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United States securities and exchange commission logo
July 11, 2022
Glen A. Messina
President and Chief Executive Officer
Ocwen Financial Corporation
1661 Worthington Road
Suite 100
West Palm Beach, Florida 33409
Re: Ocwen Financial
Corporation
Form 10-K for the
Fiscal Year Ended December 31, 2021
Filed February 25,
2022
Form 10-Q for the
Quarterly Period Ended March 31, 2022
Filed May 5, 2022
Form 8-K Dated May
5, 2022
Filed May 5, 2022
File No. 001-13219
Dear Mr. Messina:
We have limited our review of your filings to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the fiscal year ended December 31, 2021
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Segment Results of Operations
Originations, page 69
1. In the fourth paragraph
of this section you indicate that you expanded your network of
correspondent sellers
through the assignment by Texas Capital Bank (TCB) to you of all
of its correspondent
loan purchase agreements. At the bottom of page 4, you disclose that
you acquired TCB's
network of approximately 220 correspondent lenders. Please tell us
Glen A. Messina
Ocwen Financial Corporation
July 11, 2022
Page 2
how you accounted for this transaction and reference for us the
authoritative literature you
relied upon to support your accounting. In your response tell us any
consideration you
conveyed and what you received in return. In addition, tell us your
consideration for
disclosing the accounting for this transaction or tell us where you
made that disclosure in
your filing.
Notes to Consolidated Financial Statements
Note 9: Receivables, page F-40
2. Please tell us, and revise future filings as necessary, to clarify why
you carry an allowance
for losses on government-insured loan claims. In this regard, it is
unclear whether these
claims are in excess of guaranteed limits or whether they relate to
servicing errors as
identified in your advances policy on page F-12. In your response,
also tell us why there
is no apparent change in your allowance upon the adoption of ASC 326.
Note 11: Investment in Equity Method Investee, page F-41
3. Please address the following regarding your contribution of MAV to MAV
Canopy in
exchange for a 15% interest in MAV Canopy plus cash consideration under
your
Transaction Agreement with Oaktree Capital Management L.P. (Oaktree),
referencing
where appropriate the authoritative literature your relied upon to
support your position:
Tell us whether you recorded a gain or loss on the deconsolidation
of MAV under
ASC 810-10-40-5 and the amount of any such gain or loss. If no gain
or loss was
recorded, tell us why not.
From disclosure on pages F-48 and F-52, you disclose that you issued
your second
tranche of OFC Senior Secured Notes and common stock plus warrants
to Oaktree,
respectively, on the same date and in conjunction with the closing
of the Transaction
Agreement. It appears that you issued these debt and equity
financial instruments for
aggregate cash consideration below their aggregate fair value. Tell
us your
consideration for accounting for the issuance of these debt and
equity financial
instruments along with the Transaction Agreement as a single
transaction and
including the excess of fair value of financial instruments issued
over proceeds
received in the computation of gain or loss on disposal of MAV under
ASC 810-10-
40-5.
o In your response tell us how you determined the fair value of
each financial
instrument issued and specifically indicate whether and how the
original issue
discount on the OFC Senior Secured Notes is representative of
fair value.
o Also in your response tell us whether and how the original
issue discount on the
first tranche of OFC Senior Secured Notes is representative of
fair value. If it is
not representative of fair value, tell us how you considered
that fact in assessing
FirstName LastNameGlen A. Messina
the accounting for the Transaction Agreement.
Comapany
Provide us your analysisCorporation
NameOcwen Financial supporting why separate financial
statements of MAV
Canopy
July 11, 2022 Page 2were not provided under Rule 3-09 of Regulation S-X.
FirstName LastName
Glen A. Messina
FirstName LastNameGlen A. Messina
Ocwen Financial Corporation
Comapany
July NameOcwen Financial Corporation
11, 2022
July 11,
Page 3 2022 Page 3
FirstName LastName
Form 10-Q for the quarterly period ended March 31, 2022
Notes to Unaudited Consolidated Financial Statements
Note 22: Subsequent Events, page 50
4. You disclose the repurchase of $262 million of delinquent and aged
loans under the
Ginnie Mae early buyout program on May 2, 2022 and the concurrent sale
of these loans
to third-parties. You disclose an estimated loss of approximately $9
million, net of
associated MSR fair value adjustment and advances, that will be
recorded in the second
quarter of 2022. During your first quarter 2022 earnings conference
call on May 5, 2022,
you indicate that you were looking into selling some severely aged
Ginnie Mae loans on
which you took a $13 million charge in the first quarter as an MSR
fair value adjustment.
Please confirm if the anticipated $9 million loss in the second
quarter of 2022 relates to
the loans on which a $13 million MSR fair value adjustment was
recorded in the first
quarter of 2022, or advise otherwise.
Form 8-K dated May 5, 2022
Exhibit 99.1: Press Release dated May 5, 2022 announcing financial results for
the first quarter
ended March 31,2022
Note Regarding Non-GAAP Financial Measures
Income Statement Notables, page 5
5. Please tell us how you considered Question 100.04 of the Non-GAAP
C&DIs and Rule
100(b) of Regulation G as the removal of changes in MSR, MSR Liability
and Reverse
fair value in the determination of your non-GAAP adjusted pre-tax
income (loss) appears
to be a tailored accounting measurement.
6. Additionally, please tell us how these adjustments are meaningful to
financial statement
users. Your disclosure that the adjustments are consistent with your
intent of providing
investors with a supplemental means of evaluating your net
income/(loss) does not
indicate why the the adjustments or a supplemental means is meaningful
or useful as
contemplated in Item 10(e)(1)(i)(C) of Regulation S-K.
Glen A. Messina
FirstName LastNameGlen A. Messina
Ocwen Financial Corporation
Comapany
July NameOcwen Financial Corporation
11, 2022
July 11,
Page 4 2022 Page 4
FirstName LastName
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Mark Brunhofer at 202-551-3638 or David Irving at
202-551-3321 with
any questions.
Sincerely,
Division of
Corporation Finance
Office of Finance