplement and the Subservicing Supplement for the transaction, any performance based incentive fee payable for such month will be reduced by an amount equal to 3.00% per annum of the amount of any such excess servicing advances. The Subservicing Supplement for the transaction is governed by the Master Subservicing Agreement previously entered into by OLS and HLSS Holdings, LLC.

NOTE 1 DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Transfers of Financial Assets

Recent Accounting Pronouncements

The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors, and

Any additional amount the reporting entity expects to pay on behalf of its co-obligors.”

●

sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity,

●

loss of a controlling financial interest in an investment in a foreign entity (i.e., the foreign entity is deconsolidated), or

●

step acquisition for a foreign entity (i.e., when an entity has changed from applying the equity method for an investment in a foreign entity to consolidating the foreign entity).

Disclosure of accounting policy for transfers and servicing financial assets, including securitization transactions as well as repurchase and resale agreements. This disclosure may include how the entity (1) determines whether a transaction is accounted for as a sale; (2) accounts for a sale transaction, including the initial and subsequent accounting for any interests that the entity obtains or continues to hold in the transaction, how such interests are valued, and the significant assumptions used in the valuation; (3) accounts for a transaction that does not qualify for sale treatment (that is, a financing); and (4) accounts for its servicing assets and liabilities ("servicing"), including how such servicing is measured initially and subsequently, and the methodology and significant assumptions used to value such servicing.

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NOTE 2 SECURITIZATIONS AND VARIABLE INTEREST ENTITIES (Tables)

6 Months Ended

Jun. 30, 2013

Schedule of cash flows related to transfers accounted for as sales

	Three Months			Six Months
Proceeds received from securitizations	$	1,887,359		$	4,464,151
Servicing fees collected		5,290			6,807
Purchases of previously transferred assets		(4,854	)		(11,790	)
	$	1,887,795		$	4,459,168

Schedule of assets that relate to our continuing involvement with forward loans that we have transferred with servicing rights retained as well as our maximum exposure to loss including the unpaid principal balance

	June 30, 2013		December 31, 2012
Carrying value of assets:
Mortgage servicing rights, at amortized cost	$	44,375	$	—
Mortgage servicing rights, at fair value		2,580		2,908
Advances and match funded advances		764		—
Unpaid principal balance of loans transferred (1)		4,458,218		238,010
Maximum exposure to loss	$	4,505,937	$	240,918

(1)

The UPB of the loans transferred is the maximum exposure to loss under our standard representations and warranties obligations.

NOTE 3 TRANSFERS OF FINANCIAL ASSETES (Tables)

6 Months Ended

Jun. 30, 2013

Schedule of summary of the assets and liabilities sold to HLSS

	2013		2012
Sale of MSRs accounted for as a financing	$	148,622	$	73,691
Sale of match funded advances		1,079,777		92,225
Sale of advance SPEs:
Match funded advances		—		413,374
Debt service account		—		14,786
Prepaid lender fees and debt issuance costs		—		5,422
Other prepaid expenses		—		1,928
Match funded liabilities		—		(358,335	)
Accrued interest payable and other accrued expenses		—		(841	)
Net assets of advance SPEs		—		76,334
Sales price, as adjusted		1,228,399		242,250
Amount due to HLSS for post-closing adjustments at June 30		—		368
Cash received	$	1,228,399	$	242,618

NOTE 4 BUSINESS ACQUISITIONS (Tables)

6 Months Ended

Jun. 30, 2013

ResCap and Homeward Acquisitions

Schedule of purchase price allocation

	ResCap									Homeward
Purchase Price Allocation	March 31, 2013			Adjustments			Revised			December 31, 2012			Adjustments			Revised
Cash	$	—		$	—		$	—		$	79,511		$	—		$	79,511
Loans held for sale		—			—			—			558,721			—			558,721
Mortgage servicing rights		393,891			—			393,891			358,119			2,225			360,344
Advances and match funded advances		1,622,348			(3,492	)		1,618,856	(1)		2,266,882			—			2,266,882	(1)
Deferred tax assets		—			—			—			47,346			—			47,346	(1)
Premises and equipment		22,398			(5,975	)		16,423	(1)		16,803			—			16,803	(1)
Debt service accounts		—			—			—			69,287			—			69,287
Investment in unconsolidated entities		—			—			—			5,485			—			5,485	(1)
Receivables and other assets		2,989						2,989			56,886			—			56,886
Match funded liabilities		—			—			—			(1,997,459	)		—			(1,997,459	)
Other borrowings		—			—			—			(864,969	)		—			(864,969	)
Other liabilities
Liability for indemnification obligations		(49,500	)		—			(49,500	)		(32,498	)		—			(32,498	) (1)
Liability for certain foreclosure matters		—			—			—			—			(13,602	)		(13,602	) (1)
Accrued bonuses		—			—			—			(35,201	)		—			(35,201	)
Checks held for escheat		—			—			—			(16,418	)		—			(16,418	) (1)
Other		(24,840	)		(340	)		(25,180	)		(47,614	)		—			(47,614	) (1)
Total identifiable net assets		1,967,286			(9,807	)		1,957,479			464,881			(11,377	)		453,504
Goodwill		204,743			5,295			210,038	(1)		300,843			10,477			311,320	(1)
Total consideration	$	2,172,029		$	(4,512	)	$	2,167,517		$	765,724		$	(900	)	$	764,824

(1)

Initial fair value estimate

Schedule of revenue and earnings

For the Periods Ended June 30, 2013:	Three Months		Six Months
Revenues	$	193,596	$	266,636
Net income	$	43,646	$	58,525

Schedule of pro forma results of operations

For the Periods Ended June 30:	Three Months		Six Months
	2012		2013		2012
Revenues	$	348,430	$	987,623	$	652,151
Net income (loss)	$	20,335	$	106,649	$	14,138

Homeward Acquisitions

Schedule of pro forma results of operations

For the Periods Ended June 30, 2012:	Three Months		Six Months
Revenues	$	325,915	$	603,550
Net income	$	53,880	$	76,808

Tabular disclosure of pro forma results of operations for a material business acquisition or series of individually immaterial business acquisitions that are material in the aggregate.

Schedule of carrying and estimated fair values of financial instruments

NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

		June 30, 2013						December 31, 2012
	Level	Carrying Value			Fair Value			Carrying Value			Fair Value
Financial assets:
Loans held for sale, at fair value (1)	2	$	361,144		$	361,144		$	426,480		$	426,480
Loans held for sale, at lower of cost or fair value (2)	3		33,987			33,987			82,866			82,866
Loans – restricted for securitization investors, at fair value (1)	3		76,649			76,649			—			—
Advances and match funded advances (3)	3		3,405,795			3,405,795			3,233,707			3,233,707
Receivables, net (3)	3		225,011			225,011			167,459			167,459

Financial liabilities:
Match funded liabilities (3)	3	$	2,391,832		$	2,391,832		$	2,532,745		$	2,533,278
Other borrowings:
Secured borrowings – owed to securitization investors, at fair value (1)	3		73,641			73,641			—			—
Other (3)	3		2,098,437			2,082,458			1,096,679			1,101,504
Total Other borrowings			2,172,078			2,156,099			1,096,679			1,101,504

Derivative financial instruments (1):
Interest rate lock commitments (IRLCs)	2	$	(7,064	)	$	(7,064	)	$	5,781		$	5,781
Interest rate swaps	3		—			—			(10,836	)		(10,836	)
Forward MBS trades	1		18,681			18,681			(1,719	)		(1,719	)
U.S. Treasury futures	1		—			—			(1,258	)		(1,258	)
Interest rate caps	3		176			176			168			168

MSRs, at fair value (1)	3	$	97,163		$	97,163		$	85,213		$	85,213

(1)

Measured at fair value on a recurring basis.

(2)

Measured at fair value on a non-recurring basis.

(3)

Financial instruments disclosed, but not carried, at fair value.

Schedule of reconciliation of the changes in fair value of Level 3 assets

	Loans – restricted for securitization investors			Secured borrowings – owed to securitization investors			Derivative Financial Instruments			MSRs at Fair Value		Total

Three Months Ended June 30, 2013:
Beginning balance	$	—		$	—		$	(18,635	)	$	84,534	$	65,899

Purchases, issuances, sales and settlements:
Purchases		10,251			(10,179	)		—			—		72
Issuances		63,029			(65,938	)		—			—		(2,909	)
Sales		—			—			24,156			—		24,156
Settlements		(871	)		867			(1,375	)		—		(1,379	)
		72,409			(75,250	)		22,781			—		19,940

Total realized and unrealized gains and (losses) (1):
Included in Other, net		4,240			1,609			1,469			12,629		19,947
Included in Other comprehensive income (loss)		—			—			(5,439	)		—		(5,439	)
		4,240			1,609			(3,970	)		12,629		14,508

Transfers in and / or out of Level 3		—			—			—			—		—
Ending balance	$	76,649		$	(73,641	)	$	176		$	97,163	$	100,347

Three Months Ended June 30, 2012:
Beginning balance	$	—		$	—		$	(12,806	)	$	—	$	(12,806	)

Purchases, issuances, sales and settlements:
Settlements		—			—			65			—		65
		—			—			65			—		65

Total realized and unrealized gains and (losses) (1):
Included in Other, net		—			—			1,843			—		1,843
Included in Other comprehensive income (loss)		—			—			(4,007	)		—		(4,007	)
		—			—			(2,164	)		—		(2,164	)

Transfers in and / or out of Level 3		—			—			—			—		—
Ending balance	$	—		$	—		$	(14,905	)	$	—	$	(14,905	)

	Loans – restricted for securitization investors			Secured borrowings – owed to securitization investors			Derivative Financial Instruments			MSRs at Fair Value		Total

Six Months Ended June 30, 2013:
Beginning balance	$	—		$	—		$	(10,668	)	$	85,213	$	74,545

Purchases, issuances, sales and settlements:
Purchases		10,251			(10,179	)		—			—		72
Issuances		63,029			(65,938	)		—			—		(2,909	)
Sales		—			—			24,156			—		24,156
Settlements		(871	)		867			(1,066	)		—		(1,070	)
		72,409			(75,250	)		23,090			—		20,249

Total realized and unrealized gains and (losses) (1):
Included in Other, net		4,240			1,609			117			11,950		17,916
Included in Other comprehensive income (loss)		—			—			(12,363	)		—		(12,363	)
		4,240			1,609			(12,246	)		11,950		5,553

Transfers in and / or out of Level 3		—			—			—			—		—
Ending balance	$	76,649		$	(73,641	)	$	176		$	97,163	$	100,347

Six Months Ended June 30, 2012:
Beginning balance	$	—		$	—		$	(16,676	)	$	—	$	(16,676	)

Purchases, issuances, sales and settlements:
Settlements		—			—			2,422			—		2,422
		—			—			2,422			—		2,422

Total realized and unrealized gains and (losses) (1):
Included in Other, net		—			—			5,248			—		5,248
Included in Other comprehensive income (loss)		—			—			(5,899	)		—		(5,899	)
		—			—			(651	)		—		(651	)

Transfers in and / or out of Level 3		—			—			—			—		—
Ending balance	$	—		$	—		$	(14,905	)	$	—	$	(14,905	)

(1)

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
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Loans Held For Sale At Fair Value [Abstract]

NOTE 6 LOANS HELD FOR SALE, AT FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2013

Schedule of activity in balance of loans held for sale

Balance at December 31, 2012	$	426,480
Originations and purchases (1)		4,511,255
Proceeds from sale		(4,526,875	)
Loss on sale of loans		(37,794	)
Decrease in fair value		(11,821	)
Other		(101	)
Balance at June 30, 2013	$	361,144

(1)

Purchases include $60.0 million of reverse mortgages acquired in the Liberty Acquisition.

Schedule of activity in Gain on loans held for sale

	Three Months					Six Months
	2013			2012		2013			2012
Gain on sales of loans (1)	$	10,179		$	—	$	9,098		$	—
Changes in fair value of IRLCs		(11,757	)		—		(12,994	)		—
Change in fair value of loans held for sale (2)		(5,216	)		—		(5,656	)		—
Gain on hedge instruments		28,814			—		39,003			—
Provision for representations and warranties		(370	)		—		(883	)		—
Other		(19	)		—		(188	)		—
	$	21,631		$	—	$	28,380		$	—

(1)

Includes gains of $18.2 million and $46.9 million for the three and six months ended June 30, 2013, respectively, representing the value assigned to MSRs retained on sales of loans.

(2)

Includes a gain of $6.2 million recorded during the three months ended June 30, 2013 to adjust Loans – Restricted for Securitization Investors to fair value.

NOTE 7 ADVANCES (Tables)

6 Months Ended

Jun. 30, 2013

Advances [Abstract]

Schedule of advances, representing payments made

	June 30, 2013		December 31, 2012
Servicing:
Principal and interest	$	109,012	$	83,617
Taxes and insurance		215,981		51,447
Foreclosures, bankruptcy and other		108,115		41,296
		433,108		176,360
Lending		353		—
Corporate Items and Other		12,010		8,103
	$	445,471	$	184,463

NOTE 8 MATCH FUNDED ADVANCES (Tables)

6 Months Ended

Jun. 30, 2013

Match Funded Advances [Abstract]

Schedule of advances, representing payments made

	June 30, 2013		December 31, 2012
Principal and interest	$	1,931,073	$	1,577,808
Taxes and insurance		765,241		1,148,486
Foreclosures, bankruptcy, real estate and other		264,010		322,950
	$	2,960,324	$	3,049,244

NOTE 9 MORTGAGE SERVICING (Tables)

6 Months Ended

Jun. 30, 2013

Mortgage Servicing [Abstract]

Schedule of activity related to MSRs - Amortization method

	2013			2012
Balance at December 31	$	678,937		$	293,152
Additions recognized in connection with business and asset acquisitions (1) (2)		1,078,819			175,852
Additions recognized on the sale of residential mortgage loans		46,892			—
Servicing transfers, adjustments and other		1,970			(88	)
Amortization (3)		(118,580	)		(34,348	)
Balance at June 30	$	1,688,038		$	434,568

Estimated fair value at June 30	$	2,269,985		$	470,974

(1)

MSRs purchased during 2013 include $393.9 million acquired in the ResCap Acquisition. See Note 4 – Business Acquisitions for additional information.

(2)

(3)

Amortization of mortgage servicing rights is reported net of the amortization of servicing liabilities and includes the amount of charges we recognized to increase servicing liability obligations.

Schedule of activity related to MSRs - Fair value measurement method

Balance at December 31, 2012	$	85,213
Changes in fair value:
Due to changes in market valuation assumptions		20,680
Realization of cash flows and other changes		(8,730	)
Balance at June 30, 2013	$	97,163

Schedule of estimated change in the fair value of our MSRs

	Adverse change in fair value
	10%			20%
Weighted average prepayment speeds	$	(3,850	)	$	(7,459	)

Discount rate (Option-adjusted spread)	$	(4,143	)	$	(7,962	)

Schedule of components of servicing and subservicing fees

	Three Months				Six Months
	2013		2012		2013		2012
Loan servicing and subservicing fees	$	363,739	$	149,384	$	631,767	$	261,973
Home Affordable Modification Program (HAMP) fees		46,792		21,390		86,939		34,074
Late charges		29,589		17,676		55,485		36,521
Loan collection fees		7,755		3,830		14,137		7,169
Custodial accounts (float earnings)		2,110		663		3,790		1,450
Other		32,647		7,392		58,007		14,237
	$	482,632	$	200,335	$	850,125	$	355,424

Schedule of composition of servicing and subservicing portfolios by type of property serviced

	Residential		Commercial		Total
UPB at June 30, 2013
Servicing (1)	$	344,173,439	$	—	$	344,173,439
Subservicing		92,081,944		452,042		92,533,986
	$	436,255,383	$	452,042	$	436,707,425

UPB at December 31, 2012
Servicing (1)	$	175,762,161	$	—	$	175,762,161
Subservicing		27,903,555		401,031		28,304,586
	$	203,665,716	$	401,031	$	204,066,747

(1)

Includes UPB of $99.8 billion and $79.4 billion at June 30, 2013 and December 31, 2012, respectively, for which the Rights to MSRs have been sold to HLSS.

Tabular disclosure of the activity in the balance of servicing assets subsequently measured at amortized value (including a description of where changes in carrying value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (through purchases of servicing assets and servicing assets that result from transfers of financial assets), disposals, amortization, application of valuation allowances, other-than-temporary impairments, and other changes that affect the balance along with a description of those changes.

Tabular disclosure of the activity in the balance of servicing assets (including a description of where changes in fair value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (for instance, through purchases of servicing assets), disposals, changes in fair value during the period resulting from changes in inputs or assumptions used in the valuation model, other changes in fair value along with a description of those changes, and other changes that affect the balance along with a description of those changes.

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 10 RECEIVABLES (Tables)

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Schedule of receivables

	Receivables		Allowance for Losses			Net
June 30, 2013
Servicing (1)	$	157,869	$	(14,202	)	$	143,667
Income taxes receivable		43,851		—			43,851
Due from related parties (2)		21,828		—			21,828
Other		17,622		(1,957	)		15,665
	$	241,170	$	(16,159	)	$	225,011

December 31, 2012
Servicing (1)	$	84,870	$	(1,647	)	$	83,223
Income taxes receivable		55,292		—			55,292
Due from related parties (2)		12,361		—			12,361
Other		18,577		(1,994	)		16,583
	$	171,100	$	(3,641	)	$	167,459

(1)

The receivable balances arise from our Servicing business and include reimbursable expenditures due from investors and amounts to be recovered from the custodial accounts of the trustees.

(2)

See Note 22 – Related Party Transactions for additional information regarding transactions with Altisource and HLSS.

NOTE 11 GOODWILL (Tables)

6 Months Ended

Jun. 30, 2013

Schedule of goodwill

	ResCap Acquisition			Homeward Acquisition			Litton Acquisition		Hom Eq Acquisition		Total
Balance at December 31, 2012	$	—		$	311,320		$	57,430	$	12,810	$	381,560

Derecognition of goodwill in connection with the sale of a business (1) (2)		(128,750	)		(72,309	)		—		—		(201,059	)
ResCap Acquisition (2)		210,038			—			—		—		210,038
Balance at June 30, 2013	$	81,288		$	239,011		$	57,430	$	12,810		390,539
Liberty Acquisition (2)												—
Step acquisition - Correspondent One (2)												101
Balance at June 30, 2013											$	390,640

(1)

(2)

See Note 4 – Business Acquisitions for additional information regarding this transaction.

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

Schedule of match funded liabilities

NOTE 13 OTHER ASSETS (Tables)

6 Months Ended

Jun. 30, 2013

Other Assets [Abstract]

Schedule of other assets

	June 30, 2013		December 31, 2012
Loans – restricted for securitization investors, at fair value (1)	$	76,649	$	—
Loans held for sale, at lower of cost or fair value (2)		33,987		82,866
Prepaid lender fees and debt issuance costs, net (3)		32,912		14,389
Prepaid income taxes		23,112		23,112
Derivatives, at fair value (4)		18,857		10,795
Investment in unconsolidated entities (5)		12,886		25,187
Real estate, net		8,028		6,205
Interest earning collateral deposits (6)		5,668		31,710
Acquisition deposits (7)		—		57,000
Prepaid expenses and other		19,125		22,314
	$	231,224	$	273,578

(1)

(2)

(3)

These balances relate to match funded liabilities and other secured borrowings.

(4)

See Note 18 – Derivative Financial Instruments and Hedging Activities for additional information.

(5)

(6)

These balances include $1.1 million and $25.8 million of cash collateral held by the counterparties to certain of our derivative agreements at June 30, 2013 and December 31, 2012, respectively.

(7)

NOTE 14 MATCH FUNDED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2013

Match Funded Liabilities [Abstract]

				Available		Balance Outstanding
Borrowing Type	Interest Rate	Maturity (1)	Amortization Date (1)	Borrowing Capacity (2)		June 30, 2013		December 31, 2012
2011-Servicer Advance Revolving Trust 1 (3)	2.23%	May 2043	May 2013	$	—	$	—	$	325,000
2011-Servicer Advance Revolving Trust 1 (3)	3.37 – 5.92%	May 2043	May 2013		—		—		525,000
2012-Servicing Advance Revolving Trust 2 (3)	3.27 – 6.90%	Sep. 2043	Sept. 2013		—		—		250,000
2012-Servicing Advance Revolving Trust 3 (3)	2.98%	Mar. 2043	Mar. 2013		—		—		248,999
2012-Servicing Advance Revolving Trust 3 (3)	3.72 – 7.04%	Mar. 2044	Mar. 2014		—		—		299,278
Total fixed rate					—		—		1,648,277

				Available		Balance Outstanding
Borrowing Type	Interest Rate	Maturity (1)	Amortization Date (1)	Borrowing Capacity (2)		June 30, 2013		December 31, 2012
Advance Receivable Backed Notes (4)	1-month LIBOR (1ML) + 285 bps	Apr. 2015	Apr. 2014		168,640		131,360		205,016
Advance Receivable Backed Notes Series 2012-ADV1	Commercial paper (CP) rate + 225 or 335 bps	Dec. 2043	Dec. 2013		276,618		173,382		232,712
Advance Receivable Backed Notes Series 2012-ADV1	1ML + 250 bps	June 2016	June 2014		25,000		200,000		94,095
Advance Receivable Backed Note	1ML + 300 bps	Dec. 2015	Dec. 2014		10,827		39,173		49,138
2011-Servicing Advance Revolving Trust 1 (3)	1ML + 300 bps	May 2043	May 2013		—		—		204,633
2012-Servicing Advance Revolving Trust 2 (3)	1ML + 315 bps	Sep. 2043	Sept. 2013		—		—		22,003
2012-Servicing Advance Revolving Trust 3 (3)	1ML + 300 bps – 675 bps	Mar. 2044	Mar. 2014		—		—		40,626
2012-Homeward Agency Advance Funding Trust 2012-1	1ML + 300 bps	Sept. 2013	Sept. 2013		3,581		21,419		16,094
2012-Homeward DSF Advance Revolving Trust 2012-1 (3)	1ML + 450 bps	Feb. 2013	Feb. 2013		—		—		20,151
Homeward Residential Bridge Loan Trust – 2013 Series-Bridge-VF1 and VF2 (3)(5)	1ML + 150 bps	Aug. 2043	Aug. 2013		133,162		766,838		—
Ocwen Servicer Advance Receivables Trust – Series 2013-VF1 Class A, B, C and D Notes (5)(6)	1ML + 150 – 525 bps	Feb. 2044	Feb. 2014		351,254		848,746		—
Ocwen Servicer Advance Receivables Trust II – Series 2013-VF1 Class A, B, C and D Notes (5)(6)	1ML + 287.5 bps	Feb. 2044	Feb. 2014		14,086		210,914		—
Total variable rate					983,168		2,391,832		884,468
				$	983,168	$	2,391,832	$	2,532,745

(1)

(2)

(3)

(4)

We repaid this facility in full in July 2013.

(5)	On July 1, 2013, we repaid these facilities in full from the proceeds received on the sale of servicing advances to HLSS. See Note 25 – Subsequent Events for additional information regarding this transaction.

(6)	We entered into these facilities in connection with the ResCap Acquisition (See Note 4 – Business Acquisitions).

NOTE 15 OTHER BORROWINGS (Tables)

6 Months Ended

Jun. 30, 2013

Other Borrowings [Abstract]

Schedule of lines of credit and other secured and unsecured borrowings

				Available		Balance Outstanding
Borrowings	Collateral	Interest Rate	Maturity	Borrowing Capacity		June 30, 2013			December 31, 2012

Servicing:
SSTL (1)	(1)	1ML + 550 bps; LIBOR floor of 150 bps (1)	Sept. 2016	$	—	$	—		$	314,229
SSTL (2)	(2)	(2)	Feb. 2018		—		1,296,750			—

Senior unsecured term loan (3)		1-Month Euro-dollar rate + 675 bps with a Eurodollar floor of 150 bps	Mar. 2017		—		—			75,000
Financing liability – MSRs pledged (4)	MSRs (4)	(4)	(4)		—		428,339			303,705
Financing liability – MSRs pledged (5)	MSRs (5)	(5)	(5)		—		—			2,603
Promissory note (6)	MSRs	1ML + 350 bps	May 2017		—		17,844			18,466
Repurchase agreement	Loans held for sale (LHFS)	1 ML + 250 – 345 bps	Apr. 2014		92,579		7,421			—
					92,579		1,750,354			714,003

Lending:
Master repurchase agreement (7)	LHFS	1ML + 175 bps	Mar. 2014		231,875		68,125			88,122
Participation agreement (8)	LHFS	N/A	May 2014		—		21,742			58,938
Master repurchase agreement (9)	LHFS	1ML + 200 bps	Aug. 2013		143,392		106,608			133,995
Master repurchase agreement	LHFS	1ML + 200 bps	Jul. 2013		216,806		83,194			107,020
Master repurchase agreement	LHFS	1ML + 275 bps	Aug. 2013		39,690		60,310			—
Financing liability – MSRs pledged (5)	MSRs (5)	(5)	(5)		—		10,068			—
Secured borrowings - owed to securitization investors (10)	Loans held for investment	1ML + 220 bps	(10)		—		73,641			—
					631,763		423,688			388,075

Corporate Items and Other
Securities sold under an agreement to repurchase (11)	Ocwen Real Estate Asset Liquidating Trust 2007-1 Notes	Class A-2 notes: 1ML + 200 bps; Class A-3 notes: 1ML + 300 bps	Monthly		—		4,045			2,833
					724,342		2,178,087			1,104,911

Discount (1) (2)					—		(6,009	)		(8,232	)
				$	724,342	$	2,172,078		$	1,096,679

(1)

In February 2013, we repaid this loan in full and wrote off the remaining discount as part of the loss on extinguishment.

(2)

(3)

We repaid this loan in full in February 2013.

(4)

(5)

(6)

Prepayments of the balance on this note may be required if the borrowing base, as defined, falls below the amount of the note outstanding.

(7)

On March 19, 2013, the maturity date of the Master Repurchase Agreement was extended to March 18, 2014 and the maximum borrowing capacity was increased to $120.0 million to $300.0 million.

(8)

(9)

On June 12, 2013, the maturity date of the Master Repurchase Agreement was extended to August 2, 2013.

(10)

(11)

This agreement has no stated credit limit and lending is determined for each transaction based on the acceptability of the securities presented as collateral.

NOTE 16 OTHER LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2013

Other Liabilities [Abstract]

Schedule of other liabilities

	June 30, 2013		December 31, 2012
Liability for indemnification obligations (1)	$	220,041	$	38,140
Accrued expenses		103,742		70,831
Amount due seller for purchase price adjustments – ResCap Acquisition		69,696		—
Liability for certain foreclosure matters (2)		66,431		13,602
Checks held for escheat		25,448		33,225
Payable to servicing and subservicing investors (3)		23,545		9,973
Liability for selected tax items		22,338		22,702
Due to related parties (4)		19,132		45,034
Servicing liabilities (5)		11,704		9,830
Accrued interest payable		8,874		5,410
Derivatives, at fair value (6)		7,064		18,658
Other		58,613		23,861
	$	636,628	$	291,266

(1)

(2)

(3)

The balance represents amounts due to investors in connection with loans we service under servicing and subservicing agreements.

(4)

See Note 22 – Related Party Transactions for additional information.

(5)

(6)

See Note 18 – Derivative Financial Instruments and Hedging Activities for additional information.

NOTE 17 MEZZANINE EQUITY (Tables)

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Schedule of carrying value of preferred shares

Initial issuance price on December 27, 2012	$	162,000
Discount for beneficial conversion feature		(8,688	)
Accretion of BCF discount (Deemed dividend)		60
Carrying value at December 31, 2012		153,372
Accretion of discount (Deemed dividend)		2,172
Carrying value at June 30, 2013	$	155,544

Tabular disclosure of temporary equity. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Includes any type of security that is redeemable at a fixed or determinable price or on a fixed or determinable date or dates, is redeemable at the option of the holder, or has conditions for redemption which are not solely within the control of the issuer. If convertible, the issuer does not control the actions or events necessary to issue the maximum number of shares that could be required to be delivered under the conversion option if the holder exercises the option to convert the stock to another class of equity. If the security is a warrant or a rights issue, the warrant or rights issue is considered to be temporary equity if the issuer cannot demonstrate that it would be able to deliver upon the exercise of the option by the holder in all cases. Includes stock with put option held by ESOP and stock redeemable by holder only in the event of a change in control of the issuer.

Derivative Instruments and Hedging Activities Disclosure [Abstract]

NOTE 18 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

6 Months Ended

Jun. 30, 2013

Schedule of changes in notional balance of holdings of derivatives

	IRLCs			U.S. Treasury Futures			Forward MBS Trades			Interest Rate Caps			Interest Rate Swaps

Balance at December 31, 2012	$	1,112,519		$	109,000		$	1,638,979		$	1,025,000		$	1,495,955
Additions		2,803,364			85,000			6,443,459			—			1,280,000
Amortization		(228,319	)		—			(33,372	)		(24,000	)		—
Maturities		(2,826,503	)		—			(3,094,020	)		—			(295,604	)
Terminations		(207,842	)		(194,000	)		(4,100,120	)		(126,000	)		(2,480,351	)
Balance at June 30, 2013	$	653,219		$	—		$	854,926		$	875,000		$	—

Fair value of net derivative assets (liabilities) at:
June 30, 2013	$	(7,064	)	$	—		$	18,681		$	176		$	—
December 31, 2012	$	5,781		$	(1,258	)	$	(1,719	)	$	168		$	(10,836	)

Maturity		Jul. 2013 – Oct. 2013			—			Jul. 2013 – Sep. 2013			Aug. 2015 – May 2016			—

Schedule of gains (losses) on derivatives

Purpose	Expiration Date	Notional Amount		Fair Value (1)			Gains / (Losses)			Consolidated Statement of Operations Caption
Interest rate risk of borrowings
Interest rate caps
Hedge the effects of changes in 1ML on advance funding facilities	2015-2016	$	875,000	$	176		$	9		Other, net

Interest rate risk of mortgage loans held for sale and IRLCs
Forward MBS trades	2013		854,926		18,681			40,293		Loss on loans held for sale, net and Other, net

IRLCs	2013		653,219		(7,064	)		(12,994	)	Loss on loans held for sale, net
Total derivatives				$	11,793		$	27,308

(1)

Derivatives are reported at fair value in Receivables, Other assets or in Other liabilities on our unaudited Consolidated Balance Sheets.

Schedule of changes in the losses on cash flow hedges included in AOCL

Accumulated losses on cash flow hedges at December 31, 2012	$	9,878
Additional net losses on cash flow hedges		12,363
Ineffectiveness of cash flow hedges reclassified to earnings		(657	)
Losses on terminated hedging relationships amortized to earnings (1)		(1,654	)
Accumulated losses on cash flow hedges at June 30, 2013	$	19,930

(1)

Schedule of statements of operations related to derivative financial instruments

	Three Months						Six Months
	2013			2012			2013			2012
Servicing and origination expense
Gains on economic hedges	$	17		$	—		$	1,017		$	—
Loss on loans held for resale, net
Gains (losses) on economic hedges		17,056			—			26,009			—
Other, net
Gains (losses) on economic hedges (1)		2,742			1,843			(2,429	)		5,248
Ineffectiveness of cash flow hedges		—			(64	)		(657	)		(1)
Write-off of losses in AOCL for a discontinued hedge relationship		(1,654	)		(772	)		(1,654	)		(1,544	)
Write-off of losses in AOCL for hedge of a financing facility assumed by HLSS (See Note 3 – Transfers of Financial Assets)		—			—			—			(5,958	)
	$	18,161		$	1,007		$	22,286		$	(2,255	)

(1)

Includes a gain of $3.4 million recognized during the three months ended March 31, 2012 from the termination of foreign exchange forward contracts.

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624163-113959

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Section 50
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Schedule of components of interest expense

NOTE 19 INTEREST EXPENSE (Tables)

6 Months Ended

Jun. 30, 2013

Interest Expense [Abstract]

	Three Months				Six Months
	2013		2012		2013		2012
Match funded liabilities	$	25,078	$	35,920	$	55,429	$	67,035
Other borrowings (1)		72,180		21,060		132,703		35,283
Debt securities:
3.25% Convertible Notes		—		—		—		153
10.875% Capital Trust Securities		—		710		—		1,420
Other		2,610		629		5,152		1,352
	$	99,868	$	58,319	$	193,284	$	105,243

(1)

NOTE 20 BASIC AND DILUTED EARNINGS PER SHARE (EPS) (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share, Basic and Diluted [Abstract]

Schedule of reconciliation of calculation of basic EPS to diluted EPS

	Three Months				Six Months
	2013		2012		2013		2012
Basic EPS:
Net income attributable to Ocwen common stockholders	$	74,116	$	44,833	$	116,692	$	64,182

Weighted average shares of common stock		135,690,264		134,856,101		135,664,242		132,752,848

Basic EPS	$	0.55	$	0.33	$	0.86	$	0.48

Diluted EPS:
Net income attributable to Ocwen common stockholders	$	74,116	$	44,833	$	116,692	$	64,182
Preferred stock dividends (1)		2,605		—		—		—
Interest expense on Convertible Notes, net of income tax (2)		—		—		—		98
Adjusted net income attributable to Ocwen	$	76,721	$	44,833	$	116,692	$	64,280

Weighted average shares of common stock		135,690,264		134,856,101		135,664,242		132,752,848
Effect of dilutive elements:
Preferred Shares (1)		5,095,942		—		—		—
Convertible Notes (2)		—		—		—		2,028,868
Stock options		3,924,536		3,297,798		3,913,463		3,317,685
Common stock awards		10,305		1,474		14,253		1,421
Dilutive weighted average shares of common stock		144,721,047		138,155,373		139,591,958		138,100,822

Diluted EPS	$	0.53	$	0.32	$	0.84	$	0.47

Stock options excluded from the computation of diluted EPS:
Anti-dilutive (3)		—		166,250		—		158,750
Market-based (4)		1,530,000		558,750		1,530,000		558,750

(1)

(2)

(3)

These stock options were anti-dilutive because their exercise price was greater than the average market price of our stock.

(4)

Shares that are issuable upon the achievement of certain performance criteria related to OCN’s stock price and an annualized rate of return to investors.

NOTE 21 BUSINESS SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting Information [Line Items]

Schedule of segment reporting information

	Servicing			Lending			Corporate Items and Other			Corporate Eliminations			Business Segments Consolidated
Results of Operations

Three Months Ended June 30, 2013:
Revenue	$	495,033		$	33,735		$	1,241		$	(44	)	$	529,965
Operating expenses (1)		282,651			28,941			63,248			(44	)		374,796
Income (loss) from operations		212,382			4,794			(62,007	)		—			155,169
Other income (expense), net:
Interest income		3,485			4,587			1,042			—			9,114
Interest expense (1)		(96,073	)		(4,001	)		206			—			(99,868	)
Other		17,923			4,741			431			—			23,095
Other income (expense), net		(74,665	)		5,327			1,679			—			(67,659	)
Income (loss) before income taxes	$	137,717		$	10,121		$	(60,328	)	$	—		$	87,510

Three Months Ended June 30, 2012:
Revenue	$	210,407		$	—		$	1,204		$	(230	)	$	211,381
Operating expenses (1)		80,936			—			5,099			(131	)		85,904
Income (loss) from operations		129,471			—			(3,895	)		(99	)		125,477
Other income (expense), net:
Interest income		—			—			2,038			—			2,038
Interest expense (1)		(58,139	)		—			(180	)		—			(58,319	)
Other		1,070			—			(201	)		99			968
Other income (expense), net		(57,069	)		—			1,657			99			(55,313	)
Income (loss) before income taxes	$	72,402		$			$	(2,238	)	$	—		$	70,164

	Servicing			Lending			Corporate Items and Other			Corporate Eliminations			Business Segments Consolidated
Six Months Ended June 30, 2013:
Revenue	$	869,300		$	47,643		$	17,954		$	(89	)	$	934,808
Operating expenses (1)		494,262			40,041			84,216			(89	)		618,430
Income (loss) from operations		375,038			7,602			(66,262	)		—			316,378
Other income (expense), net:
Interest income		4,795			9,366			2,062			—			16,223
Interest expense (1)		(186,533	)		(6,829	)		78			—			(193,284	)
Other		(8,162	)		5,008			2,682			—			(472	)
Other income (expense), net		(189,900	)		7,545			4,822			—			(177,533	)
Income (loss) before income taxes	$	185,138		$	15,147		$	(61,440	)	$	—		$	138,845

Six Months Ended June 30, 2012:
Revenue	$	374,586		$	—		$	1,862		$	(535	)	$	375,913
Operating expenses (1)		163,801			—			8,495			(279	)		172,017
Income (loss) from operations		210,785			—			(6,633	)		(256	)		203,896
Other income (expense), net:
Interest income		—			—			4,350			—			4,350
Interest expense (1)		(104,665	)		—			(578	)		—			(105,243	)
Other		759			—			(3,735	)		256			(2,720	)
Other income (expense), net		(103,906	)		—			37			256			(103,613	)
Income (loss) before income taxes	$	106,879		$			$	(6,596	)	$	—		$	100,283

Total Assets
June 30, 2013	$	5,791,710		$	599,870		$	690,700		$	—		$	7,082,280
December 31, 2012	$	4,474,457		$	551,733		$	659,294		$	—		$	5,685,484
June 30, 2012	$	4,978,986		$	—		$	395,876		$	—		$	5,374,862

Depreciation and Amortization

Segment Reporting Information [Line Items]

Schedule of segment reporting information

	Servicing		Lending			Corporate Items and Other		Business Segments Consolidated
Three Months Ended June 30, 2013:
Depreciation expense	$	3,680	$	(160	)	$	2,422	$	5,942
Amortization of MSRs		70,369		—			—		70,369
Amortization of debt discount		328		—			—		328
Amortization of debt issuance costs – SSTL		1,192		—			—		1,192

Three Months Ended June 30, 2012:
Depreciation expense	$	419	$	—		$	686	$	1,105
Amortization of MSRs		19,097		—			—		19,097
Amortization of debt discount		735		—			—		735
Amortization of debt issuance costs – SSTL		923		—			—		923

Six Months Ended June 30, 2013:
Depreciation expense	$	6,378	$	74		$	4,003	$	10,455
Amortization of MSRs		118,252		—			—		118,252
Amortization of debt discount		752		—			—		752
Amortization of debt issuance costs – SSTL		2,086		—			—		2,086

Six Months Ended June 30, 2012:
Depreciation expense	$	674	$	—		$	1,263	$	1,937
Amortization of MSRs		33,411		—			—		33,411
Amortization of debt discount		1,480		—			—		1,480
Amortization of debt issuance costs – SSTL		1,843		—			—		1,843

Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.

Schedule of revenues and expenses related to various service agreements

NOTE 22 RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2013

	Three Months				Six Months
	2013		2012		2013		2012
Revenues and Expenses:
Altisource:
Revenues	$	5,971	$	4,461	$	10,205	$	8,073
Expenses		11,806		7,182		23,497		13,711
HLSS:
Revenues	$	40	$	30	$	152	$	40
Expenses		738		741		1,228		993

Schedule of amounts receivable from or payable to at the dates

	June 30, 2013			December 31, 2012
Net Payable
Altisource	$	(6,110	)	$	(5,971	)
HLSS		(3,654	)		(25,524	)
	$	(9,764	)	$	(31,495	)

NOTE 1 DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2013
Accounting Policy [Line Items]
Business acquisition, percentage of voting interests acquired			50.00%
Reclassification \| Other Income
Accounting Policy [Line Items]
Process management fees	$ 9.9	$ 18.7

NOTE 2 SECURITIZATIONS AND VARIABLE INTEREST ENTITIES (Details) - (Table 1) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Asset Sales and Financing [Abstract]
Proceeds received from securitizations	$ 1,887,359	$ 4,464,151
Servicing fees collected	5,290	6,807
Purchases of previously transferred assets	(4,854)	(11,790)
Cash flows received from and paid to securitization trusts, Total	$ 1,887,795	$ 4,459,168

NOTE 2 SECURITIZATIONS AND VARIABLE INTEREST ENTITIES (Details) - (Table 2) - USD ($)
$ in Thousands

Jun. 30, 2013

Dec. 31, 2012

Carrying Value of Assets:

Mortgage servicing rights, at amortized cost

$ 44,375

Mortgage servicing rights, at fair value

2,580

2,908

Unpaid principal balance of loans transferred

764

^[1]

4,458,218

238,010

Maximum exposure to loss

$ 4,505,937

$ 240,918

[1]	The UPB of the loans transferred is the maximum exposure to loss under our standard representations and warranties obligations.

NOTE 2 SECURITIZATIONS AND VARIABLE INTEREST ENTITIES (Detail)	6 Months Ended
	Jun. 30, 2013 Trust
Variable Interest Entities [Abstract]
Beneficial interests held in number of trust	4
Percentage of loan transferred	0.05%

NOTE 2 SECURITIZATIONS AND VARIABLE INTEREST ENTITIES (Detail 1) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2013 USD ($)
MSRs	$ 18.2	$ 46.9
Ocwen
Balance of notes outstanding	131.4	131.4
OLS
Balance of notes outstanding	39.2	39.2
HMBS
Borrowings pledged as collateral to the pools	73.6	73.6
HECMs
Borrowings pledged as collateral to the pools	$ 76.6	$ 76.6

NOTE 3 TRANSFERS OF FINANCIAL ASSETS (Details) - (Table 1) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Net assets of advance SPEs		$ 76,334
HLSS
Sale of MSRs accounted for as a financing	$ 148,622	73,691
Sale of match funded advances	1,079,777	92,225
Match funded advances		413,374
Debt service account		14,786
Prepaid lender fees and debt issuance costs		5,422
Other prepaid expenses		1,928
Match funded liabilities		(358,335)
Accrued interest payable and other accrued expenses		(841)
Net assets of advance SPEs		76,334
Sales price, as adjusted	1,228,399	242,250
Amount due to HLSS for post-closing adjustments at June 30		368
Cash received	$ 1,228,399	$ 242,618

NOTE 3 TRANSFERS OF FINANCIAL ASSETS (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jul. 01, 2013
Asset Sale Transaction H
Unpaid principal balance of loans related to servicing assets sold	$ 26,500	$ 18,200
HLSS
Unpaid principal balance of loans related to servicing assets sold	$ 83,600
HLSS \| Subsequent Event
Purchase price			$ 2,700
Servicing advances			2,400
Associated Rights to MSRs			$ 241

NOTE 4 BUSINESS ACQUISITIONS (Detail) - (Table 1) - USD ($)
$ in Thousands

Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

^[1]

$ (220,041)

$ (38,140)

^[2]

$ (66,431)

(13,602)

393,891

^[3]

1,618,856

^[3]

16,423

2,989

(49,500)

^[3]

^[3]

(25,180)

1,957,479

^[3]

210,038

ResCap Acquisition | Initial Estimate

2,167,517

393,891

^[3]

1,622,348

^[3]

22,398

2,989

(49,500)

^[3]

^[3]

(24,840)

1,967,286

^[3]

204,743

ResCap Acquisition | Adjustments

2,172,029

^[3]

(3,492)

^[3]

(5,975)

^[3]

^[3]

(340)

(9,807)

^[3]

5,295

$ (4,512)

79,511

558,721

360,344

^[3]

2,266,882

^[3]

47,346

^[3]

16,803

69,287

^[3]

5,485

56,886

(1,997,459)

(864,969)

^[3]

(32,498)

^[3]

(13,602)

(35,201)

^[3]

(16,418)

^[3]

(47,614)

453,504

^[3]

311,320

Homeward Acquisition | Initial Estimate

764,824

79,511

558,721

358,119

^[3]

2,266,882

^[3]

47,346

^[3]

16,803

69,287

^[3]

5,485

56,886

(1,997,459)

(864,969)

^[3]

(32,498)

^[3]

(35,201)

^[3]

(16,418)

^[3]

(47,614)

464,881

^[3]

300,843

Homeward Acquisition | Adjustments

765,724

2,225

^[3]

^[3]

^[3]

^[3]

^[3]

^[3]

(13,602)

^[3]

^[3]

(11,377)

^[3]

10,477

$ (900)

[1]	The balance includes origination representation and warranty obligations and compensatory fees for foreclosures that may ultimately exceed investor timelines. These obligations were primarily assumed in connection with the Ally MSR Transaction, the ResCap Acquisition and the Homeward Acquisition. See Note 4 - Business Acquisitions and Note 9 - Mortgage Servicing for additional information.
[2]	The balance represents a liability established in connection with our ongoing discussions with the Multi-State Mortgage Committee of the Conferences of State Bank Supervisors (MMC), Consumer Finance Protection Bureau (CFPB) and state Attorneys General in connection with certain foreclosure related matters. We recognized $52.8 million of expense in Professional services in the second quarter of 2013 in establishing the liability. We recognized the remaining $13.6 million of the liability as an adjustment to the initial purchase price allocation related to the Homeward Acquisition. We applied this measurement period adjustment retrospectively to our Consolidated Balance Sheet at December 31, 2012 with an offsetting increase in goodwill. See Note 24 - Commitments and Contingencies for additional information.
[3]	Initial fair value estimate

NOTE 4 BUSINESS ACQUISITIONS (Detail) - (Table 2) - ResCap Acquisition - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Business Acquisition [Line Items]
Revenue	$ 193,596	$ 266,636
Net income	$ 43,646	$ 58,525

NOTE 4 BUSINESS ACQUISITIONS (Detail) - (Table 3) - ResCap Acquisition - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Business Acquisition [Line Items]
Revenues	$ 348,430	$ 987,623	$ 652,151
Net income (loss)	$ 20,335	$ 106,649	$ 14,138

NOTE 4 BUSINESS ACQUISITIONS (Detail) - (Table 4) - Homeward Acquisition - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Business Acquisition [Line Items]
Revenues	$ 325,915	$ 603,550
Net income	$ 53,880	$ 76,808

NOTE 4 BUSINESS ACQUISITIONS (Detail)
$ in Thousands

1 Months Ended

6 Months Ended

Apr. 12, 2013

USD ($)

Apr. 01, 2013

USD ($)

Loan

Mar. 31, 2013

USD ($)

Mar. 29, 2013

USD ($)

Dec. 27, 2012

USD ($)

Loan

Jun. 30, 2013

USD ($)

Facility

Feb. 15, 2013

USD ($)

Dec. 31, 2012

USD ($)

Intangible assets amortization period

15 years

Derecognition of goodwill in connection with the sale of a business

^[1],[2]

$ (201,059)

50.00%

MSRs acquired

$ 87,000,000

Altisource

Proceeds from sale of business

Liability assumed

$ 4,000

$ 128,800

87,000

Assets sold consisted of receivables and other assets

18,700

Derecognition of goodwill in connection with the sale of a business

$ 128,800

$ 72,300

Deployed of net additional capital

840,000

Servicing advance facilities and existing facility borrowed

1,200,000

Assets sold consisted of receivables and other assets

2,989

Derecognition of goodwill in connection with the sale of a business

^[1],[2]

(128,750)

Cash acquired

Recognized goodwill

^[3]

210,038

ResCap Acquisition | Subservicing contracts

Unpaid principal balance of subserviced loans until certain consents and court approvals

$ 25,900,000

9,000,000

ResCap Acquisition | Senior Secured Term Loan

Proceeds of senior secured term loan (SSTL) facility

$ 1,300,000

New servicing advance facilities | Facility

Existing servicing facility | Facility

ResCap Acquisition | Freddie Mac and Ginnie Mae loans | MSRs acquired

ResCap Acquisition | MSRs acquired

107,300,000

$ 42,100,000

Assets sold consisted of receivables and other assets

$ 558,721

56,886

Derecognition of goodwill in connection with the sale of a business

^[1],[2]

$ (72,309)

Cash acquired

79,511

Recognized goodwill

^[3]

$ 311,320

Homeward Acquisition | Residential Mortgage

Number of MSRs and subservicing acquired | Loan

$ 77,000,000

421,000

Correspondent One

Recognized gain loss on changes in fair value of investment

Acquired net assets

26,300

Cash acquired

23,000

Recognized goodwill

100

400

Correspondent One | Residential Mortgage

Correspondent One | Unrelated Party

Receivables acquired

1,100

Correspondent One | Altisource

Acquisition of shares

$ 900

Correspondent One | Maximum | Altisource

100.00%

49.00%

Acquisition of shares

$ 12,600

Correspondent One | Minimum | Altisource

100.00%

49.00%

Liberty Acquisition

Number of MSRs and subservicing acquired | Loan

$ 55,200

420

Aggregate purchase price paid

$ 22,000

Amount of existing outstanding debt repaid to the sellers

9,100

31,100

10,300

4,600

11,200

Amount of residential reverse mortgage loans

60,000

Amount of warehouse facilities

46,300

HMBS-related borrowings

$ 10,200

Reverse mortgage loan acquired

$ 60,000

[1]	On March 29, 2013, we sold the diversified fee-based business acquired in the Homeward Acquisition to Altisource and derecognized the assigned goodwill. On April 12, 2013, we sold the diversified fee-based business acquired in the ResCap Acquisition to Altisource and derecognized the assigned goodwill.
[2]	See Note 4 - Business Acquisitions for additional information regarding this transaction.
[3]	Initial fair value estimate

NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS (Detail) - (Table 1) - USD ($)
$ in Thousands

Jun. 30, 2013

Dec. 31, 2012

Financial assets:

Loans held for sale, at fair value

$ 361,144

$ 426,480

Loans - restricted for securitization investors, at fair value

^[1]

76,649

Financial liabilities:

Loans held for sale, at fair value

2,391,832

2,532,745

Carrying Value

Financial assets:

^[2]

361,144

426,480

Loans held for sale, at lower of cost or fair value

^[3]

33,987

82,866

Loans - restricted for securitization investors, at fair value

^[2]

76,649

^[4]

3,405,795

3,233,707

Receivables, net

^[4]

225,011

167,459

Financial liabilities:

Secured borrowings - owed to securitization investors, at fair value

^[4]

2,391,832

2,532,745

Other borrowings:

^[2]

73,641

Carrying Value | Interest Rate Lock Commitments (IRLCs)

^[4]

2,098,437

1,096,679

Total Other borrowings

2,172,078

1,096,679

Fair Value Of Financial Instrument [Line Items]

Carrying Value | Interest rate swaps

^[2]

(7,064)

5,781

Fair Value Of Financial Instrument [Line Items]

Carrying Value | Forward MBS trades

^[2]

(10,836)

Fair Value Of Financial Instrument [Line Items]

Carrying Value | U.S. Treasury futures

^[2]

18,681

(1,719)

Fair Value Of Financial Instrument [Line Items]

Carrying Value | Interest rate caps

^[2]

(1,258)

Fair Value Of Financial Instrument [Line Items]

Carrying Value | MSRs acquired

^[2]

176

168

Fair Value Of Financial Instrument [Line Items]

^[2]

97,163

85,213

Loans held for sale, at fair value

Financial assets:

^[2]

361,144

426,480

Loans held for sale, at lower of cost or fair value

^[3]

33,987

82,866

Loans - restricted for securitization investors, at fair value

^[2]

76,649

^[4]

3,405,795

3,233,707

Receivables, net

^[4]

225,011

167,459

Financial liabilities:

Secured borrowings - owed to securitization investors, at fair value

^[4]

2,391,832

2,533,278

Other borrowings:

^[2]

73,641

Fair Value | Interest Rate Lock Commitments (IRLCs)

^[4]

2,082,458

1,101,504

Total Other borrowings

2,156,099

1,101,504

Fair Value Of Financial Instrument [Line Items]

Fair Value | Interest rate swaps

^[2]

(7,064)

5,781

Fair Value Of Financial Instrument [Line Items]

Fair Value | Forward MBS trades

^[2]

(10,836)

Fair Value Of Financial Instrument [Line Items]

Fair Value | U.S. Treasury futures

^[2]

18,681

(1,719)

Fair Value Of Financial Instrument [Line Items]

Fair Value | Interest rate caps

^[2]

(1,258)

Fair Value Of Financial Instrument [Line Items]

Fair Value | MSRs acquired

^[2]

176

168

Fair Value Of Financial Instrument [Line Items]

Fair Value Of Financial Instrument [Line Items]

^[2]

$ 97,163

$ 85,213

[1]	Loans sold into Ginnie Mae guaranteed securitizations that we include in our Consolidated Financial Statements because the transfers of reverse mortgage loans to the trusts did not qualify for sales accounting treatment.
[2]	See Note 21 - Related Party Transactions for additional information regarding transactions with Altisource and HLSS.
[3]	Measured at fair value on a non-recurring basis.
[4]	Financial instruments disclosed, but not carried, at fair value.

NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS (Detail) - (Table 2) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Jun. 30, 2013

Jun. 30, 2012

$ 65,899

$ (12,806)

$ 74,545

$ (16,676)

(2,909)

24,156

(1,379)

(1,070)

2,422

Total realized and unrealized gains and (losses)

19,940

20,249

2,422

^[1]

19,947

1,843

17,916

5,248

^[1]

(5,439)

(4,007)

(12,363)

(5,899)

^[1]

14,508

(2,164)

5,553

(651)

Loans - restricted for securitization investors

100,347

(14,905)

100,347

(14,905)

Fair Value Of Financial Instrument [Line Items]

Total realized and unrealized gains and (losses)

10,251

63,029

(871)

72,409

^[1]

4,240

^[1]

^[1]

4,240

Secured borrowings - owed to securitization investors

76,649

Fair Value Of Financial Instrument [Line Items]

Total realized and unrealized gains and (losses)

(10,179)

(65,938)

867

(75,250)

^[1]

1,609

^[1]

^[1]

1,609

Derivative Financial Instruments

(73,641)

Fair Value Of Financial Instrument [Line Items]

(18,635)

(12,806)

(10,668)

(16,676)

24,156

(1,375)

(1,066)

2,422

Total realized and unrealized gains and (losses)

22,781

23,090

2,422

^[1]

1,469

1,843

117

5,248

^[1]

(5,439)

(4,007)

(12,363)

(5,899)

^[1]

(3,970)

(2,164)

(12,246)

(651)

Fair Value Of Financial Instrument [Line Items]

176

(14,905)

176

(14,905)

MSRs at Fair Value

84,534

85,213

Total realized and unrealized gains and (losses)

^[1]

12,629

11,950

^[1]

^[1]

12,629

11,950

Movement In Loans Held For Sale At Fair Value [Roll Forward]

$ 97,163

[1]

NOTE 5 FAIR VALUE OF FINANCIAL INSTRUMENTS (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Fair Value Of Financial Instrument [Line Items]
Gain (loss) held for sale attributable to derivative financial instruments (in dollars)	$ 0.1	$ (2.2)		$ (6.4)
Derivative, description of variable rate basis			one-month LIBOR
Amortized cost \| Cost of financing advances
Fair Value Of Financial Instrument [Line Items]
Fair value inputs basis spread on variable rate			4.00%
Fair value inputs, description of variable rate basis			1-month LIBOR
Amortized cost \| Float earnings
Fair Value Of Financial Instrument [Line Items]
Fair value inputs, description of variable rate basis			1-month LIBOR
Fair value
Fair Value Of Financial Instrument [Line Items]
Prepayment rate			9.51%
Fair value inputs, description of variable rate basis			1-Month LIBOR
SSTL
Fair Value Of Financial Instrument [Line Items]
Discount rate			5.63%
MSRs acquired \| Maximum \| Amortized cost
Fair Value Of Financial Instrument [Line Items]
Delinquency rates			25.02%
Discount rate			20.00%
Prepayment rate			25.92%
MSRs acquired \| Maximum \| Fair value
Fair Value Of Financial Instrument [Line Items]
Fair value inputs basis spread on variable rate			10.50%
MSRs acquired \| Minimum \| Amortized cost
Fair Value Of Financial Instrument [Line Items]
Delinquency rates			3.83%
Discount rate			10.90%
Prepayment rate			7.22%
MSRs acquired \| Weighted Average \| Amortized cost
Fair Value Of Financial Instrument [Line Items]
Delinquency rates			14.61%
Discount rate			14.65%
Prepayment rate			14.42%
Loans - Restricted for Securitization Investors
Fair Value Of Financial Instrument [Line Items]
Discount rate			2.14%
Loans - Restricted for Securitization Investors \| Maximum
Fair Value Of Financial Instrument [Line Items]
Prepayment rate			64.59%
Weighted average life (in years)			26 years 6 months 29 days
Loans - Restricted for Securitization Investors \| Minimum
Fair Value Of Financial Instrument [Line Items]
Prepayment rate			5.04%
Weighted average life (in years)			3 years 2 months 9 days
Loans - Restricted for Securitization Investors \| Weighted Average
Fair Value Of Financial Instrument [Line Items]
Prepayment rate			12.82%
Weighted average life (in years)			6 years 10 months 10 days
Secured Borrowings - Owed to Securitization Investors
Fair Value Of Financial Instrument [Line Items]
Discount rate			1.27%
Secured Borrowings - Owed to Securitization Investors \| Maximum
Fair Value Of Financial Instrument [Line Items]
Prepayment rate			61.69%
Weighted average life (in years)			22 years 10 months 2 days
Secured Borrowings - Owed to Securitization Investors \| Minimum
Fair Value Of Financial Instrument [Line Items]
Prepayment rate			5.01%
Weighted average life (in years)			3 years 1 month 24 days
Secured Borrowings - Owed to Securitization Investors \| Weighted Average
Fair Value Of Financial Instrument [Line Items]
Prepayment rate			10.74%
Weighted average life (in years)			6 years 5 months 9 days

NOTE 6 LOANS HELD FOR SALE, AT FAIR VALUE (Detail) - (Table 1) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2012

Jun. 30, 2013

Jun. 30, 2012

Originations and purchase

$ 426,480

^[1]

4,511,255

Proceeds from sale

(4,526,875)

Loss on sale of loans

(37,794)

Decrease in fair value

(11,821)

(101)

Balance at June 30, 2013

$ 361,144

[1]	Purchases include $60.0 million of reverse mortgages acquired in the Liberty Acquisition.

The cash inflow from sales of loans that are secured with real estate mortgages and are held with the intention to resell in the near future.

Loans Held For Sale At Fair Value [Line Items]

NOTE 6 LOANS HELD FOR SALE, AT FAIR VALUE (Detail) - (Table 2) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Jun. 30, 2013

Jun. 30, 2012

Gain on sales of loans

^[1]

$ 10,179

$ 9,098

Change in fair value of loans held for sale

^[2]

(5,216)

(5,656)

Gain on hedge instruments

28,814

39,003

Provision for representations and warranties

(370)

(883)

Gain on loans held for sale, net

(19)

(188)

21,631

28,380

Interest Rate Lock Commitments (IRLCs)

Loans Held For Sale At Fair Value [Line Items]

Changes in fair value of IRLCs

$ (11,757)

$ (12,994)

[1]	Includes gains of $18.2 million and $46.9 million for the three and six months ended June 30, 2013, respectively, representing the value assigned to MSRs retained on sales of loans.
[2]	Includes a gain of $6.2 million recorded during the three months ended June 30, 2013 to adjust Loans - Restricted for Securitization Investors to fair value.

NOTE 6 LOANS HELD FOR SALE, AT FAIR VALUE (Detail) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2013 USD ($)	Jun. 30, 2013 USD ($)
Business Acquisition [Line Items]
MSRs retained on sales of loans	$ 18.2	$ 46.9
Loans - Restricted for Securitization Investors to fair value	6.2
Liberty Home Equity Solutions Inc
Business Acquisition [Line Items]
Reverse mortgage loan cash acquired	$ 60.0	$ 60.0

NOTE 7 ADVANCES (Detail) - (Table 1) - USD ($) $ in Thousands	Jun. 30, 2013	Dec. 31, 2012
Advances	$ 445,471	$ 184,463
Servicing
Servicing:
Principal and interest	109,012	83,617
Taxes and insurance	215,981	51,447
Foreclosures, bankruptcy and other	108,115	41,296
Total	433,108	176,360
Lending
Lending	353
Corporate Items and Other
Corporate Items and Other	12,010	8,103
Total
Advances	$ 445,471	$ 184,463

NOTE 8 MATCH FUNDED ADVANCES (Detail) - (Table 1) - Residential mortgage loan - USD ($) $ in Thousands	Jun. 30, 2013	Dec. 31, 2012
Match Funded Advances [Line Items]
Principal and interest	$ 1,931,073	$ 1,577,808
Taxes and insurance	765,241	1,148,486
Foreclosures, bankruptcy, real estate and other	264,010	322,950
Match funded advances	$ 2,960,324	$ 3,049,244

NOTE 9 MORTGAGE SERVICING (Detail) - (Table 1) - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Servicing Asset at Amortized Value, Balance [Roll Forward]

Balance at December 31

$ 678,937

$ 293,152

Additions recognized in connection with business and asset acquisitions

^[1],[2]

1,078,819

175,852

Additions recognized on the sale of residential mortgage loans

46,892

Servicing transfers, adjustments and other

1,970

(88)

Amortization

^[3]

(118,580)

(34,348)

Balance at June 30

1,688,038

434,568

Estimated fair value at June 30

$ 2,269,985

$ 470,974

[1]	MSRs purchased during 2013 also include $680.0 million of MSRs acquired in the Ally MSR Transaction. The acquired MSRs relate to mortgage loans with a UPB of approximately $87.0 billion owned by Freddie Mac and Fannie Mae. We also acquired servicing advance receivables of $73.5 million. We assumed the origination representation and warranty obligations of approximately $136.4 million in connection with a majority of the acquired MSRs. We had been subservicing these MSRs on behalf of Ally under a subservicing contract assumed by us in connection with the ResCap Acquisition.
[2]	MSRs purchased during 2013 include $393.9 million acquired in the ResCap Acquisition. See Note 4 - Business Acquisitions for additional information.
[3]	Amortization of mortgage servicing rights is reported net of the amortization of servicing liabilities and includes the amount of charges we recognized to increase servicing liability obligations.

Amortized carrying amount (balance) as of the balance sheet date of an asset representing net future revenues from contractually specified servicing fees, late charges, and other ancillary revenues, in excess of future costs related to servicing arrangements.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 50
-Section 25
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=7524895&loc=d3e120260-111741

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 50
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6469459&loc=d3e122492-111745

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 860
-SubTopic 50
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6469459&loc=d3e122501-111745

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 50
-Section 50
-Paragraph 4
-Subparagraph (a)(1)
-URI http://asc.fasb.org/extlink&oid=7882072&loc=d3e122739-111746

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 140
-Paragraph 13A, 13B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS140-4/FIN46(R)-8
-Paragraph B10
-Subparagraph a(1)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 140
-Paragraph 17
-Subparagraph g(1)(a)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Fair value of the servicing asset that has been amortized as of the balance sheet date.

NOTE 9 MORTGAGE SERVICING (Detail) - (Table 2) $ in Thousands	6 Months Ended
	Jun. 30, 2013 USD ($)
Servicing Asset at Fair Value, Amount [Roll Forward]
Balance at December 31, 2012	$ 85,213
Changes in fair value:
Due to changes in market valuation assumptions	20,680
Realization of cash flows and other changes	(8,730)
Balance at June 30, 2013	$ 97,163

Fair value as of the balance sheet date of an asset representing net future revenues from contractually specified servicing fees, late charges, and other ancillary revenues, in excess of future costs related to servicing arrangements.

NOTE 9 MORTGAGE SERVICING (Detail) - (Table 3) - MSRs acquired $ in Thousands	Jun. 30, 2013 USD ($)
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Weighted average prepayment speeds for 10%	$ (3,850)
Discount rate (Option-adjusted spread) for 10%	(4,143)
Weighted average prepayment speeds for 20%	(7,459)
Discount rate (Option-adjusted spread) for 20%	$ (7,962)

NOTE 9 MORTGAGE SERVICING (Detail) - (Table 4) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Mortgage Servicing [Abstract]
Loan servicing and subservicing fees	$ 363,739	$ 149,384	$ 631,767	$ 261,973
Home Affordable Modification Program (HAMP) fees	46,792	21,390	86,939	34,074
Late charges	29,589	17,676	55,485	36,521
Loan collection fees	7,755	3,830	14,137	7,169
Custodial accounts (float earnings)	2,110	663	3,790	1,450
Other	32,647	7,392	58,007	14,237
Servicing and subservicing fees, Total	$ 482,632	$ 200,335	$ 850,125	$ 355,424

All amounts that, per contract, are due to the servicer in exchange for servicing the financial asset and would no longer be received by a servicer if the beneficial owners of the serviced assets (or their trustees or agents) were to exercise their actual or potential authority under the contract to shift the servicing to another servicer. Depending on the servicing contract, those fees may include some or all of the difference between the interest rate collected on the asset being serviced and the rate to be paid to the beneficial owners of the asset.

NOTE 9 MORTGAGE SERVICING (Detail) - (Table 5) - USD ($)
$ in Thousands

Jun. 30, 2013

Dec. 31, 2012

^[1]

$ 344,173,439

$ 175,762,161

Subservicing

92,533,986

28,304,586

436,707,425

204,066,747

Residential Mortgage

^[1]

344,173,439

175,762,161

Subservicing

92,081,944

27,903,555

436,255,383

203,665,716

Commercial

^[1]

Subservicing

452,042

401,031

Carrying value of servicing assets sold

$ 452,042

$ 401,031

[1]	Includes UPB of $99.8 billion and $79.4 billion at June 30, 2013 and December 31, 2012, respectively, for which the Rights to MSRs have been sold to HLSS.

NOTE 9 MORTGAGE SERVICING (Detail) - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Dec. 31, 2012

$ 360,600

Unpaid principal balance of small balance commercial loans serviced

1,900,000

$ 2,100,000

Fair value disclosure, off-balance sheet risks, amount, asset

7,600,000

1,300,000

Additions recognized in connection with business and asset acquisitions

^[1],[2]

1,078,819

$ 175,852

Master servicing rights

Additions recognized in connection with business and asset acquisitions

680,000

Origination representation and warranty obligations

87,000,000

Servicing advances

73,500

136,400

Rescap Acquisition

Additions recognized in connection with business and asset acquisitions

393,900

HLSS

Unpaid principal balance of loans associated with MSRs sold

$ 99,800,000

$ 79,400,000

[1]

[2]

MSRs purchased during 2013 include $393.9 million acquired in the ResCap Acquisition. See Note 4 - Business Acquisitions for additional information.

NOTE 10 RECEIVABLES (Detail) - (Table 1) - USD ($)
$ in Thousands

Jun. 30, 2013

Dec. 31, 2012

$ 225,011

$ 167,459

Receivable

^[1]

157,869

84,870

Income taxes receivable

43,851

55,292

Due from related parties

^[2]

21,828

12,361

17,622

18,577

Receivables, Total

241,170

171,100

Allowance for Losses

^[1]

(14,202)

(1,647)

Income taxes receivable

Due from related parties

^[2]

(1,957)

(1,994)

Receivables, Total

(16,159)

(3,641)

Net

^[1]

143,667

83,223

Income taxes receivable

43,851

55,292

Due from related parties

^[2]

21,828

12,361

15,665

16,583

Receivables, Total

$ 225,011

$ 167,459

[1]	The receivable balances arise from our Servicing business and include reimbursable expenditures due from investors and amounts to be recovered from the custodial accounts of the trustees.
[2]	See Note 22 - Related Party Transactions for additional information regarding transactions with Altisource and HLSS.

For an unclassified balance sheet, amount of receivables due from an entity that is affiliated with the reporting entity by means of direct or indirect ownership.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-03.3)
-URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39599-107864

Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 235
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-Paragraph 1
-Subparagraph (SX 210.4-08.(k)(1))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
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-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph k
-Subparagraph 1
-Article 4

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 46R
-Paragraph 16, 17
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 3
-Article 7

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 2
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

NOTE 11 GOODWILL (Detail) - (Table 1)
$ in Thousands

6 Months Ended

Jun. 30, 2013

USD ($)

Derecognition of goodwill in connection with the sale of a business

$ 381,560

(201,059)

^[1],[2]

Goodwill excluding liberty and step acquisition, amount

210,038

^[2]

390,539

Liberty Acquisition

^[2]

Step acquisition - Correspondent One

101

^[2]

Balance at June 30, 2013

390,640

Derecognition of goodwill in connection with the sale of a business

(128,750)

^[1],[2]

Goodwill excluding liberty and step acquisition, amount

210,038

^[2]

81,288

Derecognition of goodwill in connection with the sale of a business

311,320

(72,309)

^[1],[2]

Goodwill excluding liberty and step acquisition, amount

^[2]

239,011

Litton Acquisition

Derecognition of goodwill in connection with the sale of a business

57,430

^[1],[2]

Goodwill excluding liberty and step acquisition, amount

^[2]

57,430

HomEq Acquisition

Derecognition of goodwill in connection with the sale of a business

12,810

^[1],[2]

Goodwill excluding liberty and step acquisition, amount

^[2]

$ 12,810

[1]	On March 29, 2013, we sold the diversified fee-based business acquired in the Homeward Acquisition to Altisource and derecognized the assigned goodwill. On April 12, 2013, we sold the diversified fee-based business acquired in the ResCap Acquisition to Altisource and derecognized the assigned goodwill.
[2]	See Note 4 - Business Acquisitions for additional information regarding this transaction.

NOTE 11 GOODWILL (Detail) - USD ($)
$ in Thousands

Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

$ 390,640

$ 381,560

Amount of recognized goodwill

^[1]

$ 210,038

ResCap Acquisition | Servicing

81,300

Amount of recognized goodwill

311,320

^[1]

$ 311,320

Homeward Acquisition | Servicing

Homeward Acquisition | Lending

118,600

Homeward Acquisition | Servicing and Lending

120,400

Amount of recognized goodwill

$ 4,700

[1]	Initial fair value estimate

Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=14024403&loc=d3e13816-109267

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 350
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-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6388280&loc=d3e13770-109266

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 45
-Subparagraph e
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 43
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 72
-Subparagraph d
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-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 45
-Subparagraph e
-Clause 1
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-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 68
-Subparagraph l
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-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 34
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Loans - restricted for securitization investors, at fair value

NOTE 12 DEBT SERVICE ACCOUNTS (Detail) - USD ($) $ in Thousands	Jun. 30, 2013	Dec. 31, 2012
Debt Service Accounts [Abstract]
Debt service accounts	$ 84,248	$ 88,748

NOTE 13 OTHER ASSETS (Detail) - (Table 1) - USD ($)
$ in Thousands

Jun. 30, 2013

Dec. 31, 2012

Other Assets [Abstract]

^[1]

$ 76,649

Loans held for sale, at lower of cost or fair value

^[2]

33,987

$ 82,866

Prepaid lender fees and debt issuance costs, net

^[3]

32,912

14,389

Prepaid income taxes

23,112

Derivatives, at fair value

^[4]

18,857

10,795

Interest earning collateral deposits

^[5]

12,886

25,187

Real estate, net

8,028

6,205

^[6]

5,668

31,710

Acquisition deposits

^[7]

57,000

Prepaid expenses and other

19,125

22,314

Other assets

$ 231,224

$ 273,578

[1]	Loans sold into Ginnie Mae guaranteed securitizations that we include in our Consolidated Financial Statements because the transfers of reverse mortgage loans to the trusts did not qualify for sales accounting treatment.
[2]	The carrying values at June 30, 2013 and December 31, 2012 are net of valuation allowances of $19.4 million and $14.7 million, respectively. The balances include non-performing subprime single-family residential loans that we do not intend to hold to maturity. The balance at June 30, 2013 includes $14.0 million of loans that we were required to repurchase from Ginnie Mae guaranteed securitizations following the ResCap Acquisition in connection with loan modifications and loan resolutions. The balance at December 31, 2012 includes non-performing mortgage loans with a carrying value of $65.4 million that we acquired in December 2012 and sold to Altisource Residential, LP in February 2013 for an insignificant gain.
[3]	These balances relate to match funded liabilities and other secured borrowings.
[4]	See Note 18 - Derivative Financial Instruments and Hedging Activities for additional information.
[5]	The balance at December 31, 2012 includes an investment of $13.4 million that represented our 49% equity interest in Correspondent One. As disclosed in Note 4 - Business Acquisitions, we increased our ownership to 100% on March 31, 2013. Effective on that date, we began including the accounts of Correspondent One in our consolidated financial statements and have eliminated our current investment in consolidation.
[6]	These balances include $1.1 million and $25.8 million of cash collateral held by the counterparties to certain of our derivative agreements at June 30, 2013 and December 31, 2012, respectively.
[7]	The balance at December 31, 2012 represents an earnest money cash deposit we made in connection with the ResCap Acquisition. This deposit was subsequently applied towards the purchase price upon closing of the transaction on February 15, 2013. See Note 3 - Business Acquisitions for additional information.

NOTE 13 OTHER ASSETS (Detail) - USD ($) $ in Millions	Jun. 30, 2013	Dec. 31, 2012
Ginnie Mae
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans, repurchase amount	$ 14.0
Loans Receivable \| Non Performing Mortgage Loans Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Amount of valuation allowance	$ 19.4	$ 14.7
Carrying value of non-performing mortgage loans		$ 65.4

Amount of allowance to cover probable credit losses on loans and leases. Includes carryover of or adjustments to the allowance for loan losses in connection with business combinations. Excludes allowance for loans and leases covered under loss sharing agreements.

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03.7(d))
-URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (b)(1)(ii)
-URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher OTS
-Name Federal Regulation (FR)
-Number Title 12
-Section 563c.102
-Paragraph 8
-Subparagraph a(ii)
-Chapter V
-Subsection I
-LegacyDoc This is a non-GAAP reference that was included in the 2009 taxonomy. It will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 8, 9
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 7
-Subparagraph d
-Article 9

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 114
-Paragraph 20
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 6
-Section L
-Subsection 1

Accounts, Notes, Loans and Financing Receivable [Line Items]

NOTE 13 OTHER ASSETS (Detail 1) - USD ($)
$ in Thousands

Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

Investments in and advance to affiliates, subsidiaries, associates, and joint ventures (in dollars)

^[1]

$ 12,886

$ 25,187

Derivative, collateral, right to reclaim cash

$ 1,100

25,800

Correspondent One | Altisource

Accounts, Notes, Loans and Financing Receivable [Line Items]

Investments in and advance to affiliates, subsidiaries, associates, and joint ventures (in dollars)

$ 13,400

Equity method investment, ownership percentage by parent

100.00%

49.00%

[1]

The balance at December 31, 2012 includes an investment of $13.4 million that represented our 49% equity interest in Correspondent One. As disclosed in Note 4 - Business Acquisitions, we increased our ownership to 100% on March 31, 2013. Effective on that date, we began including the accounts of Correspondent One in our consolidated financial statements and have eliminated our current investment in consolidation.

NOTE 14 MATCH FUNDED LIABILITIES (Detail) - (Table 1) - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2013

Dec. 31, 2012

^[1]

$ 983,168

2011-Servicer Advance Revolving Trust 1

$ 2,391,832

$ 2,532,745

^[2]

2.23%

^[2],[3]

May 31, 2043

^[2],[3]

May 2013

^[1],[2]

2011-Servicer Advance Revolving Trust 1

^[2]

325,000

^[2]

3.37 - 5.92%

^[2],[3]

May 31, 2043

^[2],[3]

May 2013

^[1],[2]

2012-Servicing Advance Revolving Trust 2

^[2]

525,000

^[2]

3.27 - 6.90%

^[2],[3]

Sep. 30, 2043

^[2],[3]

Sept. 2013

^[1],[2]

2012-Servicing Advance Revolving Trust 3

^[2]

250,000

^[2]

2.98%

^[2],[3]

Mar. 31, 2043

^[2],[3]

Mar. 2013

^[1],[2]

2012-Servicing Advance Revolving Trust 3

^[2]

248,999

^[2]

3.72 - 7.04%

^[2],[3]

Mar. 31, 2044

^[2],[3]

Mar. 2014

^[1],[2]

^[2]

299,278

Total fixed rate

^[1]

Advance Receivable Backed Notes

1,648,277

^[4]

1-month LIBOR (1ML) + 285 bps

^{[2],[3],[4],[5]}

Apr. 30, 2015

^{[3],[4],[5],[6]}

Apr. 2014

^{[1],[4],[5],[6]}

$ 168,640

Advance Receivable Backed Notes Series 2012-ADV1

^[4]

$ 131,360

205,016

Commercial paper (CP) rate + 225 or 335 bps

^[3]

Dec. 31, 2043

^[3]

Dec. 2013

^[1]

$ 276,618

Advance Receivable Backed Notes Series 2012-ADV1

$ 173,382

232,712

1ML + 250 bps

^[3]

Jun. 30, 2016

^[3]

June 2014

^[1]

$ 25,000

Advance Receivable Backed Note

$ 200,000

94,095

1ML + 300 bps

^[3]

Dec. 31, 2015

^[3]

Dec. 2014

^[1]

$ 10,827

2011-Servicing Advance Revolving Trust 1

$ 39,173

49,138

^[2]

1ML + 300 bps

^[2],[3]

May 31, 2043

^[2],[3]

May 2013

^[1],[2]

2012-Servicing Advance Revolving Trust 2

^[2]

204,633

^[2]

1ML + 315 bps

^[2],[3]

Sep. 30, 2043

^[2],[3]

Sept. 2013

^[1],[2]

2012-Servicing Advance Revolving Trust 3

^[2]

22,003

^[2]

1ML + 300 bps - 675 bps

^[2],[3]

Mar. 31, 2044

^[2],[3]

Mar. 2014

^[1],[2]

2012-Homeward Agency Advance Funding Trust 2012-1

^[2]

40,626

1ML + 300 bps

^[3]

Sep. 30, 2013

^[3]

Sept. 2013

^[1]

$ 3,581

2012-Homeward DSF Advance Revolving Trust 2012-1

$ 21,419

16,094

^[2]

1ML + 450 bps

^[2],[3]

Feb. 28, 2013

^[2],[3]

Feb. 2013

^[1],[2]

Homeward Residential Bridge Loan Trust - 2013 Series-Bridge-VF1 and VF2

^[2]

20,151

^{[2],[3],[4],[5]}

1ML + 150 bps

^[2],[3],[5]

Aug. 31, 2043

^[2],[3],[5]

Aug. 2013

^[1],[2],[5]

$ 133,162

Ocwen Servicer Advance Receivables Trust - Series 2013-VF1 Class A, B, C and D Notes

^[2],[5]

$ 766,838

^{[3],[4],[5],[6]}

1ML + 150 - 525 bps

^[3],[5],[6]

Feb. 29, 2044

^[3],[5],[6]

Feb. 2014

^[1],[5],[6]

$ 351,254

Ocwen Servicer Advance Receivables Trust II - Series 2013-VF1 Class A, B, C and D Notes

^[5],[6]

$ 848,746

^{[1],[4],[5],[6]}

1ML + 287.5 bps

^[3],[5],[6]

Feb. 29, 2044

^[3],[5],[6]

Feb. 2014

^[1],[5],[6]

$ 14,086

^[5],[6]

210,914

Total variable rate

^[1]

983,168

$ 2,391,832

$ 884,468

[1]	Borrowing capacity is available to us provided that we have additional eligible collateral to pledge. Collateral may only be pledged to one facility. At June 30, 2013, none of the available borrowing capacity could be used because we had borrowed the maximum amount against the pledged collateral.
[2]	Facility was repaid in February 2013 from the proceeds of a new $1.4 billion bridge facility (Homeward Residential Bridge Loan Trust - 2013) which has an amortization date of August 14, 2013. On May 24, 2013, the total maximum borrowing capacity for this facility was reduced to $900,000.
[3]	The amortization date of our facilities is the date on which the revolving period ends under each advance facility note and repayment of the outstanding balance must begin if the note is not renewed or extended. The maturity date is the date on which all outstanding balances must be repaid. In two advance facilities, there are multiple notes outstanding. For each note, after the amortization date, all collections that represent the repayment of advances pledged to the facility must be applied to reduce the balance of the note outstanding, and any new advances are ineligible to be financed.
[4]	We repaid this facility in full in July 2013.
[5]	On July 1, 2013, we repaid these facilities in full from the proceeds received on the sale of servicing advances to HLSS. See Note 25 - Subsequent Events for additional information regarding this transaction.
[6]	We entered into these facilities in connection with the ResCap Acquisition (See Note 4 - Business Acquisitions).

NOTE 14 MATCH FUNDED LIABILITIES (Detail) - USD ($)	May 24, 2013	Feb. 28, 2013
Homeward Residential Bridge Loan Trust - 2013 Series-Bridge-VF1 and VF2
Maximum borrowing capacity	$ 900,000	$ 1,400,000,000

NOTE 15 OTHER BORROWINGS (Detail) -(Table 1) - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2013

Dec. 31, 2012

$ 2,178,087

$ 1,104,911

724,342

Discount

^[1],[2]

(6,009)

(8,232)

2,172,078

1,096,679

1,750,354

714,003

Servicing | SSTL | Sept. 2016

$ 92,579

^[1]

1ML + 550 bps; LIBOR floor of 150 bps

^[1]

Sept. 2016

Servicing | SSTL | Feb. 2018

^[1]

314,229

^[2]

Feb. 2018

Servicing | Senior unsecured term loan

^[2]

$ 1,296,750

^[3]

1-Month Euro-dollar rate + 675 bps with a Eurodollar floor of 150 bps

^[3]

Mar. 2017

Servicing | Financing liability - MSRs pledged | HLSS

^[3]

75,000

^[4]

MSRs

Servicing | Financing liability - MSRs pledged | Unrelated third party

^[4]

$ 428,339

303,705

^[5]

MSRs

Servicing | Promissory note

^[5]

2,603

^[6]

MSRs

^[6]

1ML + 350 bps

^[6]

May 2017

Servicing | Repurchase agreement | Apr 2014

^[6]

$ 17,844

18,466

Loans held for sale (LHFS)

1 ML + 250 - 345 bps

Apr. 2014

$ 7,421

92,579

Lending

423,688

388,075

Lending | Master repurchase agreement | Mar. 2014

$ 631,763

^[7]

LHFS

^[7]

1ML + 175 bps

^[7]

Mar. 31, 2014

^[7]

$ 68,125

88,122

Lending | Master repurchase agreement | Aug 2013

^[7]

$ 231,875

^[8]

LHFS

^[8]

1 ML + 200 bps

^[8]

Aug. 31, 2013

^[8]

$ 106,608

133,995

Lending | Master repurchase agreement | Aug 2013

^[8]

$ 143,392

LHFS

1ML + 275 bps

Aug. 31, 2013

$ 60,310

Lending | Master repurchase agreement | Jul. 2013

$ 39,690

LHFS

1ML + 200 bps

Jul. 31, 2013

$ 83,194

107,020

Lending | Participation agreement | May 2014

$ 216,806

^[9]

LHFS

^[9]

N/A

^[9]

May 31, 2014

Lending | Secured borrowings owed to securitization investors

^[9]

$ 21,742

58,938

^[10]

Loans held for investment

^[10]

1 ML + 220 bps

Lending | Financing liability - MSRs pledged

^[10]

$ 73,641

^[5]

MSRs

Corporate Items and Other

^[5]

$ 10,068

2,178,087

1,104,911

Corporate Items and Other | Securities sold under an agreement to repurchase

$ 724,342

^[11]

Ocwen Real Estate Asset Liquidating Trust 2007-1 Notes

^[11]

Class A-2 notes: 1ML + 200 bps; Class A-3 notes: 1ML + 300 bps

^[11]

Monthly

^[11]

$ 4,045

$ 2,833

[1]	In February 2013, we repaid this loan in full and wrote off the remaining discount as part of the loss on extinguishment.
[2]	On February 15, 2013, we entered into a new SSTL facility agreement and borrowed $1.3 billion that was used principally to fund the ResCap Acquisition and repay the balance of the previous SSTL. The loan was issued with an original issue discount of $6.5 million that we are amortizing over the term of the loan. We are required to repay the principal amount of the borrowings in consecutive quarterly installments of $3.3 million. In addition, we are required to use the net cash proceeds (as defined) from any asset sale (as defined) to repay loan principal. Generally, this provision applies to non-operating sales of assets, such as the HLSS Transactions, and generally, net cash proceeds represent the proceeds from the sale of the assets, net of the repayment of any debt secured by a lien on the assets sold. The borrowings are secured by a first priority security interest in substantially all of the assets of Ocwen. Borrowings bear interest, at the election of Ocwen, at a rate per annum equal to either (a) the base rate [the greatest of (i) the prime rate in effect on such day, (ii) the federal funds rate in effect on such day plus 0.50% and (iii) the one-month Eurodollar rate (1-Month LIBOR)], plus a margin of 2.75% and a base rate floor of 2.25% or (b) the one month Eurodollar rate, plus a margin of 3.75% with a 1-Month LIBOR floor of 1.25%. To date we have elected option (b) to determine the interest rate.
[3]	We repaid this loan in full in February 2013.
[4]	As part of the HLSS Transactions, we transfer certain Rights to MSRs to HLSS. Because we have not yet transferred legal title to the MSRs, we account for these transfers as financings with the proceeds from the sale of the Rights to MSRs recorded as a financing liability. The financing liability is amortized using the interest method with the servicing income that is remitted to HLSS representing payments of principal and interest. The liability has no contractual maturity but is amortized over the estimated life of the transferred Rights to MSRs. The balance of the liability is reduced each month based on the change in the estimated fair value of the transferred rights to MSRs. See Note 3 - Transfers of Financial Assets for additional information.
[5]	We sold MSRs for certain loans to an unrelated third party in December 2012 and June 2013; however, we are required to repurchase the MSRs for any loans that cannot be refinanced by the purchaser under the federal government's Home Affordable Refinance Program (HARP). As a result, the sale is being accounted for as a financing. The financing liability is being amortized using the interest method with the servicing income that is remitted to the purchaser representing payments of principal and interest. In June 2013, we derecognized a portion of the liability from the December 2012 sale related to loans that had been refinanced under HARP and recognized a $3.2 million gain on the retirement of the financing liability.
[6]	Prepayments of the balance on this note may be required if the borrowing base, as defined, falls below the amount of the note outstanding.
[7]	On March 19, 2013, the maturity date of the Master Repurchase Agreement was extended to March 18, 2014 and the maximum borrowing capacity was increased to $120.0 million to $300.0 million.
[8]	On June 12, 2013, the maturity date of the Master Repurchase Agreement was extended to August 2, 2013.
[9]	Under this participation agreement, the lender provides financing on an uncommitted basis for up to $100.0 million at the discretion of the lender. The participation agreement allows the lender to acquire a 100% beneficial interest in the underlying mortgage loans. However, the transaction does not qualify for sales accounting treatment and is, therefore, accounted for as a financing. The lender earns the stated interest rate of the underlying mortgage loans while the loans are financed under the participation agreement. In April 2013, we extended the participation agreement maturity date to May 31, 2014.
[10]	This represents amounts due to the holders of beneficial interests in Ginnie Mae guaranteed securitization that we include in our consolidated financial statements because the transfers of reverse mortgage loans to the trusts did not qualify for sales accounting treatment. There are no maturity dates; the borrowings mature as the related loans are repaid.
[11]	This agreement has no stated credit limit and lending is determined for each transaction based on the acceptability of the securities presented as collateral.

NOTE 15 OTHER BORROWINGS (Detail) - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2013

Mar. 19, 2013

Mar. 18, 2013

Dec. 31, 2012

Debt instrument, unamortized discount

^[1],[2]

$ (6,009)

$ (8,232)

Gain on retirement of financing liability

3,200

Uncommitted Line Of Credit

Debt instrument, borrowings

$ 100,000

Percentage of beneficial interest acquirable on underlying mortgage loans

100.00%

Master repurchase agreement

Debt instrument, borrowings

$ 300,000

$ 120,000

SSTL | Option a (i)

<div>the prime rate in effect on such day</div>

SSTL | Option (a) ii

Borrowings, basis spread on variable rate

<div>the federal funds rate in effect on such day</div>

0.50%

SSTL | Option a (iii)

Borrowings, basis spread on variable rate

the one-month Eurodollar rate (1-Month LIBOR)

2.75%

Borrowings, index floor rate

2.25%

SSTL | Option b

Borrowings, basis spread on variable rate

the one month Eurodollar rate with a 1-Month LIBOR floor

3.75%

Borrowings, index floor rate

1.25%

SSTL | Rescap Acquisition

Debt instrument, borrowings

$ 1,300,000

Debt instrument, unamortized discount

$ 6,500

Debt instrument, frequency of periodic payment

Quarterly

Principal amount of borrowings in consecutive quarterly installments

$ 3,300

[1]

In February 2013, we repaid this loan in full and wrote off the remaining discount as part of the loss on extinguishment.

[2]

NOTE 16 OTHER LIABILITIES (Detail) - (Table 1) - USD ($)
$ in Thousands

Jun. 30, 2013

Dec. 31, 2012

Other Liabilities [Abstract]

Amount due seller for purchase price adjustments - ResCap Acquisition

^[1]

$ 220,041

$ 38,140

Accrued expenses

103,742

70,831

69,696

^[2]

66,431

13,602

Payable to servicing and subservicing investors

25,448

33,225

^[3]

23,545

9,973

Liability for selected tax items

22,338

22,702

Due to related parties

^[4]

19,132

45,034

Servicing liabilities

^[5]

11,704

9,830

Accrued interest payable

8,874

5,410

Derivatives, at fair value

^[6]

7,064

18,658

58,613

23,861

Total other liabilities

$ 636,628

$ 291,266

[1]	The balance includes origination representation and warranty obligations and compensatory fees for foreclosures that may ultimately exceed investor timelines. These obligations were primarily assumed in connection with the Ally MSR Transaction, the ResCap Acquisition and the Homeward Acquisition. See Note 4 - Business Acquisitions and Note 9 - Mortgage Servicing for additional information.
[2]	The balance represents a liability established in connection with our ongoing discussions with the Multi-State Mortgage Committee of the Conferences of State Bank Supervisors (MMC), Consumer Finance Protection Bureau (CFPB) and state Attorneys General in connection with certain foreclosure related matters. We recognized $52.8 million of expense in Professional services in the second quarter of 2013 in establishing the liability. We recognized the remaining $13.6 million of the liability as an adjustment to the initial purchase price allocation related to the Homeward Acquisition. We applied this measurement period adjustment retrospectively to our Consolidated Balance Sheet at December 31, 2012 with an offsetting increase in goodwill. See Note 24 - Commitments and Contingencies for additional information.
[3]	The balance represents amounts due to investors in connection with loans we service under servicing and subservicing agreements.
[4]	See Note 22 - Related Party Transactions for additional information.
[5]	During the six months ended June 30, 2013 and 2012, amortization of servicing liabilities exceeded the amount of charges we recognized to increase our servicing liability obligations by $0.3 million and $0.9 million, respectively. Amortization of mortgage servicing rights is reported net of this amount in the unaudited Consolidated Statement of Operations.
[6]	See Note 18 - Derivative Financial Instruments and Hedging Activities for additional information.

NOTE 16 OTHER LIABILITIES (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
NOTE 16 OTHER LIABILITIES (Detail) - USD ($) $ in Millions	Jun. 30, 2013	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Other Liabilities [Abstract]
Amount of increase in servicing liability obligations		$ 0.3	$ 0.9
Professional and Contract Services Expense	$ 52.8
Recognized liability adjustment to initial purchase price allocation related acquicistion				$ 13.6

NOTE 17 MEZZANINE EQUITY (Detail) - (Table 1) - USD ($) $ in Thousands		6 Months Ended
	Dec. 31, 2012	Jun. 30, 2013
Preferred Stock [Roll Forward]
Carrying value, beginning balance	$ 162,000	$ 153,372
Discount for beneficial conversion feature	(8,688)
Accretion of BCF discount (Deemed dividend)	60	2,172
Carrying value, ending balance	$ 153,372	$ 155,544

NOTE 17 MEZZANINE EQUITY (Detail) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended
	Dec. 31, 2012	Dec. 27, 2012
Stockholders Equity [Line Items]
Preferred stock, Convertible beneficial conversion feature, Intrinsic value	$ (8,688)
Series A Perpetual Convertible Preferred Stock
Stockholders Equity [Line Items]
Number of preferred stock shares issued		162,000
Stated value per share of preferred stock shares		$ 0.01
Dividend rate percentage of preferred stock shares		3.75%
Liquidation preference (in dollars per share)		$ 1,000

The per share liquidation preference (or restrictions) of nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) that has a preference in involuntary liquidation considerably in excess of the par or stated value of the shares. The liquidation preference is the difference between the preference in liquidation and the par or stated values of the share.

NOTE 18 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Detail) - (Table 1)
$ in Thousands

6 Months Ended

Jun. 30, 2013

USD ($)

Fair value of net derivative assets (liabilities) at 30-Jun-13

$ 10,795

^[1]

Fair value of net derivative assets (liabilities) at 31-Dec-12

18,857

^[1]

Interest Rate Lock Commitments (IRLCs)

1,112,519

2,803,364

(228,319)

(2,826,503)

(207,842)

Fair value of net derivative assets (liabilities) at 30-Jun-13

653,219

(7,064)

Fair value of net derivative assets (liabilities) at 31-Dec-12

$ 5,781

Jul. 2013 - Oct 2013

U.S. Treasury futures

$ 109,000

85,000

(194,000)

Fair value of net derivative assets (liabilities) at 30-Jun-13

Fair value of net derivative assets (liabilities) at 31-Dec-12

(1,258)

Forward MBS trades

1,638,979

6,443,459

(33,372)

(3,094,020)

(4,100,120)

Fair value of net derivative assets (liabilities) at 30-Jun-13

854,926

18,681

Fair value of net derivative assets (liabilities) at 31-Dec-12

$ (1,719)

Jul. 2013 - Sep. 2013

Interest rate caps

$ 1,025,000

(24,000)

(126,000)

Fair value of net derivative assets (liabilities) at 30-Jun-13

875,000

176

Fair value of net derivative assets (liabilities) at 31-Dec-12

$ 168

Aug. 2015 - May 2016

Interest rate swaps

$ 1,495,955

1,280,000

(295,604)

(2,480,351)

Fair value of net derivative assets (liabilities) at 30-Jun-13

Fair value of net derivative assets (liabilities) at 31-Dec-12

$ (10,836)

[1]	See Note 18 - Derivative Financial Instruments and Hedging Activities for additional information.

NOTE 18 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Detail) - (Table 2) - Not designated as qualifying hedges
$ in Thousands

6 Months Ended

Jun. 30, 2013

USD ($)

$ 11,793

Debt | Interest rate caps | Hedge the effects of a change in 1ML on borrowing under an advance funding facility

$ 27,308

Expiration Date

2015-2016

Notional Amount

$ 875,000

176

^[1]

Consolidated Statement of Operations Caption

$ 9

Other, net

Mortgage Loans Held For Sale and Interest Rate Lock Commitments | Forward MBS trades

Expiration Date

2013

Notional Amount

$ 854,926

18,681

^[1]

Consolidated Statement of Operations Caption

$ 40,293

Loss on loans held for sale, net and Other, net

Mortgage Loans Held For Sale and Interest Rate Lock Commitments | Interest Rate Lock Commitments (IRLCs)

Expiration Date

2013

Notional Amount

$ 653,219

(7,064)

^[1]

Consolidated Statement of Operations Caption

$ (12,994)

Loss on loans held for sale, net

[1]	Derivatives are reported at fair value in Receivables, Other assets or in Other liabilities on our unaudited Consolidated Balance Sheets.

NOTE 18 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Details) (Table 3) - Cash flow hedge
$ in Thousands

6 Months Ended

Jun. 30, 2013

USD ($)

Changes In Losses On Cash Flow Hedges Included In Aocl [Roll Forward]

Accumulated losses on cash flow hedges at December 31, 2012

$ 9,878

Additional net losses on cash flow hedges

12,363

Ineffectiveness of cash flow hedges reclassified to earnings

(657)

Losses on terminated hedging relationships amortized to earnings

(1,654)

^[1]

Accumulated losses on cash flow hedges at June 30, 2013

$ 19,930

[1]	Where the hedging relationship has been terminated but the hedged transaction is still forecast to occur, losses on the hedging relationship that are included in AOCL are amortized to earnings in the periods in which earnings are affected by the hedged transaction.

Accumulated change, net of tax, in accumulated gains and losses from derivative instruments designated and qualifying as the effective portion of cash flow hedges. Includes an entity's share of an equity investee's Increase or Decrease in deferred hedging gains or losses.

NOTE 18 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Detail) - (Table 4) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Jun. 30, 2013

Jun. 30, 2012

Derivative, gain (loss) on derivative, net

$ 18,161

$ 1,007

$ 22,286

$ (2,255)

Servicing and origination expense

Gains (losses) on economic hedges

1,017

Loss on loans held for resale, net

Gains (losses) on economic hedges

17,056

26,009

Other, net

Gains (losses) on economic hedges

^[1]

2,742

1,843

(2,429)

5,248

Ineffectiveness of cash flow hedges

(64)

(657)

(1)

Write-off of losses in AOCL for a discontinued hedge relationship

(1,654)

(772)

(1,654)

(1,544)

Write-off of losses in AOCL for hedge of a financing facility assumed by HLSS (See 0 -Transfers of Financial Assets)

$ (5,958)

[1]	Includes a gain of $3.4 million recognized during the three months ended March 31, 2012 from the termination of foreign exchange forward contracts.

NOTE 18 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Mar. 31, 2012	Jun. 30, 2013	Dec. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative, description of variable rate basis		one-month LIBOR
Derivative forward exchange gain	$ 3.4
Unrealized gain (loss) on interest rate cash flow hedges, pretax, accumulated other comprehensive income (loss)		$ 19.9	$ 9.9
Unrealized gain (loss) on interest rate cash flow hedges included in accumulated other comprehensive income (loss), tax expense		$ 7.6	$ 3.6

NOTE 19 INTEREST EXPENSE (Detail) - (Table 1) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Jun. 30, 2013

Jun. 30, 2012

$ 99,868

$ 58,319

$ 193,284

$ 105,243

Match Funded Liabilities

25,078

35,920

55,429

67,035

Other Borrowings

Debt Securities Convertible Notes

^[1]

72,180

21,060

132,703

35,283

Debt Securities Capital Trust Securities

153

710

1,420

Financing liabilities , interest expense

$ 2,610

$ 629

$ 5,152

$ 1,352

[1]

Includes interest expense of $49.9 million and $10.6 million for the three months ended June 30, 2013 and 2012, respectively, and $94.4 million and $13.5 million for the six months ended June 30, 2013 and 2012, respectively, related to financing liabilities recorded in connection with the HLSS Transactions. See Note 3 - Transfers of Financial Assets and Note 15 - Other Borrowings for additional information.

NOTE 19 INTEREST EXPENSE (Detail) - (Parentheticals) (Table 1)	6 Months Ended
	Jun. 30, 2012
Interest Expense [Abstract]
Conversion of convertible notes	3.25%
Redemption of capital securities	10.875%

NOTE 19 INTEREST EXPENSE (Detail) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Jun. 30, 2013

Jun. 30, 2012

Other Borrowings [Line Items]

$ 99,868

$ 58,319

$ 193,284

$ 105,243

Other Borrowings

Other Borrowings [Line Items]

Financing liabilities , interest expense

^[1]

72,180

21,060

132,703

35,283

Other Borrowings | HLSS

Other Borrowings [Line Items]

Financing liabilities , interest expense

$ 49,900

$ 10,600

$ 94,400

$ 13,500

[1]

Includes interest expense of $49.9 million and $10.6 million for the three months ended June 30, 2013 and 2012, respectively, and $94.4 million and $13.5 million for the six months ended June 30, 2013 and 2012, respectively, related to financing liabilities recorded in connection with the HLSS Transactions. See Note 3 - Transfers of Financial Assets and Note 15 - Other Borrowings for additional information.

NOTE 20 BASIC AND DILUTED EARNINGS PER SHARE (EPS) (Detail) - (Table 1) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2012

Jun. 30, 2013

Jun. 30, 2012

Basic EPS:

Net income attributable to Ocwen common stockholders (in dollars)

$ 74,116

$ 44,833

$ 116,692

$ 64,182

Weighted average shares of common stock

135,690,264

134,856,101

135,664,242

132,752,848

Basic EPS

$ 0.55

$ 0.33

$ 0.86

$ 0.48

Diluted EPS:

Net income attributable to Ocwen common stockholders (in dollars)

$ 74,116

$ 44,833

$ 116,692

$ 64,182

Preferred stock dividends

^[1]

2,605

Interest expense on Convertible Notes, net of income tax (in dollars)

^[2]

Adjusted net income attributable to Ocwen (in dollars)

$ 76,721

$ 44,833

$ 116,692

$ 64,280

Weighted average shares of common stock

135,690,264

134,856,101

135,664,242

132,752,848

Effect of dilutive elements:

Preferred Shares

^[1]

5,095,942

Convertible Notes

^[2]

2,028,868

Stock options

3,924,536

3,297,798

3,913,463

3,317,685

Common stock awards

10,305

1,474

14,253

1,421

Dilutive weighted average shares of common stock

144,721,047

138,155,373

139,591,958

138,100,822

Diluted EPS (in dollars per share)

$ 0.53

$ 0.32

$ 0.84

$ 0.47

Stock options excluded from the computation of diluted EPS:

Anti-dilutive

^[3]

166,250

158,750

Market-based

^[4]

1,530,000

558,750

1,530,000

558,750

[1]	The effect of our Preferred Shares on diluted EPS is computed using the if-converted method. In the three months ended June 30, 2013, the effect of the Preferred Shares was dilutive, and we added back preferred stock dividends, including the deemed dividend related to the BCF of the Preferred Shares, to net income. We assumed no conversion to common shares for the six months ended June 30, 2013 because the effect was anti-dilutive.
[2]	Prior to the redemption of the 3.25% Convertible Notes in March 2012, we also computed their effect on diluted EPS using the if-converted method. Interest expense and related amortization costs applicable to the Convertible Notes, net of income tax, were added back to net income. We assumed the conversion of the Convertible Notes into shares of common stock for purposes of computing diluted EPS unless the effect was anti-dilutive. We issued 4,635,159 shares of common stock upon conversion of $56.4 million of the Convertible Notes.
[3]	These stock options were anti-dilutive because their exercise price was greater than the average market price of our stock.
[4]	Shares that are issuable upon the achievement of certain performance criteria related to OCN's stock price and an annualized rate of return to investors.

NOTE 20 BASIC AND DILUTED EARNINGS PER SHARE (EPS) (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Debt Instrument [Line Items]
Percentage of interest rate on convertible notes		3.25%
Debt conversion, converted instrument, shares issued (in shares)	4,635,159
Convertible Notes Payable
Debt Instrument [Line Items]
Percentage of interest rate on convertible notes	3.25%
Conversion amount, convertible notes	$ 56.4

NOTE 21 BUSINESS SEGMENT REPORTING (Detail) - (Table 1) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Revenue	$ 529,965	$ 211,381	$ 934,808	$ 375,913
Operating expenses	374,796	85,904	618,430	172,017
Other income (expense), net:
Interest expense	(99,868)	(58,319)	(193,284)	(105,243)
Other income (expense), net	19,903	968	13,366	(2,720)
Total Assets
Balance as of	7,082,280		7,082,280		$ 5,685,484
Servicing
Revenue	495,033	210,407	869,300	374,586
Operating expenses	282,651	80,936	494,262	163,801
Income (loss) from operations	212,382	129,471	375,038	210,785
Other income (expense), net:
Interest income	3,485		4,795
Interest expense	(96,073)	(58,139)	(186,533)	(104,665)
Other	17,923	1,070	(8,162)	759
Other income (expense), net	(74,665)	(57,069)	(189,900)	(103,906)
Income (loss) before income taxes	137,717	72,402	185,138	106,879
Total Assets
Balance as of	5,791,710	4,978,986	5,791,710	4,978,986	4,474,457
Lending
Revenue	33,735		47,643
Operating expenses	28,941		40,041
Income (loss) from operations	4,794		7,602
Other income (expense), net:
Interest income	4,587		9,366
Interest expense	(4,001)		(6,829)
Other	4,741		5,008
Other income (expense), net	5,327		7,545
Income (loss) before income taxes	10,121		15,147
Total Assets
Balance as of	599,870		599,870		551,733
Corporate Items and Other
Revenue	1,241	1,204	17,954	1,862
Operating expenses	63,248	5,099	84,216	8,495
Income (loss) from operations	(62,007)	(3,895)	(66,262)	(6,633)
Other income (expense), net:
Interest income	1,042	2,038	2,062	4,350
Interest expense	206	(180)	78	(578)
Other	431	(201)	2,682	(3,735)
Other income (expense), net	1,679	1,657	4,822	37
Income (loss) before income taxes	(60,328)	(2,238)	(61,440)	(6,596)
Total Assets
Balance as of	690,700	395,876	690,700	395,876	659,294
Corporate Eliminations
Revenue	(44)	(230)	(89)	(535)
Operating expenses	(44)	(131)	(89)	(279)
Income (loss) from operations		(99)		(256)
Other income (expense), net:
Interest income
Interest expense
Other		99		256
Other income (expense), net		99		256
Income (loss) before income taxes
Total Assets
Balance as of
Business Segments Consolidated
Revenue	529,965	211,381	934,808	375,913
Operating expenses	374,796	85,904	618,430	172,017
Income (loss) from operations	155,169	125,477	316,378	203,896
Other income (expense), net:
Interest income	9,114	2,038	16,223	4,350
Interest expense	(99,868)	(58,319)	(193,284)	(105,243)
Other	23,095	968	(472)	(2,720)
Other income (expense), net	(67,659)	(55,313)	(177,533)	(103,613)
Income (loss) before income taxes	87,510	70,164	138,845	100,283
Total Assets
Balance as of	$ 7,082,280	$ 5,374,862	$ 7,082,280	$ 5,374,862	$ 5,685,484

NOTE 21 BUSINESS SEGMENT REPORTING (Detail) - (Table 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Amortization of MSRs	$ 70,369	$ 19,097	$ 118,252	$ 33,411
Amortization of debt discount			752	1,480
Amortization of debt issuance costs - SSTL			2,086	1,843
Servicing
Depreciation expense	3,680	419	6,378	674
Amortization of MSRs	70,369	19,097	118,252	33,411
Amortization of debt discount	328	735	752	1,480
Amortization of debt issuance costs - SSTL	1,192	923	2,086	1,843
Lending
Depreciation expense	(160)		74
Amortization of MSRs
Amortization of debt discount
Amortization of debt issuance costs - SSTL
Corporate Items and Other
Depreciation expense	2,422	686	4,003	1,263
Amortization of MSRs
Amortization of debt discount
Amortization of debt issuance costs - SSTL
Business Segments Consolidated
Depreciation expense	5,942	1,105	10,455	1,937
Amortization of MSRs	70,369	19,097	118,252	33,411
Amortization of debt discount	328	735	752	1,480
Amortization of debt issuance costs - SSTL	$ 1,192	$ 923	$ 2,086	$ 1,843

NOTE 22 RELATED PARTY TRANSACTIONS (Detail) - (Table 1) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Altisource
Revenues and Expenses:
Revenues	$ 5,971	$ 4,461	$ 10,205	$ 8,073
Expenses	11,806	7,182	23,497	13,711
HLSS
Revenues and Expenses:
Revenues	40	30	152	40
Expenses	$ 738	$ 741	$ 1,228	$ 993

Amount of revenue, fees and commissions earned from transactions between (a) a parent company and its subsidiaries; (b) subsidiaries of a common parent; (c) an entity and trusts for the benefit of employees, for example, but not limited to, pension and profit-sharing trusts that are managed by or under the trusteeship of the entity's management; (d) an entity and its principal, owners, management, or members of their immediate families; and (e) affiliates.