SEC Comment Letter for ONITY GROUP INC. (ONIT) (CIK 0000873860) (ONIT) — Dec 18, 2014
ONITY GROUP INC. (ONIT) (CIK 0000873860)
Date: Dec. 18, 2014 · CIK: 0000873860 · Accession: 0000000000-14-065551
AI Filing Summary & Sentiment
Reasoning
Letter
December 18 , 2014 Via E -mail Mr. Michael R. Bourque, Jr. Chief Financial Officer Ocwen Financial Corporation 2002 Summit Boulevard. 6th Floor Atlanta, Georgia 30319
Re: Ocwen Financial Corporation Amendment #1 to Form 10 -K for the Fiscal Year Ended December 31, 2013 Filed August 18, 2014 Form 10 -Q for Fiscal Quarter Ended September 30, 2014 Filed October 31, 2014 Response dated August 22, 2014 File No. 00 1-13219
Dear Mr. Bourque :
We have reviewed your supplemental response 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 this letter within ten busines s days by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe future revisions are appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments, we may have additional comments.
Form 10 -K/A for the Fiscal Year Ended December 31, 2013
Note 1A – Restatement and Revision of Previously Issued Consolidated Financial Statements, page F -17
1. Please explain the nature of the error in the application of the interest method in accounting for a financing liability which resulted in the restatement of the financial statements for the fiscal year ended December 31, 2013 and the interim period ending March 31, 2014. Please address the previous accounting, why you revised your accounting a nd why you consider the accounting revision the correction of an error in accordance with GAAP.
Mr. Michael R. Bourque, Jr. Ocwen Financial Corporation December 1 8, 2014 Page 2
2. Given that the Company entered into transactions with HLSS beginning with the initial transaction on March 5, 2012, please explain to us how you concluded that the error in the application of the interest method for a financing liabili ty did not also impact the 2012 audited financial statements .
3. Please tell us the specific internal controls implemented to properly allocate cash payments between principal and interest in connection with the financing liability.
Note 25 – Business Segment Reporting, page F -69
4. We note the net margin on non -Agen cy servicing is higher than margins on the conventional and government insured servicing. Please tell us how the company determines the net margins on each of the different types of servicing provided.
5. Please disclose in future filings revenues genera ted from the conventional, government insured and non -Agency servicing portfolios in each of the last three fiscal periods as well as the interim reporting period s during 2014 in accordance with ASC 280 -10-50-40.
Form 10 -Q for Fiscal Quarter Ended Sept ember 30, 2014
Notes to Unaudited Consolidated Financial Statements
Note 11 - Borrowings
Covenants, page 35
6. Please tell us whether you are in compliance with all the qualitative and quantitative covenants as of September 30, 2014. We note you revised your disclosures that “We are in compliance with all of our qualitative and quantitative covenants” at June 30, 2014 to “We believe that we are in compliance with all of our qualitative and quantitative covenants” at September 30, 2014.
Note 22 – Commitments and Contingencies, page 47
Litigation Contingencies
7. Please further explain the nature of the tolling agreements related to certain securi tizations in your next response letter and the estimated dollar amount of potential claims under t hese agreements.
Regulatory Contingencies
8. We note you accrued $100 million during the quarter ended September 30, 2014 for losses that you believed were probable and reasonably estimable related to the New York Department of Financial Services litigation. Please more fully explain how you determi ned this accrual in the most recent quarter ended.
Mr. Michael R. Bourque, Jr. Ocwen Financial Corporation December 1 8, 2014 Page 3
Please address questions regarding all comments to Marc Thomas, Staff Accountant, at (202) 551 -3452 or, if you thereafter need further ass istance, to me at (202) 551 -3752 .
Sincerely,
/s/ Gus Rodriguez
Show Raw Text
December 18 , 2014
Via E -mail
Mr. Michael R. Bourque, Jr.
Chief Financial Officer
Ocwen Financial Corporation
2002 Summit Boulevard. 6th Floor
Atlanta, Georgia 30319
Re: Ocwen Financial Corporation
Amendment #1 to Form 10 -K for the Fiscal Year Ended December 31, 2013
Filed August 18, 2014
Form 10 -Q for Fiscal Quarter Ended September 30, 2014
Filed October 31, 2014
Response dated August 22, 2014
File No. 00 1-13219
Dear Mr. Bourque :
We have reviewed your supplemental response 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 this letter within ten busines s days by providing the requested
information, or by advising us when you will provide the requested response. If you do not
believe our comments apply to your facts and circumstances or do not believe future revisions
are appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments, we may
have additional comments.
Form 10 -K/A for the Fiscal Year Ended December 31, 2013
Note 1A – Restatement and Revision of Previously Issued Consolidated Financial Statements,
page F -17
1. Please explain the nature of the error in the application of the interest method in
accounting for a financing liability which resulted in the restatement of the financial
statements for the fiscal year ended December 31, 2013 and the interim period ending
March 31, 2014. Please address the previous accounting, why you revised your
accounting a nd why you consider the accounting revision the correction of an error in
accordance with GAAP.
Mr. Michael R. Bourque, Jr.
Ocwen Financial Corporation
December 1 8, 2014
Page 2
2. Given that the Company entered into transactions with HLSS beginning with the initial
transaction on March 5, 2012, please explain to us how you concluded that the error in
the application of the interest method for a financing liabili ty did not also impact the
2012 audited financial statements .
3. Please tell us the specific internal controls implemented to properly allocate cash
payments between principal and interest in connection with the financing liability.
Note 25 – Business Segment Reporting, page F -69
4. We note the net margin on non -Agen cy servicing is higher than margins on the
conventional and government insured servicing. Please tell us how the company
determines the net margins on each of the different types of servicing provided.
5. Please disclose in future filings revenues genera ted from the conventional, government
insured and non -Agency servicing portfolios in each of the last three fiscal periods as
well as the interim reporting period s during 2014 in accordance with ASC 280 -10-50-40.
Form 10 -Q for Fiscal Quarter Ended Sept ember 30, 2014
Notes to Unaudited Consolidated Financial Statements
Note 11 - Borrowings
Covenants, page 35
6. Please tell us whether you are in compliance with all the qualitative and quantitative
covenants as of September 30, 2014. We note you revised your disclosures that “We are
in compliance with all of our qualitative and quantitative covenants” at June 30, 2014 to
“We believe that we are in compliance with all of our qualitative and quantitative
covenants” at September 30, 2014.
Note 22 – Commitments and Contingencies, page 47
Litigation Contingencies
7. Please further explain the nature of the tolling agreements related to certain
securi tizations in your next response letter and the estimated dollar amount of potential
claims under t hese agreements.
Regulatory Contingencies
8. We note you accrued $100 million during the quarter ended September 30, 2014 for
losses that you believed were probable and reasonably estimable related to the New York
Department of Financial Services litigation. Please more fully explain how you
determi ned this accrual in the most recent quarter ended.
Mr. Michael R. Bourque, Jr.
Ocwen Financial Corporation
December 1 8, 2014
Page 3
Please address questions regarding all comments to Marc Thomas, Staff Accountant, at
(202) 551 -3452 or, if you thereafter need further ass istance, to me at (202) 551 -3752 .
Sincerely,
/s/ Gus Rodriguez
Gus Rod riguez
Accounting Branch Chief