ONITY GROUP INC
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
ONIT$31.00-3.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001628280-24-020055
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001628280-24-034197
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 310 previous paragraphs and 315 current paragraphs.
187 unchanged; 96 reworded; 31 added; 25 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 34 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
•Originations gain on sale of $16.7 million
Current report
Financial condition at June 30, 2024
Current report
•MSR investment of $2.3 billion, and $304.5 billion total servicing and subservicing UPB
Current report
•Cash position of $203.1 million
Current report
•A $7.3 million increase in revenue, largely driven by higher volumes in Originations.
Current report
•A $21.1 million higher loss on MSR valuation adjustments, net primarily due to unfavorable interest rate hedge performance and cost.
Current report
•A $5.0 million increase in Other expense, net, primarily due to an increase in financing and transaction costs, and flat Operating expenses.
Current report
Total segment revenue for the three months ended June 30, 2024 increased $7.3 million, or 3% as compared to the three months ended March 31, 2024 due to a $9.2 million increase in Originations revenue offset in part by a $1.9 million decrease in Servicing revenue:
Current report
•The decrease in Servicing revenue is mostly driven by a $5.8 million decrease in Gain on reverse loans held for investment and HMBS-related borrowings, net due to more favorable market conditions (tighter yield spread) in the first quarter of 2024, and a $2.0 million reduction in Gain on loans held for sale, net mostly driven by reverse mortgage loan buyouts. These decreases were partially offset by a $6.0 million increase in servicing and subservicing fees largely driven by float earnings with seasonally higher average float balances.
Current report
•The decline in Servicing revenue is mostly due to a $54.7 million decrease in servicing and subservicing fees largely due to the effects of our derecognition of MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023, as discussed above ($65.0 million fees collected and remitted to Rithm recognized in the six months ended June 30, 2023). In addition, Gain on loans held for sale, net declined $12.2 million primarily due to the revaluation gain of reverse mortgage buyouts opportunistically acquired at a discount and securitized, recognized in the six months ended June 30, 2023.
Current report
The $32.7 million loss on MSR valuation adjustments, net for the three months ended June 30, 2024 is comprised of $38.0 million runoff, $56.0 million fair value gain attributed to rate and assumption changes and $50.6 million loss on MSR hedging derivatives. As we maintained a high hedge coverage ratio in both quarters, the $21.1 million higher loss in MSR valuation adjustments, net in the three months ended June 30, 2024 as compared to the three months ended March 31, 2024 is largely driven by unfavorable hedge performance and costs in the second quarter of 2024 and certain favorable assumption updates reported in the first quarter of 2024 to reflect actual market trades.
Current report
•The $133.2 million increase in fair value gains is mostly driven by changes in market interest rates, as the 10-year Treasury rate increased 48 basis points during the six months ended June 30, 2024 as compared to a decrease of 7 basis points during the same period of 2023. In addition, we recognized certain favorable assumption updates in the six months ended June 30, 2024 compared to unfavorable updates during the same period of 2023 to reflect market participant perspectives and actual trade levels.
Current report
•The $53.2 million higher loss from derivatives is mainly due to the increase in market interest rates noted above, hedge performance and hedge costs. During the first half of 2023, we gradually increased our hedge coverage ratio from a minimum of 30% to 60% while we maintained a near 100% hedge coverage ratio during the first half of 2024.
Current report
Servicing and origination expense for the three months ended June 30, 2024 decreased $1.1 million as compared to the three months ended March 31, 2024, mostly driven by reverse servicing expenses recognized in the first quarter of 2024.
Current report
As compared to the six months ended June 30, 2023, Servicing and origination expenses for the six months ended June 30, 2024 decreased $4.3 million mostly due to a $7.2 million decrease in Servicing, partially offset by $2.6 million incremental expenses in Originations. The decline in Servicing expense is primarily attributed to a release of indemnification obligations driven by recoveries and favorable resolutions, lower claim losses driven by lower severity, and lower expenses on our reverse subservicing portfolio due to a decline in volume. The increase in Originations expense is mostly driven by higher production volume and a provision release for representation and warranty indemnification recorded in the first half of 2023 due to favorable resolution of demands.
Current report
Professional services expense for the three months ended June 30, 2024 decreased $1.3 million as compared to the three months ended March 31, 2024 primarily due to reimbursements received in the second quarter of 2024 from mortgage loan investors related to prior year legal expenses and payments following resolution of legacy litigation matters, partially offset by higher litigation-related expenses and higher other professional fees incurred in connection with MSR sales in the second quarter of 2024.
Current report
As compared to the six months ended June 30, 2023, Professional services expense for the six months ended June 30, 2024 increased $26.4 million primarily due to the reversal of our accrual related to the CFPB matter resolved in our favor in the second quarter of 2023, partially offset by the reimbursements received in the second quarter of 2024 related to legacy litigation matters discussed above.
Current report
Servicing and subservicing fees (excluding Ancillary income) for the three months ended June 30, 2024 remained flat (increased $0.7 million) as compared to the three months ended March 31, 2024, with a $1.5 million, or 1% increase in servicing fees partially offset by a $0.9 million, or 3% decline in subservicing fees. As the average servicing UPB remained flat, the increase in servicing fees is mostly driven by additional borrower collections on liquidated loans. The decline in subservicing fees is primarily driven by the runoff of the reverse subservicing portfolio, partially offset by the increase in forward subservicing.
Current report
Ancillary income for the three months ended June 30, 2024 increased by $5.3 million, or 11% as compared to the three months ended March 31, 2024 primarily due to a $4.7 million increase in float earnings mostly attributable to seasonally higher average float balances.
Current report
We recognized a $0.2 million loss on loans held for sale, net for the three months ended June 30, 2024, as compared to a $1.8 million gain recognized in the three months ended March 31, 2024, mostly due to reverse mortgage buyouts.
Current report
For the six months ended June 30, 2024 and 2023, we recognized gains of $1.7 million and $13.8 million, respectively, mostly due to gains on reverse mortgage buyouts associated with our acquisitions and securitization strategy. The gain reported in the six months ended June 30, 2023 is mostly attributable to the revaluation of reverse mortgage buyouts opportunistically acquired at a discount and securitized in the second quarter.
Current report
As compared to the six months ended June 30, 2023, Gain on reverse loans held for investment and HMBS-related borrowings, net for the six months ended June 30, 2024 increased $1.4 million mainly due to favorable assumption updates, including yield spread tightening in the current period, with offsetting fair value losses due to rates. The 10-year Treasury rate increased 48 basis points during the six months ended June 30, 2024 as compared to a decrease of 7 basis points during the six months ended June 30, 2023. Net interest income remained mostly flat (+3%), consistent with the portfolio growth.
Current report
As compared to the six months ended June 30, 2023, Servicing expense for the six months ended June 30, 2024 declined $7.2 million, primarily attributed to a release of indemnification obligations driven by recoveries and favorable resolutions in the six months ended June 30, 2024, lower claim losses driven by lower severity, and lower expenses on our reverse subservicing portfolio due to a decline in volume.
Current report
Other, net for the three months ended June 30, 2024 increased $2.3 million, as compared to the three months ended March 31, 2024, mostly due to expenses recognized in connection with MSR sales.
Current report
Gain on loans held for sale, net for the three months ended June 30, 2024 increased by $7.6 million, or 83%, as compared to the three months ended March 31, 2024, driven by a 53% increase in volume and a 19% increase in margin. The $6.3 million increase in our Correspondent channel is due to an increase in volume driven by our Owned MSR replenishment strategy after our recent MSR bulk sales and seasonality to a lesser extent. The Correspondent margin increase is driven by our continued focus on pricing management and execution including an increased mix of higher margin products. The $1.3 million increase in our Consumer Direct channel is primarily driven by a 41% increase in loan production volume, attributed to our increased recapture operational capability and seasonality to a lesser extent.
Current report
Operating expenses for the three months ended June 30, 2024 increased $2.9 million, or 16%, as compared to the three months ended March 31, 2024, primarily driven by higher loan production volume (up approximately 50%). Compensation and benefits increased $1.1 million, or 10%, driven by commissions with higher loan production volume and a 4% increase in average headcount quarter-over-quarter. Other operating expenses (excluding Compensation and benefits expense) increased $1.9 million mostly driven by the increase in volume.
Current report
As compared to the six months ended June 30, 2023, interest income for the six months ended June 30, 2024 increased $1.7 million primarily due to an increase in the average note rates (the 30 year fixed rate mortgage increased 42 basis points), partially offset by lower average loans held for sale balances. Similarly, interest expense for the six months ended June 30, 2024 increased $1.2 million primarily due to higher cost of borrowing, driven by a 51 basis point increase in average short-term market interest rates, partially offset by a decrease in average mortgage loan financing debt balances.
Current report
Operating expenses before corporate overhead allocations increased by $4.4 million, or 15%, for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024, primarily driven by Professional services and Compensation and benefits. Professional services increased $2.8 million mainly driven by litigation related expenses in the three months ended June 30, 2024. Compensation and benefits increased $1.0 million, or 6%, primarily due to new share-based awards and lower forfeitures.
Current report
Operating expenses before corporate overhead allocations increased by $33.8 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily driven by Professional services, partially offset by Compensation and benefits. The $35.7 million increase in Professional services is primarily driven by the reversal of our accrual related to the CFPB matter resolved in our favor in the second quarter of 2023, certain recoveries of prior years’ legal expenses from private mortgage insurers in the second quarter of 2023, and other litigation related expenses recognized in the three months ended June 30, 2024 discussed above. Compensation and benefits expense decreased $1.8 million, or 5%, mostly due to a $1.4 million decrease in the fair value of cash-settled share-based awards in the six months ended June 30, 2024 following the more pronounced decrease of our common stock price, as compared to the six months ended June 30, 2023.
Current report
Our investing activities provided $128.4 million of cash. Cash inflows primarily include $96.0 million proceeds from sales of MSRs, $78.8 million net cash received in connection with our HECM reverse mortgages and $12.3 million proceeds from sales of real estate as part of our asset recovery strategy, $9.3 million received from the sale of advances in connection with sales of MSRs, and $6.5 million of capital distributions received, net of contributions, from our equity method investee MAV
Current report
Cash flows for the six months ended June 30, 2023
Removed paragraphs (25)
Previous report
(2)Represents the UPB of loans for which the MSR is purchased.
Previous report
•Originations gain on sale of $9.1 million
Previous report
Financial condition at the end of the first quarter of 2024
Previous report
•MSR investment of $2.4 billion, up $102.4 million, and a $0.8 billion decrease in the average servicing and subservicing UPB as compared with the previous quarter
Previous report
•Cash position of $185.1 million
Previous report
•A $38.2 million decrease in revenue, with a $41.2 million decrease in Servicing revenue partially offset by an increase in Originations revenue. The Servicing revenue decrease is primarily due to the effects of our derecognition of MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023. The decrease in servicing revenue was fully offset by a decrease in Pledged MSR liability expense resulting in no impact to Ocwen’s profitability - further discussed below.
Previous report
•An $86.4 million lower loss on MSR valuation adjustments, net primarily due to favorable rate and assumption updates, net of hedging, mostly driven by an increase in market interest rates in the current quarter vs. a decline in the prior quarter (the 10-year Treasury rate increased by 32 basis points in the first quarter of 2024 and declined by 71 basis points in the fourth quarter of 2023).
Previous report
•A $30.0 million decrease in Other expense, net, primarily due to a $31.6 million decrease in Pledged MSR liability expense largely attributed to the effects of our derecognition of MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023, as discussed above, and a $1.4 million gain on extinguishment of $47.4 million PMC Senior Secured Notes repurchased in the first quarter of 2024.
Previous report
Total segment revenue for the three months ended March 31, 2024 decreased $38.2 million, or 14% as compared to the three months ended December 31, 2023, mostly due to the accounting presentation change of Rithm servicing fees upon MSR derecognition discussed above:
Previous report
•The $41.2 million decrease in Servicing revenue is mostly driven by a $35.1 million decrease in servicing and subservicing fees largely due to the effects of our derecognition of MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023 ($29.6 million fees collected and remitted to Rithm recognized in the three months ended December 31, 2023), and a seasonal reduction of float earnings. Gain on reverse loans held for investment and HMBS-related borrowings, net decreased $11.1 million attributed to higher market interest rates, partially offset by tighter yield spread. These declines were partially offset by $4.5 million additional gains on loans held for sale mostly driven by reverse mortgage loan buyouts.
Previous report
•The decline in Servicing revenue is mostly due to a $27.6 million decrease in servicing and subservicing fees largely due to the effects of our derecognition of MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023, as discussed above ($32.6 million fees collected and remitted to Rithm recognized in the three months ended March 31, 2023), and a $5.5 million decline in Gain on reverse loans held for investment and HMBS-related borrowings, net due to a decline in unrealized fair value gains mostly attributable to an increase in market interest rates (vs. a decrease during the three months ended March 31, 2023) and a less significant yield spread tightening in the current period as compared to the corresponding quarter of the prior year. These declines were partially offset by a gain recognized in the first quarter of 2024 on reverse mortgage loan buyouts.
Previous report
Servicing and origination expense for the three months ended March 31, 2024 increased $6.5 million as compared to the three months ended December 31, 2023, mostly due to favorable adjustments recognized in the three months ended December 31, 2023. The $4.6 million increase in Servicing expense is mostly driven by mortgage insurance premium refunds and favorable adjustments to captive reinsurance losses recognized during the three months ended December 31, 2023. The $1.9 million increase in Originations expense is largely driven by a provision release for representation and warranty indemnification recorded in the three months ended December 31, 2023 due to favorable resolution of demands.
Previous report
As compared to the three months ended March 31, 2023, Servicing and origination expenses for the three months ended March 31, 2024 was mostly flat, with a lower provision for indemnification in Servicing in the three months ended March 31, 2024, largely offset by the effect of a release of provision for representation and warranty indemnification recorded in the first quarter of 2023 in Originations.
Previous report
Other, net for the three months ended March 31, 2024 decreased $5.2 million, as compared to the three months ended December 31, 2023, largely due to the recognition in the fourth quarter of 2023 of $5.7 million of compensation from a subservicer related to a negotiated subservicing termination on a company-owned MSR. The payment received offset an unfavorable impact to the fair value of the associated MSRs (reported as a loss in MSR valuation adjustments, net). As compared to the three months ended March 31, 2023, Other, net for the three months ended March 31, 2024 decreased $1.8 million driven by an increase in early payoff protection expense, among other factors.
Previous report
MSR Valuation Adjustments
Previous report
The $38.2 million decrease in servicing fees as compared to the three months ended December 31, 2023 is driven by the effects of our derecognition of MSRs previously sold to Rithm, as discussed above with $41.9 million servicing fee collected on behalf of Rithm recognized in the fourth quarter of 2023, partially offset by $2.1 million increased collection of previously deferred non-Agency servicing fee and $2.0 million higher servicing fee on higher relative average balance of Ginnie Mae servicing UPB (yielding a higher servicing fee percentage). The increase in subservicing fees is primarily driven by the effects of our derecognition of MSRs previously sold to Rithm, as discussed above.
Previous report
Ancillary income for the three months ended March 31, 2024 declined by $8.2 million, or 15% as compared to the three months ended December 31, 2023 primarily because of a $5.6 million decline in float earnings due to seasonally lower average float balances, a $1.4 million decrease in late charges and a $0.6 million decline in reverse subservicing ancillary fees due to a lower volume of claims filed on behalf of clients consistent with a decrease in the portfolio.
Previous report
We recognized a $1.8 million gain on loans held for sale, net for the three months ended March 31, 2024, as compared to a $2.7 million loss for the three months ended December 31, 2023. The gain reported in the three months ended March 31, 2024 is mostly attributable to gains on reverse mortgage buyouts. The losses reported in the three months ended December 31, 2023 and the three months ended March 31, 2023 are mostly driven by losses on repurchased loans in connection with Ginnie Mae loan modifications and EBO activities, including HECM loans, due to the unfavorable impact of higher market interest rates on redelivery gains and loan fair value.
Previous report
As compared to the three months ended March 31, 2023, Gain on reverse loans held for investment and HMBS-related borrowings, net for the three months ended March 31, 2024 declined $5.5 million. The $5.6 million decline in unrealized fair value gains is mostly attributable to an increase in market interest rates during the three months ended March 31, 2024 as compared to a decrease during the three months ended March 31, 2023 and a less significant yield spread tightening in the current period as compared to the same period of the prior year. The 10-year Treasury rate increased 32 basis points during the three months ended March 31, 2024 as compared to a decrease of 40 basis points during the three months ended March 31, 2023 (from December 31, 2022 to March 31, 2023).
Previous report
Compensation and benefits expense for the three months ended March 31, 2024 decreased $0.7 million or 3% as compared to the three months ended December 31, 2023 primarily as a result of lower headcount and a decrease in incentive compensation. The fair value of cash-settled share-based awards decreased in the quarter following the decline of our common stock price, as compared to an increase in the prior quarter.
Previous report
As compared to the three months ended March 31, 2023, Servicing expense for the three months ended March 31, 2024 declined $1.9 million or 13%, primarily due to higher servicing-related indemnification provision expense recognized in the three months ended March 31, 2023, largely driven by the PLS subservicing portfolio.
Previous report
Other, net for the three months ended March 31, 2024 decreased $6.0 million, as compared to the three months ended December 31, 2023, mostly due to the recognition of $5.7 million compensation from a subservicer relating to a negotiated subservicing termination on a company-owned MSR in the three months ended December 31, 2023. The payment received offsets an unfavorable impact to the fair value of the associated MSRs (reported as a loss in MSR valuation adjustments, net). As compared to the three months ended March 31, 2023, Other, net for the three months ended March 31, 2024 was mostly flat.
Previous report
Gain on loans held for sale, net for the three months ended March 31, 2024 increased by $2.1 million as compared to the three months ended December 31, 2023, with a $1.5 million increase in our Consumer Direct channel and a $0.5 million increase in our Correspondent channel. The increase of Consumer Direct gain is due to both an increase of volume and an increase of margin. The increase in margin is the result of our disciplined pricing management and execution. The margin increase in Correspondent is also due to the significant increase in commitments outstanding but not yet funded at March 31, 2024 (see Operating metrics above).
Previous report
Operating expenses for the three months ended March 31, 2024 were flat as compared to the three months ended December 31, 2023, with some offsets. Originations expense increased $1.9 million mostly driven by a provision release for representation and warranty indemnification recorded in the fourth quarter of 2023 due to favorable resolution of demands. Most other operating expenses decreased as a result of lower volume and our continued cost saving initiatives, driven by Compensation and benefits with a 7% decrease in average headcount quarter-over-quarter.
Previous report
Operating expenses are primarily driven by Compensation and benefits which declined $2.8 million, or 13%, for the three months ended March 31, 2024 as compared to the three months ended December 31, 2023. The decrease in Compensation and benefits is mostly due to lower incentive compensation as the fair value of cash-settled share-based awards decreased in the quarter following the decline of our common stock price, as compared to an increase in the prior quarter, and a decrease in equity classified share-based awards.
Reworded paragraphs (96)
Previous wording
(Dollars in millions, except per share amounts and unless otherwise indicated)
Current wording
(Dollars in millions, except per share amounts and unless otherwise indicated. Amounts may not add in certain tables due to rounding.)
Previous wording
We are a leading non-bank mortgage servicer and originator providing solutions through our primary brands, PHH Mortgage and Liberty Reverse Mortgage. PHH is one of the largest non-bank servicers in the country based on UPB, focused on delivering a variety of servicing and lending programs. PHH is one of the largest correspondent lenders in the U.S. based on origination UPB. Liberty is one of the nation’s largest reverse mortgage lenders and servicer based on origination and securitization UPB, dedicated to education and providing loans that help customers meet their personal and financial needs. We serviced or subserviced 1.4 million loans with a total UPB of $302.3 billion on behalf of more than 3,900 investors and 116 subservicing clients as of March 31, 2024. We service all mortgage loan classes, including conventional, government-insured, non-Agency, small-balance commercial and multi-family loans. Our Originations business is part of our balanced business model to generate gains on loan sales and profitable returns, and to support the replenishment and the growth of our servicing portfolio. Through our retail, correspondent and wholesale channels, we originate and purchase conventional and government-insured forward and reverse mortgage loans that we sell or securitize on a servicing retained basis. In addition, we grow our mortgage servicing volume through MSR flow purchase agreements, Agency Cash Window and co-issue programs, bulk MSR purchase transactions, and subservicing agreements.
Current wording
On June 10, 2024, Ocwen Financial Corporation changed its name to Onity Group Inc. We are a leading non-bank mortgage servicer and originator providing solutions through our primary brands, PHH Mortgage and Liberty Reverse Mortgage. PHH is one of the largest non-bank servicers in the country based on UPB, focused on delivering a variety of servicing and lending programs. PHH is one of the largest correspondent lenders in the U.S. based on origination UPB. Liberty is one of the nation’s largest reverse mortgage lenders and servicer based on origination and securitization UPB, dedicated to education and providing loans that help customers meet their personal and financial needs. We serviced or subserviced 1.4 million loans with a total UPB of $304.5 billion on behalf of more than 4,000 investors and 120 subservicing clients as of June 30, 2024. We service all mortgage loan classes, including conventional, government-insured, non-Agency, small-balance commercial and multi-family loans. Our Originations business is part of our balanced business model to generate gains on loan sales and profitable returns, and to support the replenishment and the growth of our servicing portfolio. Through our retail, correspondent and wholesale channels, we originate and purchase conventional and government-insured forward and reverse mortgage loans that we sell or securitize on a servicing retained basis. In addition, we grow our mortgage servicing volume through MSR flow purchase agreements, Agency Cash Window and co-issue programs, bulk MSR purchase transactions, and subservicing agreements.
Previous wording
The table below summarizes the volume of Originations by channel in the first quarter of 2024, compared with the volume of the preceding quarter and the corresponding quarter of the prior year. The volume of Originations is a key driver of the profitability of our Originations segment, together with margins, and a key driver of the replenishment and growth of our Servicing segment. In the first quarter of 2024, we added $23.2 billion of new volume, mainly $17.8 billion of new subservicing and $4.6 billion of non-bulk new servicing, as further detailed in the below table.
Current wording
The table below summarizes the volume of Originations by channel in the second quarter of 2024 compared with the volume of the preceding quarter, and the six months ended June 30, 2024 compared with the corresponding period of the prior year. The volume of Originations is a key driver of the profitability of our Originations segment, together with margins, and a key driver of the replenishment and growth of our Servicing segment. In the second quarter of 2024, we added $18.8 billion of new volume, mainly $11.6 billion of new subservicing and $7.0 billion of non-bulk new servicing, as further detailed in the below table.
Previous wording
(3)Represents the UPB of reverse mortgage loans that have been securitized on a servicing retained basis. The loans are recognized on our consolidated balance sheets under GAAP without any separate recognition of MSRs.
Current wording
(2)Represents the UPB of reverse mortgage loans that have been securitized on a servicing retained basis. The loans are recognized on our consolidated balance sheets under GAAP without any separate recognition of MSRs.
Previous wording
(4)Includes interim subservicing, including the volume of UPB associated with short-term interim subservicing for certain clients as a support to their originate-to-sell business.
Current wording
(3)Includes interim subservicing, including the volume of UPB associated with short-term interim subservicing for certain clients as a support to their originate-to-sell business.
Previous wording
The following table summarizes the average volume of our Servicing segment during the first quarter of 2024, compared with the preceding quarter and the corresponding quarter of the prior year. The average servicing volume is a key driver of the profitability of our Servicing segment. The relative weight of performing and delinquent loans or servicing and subservicing also drive the gross revenue and expenses, and their timing. Our average total servicing and subservicing UPB remained flat at $291 billion during the first quarter of 2024 as compared to prior quarter, and the composition of owned MSR and subservicing remained constant, as further detailed in the below table.
Current wording
The following table summarizes the average volume of our Servicing segment during the second quarter of 2024 compared with the preceding quarter, and the six months ended June 30, 2024 compared with the corresponding period of the prior year. The average servicing volume is a key driver of the profitability of our Servicing segment. The relative weight of performing and delinquent loans or servicing and subservicing also drive the gross revenue and expenses, and their timing. Our average total servicing and subservicing UPB increased $13 billion or 5% during the second quarter of 2024 as compared to prior quarter, as subservicing UPB increased $15 billion or 30%, as further detailed in the below table.
Previous wording
As of March 31, 2024 and December 31, 2023, the total servicing and subservicing UPB amounted to $302.3 billion and $288.4 billion, respectively, a net increase of $13.9 billion or 5%.
Current wording
As of June 30, 2024 and March 31, 2024, the total servicing and subservicing UPB amounted to $304.5 billion and $302.3 billion, respectively, a net increase of $2.2 billion or 1%.
Previous wording
The following table presents key market interest rates and respective changes in the periods presented. As further discussed, the 30-year fixed rate mortgage is a key driver of the Originations volumes, the 10-year Treasury rate is a key benchmark for MSR valuation and hedging activities, and the 1-month SOFR is a key benchmark for the profitability of our Servicing segment (including float earnings and asset-backed financing cost). The average 30-year fixed rate mortgage rate declined 56 basis points quarter over quarter. The 10-year Treasury rate increased by 32 basis points quarter-over-quarter. Average 1-month SOFR remained constant in the current quarter as compared to the fourth quarter of 2023.
Current wording
The following table presents key market interest rates. As further discussed, the 30-year fixed rate mortgage is a key driver of Originations volume, the 10-year Treasury rate is a key benchmark for MSR valuation and hedging activities, and the 1-month SOFR is a key benchmark for the profitability of our Servicing segment (including float earnings and asset-backed financing cost). Quarter over quarter, the average 30-year fixed rate mortgage rate increased 24 basis points, the 10-year Treasury rate increased by 16 basis points, and the average 1-month SOFR remained constant. When comparing the six months ended June 30, 2024 to the six months ended June 30, 2023, the average 30-year fixed rate mortgage rate increased 42 basis points, the 10-year Treasury rate increased by 55 basis points, and the average 1-month SOFR increased by 51 basis points.
Previous wording
Results of operations for the first quarter of 2024
Current wording
Results of operations for the second quarter of 2024
Previous wording
•Net income of $30.1 million, or $3.91 per share basic and $3.74 per share diluted
Current wording
•Net income of $10.5 million, or $1.34 per share basic and $1.33 per share diluted
Previous wording
•Servicing and subservicing fee revenue of $204.5 million
Current wording
•Servicing and subservicing fee revenue of $210.8 million
Previous wording
•$28.3 million MSR valuation gain attributable to rate and assumption changes, net of hedging
Current wording
•$5.4 million MSR valuation gain attributable to rate and assumption changes, net of hedging
Previous wording
•Stockholders’ equity of $432.1 million, or $55.51 book value per common share
Current wording
•Stockholders’ equity of $446.2 million, or $56.88 book value per common share
Previous wording
Ocwen reported $30.1 million net income in the first quarter of 2024, an increase of $77.5 million as compared to the $47.4 million net loss in the fourth quarter of 2023, mostly driven by the following:
Current wording
Onity reported $10.5 million net income in the second quarter of 2024, a decrease of $19.6 million as compared to $30.1 million net income in the first quarter of 2024, mostly driven by the following:
Previous wording
On December 31, 2023, we derecognized from our balance sheet $421.7 million non-Agency MSRs and Pledged MSR liability associated with Rithm servicing agreements with a UPB of $33.4 billion for which MSR sale accounting criteria was met. As PHH continues to subservice the portfolio, our statement of operations in 2024 reflects subservicing fee revenue as opposed to the gross presentation of servicing fee revenue and offsetting servicing fee remittances within Pledged MSR liability expense, a component of Other income (expense), net, prior to December 31, 2023. These required presentation changes do not affect the amount of net fee retained by Ocwen in connection with the Rithm servicing agreements. For comparison purposes, the statement of operations for the three months ended December 31, 2023 reflects $29.6 million servicing fee collected on behalf of and remitted to Rithm and reported both as Revenue (Servicing and subservicing fees) and as Other income (expense), net (Pledged MSR liability expense) associated with the MSR that achieved sale accounting treatment on December 31, 2023, with no impact on Net income (loss). Similarly, the servicing fee collected on behalf of and remitted to Rithm amounted to $32.6 million for the three months ended March 31, 2023.
Current wording
On December 31, 2023, we derecognized from our balance sheet $421.7 million non-Agency MSRs and Pledged MSR liability associated with Rithm servicing agreements with a UPB of $33.4 billion for which MSR sale accounting criteria was met. As PHH continues to subservice the portfolio, our statement of operations in 2024 reflects subservicing fee revenue as opposed to the gross presentation of servicing fee revenue and offsetting servicing fee remittances within Pledged MSR liability expense, a component of Other income (expense), net, prior to December 31, 2023. These required presentation changes do not affect the amount of net fee retained by Onity in connection with the Rithm servicing agreements. For comparison purposes, the statement of operations for the six months ended June 30, 2023 reflects $65.0 million servicing fee collected on behalf of and remitted to Rithm and reported both as Revenue (Servicing and subservicing fees) and as Other income (expense), net (Pledged MSR liability expense) associated with the MSR that achieved sale accounting treatment on December 31, 2023, with no impact on Net income (loss).
Previous wording
•The $3.0 million increase in Originations revenue is mostly driven by higher margins across all of our channels. Our forward channels reported a $2.1 million increase in gains on sale mostly attributed to our Consumer Direct channel due to both an increase of volume and an increase of margin. The increase in margin is the result of our disciplined pricing management and execution. Our reverse channels reported a $1.2 million increase in gains driven by higher margins in all three channels, partially offset by lower origination volume in our correspondent and wholesale channels.
Current wording
•The increase in Originations revenue is driven by our forward channels which reported a $7.6 million increase in gains on sale mostly attributed to our Correspondent channel due to an increase in both volume and margin. The increase in volume is primarily due to our MSR replenishment and growth strategy after our recent MSR bulk sales. The increase in margin is the result of our continued focus on pricing management and execution.
Previous wording
As compared to the three months ended March 31, 2023, total segment revenue for the three months ended March 31, 2024 was $22.7 million or 9% lower, due to a $28.0 million decline in Servicing revenue offset by a $5.2 million increase in Originations revenue.
Current wording
As compared to the six months ended June 30, 2023, total segment revenue for the six months ended June 30, 2024 was $48.4 million or 9% lower, due to a $63.6 million decline in Servicing revenue offset by a $15.2 million increase in Originations revenue.
Previous wording
•The increase in Originations revenue is primarily driven by a $4.9 million increase in gain on sale of forward loans due to an increase in margin and volume for both our Correspondent and Consumer Direct channels.
Current wording
•The increase in Originations revenue is primarily driven by an $11.4 million increase in gain on sale of forward loans due to an increase in volume for both our Correspondent and Consumer Direct channels, with similar factors discussed above.
Previous wording
•MSRs are subject to runoff, a fair value decline due to the realization of expected cash flows and yield based on projected borrower behavior, including scheduled amortization of the loan UPB together with projected voluntary prepayments. As our owned MSR remained flat quarter over quarter, the unfavorable $3.3 million increase in runoff quarter-over-quarter is mostly due to lower average market rates in the first quarter 2024 as compared to the fourth quarter of 2023 resulting in shorter projected MSR life.
Current wording
•MSRs are subject to runoff, a fair value decline due to the realization of expected cash flows and yield based on projected borrower behavior, including scheduled amortization of the loan UPB together with projected voluntary prepayments. The favorable $1.8 million lower runoff quarter-over-quarter is mostly due to portfolio reduction from Agency MSR sales in the second quarter of 2024.
Previous wording
•The $82.0 million fair value gain due to rate and assumption changes is attributed to a rise of interest rates in the quarter and favorable assumption updates to reflect market participant perspectives on MSRs with actual trade pricing levels. The 10-year Treasury rate increased 32 basis points in the three months ended March 31, 2024. The change from a $148.0 million fair value loss in the three months ended December 31, 2023 to a gain in the three months ended March 31, 2024 is mostly driven by changes in market interest rates as the 10-year Treasury rate decreased 71 basis points in three months ended December 31, 2023.
Current wording
•The $56.0 million fair value gain due to rate and assumption changes is attributed to a rise of interest rates in the quarter and favorable assumption updates to reflect market participant perspectives on MSRs with actual trade pricing levels. The 10-year Treasury rate increased 16 basis points in the three months ended June 30, 2024. The change from an $82.0 million fair value gain in the three months ended March 31, 2024 to a $56.0 million fair value gain in the three months ended June 30, 2024 is mostly driven by changes in market interest rates as the 10-year Treasury rate increased 32 basis points in the three months ended March 31, 2024.
Previous wording
•MSR hedging derivative fair value gains or losses are designed to partially offset the expected fair value losses or gains, respectively, of the net MSR, MSR pledged liabilities and ESS exposure, commensurate with our target hedge coverage ratio. The $53.7 million derivative loss recognized in the three months ended March 31, 2024 is primarily driven by rate increase with the 10-year Treasury rate increase of 32 basis points. The change from $86.6 million hedging gains in the three months ended December 31, 2023 is mainly due to respective changes in interest rates. Also refer to Item 3. Quantitative and Qualitative Disclosures about Market Risk for further detail on our hedging strategy and its effectiveness.
Current wording
•MSR hedging derivative fair value gains or losses are designed to partially offset the expected fair value losses or gains, respectively, of the net MSR, MSR pledged liabilities and ESS exposure, commensurate with our target hedge coverage ratio. The $50.6 million derivative loss recognized in the three months ended June 30, 2024 is primarily driven by the rate increase discussed above. The $3.1 million lower loss from the $53.7 million derivative loss in the three months ended March 31, 2024 is mainly due to a lower increase in interest rates. Also refer to Item 3. Quantitative and Qualitative Disclosures about Market Risk for further detail on our hedging strategy and its effectiveness.
Previous wording
The $11.6 million loss on MSR valuation adjustments, net for the three months ended March 31, 2024 is comprised of $39.9 million runoff, $82.0 million fair value gain attributed to rate and assumption changes and $53.7 million loss on MSR hedging derivatives. MSR valuation adjustments, net increased by $86.4 million (lower loss) in the three months ended March 31, 2024 as compared to the three months ended December 31, 2023 largely driven by interest rates, as discussed below.
Current wording
For the six months ended June 30, 2024, the $44.3 million loss on MSR valuation adjustments, net is comprised of $77.9 million runoff, $138.0 million fair value gain attributed to rate and assumption changes and $104.3 million loss on MSR hedging derivatives. The $73.6 million lower loss in MSR valuation adjustments, net for the six months ended June 30, 2024 as compared to the same period of 2023 is largely driven by favorable changes in market interest rates and assumptions, net of hedging, as further discussed below.
Previous wording
Compensation and benefits expense for the three months ended March 31, 2024 decreased $4.2 million, or 7% as compared to the three months ended December 31, 2023, mostly due to lower incentive compensation attributed to a decrease in the fair value of cash-settled share-based awards in the quarter following the decline of our common stock price, as compared to an increase in the prior quarter, and a decrease in equity classified share-based awards expense.
Current wording
Compensation and benefits expense for the three months ended June 30, 2024 increased $1.4 million, or 3% as compared to the three months ended March 31, 2024, mostly due to a $2.2 million increase in incentive compensation expense attributed to an increase in cash-settled share-based awards expense and increase in equity classified share-based awards expense mostly due to new awards and lower forfeitures. These increases were offset in part by a $1.1 million decrease in salaries and benefits due to the reduction of headcount.
Previous wording
As compared to the three months ended March 31, 2023, Compensation and benefits expense for the three months ended March 31, 2024 decreased $4.4 million, or 8% largely due to a $2.9 million decrease in salaries and benefits and a $1.3 million decrease in severance expense. Our total average headcount declined 6%, mostly driven by a 15% reduction in our average U.S. based Servicing headcount, reflecting our ongoing goal to improve efficiencies and create an industry leading cost structure.
Current wording
As compared to the six months ended June 30, 2023, Compensation and benefits expense for the six months ended June 30, 2024 decreased $7.1 million, or 6% largely due to a decrease in salaries and benefits and a decline in incentive compensation. Our total average headcount declined 6%, mostly driven by a 12% decrease in our average U.S. based headcount, reflecting our ongoing goal to improve efficiencies and create an industry leading cost structure. The decline in incentive compensation is attributed to a decrease in the fair value of cash-settled share-based awards following the decline of our common stock price, offset by the impact of new share-based awards.
Previous wording
The other operating expenses in the table above (excluding Compensation and benefits and Servicing and originations expense) for the three months ended March 31, 2024 were mostly flat as compared to the three months ended December 31, 2023 and the three months ended March 31, 2023.
Current wording
The other operating expenses in the table above (excluding Compensation and benefits, Servicing and originations expense, and Professional services) for the three months ended June 30, 2024 were mostly flat as compared to the three months ended March 31, 2024. As compared to the six months ended June 30, 2023, other operating expenses decreased $4.9 million mostly due to declines in mailing expenses and amortization expense related to reverse servicing intangible assets and discount on servicing advances acquired in the fourth quarter of 2023.
Previous wording
Net interest expense for the three months ended March 31, 2024 remained mostly flat as compared to the three months ended December 31, 2023. As compared to the three months ended March 31, 2023, Net interest expense for the three months ended March 31, 2024 increased $1.7 million, mostly driven by the additional financing cost incurred in connection with our acquisition and private label securitization of reverse mortgage buyouts.
Current wording
Net interest expense for the three months ended June 30, 2024 remained mostly flat (increased $0.6 million) as compared to the three months ended March 31, 2024, with certain offsetting increases and decreases. As compared to the six months ended June 30, 2023, Net interest expense for the six months ended June 30, 2024 increased $4.3 million, mostly driven by the additional financing cost incurred in connection with our acquisition and private label securitization of reverse mortgage buyouts. The increase in short-term market interest rates in the first six months of 2024, as compared to the first six months of 2023 was mostly offset by the decline in our average debt balances for servicing advances due to our collection efforts and lower Corporate debt interest expense.
Previous wording
Refer to Servicing segment for discussion of Pledged MSR liability expense (primarily impacted by the accounting presentation change of the derecognized Rithm MSR on December 31, 2023) and Earnings of equity method investee (primarily impacted by the fair value changes of MAV’s MSR portfolio).
Current wording
Refer to Servicing segment for discussion of Pledged MSR liability expense (primarily impacted by the accounting presentation change of the derecognized Rithm MSR on December 31, 2023) and Earnings of equity method investee (predominantly impacted by the fair value changes of MAV’s MSR portfolio).
Previous wording
Our effective tax rate for the periods is lower than the 21% federal statutory income tax rate primarily due to the full valuation allowance recorded on our net U.S. federal and state deferred tax assets.
Current wording
Our effective tax rate is generally lower than the 21% federal statutory income tax rate primarily due to the full valuation allowance recorded on our net U.S. federal and state deferred tax assets.
Previous wording
Income tax expense for three months ended March 31, 2024 decreased by $0.1 million and $0.2 million as compared to the three months ended December 31, 2023 and the three months ended March 31, 2023, respectively. Our income tax expense is primarily driven by the jurisdictional mix of our earnings. The increase in the effective tax rate is primarily due to the increase in pre-tax earnings.
Current wording
Income tax expense for the three months ended June 30, 2024 increased by $1.3 million as compared to the three months ended March 31, 2024. As compared to the six months ended June 30, 2023, Income tax expense for the six months ended June 30, 2024 increased $1.9 million. Our income tax expense is primarily driven by the jurisdictional mix of our earnings. The increase in the effective tax rate for the three months ended June 30, 2024 as compared to the three months ended March 31, 2024 was primarily driven by the increase in year-to-date earnings as of June 30, 2024 relative to full-year projected pre-tax earnings. The increase in the effective tax rate for the six months ended June 30, 2024 as compared to the same period of 2023 is primarily due to recognizing income tax expense in the U.S. driven by the increase in pre-tax earnings.
Previous wording
Total assets increased $576.4 million, or 5%, between December 31, 2023 and March 31, 2024 due to a $351.6 million increase in our Loans held for sale portfolio as originations and purchases exceeded sales, including our acquisition of reverse mortgage buyouts, a $155.0 million fair value increase in reverse Loans held for investment mostly driven by capitalization of interest, a $102.4 million increase in our MSR portfolio due to fair value gains attributed to rates and assumptions, and a $51.4 million increase in Other assets mostly due to an increase in the contingent loan repurchase asset. These increases were offset in part by a $76.1 million decline in servicing advances that was mainly due to seasonal reduction of escrow balances.
Current wording
Total assets increased $570.9 million, or 5%, between December 31, 2023 and June 30, 2024 due to a $429.7 million increase in our Loans held for sale portfolio as originations and purchases exceeded sales, including our acquisition of reverse mortgage buyouts, a $252.3 million fair value increase in reverse Loans held for investment mostly driven by capitalization of interest, and a $55.4 million increase in our MSR portfolio due to fair value gains attributed to rates and assumptions, partially offset by MSR sales and derecognition of MSRs previously sold to MAV. These increases were offset in part by a $128.2 million decline in servicing advances that was driven by seasonal reduction of balances.
Previous wording
Total liabilities increased by $546.1 million, or 5%, as compared to December 31, 2023, with similar effects as described above. Our borrowings under Mortgage loan financing facilities increased $398.3 million due to the higher loans held for sale balance at March 31, 2024, including the issuance of OLIT Notes in February in connection with the securitization of reverse mortgage loan buyouts. Our HMBS-related borrowings increased by $147.7 million mostly due to fair value changes attributable to interest, MSR financing facilities increased $47.9 million consistent with the increase in MSRs, and Other liabilities increased $48.7 million mostly due to an increase in the contingent loan repurchase liability. Partially offsetting these increases, Advance match funded liabilities decreased $59.5 million consistent with the decline in servicing advances discussed above and Senior notes, net decreased $43.8 million mostly due to our repurchases of PMC Senior Secured Notes during the quarter.
Current wording
Total liabilities increased by $526.5 million, or 4%, as compared to December 31, 2023, with similar effects as described above. Our borrowings under Mortgage loan financing facilities increased $479.8 million due to the higher loans held for sale balance at June 30, 2024, including the issuance of OLIT Notes in February 2024 in connection with the securitization of reverse mortgage loan buyouts. Our HMBS-related borrowings increased by $238.0 million mostly due to fair value changes attributable to interest. Partially offsetting these increases, Advance match funded liabilities decreased $94.7 million consistent with the decline in servicing advances discussed above and Senior notes, net decreased $40.7 million mostly due to our repurchases of PMC Senior Secured Notes during the first quarter of 2024. Other financing liabilities declined by $54.1 million primarily due to the derecognition of MSRs previously sold to MAV.
Previous wording
Total equity increased $30.3 million during the three months ended March 31, 2024 due to $30.1 million net income for the period.
Current wording
Total equity increased $44.4 million during the six months ended June 30, 2024 mainly due to $40.6 million net income for the period and $2.4 million compensation related to equity-classified awards.
Previous wording
The following discussion provides information regarding certain key drivers of our financial performance and includes certain forward-looking statements that are based on the current beliefs and expectations of Ocwen’s management and are subject to significant risks and uncertainties. Refer to Forward-Looking Statements beginning on page 2 of this Form 10-Q and Part I, Item 1.A. of our Annual Report on Form 10-K for the year ended December 31, 2023, for discussion of certain of those risks and uncertainties and other factors that could cause Ocwen’s actual results to differ materially because of those risks and uncertainties. There is no assurance that actual results will be in line with the outlook information set forth below, and Ocwen does not undertake to update any forward-looking statements. Also refer to the Segment results of operations section for further detail, the description of our business environment, initiatives and risks.
Current wording
The following discussion provides information regarding certain key drivers of our financial performance and includes certain forward-looking statements that are based on the current beliefs and expectations of Onity’s management and are subject to significant risks and uncertainties. Refer to Forward-Looking Statements beginning on page 2 of this Form 10-Q and Part I, Item 1.A. of our Annual Report on Form 10-K for the year ended December 31, 2023, for discussion of certain of those risks and uncertainties and other factors that could cause Onity’s actual results to differ materially because of those risks and uncertainties. There is no assurance that actual results will be in line with the outlook information set forth below, and Onity does not undertake to update any forward-looking statements. Also refer to the Segment results of operations section for further detail, the description of our business environment, initiatives and risks.
Previous wording
Gain on sale of loans held for sale- Our gain on sale is driven by both volume and margin and is channel-sensitive. The updated industry forecasts suggest an increase in loan origination in 2024 as compared to historical low origination volumes in 2023. We anticipate growth in our Consumer Direct channel considering the updated industry forecast and our increased recapture capabilities. We expect to continue to prudently manage our Correspondent volume at margins that are accretive to the business. We expect continued competitive pressure on margins across all channels.
Current wording
Gain on sale of loans held for sale- Our gain on sale is driven by both volume and margin and is channel-sensitive. The updated industry forecasts suggest an increase in loan origination in 2024 as compared to historical low origination volumes in 2023. We anticipate growth in our Consumer Direct channel considering the updated industry forecast and our increased recapture capabilities. We expect to continue to prudently grow our Correspondent volume at margins that are accretive to the business as part of our MSR replenishment and growth strategy after the opportunistic MSR bulk sales in the second quarter of 2024. We expect continued competitive pressure on margins across all channels.
Previous wording
MSR valuation adjustments, net -Our net MSR fair value changes include multiple components. First, amortization of our investment is a function of the UPB, capitalized value of the MSR relative to the UPB, and the level of scheduled payments and prepayments. We expect the MSR realization of expected cash flows to follow the growth or size of our MSR portfolio net of ESS financing liabilities and pledged MSR liabilities with our MSR capital partners. Second, MSR fair value changes are driven by changes in interest rates and assumptions, such as forecasted prepayments. Third, the MSR fair value changes are partially offset by derivative fair value changes that economically hedge the MSR portfolio. Refer to the sensitivity analysis in Item 3. Quantitative and Qualitative Disclosures About Market Risk for further detail.
Current wording
MSR valuation adjustments, net -Our net MSR fair value changes include multiple components. First, amortization of our investment is a function of the UPB, capitalized value of the MSR relative to the UPB, and the level of scheduled payments and prepayments. We expect the MSR realization of expected cash flows to follow the growth or size of our MSR portfolio net of ESS financing liabilities and pledged MSR liabilities with our MSR capital partners. Second, MSR fair value changes are driven by changes in interest rates and assumptions, such as forecasted prepayments. Third, the MSR fair value changes due to changes in interest rates are partially offset by derivative fair value changes that economically hedge the MSR portfolio to the extent of our hedge coverage ratio. Refer to the sensitivity analysis in Item 3. Quantitative and Qualitative Disclosures About Market Risk for further detail.
Previous wording
Stockholders’ equity - With the above considerations, we expect our businesses to generate net income and increase our equity in 2024, absent any significant adverse change in interest rates or other factors.
Current wording
Stockholders’ equity - With the above considerations, we expect our businesses to generate net income and increase our equity in 2024, absent any significant adverse change in interest rates, hedge performance or other factors.
Previous wording
As of March 31, 2024, we serviced 1.4 million mortgage loans with an aggregate UPB of $302.3 billion, an increase of 3% and 5%, respectively, from December 31, 2023. The average UPB during the first quarter of 2024 was mostly flat compared to the fourth quarter of 2023, and compared to the three months ended March 31, 2023.
Current wording
As of June 30, 2024, we serviced 1.4 million mortgage loans with an aggregate UPB of $304.5 billion, an increase of 3% and 6%, respectively, from December 31, 2023. The average UPB during the second quarter of 2024 increased $13 billion or 5%, compared to the first quarter of 2024, and average UPB during the six months ended June 30, 2024 increased $5 billion or 2%, compared to the six months ended June 30, 2023.
Previous wording
Effective in the fourth quarter of 2023, the Servicing segment includes CR Limited (CRL), our wholly-owned captive reinsurance subsidiary previously included in the Corporate Items and Other segment. Segment results for the first quarter of 2023 have been recast to conform to the current segment presentation. CRL provides re-insurance related to coverage on foreclosed real estate properties owned or serviced by us. CRL assumes a 90% (60% through January 2024) quota share of REO insurance coverage written by a third-party insurer under a blanket policy issued to PHH. The underlying REO policy provides coverage for direct physical loss on commercial and residential properties, subject to certain limitations.
Current wording
Effective in the fourth quarter of 2023, the Servicing segment includes CR Limited (CRL), our wholly-owned captive reinsurance subsidiary previously included in the Corporate Items and Other segment. Segment results for the six months ended June 30, 2023 have been recast to conform to the current segment presentation. CRL provides re-insurance related to coverage on foreclosed real estate properties owned or serviced by us. CRL assumes a 90% (60% through January 2024) quota share of REO insurance coverage written by a third-party insurer under a blanket policy issued to PHH. The underlying REO policy provides coverage for direct physical loss on commercial and residential properties, subject to certain limitations.
Previous wording
Rithm is one of our largest subservicing clients accounting for 15% and 25%, respectively, of UPB and loan count of our total servicing and subservicing portfolio as of March 31, 2024, and approximately 66% of all delinquent loans that Ocwen serviced. The servicing agreements automatically renew annually unless notice of termination is provided. Refer to Note 8 — Other Financing Liabilities, at Fair Value.
Current wording
Rithm is one of our largest subservicing clients accounting for 14% and 25%, respectively, of UPB and loan count of our total servicing and subservicing portfolio as of June 30, 2024, and approximately 64% of all delinquent loans that Onity serviced. The servicing agreements automatically renew annually unless notice of termination is provided. Refer to Note 8 — Other Financing Liabilities, at Fair Value.
Previous wording
MAV represented 18% and 14%, respectively, of UPB and loan count of our total servicing and subservicing portfolio as of March 31, 2024. In May 2021, PHH entered into a subservicing agreement with MAV for exclusive rights to service the mortgage loans underlying MSRs owned by MAV. MAV provides us with a source of additional subservicing volume, either with the MSRs that MAV purchases outright from third parties or with the MSRs that MAV purchases from PHH. Although the servicing agreement is not cancellable without mutual agreement, MAV is permitted to sell its MSR portfolio, in whole or in part, without Ocwen’s consent after May 3, 2024. Refer to Note 11 - Investment in Equity Method Investee and Related Party Transactions.
Current wording
MAV represented 17% and 14%, respectively, of UPB and loan count of our total servicing and subservicing portfolio as of June 30, 2024. In May 2021, PHH entered into a subservicing agreement with MAV for exclusive rights to service the mortgage loans underlying MSRs owned by MAV. MAV provides us with a source of additional subservicing volume, either with the MSRs that MAV purchases outright from third parties or with the MSRs that MAV purchases from PHH. Although the servicing agreement is not cancellable without mutual agreement, MAV is permitted to sell its MSR portfolio, in whole or in part, without Onity’s consent after May 3, 2024. Refer to Note 11 - Investment in Equity Method Investee and Related Party Transactions.
Showing the first 40 of 96 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Our capital structure and leverage ratios may be summarized as follows:
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
As compared to the three months ended March 31, 2023, our servicing and subservicing fees (excluding ancillary income) for the three months ended March 31, 2024 decreased $30.9 million, or 16% with a $38.9 million decrease in servicing fees partially offset by an $8.0 million increase in subservicing fees. These variances are largely due to the same factors discussed above, notably the effects of our derecognition of MSRs previously sold to Rithm for which the sale accounting criteria were met effective December 31, 2023 ($32.6 million servicing fees remitted to Rithm recognized in the three months ended March 31, 2023).
Previous report — wording carried elsewhere
Cash flows for the three months ended March 31, 2023