UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____________________to _____________________

Commission File Number: 1-35431

Home Loan Servicing Solutions, Ltd.

(Exact name of registrant as specified in its charter)



Cayman Islands	98-0683664
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

Home Loan Servicing Solutions, Ltd.

c/o Intertrust Corporate Services (Cayman) Limited

190 Elgin Avenue

George Town, Grand Cayman KY1-9005

Cayman Islands

(Address of principal executive offices) (Zip Code)

(345) 945-3727

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer x* Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨x No x*¨

Number of Ordinary Shares, $0.01 par value, outstanding as of ~~May~~August 117, 2015: 71,016,771 shares.

* As of March 31, 2015.

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EXPLANATORY NOTE

This Quarterly Report on Form 10-Q presents as of March 31, 2015 the business of Home Loan Servicing Solutions, Ltd. and its wholly owned subsidiaries (collectively referred to throughout as “HLSS”, “us”, “our”, “we”, or the “Company”). As discussed in Note 19, Subsequent Events, the following occurred after March 31, 2015:

• On April 6, 2015, HLSS, HLSS Holdings, LLC (“HLSS Holdings”) and Ocwen Financial Corporation (together with its subsidiaries, collectively “Ocwen”) entered into an amendment to the Purchase Agreement (as defined in Note 1A) and the sale supplements (effective upon completion of the Asset Sale as defined in Note 1A) to, among other things, (i) obtain Ocwen's consent to the assignment by HLSS of its interest under the Purchase Agreement and each sale supplement, (ii) provide that HLSS Holdings will not become the named servicer in connection with any Rights to MSRs (as defined in Note 1A), or direct the replacement of Ocwen as named servicer, before April 6, 2017 except under certain limited circumstances, (iii) extend the scheduled term of Ocwen's servicing appointment under each sale supplement until the earlier of eight years from the date of such sale supplement and April 30, 2020, and (iv) provide that Ocwen will reimburse HLSS Holdings for certain increased financing costs resulting from servicer rating downgrades of Ocwen. In addition, under such amendment (x) Ocwen agreed to exercise any “clean-up call” rights under any servicing agreement related to Rights to MSRs only at the direction of HLSS Holdings and to sell to HLSS Holdings, on an “as-is” basis, the economic beneficial interest in the right to purchase the mortgage loans and other assets in the trust for each designated servicing agreement pursuant to such clean-up call rights and (y) HLSS Holdings agreed to pay to Ocwen a fee equal to 0.50% of the outstanding balance of the performing mortgage loans purchased in connection with any such exercise and to pay Ocwen’s related costs and expenses of exercise.

• On April 6, 2015, to best address concerns relating to our ability to operate as a going concern and the associated impact on our business on an expedited basis, we agreed with New Residential Investment Corp., a Delaware corporation (“NRZ”), and Hexagon Merger Sub, Ltd., a Cayman Islands exempted company and a wholly-owned subsidiary of NRZ (“Merger Sub”) to terminate the Old Merger Agreement (as defined in Note 1A) and immediately complete the Asset Sale. The Asset Sale was made in accordance with the terms and conditions of the NRZ Purchase Agreement (as defined in Note 1A). In connection with the Asset Sale, among other things, (i) MSR-EBO Acquisitions LLC (“HLSS MSR-EBO”) acquired substantially all of the assets of the Company (including all of the issued share capital of Luxco 1B) and (ii) HLSS Advances Acquisition Corp. (“HLSS Advances”) acquired all of the issued share capital of Luxco 1A and assumed substantially all of the liabilities of the Company, including certain post-closing liabilities of the Company. In exchange, the Company received an amount in cash equal to approximately $1.0 billion plus 28,286,980 newly issued shares of NRZ common stock with a par value $0.01 per share. In conjunction with the Asset Sale, our senior secured term loan facility was retired.

• Concurrently with the execution of the NRZ Purchase Agreement, our Board of Directors adopted and approved a plan of complete liquidation and dissolution (the “Liquidation Plan”), pursuant to which we will (1) cease our business activities other than such activities that are necessary to carry out the provisions of the Liquidation Plan, (2) pay or make adequate provision for operating expenses expected to be incurred through the completion of the Liquidation Plan and (3) distribute to our shareholders in one or more distributions, (a) the cash received by the Company in the Asset Sale and the net proceeds from the sale of NRZ common stock received by the Company in the Asset Sale, less (b) amounts used to pay the liabilities of the Company and less a reserve in the amount of $50 million that will be held by the Company at the discretion of the Board to ensure that the Company will be able to meet known and unknown liabilities up to the date of the consummation of the transactions contemplated by the New Merger (as defined below) or, if the transactions contemplated by the New Merger are not consummated, the date of the final liquidating distribution after settlement of the liabilities and to ensure that the Company has available resources in the event that it is necessary to enforce against third parties any contractual or other rights of the Company or its officers or directors. If the New Merger is consummated, our shares will be converted automatically into the right to the Merger Consideration. If the New Merger is not consummated and post-closing expenses and liabilities do not exceed $50 million, it is anticipated that a further cash distribution will be made to shareholders.

• Immediately following the closing of the Asset Sale contemplated by the NRZ Purchase Agreement, we entered into: (i) an Agreement and Plan of Merger (the “New Merger Agreement”) with NRZ and Merger Sub, pursuant to which, among other things, the Company will be merged with and into Merger Sub (the “New Merger”), with the Company ceasing its corporate existence and Merger Sub surviving the New Merger, (ii) a Services Agreement, pursuant to which HLSS Advances Acquisition Corp. will provide us with certain services following the consummation of the Asset Sale, including, among other things, handling (including defending, prosecuting or resolving) all claims, disputes or controversies (including any litigation, arbitration, governmental investigations or inquiries or any other proceedings or

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negotiations) in which the Company is a party or may otherwise be involved and (iii) a Registration Rights Agreement to memorialize certain rights relating to the registration of shares of NRZ common stock to be held by the Company upon the closing of the Asset Sale. On the terms and subject to the conditions set forth in the New Merger Agreement, at the effective time of the New Merger (the “Effective Time”), each ordinary share, par value $0.01 per share, of the Company (the “Company Shares”) issued and outstanding immediately prior to the Effective Time (other than Company Shares owned by any direct or indirect wholly-owned subsidiary of NRZ (other than Merger Sub) or of Merger Sub and Company Shares as to which dissenters’ rights have been properly exercised) will be converted automatically into the right to receive the Merger Consideration. The parties’ obligations to consummate the New Merger are subject to certain closing conditions, including approval of the New Merger by the requisite vote of the shareholders, the absence of any legal restraints that would prohibit the consummation of the New Merger and other conditions customary for a transaction of this type. Each of us, NRZ and Merger Sub has made certain customary representations, warranties and covenants in the New Merger Agreement, including, among other things, covenants related to the conduct of our business during the interim period between the execution of the New Merger Agreement and the consummation of the New Merger. The New Merger Agreement provides for certain termination rights for both us and NRZ, including, if approval of the New Merger by the requisite vote of the shareholders is not obtained or if the New Merger is not consummated by the nine month anniversary of the date of the New Merger Agreement.

• On April 10, 2015, we paid cash dividends of $12,783 or $0.18 per ordinary share.

• On April 10, 2015, we declared a distribution of $16.613 per ordinary share payable on April 27, 2015, to shareholders of record as of April 20, 2015.

• On April 27, 2015, we distributed to our shareholders approximately $1.2 billion or $16.613 per ordinary share.

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HOME LOAN SERVICING SOLUTIONS, LTD.

FORM 10-Q

INDEX

		PAGE
PART I – FINANCIAL INFORMATION
Item 1.	Interim Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets at March 31, 2015 and December 31, 2014	2
	Condensed Statement of Net Assets at June 30, 2015 (Liquidation Basis)	2
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2015 and 2014	3
	Condensed Statement of Changes in Net Assets for the Period April 6, 2015 to June 30, 2015 (Liquidation Basis)	3
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2015 and 2014	4
	Condensed Consolidated Balance Sheet at December 31, 2014 (Going-Concern Basis)	4
	Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2015 and 2014	5
	Condensed Consolidated Statements of Operations for the Quarter-to-Date and Year-to-Date Periods Ended April 5, 2015 and for the Three and Six Months Ended June 30, 2014 (Going-Concern Basis)	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014	6
	Condensed Consolidated Statements of Comprehensive Income for the Quarter-to-Date and Year-to-Date Periods Ended April 5, 2015 and for the Three and Six Months Ended June 30, 2014 (Going-Concern Basis)	6
	Notes to Interim Condensed Consolidated Financial Statements	7
	Condensed Consolidated Statements of Changes in Equity for the Year-to-Date Period Ended April 5, 2015 and for the Six Months Ended June 30, 2014 (Going-Concern Basis)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
	Condensed Consolidated Statements of Cash Flows for the Year-to-Date Period Ended April 5, 2015 and for the Six Months Ended June 30, 2014 (Going-Concern Basis)	8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
	Notes to Interim Condensed Consolidated Financial Statements	9
Item 4.	Controls and Procedures	55
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	5643
Item 1A.	Risk Factors	5643
Item 6.	Exhibits	5744
Signatures		5946

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PART I – FINANCIAL INFORMATION

ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ~~(Prior to the Asset Sale discussed in Note 1A)~~

HOME LOAN SERVICING SOLUTIONS, LTD. ~~AND SUBSIDIARIES~~

CONDENSED ~~CONSOLIDATED~~STATEMENT ~~BALANCE~~OF ~~SHEETS~~NET ASSETS (LIQUIDATION BASIS) (UNAUDITED)

(Dollars in thousands~~, except share data~~)

	March 31, 2015			December 31, 2014
	June 30, 2015
Assets
Cash and cash equivalents	$	~~181~~46,~~507~~070		$	~~210,009~~
Match funded advances	5,808,796			6,121,595
Related party receivables	2,170
Notes receivable – Rights to MSRs	594,417			614,465
Estimated income expected to be earned during liquidation	17
Loans held for sale	421,257			—
Total assets	$	48,257
Loans held for investment	—			815,663
Liabilities
Related party receivables	185,067			94,401
Reserve for estimated costs during the period of liquidation	$	460
Deferred tax assets	996			491
Other liabilities	771
Other assets	244,483			281,475
Total liabilities	1,231
Total assets	$	7,436,523		$	8,138,099
Commitments and Contingencies (See Note 18)
Liabilities and Equity
Net Assets	$	47,026
Liabilities
Match funded liabilities	$	5,274,318		$	5,624,088
Other borrowings	852,419			1,182,328
Dividends payable	12,783			12,783
Income taxes payable	148			173
Deferred tax liabilities	184			491
Related party payables	8,835			14,503
Other liabilities	21,377			12,454
Total liabilities	6,170,064			6,846,820
Commitments and Contingencies (See Note 18)
Equity
Equity – Ordinary shares, $0.01 par value; 200,000,000 shares authorized; 71,016,771 shares issued and outstanding at March 31, 2015 and December 31, 2014	710			710
Additional paid-in capital	1,210,171			1,210,300
Retained earnings	56,018			79,133
Accumulated other comprehensive (loss) income, net of tax	(440		)	1,136
Total equity	1,266,459			1,291,279
Total liabilities and equity	$	7,436,523		$	8,138,099

The accompanying notes are an integral part of these ~~consolidated~~ financial statements.

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HOME LOAN SERVICING SOLUTIONS, LTD.CONDENSED ~~AND~~STATEMENT ~~SUBSIDIARIES~~OF ~~CONDENSED~~CHANGES ~~CONSOLIDATED~~IN ~~STATEMENTS~~NET OFASSETS ~~OPERATIONS~~(LIQUIDATION BASIS) (UNAUDITED)

(Dollars in thousands~~, except share data~~)

For the three months ended March 31,	2015			2014
Net assets at April 6, 2015	$	1,268,081
Revenue
Changes in Net assets
Interest income – notes receivable – Rights to MSRs	$	71,206		$	102,538
Interest income
Interest income – other	~~9,476~~107			~~2,961~~
Total interest income	80,682			105,499
Operating expenses
Related party revenue	50			628
Compensation and benefits	366
Other revenue	1,440			—
General and administrative expenses	3,297
Total revenue	82,172			106,127
Total operating expenses	3,663
Operating expenses
Other expenses
Compensation and benefits	2,078			1,599
Loss on extinguishment of senior secured term loan facility	8,083
Related party expenses	76			372
Loss on disposal of discontinued operations (Note 1A)	29,614
General and administrative expenses	16,286			2,285
Total other expenses	37,697
Total operating expenses	18,440			4,256
Liquidating distributions to shareholders	1,179,802
Income from operations	63,732			101,871
Change in Net assets during the period	(1,221,055		)
Other expense
Net assets at June 30, 2015	$	47,026
Interest expense	40,813			37,511
Unrealized loss on Loans held for sale	7,654			—
Total other expense	48,467			37,511
Income before income taxes	15,265			64,360
Income tax expense	5			—
Net income	$	15,260		$	64,360
Earnings per share
Basic	$	0.21		$	0.91
Diluted	$	0.21		$	0.91
Weighted average shares outstanding
Basic	71,016,771			71,016,771
Diluted	71,089,729			71,016,771
Dividends declared per share	$	0.54		$	0.45

The accompanying notes are an integral part of these ~~consolidated~~ financial statements.

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HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES ~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)(Dollars in thousands)~~

For the three months ended March 31,	2015			2014
Net income	$	15,260		$	64,360
Other comprehensive loss, before tax:
Change in the value of designated cash flow hedges	(2,389		)	(227		)
Total other comprehensive loss, before tax	(2,389		)	(227		)
Income tax related to items of other comprehensive loss:
Tax benefit on change in the value of designated cash flow hedges	813			78
Total income tax benefit related to items of other comprehensive loss	813			78
Total other comprehensive loss, net of tax	(1,576		)	(149		)
Total comprehensive income	$	13,684		$	64,211

CONDENSED CONSOLIDATED BALANCE SHEET (GOING-CONCERN BASIS) (UNAUDITED)

(Dollars in thousands, except share data)



	December 31, 2014
Assets
Cash and cash equivalents	$	210,009
Match funded advances	6,121,595
Notes receivable – Rights to MSRs	614,465
Loans held for investment	815,663
Related party receivables	94,401
Deferred tax assets	491
Other assets	281,475
Total assets	$	8,138,099

Liabilities and Equity
Liabilities
Match funded liabilities	$	5,624,088
Other borrowings	1,182,328
Dividends payable	12,783
Income taxes payable	173
Deferred tax liabilities	491
Related party payables	14,503
Other liabilities	12,454
Total liabilities	6,846,820

Commitments and Contingencies (See Note 18)

Equity
Equity – Ordinary shares, $0.01 par value; 200,000,000 shares authorized; 71,016,771 shares issued and outstanding at December 31, 2014	710
Additional paid-in capital	1,210,300
Retained earnings	79,133
Accumulated other comprehensive income, net of tax	1,136
Total equity	1,291,279
Total liabilities and equity	$	8,138,099

The accompanying notes are an integral part of these consolidated financial statements.

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HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES~~OPERATIONS IN(GOING-CONCERN ~~EQUITY~~BASIS) (UNAUDITED)~~(Dollars in thousands, except share data)~~

	Ordinary Shares			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Total
	Shares	Amount
Balance at December 31, 2014	71,016,771	$	710	$	1,210,300		$	79,133		$	1,136		$	1,291,279
Net income	—	—		—			15,260			—			15,260
Other comprehensive loss, net of tax	—	—		—			—			(1,576		)	(1,576		)
Share-based compensation	—	—		(129		)	(26		)	—			(155		)
Declaration of cash dividends ($0.54 per share)	—	—		—			(38,349		)	—			(38,349		)
Balance at March 31, 2015	71,016,771	$	710	$	1,210,171		$	56,018		$	(440	)	$	1,266,459

(Dollars in thousands, except share data)

	Ordinary Shares							Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Income, Net of Tax			Total
		For the period April 1, 2015 to April 5, 2015				For the three months ended June 30, 2014				For the period January 1, 2015 toApril 5, 2015				For the six months ended June 30, 2014
	Shares			Amount
Interest income
Balance at December 31, 2013	71,016,771			$	710			$	1,210,057			$	3,513			$	2,167		$	1,216,447
Interest income – other		$	1			$	13			$	25			$	30
Net income	—			—				—				64,360				—			64,360
Total interest income		1				13				25				30
Other comprehensive loss, net of tax	—			—				—				—				(149		)	(149		)
Operating expenses
Declaration of cash dividends ($0.45 per share)	—			—				—				(31,958		)		—			(31,958		)
Compensation and benefits		15				131				230				261
Balance at March 31, 2014	71,016,771			$	710			$	1,210,057			$	35,915			$	2,018		$	1,248,700
General and administrative expenses		183				601				8,952				1,081
Total operating expenses		198				732				9,182				1,342
Loss from continuing operations		(197		)		(719		)		(9,157		)		(1,312		)
Discontinued operations (Note 1A)
Earnings from discontinued operations		1,401				51,379				25,626				116,332
Income tax expense		6				—				11				—
Net income from discontinued operations		1,395				51,379				25,615				116,332
Net income		$	1,198			$	50,660			$	16,458			$	115,020
Basic (Loss) Earnings per share
From continuing operations		$	(0.01	)		$	(0.01	)		$	(0.13	)		$	(0.02	)
From discontinued operations		0.03				0.72				0.36				1.64
Basic earnings per share		$	0.02			$	0.71			$	0.23			$	1.62
Diluted (Loss) Earnings per share
From continuing operations		$	(0.01	)		$	(0.01	)		$	(0.13	)		$	(0.02	)
From discontinued operations		0.03				0.72				0.36				1.64
Diluted earnings per share		$	0.02			$	0.71			$	0.23			$	1.62
Weighted average shares outstanding
Basic		71,016,771				71,016,771				71,016,771				71,016,771
Diluted		71,029,271				71,016,771				71,084,310				71,016,771
Dividends declared per share		$	—			$	0.48			$	0.54			$	0.93

The accompanying notes are an integral part of these consolidated financial statements.

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HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH~~COMPREHENSIVE ~~FLOWS~~INCOME (GOING-CONCERN BASIS)(UNAUDITED)(Dollars in thousands)

(Dollars in thousands)



	For the period April 1, 2015 to April 5, 2015		For the three months ended June 30, 2014			For the period January 1, 2015 to April 5, 2015			For the six months ended June 30, 2014
Net income	$	1,198	$	50,660		$	16,458		$	115,020
Other comprehensive income (loss), before tax:
Change in the value of designated cash flow hedges	—		(1,778		)	(2,389		)	(2,005		)
Reclassification of loss on settlement of interest rate swaps recognized in net income	440		—			440			—
Total other comprehensive income (loss), before tax	440		(1,778		)	(1,949		)	(2,005		)
Income tax related to items of other comprehensive loss:
Tax benefit on change in the value of designated cash flow hedges	—		611			813			689
Total other comprehensive income (loss), net of tax	440		(1,167		)	(1,136		)	(1,316		)
Total comprehensive income	$	1,638	$	49,493		$	15,322		$	113,704

For the three months ended March 31,	2015			2014
Cash flows from operating activities
Net income	$	15,260		$	64,360
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of Debt issuance costs	4,377			4,962
Accretion of original issue discount on Other borrowings	185			185
Net amortization of purchase premiums and discounts on Loans held for sale	183			—
Amortization of purchase premiums on Loans held for investment	—			448
Accretion of Loans held for sale	(1,595		)	—
Decrease (increase) in the fair value of Notes receivable – Rights to MSRs	3,679			(4,025		)
Unrealized loss on Loans held for sale	7,654			—
Net forfeitures of share-based compensation	(129		)	—
Changes in assets and liabilities:
Decrease in Match funded advances	312,799			44,384
Decrease (increase) in debt service accounts	50,258			(3,077		)
(Increase) decrease in related party receivables	(90,666		)	2,450
Decrease in related party payables	(5,668		)	(2,847		)
Decrease (increase) in other assets	15,577			(2,645		)
Increase (decrease) in other liabilities	7,387			(428		)
Net cash provided by operating activities	319,301			103,767
Cash flows from investing activities
Reduction in Notes receivable – Rights to MSRs	16,369			—
Purchase of Loans held for investment	—			(556,618		)
Repayments of GNMA EBO loans and RPLs	17,040			3,526
Proceeds from the sale of RPL portfolios	337,553			—
Cash used in related party servicing advance financing transactions	—			(55,702		)
Cash proceeds from related party servicing advance financing transactions	5,412			—
Net cash provided by (used in) investing activities	376,374			(608,794		)
Cash flows from financing activities
(Repayments of) proceeds from Match funded liabilities, net	(349,771		)	59,558
Proceeds from Other borrowings	2,481			472,734
Payment of Other borrowings	(332,575		)	(875		)
Payment of Debt issuance costs	(5,963		)	(6,408		)
Payment of dividends to shareholders	(38,349		)	(31,958		)
Net cash (used in) provided by financing activities	(724,177		)	493,051
Net decrease in cash	(28,502		)	(11,976		)
Cash and cash equivalents, beginning of period	210,009			87,896
Cash and cash equivalents, end of period	$	181,507		$	75,920
Supplemental non-cash investing activities
Transfers of Loans held for sale to claims receivable from FHA	$	16,747		$	—
Increase in receivables in conjunction with the sale of RPL portfolios	16,824			—
Transfer of Loans held for investment to Loans held for sale	421,257			—
Supplemental non-cash financing activities
Dividends declared but not paid	$	12,783		$	10,653
Debt issuance costs accrued but not paid	2			58

The accompanying notes are an integral part of these consolidated financial statements.

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HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (GOING-CONCERN BASIS) (UNAUDITED)(Dollars in thousands, except share data)

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



	Ordinary Shares			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Total
	Shares	Amount
Balance at December 31, 2014	71,016,771	$	710	$	1,210,300		$	79,133		$	1,136		$	1,291,279
Net income	—	—		—			16,458			—			16,458
Other comprehensive loss, net of tax	—	—		—			—			(1,136		)	(1,136		)
Share-based compensation	—	—		(145		)	(26		)	—			(171		)
Declaration of cash dividends ($0.54 per share)	—	—		—			(38,349		)	—			(38,349		)
Balance at April 5, 2015	71,016,771	$	710	$	1,210,155		$	57,216		$	—		$	1,268,081

(Dollars in thousands unless otherwise stated, except share data)



	Ordinary Shares			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income, Net of Tax			Total
	Shares	Amount
Balance at December 31, 2013	71,016,771	$	710	$	1,210,057	$	3,513		$	2,167		$	1,216,447
Net income	—	—		—		115,020			—			115,020
Other comprehensive loss, net of tax	—	—		—		—			(1,316		)	(1,316		)
Share-based compensation	—	—		64		—			—			64
Declaration of cash dividends ($0.93 per share)	—	—		—		(66,045		)	—			(66,045		)
Balance at June 30, 2014	71,016,771	$	710	$	1,210,121	$	52,488		$	851		$	1,264,170

~~1A.~~The ~~ORGANIZATION~~accompanying ~~AND~~notes ~~RELATED~~are ~~PARTIES;~~an ~~REGULATORY~~integral ~~ENVIRONMENT,~~part ~~OCWEN~~of ~~MATTERS~~these ~~AND~~consolidated ~~RELATED~~financial ~~CONTINGENCIES; OTHER RECENT DEVELOPMENTS~~statements.

Organization and Related Parties

Home Loan Servicing Solutions, Ltd. and its wholly owned subsidiaries (collectively referred to throughout as “HLSS”, “us”, “our”, “we”, or the “Company”) are engaged in the business of acquiring assets whereby we acquire the rights to receive the servicing fees less compensation to the current servicer for their servicing activities (“Rights to MSRs”), servicing advances associated with our Rights to MSRs, whole loans held for investment, and other residential mortgage-related assets (“Residential Mortgage Assets”). We have not originated mortgage loans. We engaged Ocwen Financial Corporation (together with its subsidiaries, collectively “Ocwen”) and another residential mortgage loan servicer to service the mortgage loans underlying our Residential Mortgage Assets and therefore have not and do not intend to develop our own mortgage servicing platform.

We entered into various agreements with Ocwen and Altisource Portfolio Solutions, S.A. (“Altisource”) in connection with our Initial Public Offering on March 5, 2012. William C. Erbey, our founder and the former Chairman of our Board of Directors until January 16, 2015, was also the Chairman of the Board of Directors of Ocwen and Altisource until January 16, 2015.

We conduct a substantial amount of business with Ocwen and are heavily reliant on Ocwen and Altisource in the conduct of our operations. Conflicts may arise between us and Ocwen or Altisource because of the ongoing agreements we have with them or because of the nature of our respective businesses. Our results of operations may have differed significantly from our reported results if we did not have agreements in place with Ocwen and Altisource. See Note 17 for further discussion.

Regulatory Environment, Ocwen Matters and Related Contingencies

Ocwen has been and is subject to certain federal and state regulatory matters and other challenges and uncertainties associated with its business.

We are dependent on Ocwen as the subservicer for the Notes receivable – Rights to MSRs, and Ocwen’s servicing practices may impact the value of certain of our assets. We may be adversely impacted:

• By regulatory actions taken against Ocwen;

• By a default by Ocwen under its debt agreements;

• By further downgrades in Ocwen's servicer rating;

• If Ocwen fails to ensure its servicing advances comply with the terms of its pooling and servicing agreements ("PSAs");

• If Ocwen were terminated as servicer under certain PSAs;

• If Ocwen becomes subject to a bankruptcy proceeding; or

• If Ocwen fails to meet its obligations or is deemed to be in default under the indenture governing Notes issued by the HSART Trust (as defined below), including the allegations of certain events of default related to the Ocwen servicer downgrade and other regulatory matters by BlueMountain Capital Management LLC (“BlueMountain”).

A summary of such matters, the related impact on our business and the Company's plan to address such matters are as follows.

Ocwen Regulatory Matters

Ocwen has publicly announced that, on December 19, 2013, Ocwen reached an agreement involving the Consumer Financial Protection Bureau ("CFPB"), various state attorneys general and other agencies that regulate the mortgage servicing industry, which agreement was approved by consent judgment by the U.S. District Court for the District of Columbia on February 26, 2014. According to Ocwen's disclosure, the key elements of the agreement are as follows:

• A commitment by Ocwen to service loans in accordance with specified servicing guidelines and to be subject to oversight by an independent national monitor for three years;

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•HOME ALOAN ~~payment~~SERVICING ~~of $127.3 million to a consumer relief fund to be disbursed by an independent administrator to eligible borrowers. In May 2014~~SOLUTIONS, ~~Ocwen satisfied this obligation with regard to the consumer relief fund, $60~~LTD.4 ~~million~~AND ofSUBSIDIARIES ~~which~~CONDENSED isCONSOLIDATED ~~the~~STATEMENTS ~~responsibility~~OF ofCASH ~~former~~FLOWS ~~owners~~(GOING-CONCERN ofBASIS) ~~certain servicing portfolios acquired by Ocwen pursuant to indemnification and loss sharing provisions in the applicable agreements; and~~(UNAUDITED)

•(Dollars ~~A commitment by Ocwen to continue its principal forgiveness modification programs to delinquent and underwater borrowers~~ in anthousands) ~~aggregate amount of $2.0 billion over three years.~~

On December 22, 2014, Ocwen announced that it had reached a settlement agreement with the New York Department of Financial Services (the "NY DFS") related to investigations into Ocwen's mortgage servicing practices in the State of New York. According to Ocwen's disclosure, the key elements of the agreement are as follows:



Cash flows from operating activities	For the period January 1, 2015 to April 5, 2015			For the six months ended June 30, 2014
Net income	$	16,458		$	115,020
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of Debt issuance costs	4,615			9,560
Accretion of original issue discount on Other borrowings	185			372
Net amortization of purchase premiums and discounts on Loans held for sale	191			—
Amortization of purchase premiums on Loans held for investment	—			1,792
Accretion of Loans held for sale	(1,595		)	(151		)
Decrease (increase) in the fair value of Notes receivable – Rights to MSRs	3,679			—
Unrealized loss on Loans held for sale	7,654			—
Net forfeitures of share-based compensation	(145		)	64
Changes in assets and liabilities:
Decrease in Match funded advances	533,875			254,023
Decrease (increase) in debt service accounts	(99,398		)	(42,254		)
(Increase) decrease in related party receivables	(68,264		)	52,995
Decrease in related party payables	927			(7,741		)
Decrease (increase) in other assets	15,763			(10,415		)
Increase (decrease) in other liabilities	8,047			(1,030		)
Net cash provided by operating activities	421,992			372,235
Cash flows from investing activities
Reduction in Notes receivable – Rights to MSRs	17,498			4,190
Purchase of Loans held for investment	—			(832,866		)
Repayments of GNMA EBO loans and RPLs	20,716			29,133
Proceeds from the sale of RPL portfolios	337,553			—
Cash used in related party servicing advance financing transactions	—			(81,688		)
Cash proceeds from related party servicing advance financing transactions	5,549			1,216
Net cash provided by (used in) investing activities	381,316			(880,015		)
Cash flows from financing activities
(Repayments of) proceeds from Match funded liabilities, net	(430,970		)	(121,693		)
Proceeds from Other borrowings	2,481			707,720
Payment of Other borrowings	(334,990		)	(1,750		)
Payment of Debt issuance costs	(5,921		)	(9,639		)
Payment of dividends to shareholders	(38,349		)	(65,336		)
Net cash (used in) provided by financing activities	(807,749		)	509,302
Net increase in cash	(4,441		)	1,522
Cash and cash equivalents, beginning of period	210,009			87,896
Cash and cash equivalents, end of period	$	205,568		$	89,418

Supplemental non-cash investing activities
Transfers of Loans held for sale to claims receivable from FHA	$	16,747		$	—
Increase in receivables in conjunction with the sale of RPL portfolios	16,824			—
Transfer of Loans held for investment to Loans held for sale	421,257			—

Supplemental non-cash financing activities
Dividends declared but not paid	$	12,783		$	11,363
Debt issuance costs accrued but not paid	2			330

•The ~~Payment~~accompanying ofnotes ~~$100~~are ~~million~~an tointegral ~~the~~part ~~NY DFS to be used by the State~~ of ~~New~~these ~~York~~consolidated ~~for~~financial ~~housing, foreclosure relief and community redevelopment programs;~~statements.

• Payment of $50 million as restitution to certain New York borrowers;

• Installation of a NY DFS Operations Monitor to review and assess the adequacy and effectiveness of Ocwen's operations for a period of two years, which may be extended another twelve months at the option of the NY DFS;

• Requirements that Ocwen will not share any common officers or employees with any related party and will not share risk, internal audit or vendor oversight functions with any related party;

• Requirements that certain Ocwen employees, officers and directors be recused from negotiating or voting to approve certain transactions with a related party;

• Resignation of Ocwen's Chairman of the Board from the Board of Directors of Ocwen and at related companies, including HLSS; and

• Restrictions on Ocwen's ability to acquire new mortgage servicing rights.

On January 23, 2015, Ocwen announced that it had reached a settlement agreement with the California Department of Business Oversight (“CA DBO”) in relation to an action dated October 3, 2014, in the State of California. According to Ocwen's disclosure, the key elements of the agreement are as follows:

• Payment of $2.5 million;

• Engagement of an independent auditor to assess Ocwen’s compliance with laws and regulations impacting California borrowers for a period of at least two years; and

• Prevention of Ocwen from acquiring additional mortgage servicing rights for loans secured in the State of California until the CA DBO is satisfied that Ocwen can satisfactorily respond to the requests for information and documentation made in the course of a regulatory exam.

According to Ocwen's public disclosure, on April 28, 2014, Ocwen received a letter from the staff of the New York Regional Office of the Securities and Exchange Commission (“SEC”) informing Ocwen that the SEC was conducting an investigation relating to Ocwen and making a request for voluntary production of documents and information relating to the April 22, 2014 surrender of certain options to purchase its common stock by Mr. Erbey, its former Executive Chairman, including the 2007 Equity Incentive Plan and the related option grant and surrender documents. On June 12, 2014, Ocwen received a subpoena from the SEC requesting production of various documents relating to its business dealings with HLSS, Altisource, Altisource Asset Management Corporation (“AAMC”) and Altisource Residential Corporation (“Residential”) and the interests of its directors and executive officers in these companies. Ocwen has also disclosed that it received an additional subpoena from the SEC related to its amendments to its Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.

Other Ocwen Matters

Standard & Poor’s (“S&P”), Moody’s Investors Service (“Moody’s”), Fitch Ratings Inc. (“Fitch”) and Morningstar, Inc. (“Morningstar”) rate Ocwen as a mortgage servicer. Each of these rating agencies has downgraded Ocwen’s servicer rating within the last six months. On January 29, 2015, Moody’s downgraded Ocwen’s servicer quality (“SQ”) assessment from “SQ3+” to “SQ3-” as a primary servicer of subprime residential loans and as a special servicer of residential mortgage loans. During February 2015, Fitch downgraded Ocwen's residential primary servicer rating for subprime products from “RPS3” to “RPS4,” and Morningstar downgraded its rating to “MOR RS3.” Three of these rating agencies currently have Ocwen’s ratings outlook as “negative” or “on review for downgrade.” Additionally, Ocwen is subject to quantitative and qualitative agency servicer rating criteria which may have subjective interpretations. Certain of our advance financing facilities (described further in Note 7) require that our servicers or subservicers maintain specified servicer ratings, and failure by our servicers or subservicers to maintain the minimum rating could result in adverse adjustments to our advance rates, liquidity and profitability. Failure to maintain minimum

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orHOME ~~specified~~LOAN ~~ratings~~SERVICING ~~could adversely affect dealings with contractual counterparties~~SOLUTIONS, ~~including GSEs and regulators~~LTD. InAND addition, some PSAs also require that the servicer or subservicer maintain specified servicer ratings. The failure to maintain the specified rating could result in the termination of the servicer under such PSAs. If Ocwen is terminated as servicer, and if Ocwen is unable to make any applicable indemnification payments owed to us, we could lose a substantial portion or all of the value of the related Notes receivable – Rights to MSRs (see discussion of the BlueMountain allegations that follow).SUBSIDIARIES

~~During~~NOTES ~~February~~TO ~~and~~INTERIM ~~March~~CONDENSED ~~2015,~~CONSOLIDATED ~~Ocwen~~FINANCIAL ~~received~~STATEMENTS two notices of servicer termination affecting four separate PSAs underlying our Notes receivable – Rights to MSRs due to servicer rating downgrades. While we believe the financial impact of the termination of servicing under these four PSAs would be immaterial to our overall financial condition, Ocwen could be subject to further terminations as a result of its failure to maintain required minimum servicer ratings, which could have an adverse effect on our business, financing activities, financial condition and results of operations.(UNAUDITED)

~~Additionally,~~(Dollars ifin ~~Ocwen~~thousands ~~fails~~unless tootherwise ~~ensure its servicing advances comply with the terms of the PSAs~~stated, ~~then~~except ~~any~~share such improperly made servicing advances may not be eligible for financing under our advance financing facilities and/or may not be reimbursable by the related securitization trusts or other owners of the mortgage loans. Ocwen may be unwilling or unable to make indemnification payments for losses we incur related to unrecoverable advances.data)

~~Our~~1A. ~~advance~~ORGANIZATION; ~~financing~~ASSET ~~facilities~~SALE; ~~and~~DISCONTINUED ~~certain~~OPERATIONS; ~~Other~~RELATED ~~borrowings~~PARTIES; ~~have~~OTHER ~~cross~~RECENT ~~default provisions to Ocwen’s senior secured term facility, and there may occur an event of default under Ocwen's senior secured debt facility.~~DEVELOPMENTS

If Ocwen becomes subject to a bankruptcy proceeding, our business could be materially and adversely impacted by potential court rulings or other actions or events, including, but not limited to, the following:Organization

•Home ALoan ~~sale~~Servicing ofSolutions, ~~Residential~~Ltd. ~~Mortgage~~and ~~Assets~~its orformer ~~other~~wholly ~~assets~~owned ~~could~~subsidiaries be(collectively ~~re-characterized~~referred to throughout as “HLSS”, “us”, “our”, “we”, or the “Company”) were engaged in anthe ~~Ocwen~~business ~~bankruptcy~~of ~~proceeding~~acquiring asmortgage aservicing ~~financing~~assets ~~secured~~whereby bywe ~~such~~acquired ~~Residential~~the ~~Mortgage~~rights ~~Assets.~~to Ifreceive ~~such~~the aservicing ~~recharacterization~~fees ~~occurs,~~less compensation to the ~~validity~~current orservicer ~~priority~~for oftheir servicing activities (“Rights to MSRs”), servicing advances associated with our ~~security~~Rights ~~interest~~to inMSRs, ~~the~~whole ~~Residential~~loans ~~Mortgage~~held ~~Assets~~for orinvestment, and other residential mortgage-related assets ~~could~~(“Residential beMortgage ~~challenged~~Assets”). inWe aengaged ~~bankruptcy~~Ocwen ~~proceeding~~Financial ofCorporation (together with its subsidiaries, collectively “Ocwen.”) Ifand another residential mortgage loan servicer to service the ~~sale~~mortgage ofloans underlying our Residential Mortgage Assets orand ~~other~~therefore ~~assets~~did isnot ~~recharacterized~~develop asour aown ~~secured~~mortgage ~~financing,~~servicing ~~payments~~platform. ~~made~~Effective byApril ~~Ocwen~~6, to2015, usHome ~~prior~~Loan toServicing ~~Ocwen~~Solutions, ~~commencing~~Ltd. ~~its~~became ~~bankruptcy~~externally ~~proceeding~~managed ~~could~~pursuant beto ~~challenged~~a ~~and~~Services ~~subject~~Agreement towith ~~recovery~~HLSS asAdvances ~~preferential~~Acquisition ~~transfers;~~Corp (“HLSS Advances”).

•Asset ~~Payments made to us by Ocwen, or obligations incurred by Ocwen to us, could be challenged as fraudulent conveyances;~~Sale

•On ~~The~~April 6, ~~purchase~~2015, ~~agreement~~we ~~with~~sold ~~Ocwen~~substantially all of our assets (the “Asset Sale”) pursuant to ~~which~~a weShare ~~may~~and ~~agree~~Asset toPurchase ~~purchase~~Agreement ~~mortgage~~entered ~~servicing~~into ~~rights~~on such date (the “NRZ Purchase Agreement”) among us, ~~associated~~New ~~servicing~~Residential ~~advances~~Investment Corp. (“NRZ”), Hexagon Merger Sub, Ltd. (“Merger Sub”), MSR-EBO Acquisitions LLC (“HLSS MSR-EBO”) and HLSS Advances. In connection with the Asset Sale, among other ~~related~~things, (i) HLSS MSR-EBO acquired substantially all of the assets ~~from~~of ~~Ocwen~~the ~~from~~Company ~~time~~(including toall ~~time~~of the issued share capital of HLSS Luxco 1B S.à r.l. (“Luxco 1B”)) and (ii) HLSS Advances acquired all of the issued share capital of HLSS Luxco 1A S.à r.l. (“~~Purchase~~Luxco ~~Agreement~~1A”) ~~could~~and beassumed ~~rejected~~substantially inall of the liabilities of the Company, including certain post-closing liabilities of the Company. In exchange, the Company received an ~~Ocwen~~amount ~~bankruptcy~~in ~~proceeding;~~cash equal to approximately $1.0 billion plus 28,286,980 newly issued shares of NRZ common stock with a par value $0.01 per share. All of such shares were sold in a registered public offering, and we realized net proceeds of approximately $422,749. In conjunction with the Asset Sale, our senior secured term loan facility was retired.

•Concurrently Awith ~~bankruptcy~~the ~~court~~execution ~~could~~of ~~stay~~the NRZ Purchase Agreement, our Board of Directors adopted and approved a ~~transfer~~plan of ~~servicing~~complete liquidation and dissolution (the “Liquidation Plan”), pursuant to ~~another~~which ~~servicer;~~we agreed to (1) cease our business activities other than such activities that are necessary to carry out the provisions of the Liquidation Plan, (2) pay or make adequate provision for operating expenses expected to be incurred through the completion of the Liquidation Plan and (3) distribute to our shareholders in one or more distributions, (a) the cash received by the Company in the Asset Sale and the net proceeds from the sale of NRZ common stock received by the Company in the Asset Sale, less (b) amounts used to pay the liabilities of the Company and less a reserve in the amount of $50 million that will be held by the Company at the discretion of the Board to ensure that the Company will be able to meet known and unknown liabilities up to the date of the consummation of the transactions contemplated by the Merger (as defined below) or, if the transactions contemplated by the Merger are not consummated, the date of the final liquidating distribution after settlement of the liabilities and to ensure that the Company has available resources in the event that it is necessary to enforce against third parties any contractual or other rights of the Company or its officers or directors. If the Merger is consummated, our shares will be converted automatically into the right to receive $0.704059 per share in cash without interest (the “Merger Consideration”). If the Merger is not consummated, it is anticipated that a further cash distribution will be made to shareholders.

•Immediately ~~Ocwen~~following ~~could~~the ~~discontinue~~closing ~~servicing;~~of the Asset Sale contemplated by the NRZ Purchase Agreement, we entered into, among other things: (i) an Agreement and Plan of Merger (the “Merger Agreement”) with NRZ and Merger Sub, pursuant to which, among other things, the Company will be merged with and into Merger Sub (the “Merger”), with the Company ceasing its corporate existence and Merger Sub surviving the Merger and (ii) a Services Agreement, pursuant to which HLSS Advances provides us with certain services, including, among other things, handling (including defending, prosecuting or resolving) all claims, disputes or controversies (including any litigation, arbitration, governmental investigations or inquiries or any other proceedings or negotiations) in which the Company is a party or may otherwise be involved. On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each ordinary share, par value $0.01 per share, of the Company (the “Company Shares”) issued and outstanding immediately prior to the Effective Time (other than Company Shares owned by any direct or indirect wholly-owned subsidiary of NRZ (other than Merger Sub) or of Merger Sub and Company Shares as to which dissenters’ rights have been properly exercised) will be converted automatically

• The automatic stay under the United States Bankruptcy Code may prevent the ongoing receipt of servicing fees or other amounts due; or

• A bankruptcy of Ocwen defaults our advance financing facilities and negatively impacts our ability to continue to purchase servicing advances.

In addition, Ocwen has disclosed that certain of its debt facilities will mature during 2015. If Ocwen is not able to repay or refinance these obligations as they come due, Ocwen may become the subject of a bankruptcy proceeding.

Any of the foregoing events could have a material adverse effect on our financial condition and operating results.

On January 23, 2015, counsel to BlueMountain, which has represented that it is the investment manager of funds that hold certain Series 2012-T2 and Series 2013-T3 Notes (the “Notes”, which are more fully described in Note 7) issued by HLSS Servicer Advance Receivables Trust (the “HSART Trust”), sent a letter to HLSS Holdings, LLC (“HLSS Holdings”), the HSART Trust, Ocwen and Deutsche Bank National Trust Company (the “Indenture Trustee”), asserting certain alleged events of default under the indenture governing Notes issued by the HSART Trust. BlueMountain has publicly stated that it has taken a “short position” on behalf of certain funds in the stock of HLSS and Ocwen. On February 20, 2015, counsel to BlueMountain sent another letter asserting certain alleged events of default under the indenture governing Notes issued by the HSART Trust. The alleged defaults are related to the Ocwen servicer downgrade and other regulatory matters described above. An event of default under the HSART Trust could result in the revolving facilities within HSART Trust to cease revolving, which would impact our ability to fund the purchase of advances.

On February 17, 2015, HLSS Holdings and our wholly-owned subsidiary HLSS Servicer Advance Facility Transferor, LLC, the depositor to the HSART Trust (the “Depositor”), entered into an agreement (the “Agreement”) with the Indenture Trustee.

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~~Pursuant~~into to the ~~Agreement,~~right ~~the~~to ~~parties~~receive ~~agreed, among other things, that during~~ the ~~term~~Merger ofConsideration. The ~~the~~parties’ ~~Agreement~~obligations ~~the Indenture Trustee will not commence a judicial proceeding~~ to ~~seek~~consummate ~~judicial guidance regarding~~ the ~~allegations~~Merger ~~made~~are insubject ~~the BlueMountain letter prior~~ to ~~April~~certain ~~15,~~closing ~~2015~~conditions, ~~and~~including ~~HLSS~~approval ~~Holdings~~of ~~and~~ the ~~Depositor~~Merger ~~agreed~~by tothe ~~allow~~requisite ~~the~~vote ~~Indenture~~of ~~Trustee~~the toshareholders, ~~withhold~~the ~~from~~absence ~~distribution~~of ~~certain~~any ~~excess~~legal ~~funds~~restraints that would ~~otherwise~~prohibit bethe ~~distributable~~consummation toof the ~~Depositor~~Merger inand another ~~amount~~conditions upcustomary ~~to the Interest Accrual Differential~~ for ~~the~~a ~~related~~transaction ~~interest~~of ~~accrual~~this ~~period under the HSART Trust indenture~~type. Each ~~The~~of ~~“Interest Accrual Differential” means~~us, ~~with~~NRZ ~~respect~~and toMerger ~~any~~Sub ~~interest~~has ~~accrual~~made ~~period~~certain ~~under~~customary ~~the~~representations, ~~HSART~~warranties ~~Trust~~and ~~indenture~~covenants ~~beginning~~in ~~with~~ the ~~interest~~Merger ~~accrual~~Agreement, ~~period~~including, ~~relating~~among toother ~~the February 17~~things, ~~2015~~covenants ~~monthly~~related ~~payment~~to ~~date~~the ~~thereunder~~conduct ~~and any class~~ of ~~HSART~~our ~~Trust~~business ~~notes~~during ~~issued~~the ~~prior~~interim toperiod ~~January~~between ~~17,~~the ~~2014,~~execution anof ~~additional 3.00% per annum over~~ the ~~effective~~Merger ~~interest~~Agreement ~~rate. The Depositor~~ and ~~HLSS Holdings subsequently agreed to allow~~ the ~~Indenture~~consummation ~~Trustee~~of ~~to withhold on~~ the ~~same~~Merger. ~~basis~~The ~~with~~Merger ~~respect~~Agreement toprovides ~~HSART~~for ~~Trust~~certain ~~notes~~termination ~~issued~~rights onfor orboth ~~after~~us ~~January~~and 17NRZ, ~~2014.~~including, ~~The~~if ~~effect~~approval of ~~this~~the ~~agreement~~Merger ~~will~~by ~~be to increase~~ the ~~amount~~requisite ~~deposited~~vote ~~and~~of ~~held~~the inshareholders ~~Debt~~is ~~service~~not ~~accounts~~obtained byor ~~approximately~~if ~~$11.8~~the ~~million~~Merger ~~per~~is ~~month.~~not Inconsummated ~~conjunction~~by ~~with~~ the ~~Asset~~nine ~~Sale~~month ~~(as~~anniversary ~~defined~~of ~~below),~~the ~~Home~~date ~~Loan Servicing Solutions, Ltd. disposed~~ of ~~its interest in HLSS Holdings and~~ the ~~Depositor~~Merger Agreement.

~~Management's~~Subsequent ~~Plan~~to the Asset Sale, the Company has no meaningful sources of revenue and is in the process of winding down operations.

OnDiscontinued February 22, 2015, we entered into an Agreement and Plan of Merger (the “Old Merger Agreement”) with New Residential Investment Corp., a Delaware corporation (“NRZ”), and Hexagon Merger Sub, Ltd., a Cayman Islands exempted company and a wholly-owned subsidiary of NRZ (“Merger Sub”), pursuant to which, subject to the satisfaction or waiver of certain conditions, Merger Sub would merge with and into us (the “Old Merger”).Operations

The following table presents the components of the Loss on disposal of discontinued operations included in the Condensed Statement of Changes of Net Assets for the period from April 6, 2015 to June 30, 2015:

During the month of February 2015, our management developed a management plan that included the following elements:



Assets
Cash and cash equivalents		$	48,755
Match funded advances		5,587,720
Notes receivable – Rights to MSRs		593,288
Loans held for sale		417,574
Related party receivables		162,831
Deferred tax assets		996
Other assets		386,393
		7,197,557
Liabilities
Match funded liabilities		5,193,119
Other borrowings		510,045
Dividends payable		12,783
Income taxes payable		146
Deferred tax liabilities		184
Related party payables		15,595
Other liabilities		18,948
		5,750,820
Net assets in disposal group		1,446,737
Consideration received
Cash		994,374
NRZ common stock
Number of shares	28,286,980
Price per share	15.28
Value of NRZ common stock consideration		432,225
Less: Brokerage and other costs on sale of NRZ common stock		(9,476		)
Total consideration received		1,417,123
Loss on disposal of discontinued operations		$	29,614

• Entering into the Old Merger Agreement with NRZ;

• Negotiating certain commitments from various lenders for replacement advance financing, though never consummated;

• Selling our entire portfolio of re-performing loans (“RPLs”) for an immaterial gain and concurrently repaying the related borrowings in full;

• Marketing our Government National Mortgage Association (“GNMA”) early buy-out (“EBO”) loan portfolios and extending the maturity of the related borrowings to allow for continued marketing;

• Working closely with our legal counsel to address BlueMountain’s allegations of default, which we believe are without merit, and any potential impact of such allegations on our advance financing facilities; and

• Amending our senior secured term loan facility agreement to extend the deadline to furnish annual financial statements to April 10, 2015, to amend certain terms of cross default to our advance financing facilities and to permit an amendment to the subservicing agreement with Ocwen (the "Subservicing Agreement").

On April 6, 2015, HLSS, HLSS Holdings and Ocwen entered into an amendment to the Purchase Agreement and the sale supplements (effective upon completion of the Asset Sale described below) to, among other things, (i) obtain Ocwen's consent to the assignment by HLSS of its interest under the Purchase Agreement and each sale supplement, (ii) provide that HLSS Holdings will not become the named servicer in connection with any Rights to MSRs, or direct the replacement of Ocwen as named servicer, before April 6, 2017 except under certain limited circumstances, (iii) extend the scheduled term of Ocwen's servicing appointment under each sale supplement until the earlier of eight years from the date of such sale supplement and April 30, 2020, and (iv) provide that Ocwen will reimburse HLSS Holdings for certain increased financing costs resulting from servicer rating downgrades of Ocwen. In addition, under such amendment (x) Ocwen agreed to exercise any “clean-up call” rights under any servicing agreement related to Rights to MSRs only at the direction of HLSS Holdings and to sell to HLSS Holdings, on an “as-is” basis, the economic beneficial interest in the right to purchase the mortgage loans and other assets in the trust for each designated servicing agreement pursuant to such clean-up call rights and (y) HLSS Holdings agreed to pay to Ocwen a fee equal to 0.50% of the outstanding balance of the performing mortgage loans purchased in connection with any such exercise and to pay Ocwen’s related costs and expenses of exercise.

On April 6, 2015, to best address concerns relating to our ability to operate as a going concern and the associated impact on our business on an expedited basis, we agreed with NRZ and Merger Sub to terminate the Old Merger Agreement and immediately complete the sale of substantially all of our assets (the “Asset Sale”). The Asset Sale was made in accordance with the terms and conditions of a Share and Asset Purchase Agreement entered into on April 6, 2015 (the “NRZ Purchase Agreement”) between us, NRZ, MSR-EBO Acquisitions LLC (“HLSS MSR-EBO”) and HLSS Advances Acquisition Corp. (“HLSS Advances”). In connection with the Asset Sale, among other things, (i) HLSS MSR-EBO acquired substantially all of the assets of the Company (including all of the issued share capital of HLSS Luxco 1B S.à r.l. (“Luxco 1B”)) and (ii) HLSS Advances acquired all of the issued share capital of HLSS Luxco 1A S.à r.l. (“Luxco 1A”) and assumed substantially all of the liabilities of the Company, including certain post-closing liabilities of the Company. In exchange, the Company received an amount in cash

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~~equal~~The toAsset ~~approximately~~Sale ~~$1.0~~resulted ~~billion~~in ~~plus~~the 28disposal of substantially all of the Company’s operations,~~286~~ and as such,~~980~~ ~~newly~~certain ~~issued~~amounts ~~shares~~in ofthe ~~NRZ~~prior ~~common~~period ~~stock~~have been reclassified to Net income from discontinued operations for all periods presented to conform to the current year presentation with ano ~~par~~impact ~~value~~to ~~$0.01~~previously ~~per~~reported ~~share~~net income or shareholders’ equity. InNet ~~conjunction~~income ~~with~~from discontinued operations reported in the ~~Asset~~Interim ~~Sale,~~Condensed ~~our~~Consolidated ~~senior~~Statements ~~secured~~of ~~term~~Operations ~~loan~~consisted ~~facility~~of ~~was~~the ~~retired.~~following components for the periods indicated:

Concurrently with the execution of the NRZ Purchase Agreement, our Board of Directors adopted and approved a plan of complete liquidation and dissolution (the “Liquidation Plan”), pursuant to which we will (1) cease our business activities other than such activities that are necessary to carry out the provisions of the Liquidation Plan, (2) pay or make adequate provision for operating expenses expected to be incurred through the completion of the Liquidation Plan and (3) distribute to our shareholders in one or more distributions, (a) the cash received by the Company in the Asset Sale and the net proceeds from the sale of NRZ common stock received by the Company in the Asset Sale, less (b) amounts used to pay the liabilities of the Company and less a reserve in the amount of $50 million that will be held by the Company at the discretion of the Board to ensure that the Company will be able to meet known and unknown liabilities up to the date of the consummation of the transactions contemplated by the New Merger (as defined below) or, if the transactions contemplated by the New Merger are not consummated, the date of the final liquidating distribution after settlement of the liabilities and to ensure that the Company has available resources in the event that it is necessary to enforce against third parties any contractual or other rights of the Company or its officers or directors. If the New Merger is consummated, our shares will be converted automatically into the right to receive $0.704059 per share in cash without interest (the “Merger Consideration”). If the New Merger is not consummated and post-closing expenses and liabilities do not exceed $50 million, it is anticipated that a further cash distribution will be made to shareholders.



	For the period April 1, 2015 to April 5, 2015		For the three months ended June 30, 2014		For the period January 1, 2015 to April 5, 2015		For the six months ended June 30, 2014
Revenue
Interest income – notes receivable – Rights to MSRs	$	5,362	$	86,574	$	76,568	$	189,112
Interest income – other	542		7,777		9,994		10,721
Total interest income	5,904		94,351		86,562		199,833
Related party revenue	4		773		54		1,401
Other revenue	3		—		1,443		—
Total revenue	5,911		95,124		88,059		201,234
Operating expenses
Compensation and benefits	137		1,694		2,000		3,163
Related party expenses	—		496		76		868
General and administrative expenses	915		1,554		8,432		3,359
Total operating expenses	1,052		3,744		10,508		7,390
Other expenses
Interest expense	3,018		40,001		43,831		77,512
Loss on termination of interest rate swaps	440		—		440		—
Loss on Loans held for sale	—		—		7,654		—
Total other expenses	3,458		40,001		51,925		77,512
Income tax expense	6		—		11		—
Net income from discontinued operations	$	1,395	$	51,379	$	25,615	$	116,332

~~Immediately~~Related following the closing of the Asset Sale contemplated by the NRZ Purchase Agreement, we entered into: (i) an Agreement and Plan of Merger (the “New Merger Agreement”) with NRZ and Merger Sub, pursuant to which, among other things, the Company will be merged with and into Merger Sub (the “New Merger”), with the Company ceasing its corporate existence and Merger Sub surviving the New Merger, (ii) a Services Agreement, pursuant to which HLSS Advances Acquisition Corp. will provide us with certain services following the consummation of the Asset Sale, including, among other things, handling (including defending, prosecuting or resolving) all claims, disputes or controversies (including any litigation, arbitration, governmental investigations or inquiries or any other proceedings or negotiations) in which the Company is a party or may otherwise be involved and (iii) a Registration Rights Agreement to memorialize certain rights relating to the registration of shares of NRZ common stock to be held by the Company upon the closing of the Asset Sale. On the terms and subject to the conditions set forth in the New Merger Agreement, at the effective time of the New Merger (the “Effective Time”), each ordinary share, par value $0.01 per share, of the Company (the “Company Shares”) issued and outstanding immediately prior to the Effective Time (other than Company Shares owned by any direct or indirect wholly-owned subsidiary of NRZ (other than Merger Sub) or of Merger Sub and Company Shares as to which dissenters’ rights have been properly exercised) will be converted automatically into the right to receive the Merger Consideration. The parties’ obligations to consummate the New Merger are subject to certain closing conditions, including approval of the New Merger by the requisite vote of the shareholders, the absence of any legal restraints that would prohibit the consummation of the New Merger and other conditions customary for a transaction of this type. Each of us, NRZ and Merger Sub has made certain customary representations, warranties and covenants in the New Merger Agreement, including, among other things, covenants related to the conduct of our business during the interim period between the execution of the New Merger Agreement and the consummation of the New Merger. The New Merger Agreement provides for certain termination rights for both us and NRZ, including, if approval of the New Merger by the requisite vote of the shareholders is not obtained or if the New Merger is not consummated by the nine month anniversary of the date of the New Merger Agreement.Parties

OnWe ~~April~~entered ~~27,~~into ~~2015~~various agreements with Ocwen and Altisource Portfolio Solutions, weS.A. ~~distributed~~(“Altisource”) toin connection with our ~~shareholders~~Initial ~~approximately~~Public $1Offering on March 5, 2012.2 ~~billion~~William orC. $Erbey, our founder and the former Chairman of our Board of Directors until January 16~~.613~~, ~~per~~2015, ~~ordinary~~was ~~share~~also the Chairman of the Board of Directors of Ocwen and Altisource until January 16, 2015.

We conducted a substantial amount of business with Ocwen and were heavily reliant on Ocwen and Altisource in the conduct of our operations. Our results of operations may have differed significantly from our reported results if we did not have agreements in place with Ocwen and Altisource. See Note 17 for further discussion.

Other Recent Developments

OnAs ~~September 15, 2014, the Company received~~ a ~~subpoena~~result ~~from~~of ~~the~~an ~~SEC~~Ocwen ~~requesting~~settlement ~~that~~agreement iton ~~provide~~December ~~certain~~22, ~~information~~2014 ~~related~~with to the ~~Company’s~~New ~~prior~~York ~~accounting~~Department ~~conventions for and valuations~~ of ~~our~~Financial ~~Notes~~Services, ~~receivable~~William –C. ~~Rights~~Erbey tostepped ~~MSRs~~down ~~that~~as ~~resulted~~non-executive inChairman ~~the restatement~~ of ~~our consolidated financial statements for~~ the ~~years~~Board ~~ended~~of ~~December~~Directors ~~31,~~of ~~2013 and 2012 and for~~ the ~~quarter ended March 31~~Company, ~~2014 during August 2014. On December 22~~Ocwen, ~~2014~~Altisource, ~~the~~Altisource ~~Company~~Asset ~~received~~Management aCorporation ~~subpoena from the SEC requesting that it provide information related to certain governance documents~~ and ~~transactions~~Altisource ~~and~~Residential ~~certain~~Corporation ~~communications~~on ~~regarding~~January ~~the~~16, ~~same~~2015. ~~The~~Concurrently, ~~Company~~Robert isJ. ~~cooperating~~McGinnis ~~with~~was ~~the~~appointed ~~SEC~~as innon-executive ~~these~~Chairman ~~matters~~of HLSS.

AsOn aApril ~~result~~27, of2015, ~~Ocwen’s~~in ~~settlement~~accordance ~~agreement~~ with the NYLiquidation ~~DFS~~Plan, onwe ~~January~~distributed ~~16,~~to ~~2015,~~our ~~William~~shareholders Capproximately $1.2 ~~Erbey~~billion ~~stepped~~or ~~down~~$16.613 asper ~~non-executive~~ordinary ~~Chairman~~share, ofwhich amount represented the ~~Board~~net ofproceeds ~~Directors~~received ofby the Company, ~~Ocwen,~~in ~~Altisource,~~connection ~~AAMC~~with ~~and~~the ~~Residential.~~Asset ~~Concurrently~~Sale, ~~Robert~~less J.a ~~McGinnis~~cash ~~was~~reserve ~~appointed~~in asthe ~~non-executive~~amount ~~Chairman~~ of ~~HLSS~~$50 million.

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~~review~~On April 29, 2015, our ~~credit~~shares ~~rating~~were ~~for~~delisted ~~potential~~from ~~upgrade~~The ~~subsequent~~Nasdaq toStock ~~our~~Market ~~announcement~~LLC ofand began being quoted on the ~~Old~~OTC ~~Merger~~Pink ~~Agreement~~Marketplace onunder ~~February~~the 22symbol “HLSSF” and were subsequently deregistered under Section 12(b) of the Securities Exchange Act of 1934, ~~2015~~as amended.

On March 18, 2015, we received notification from The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Company is no longer in compliance with Nasdaq Listing Rule 5250(c)(1) for continued listing due to the Company not having timely filed its Annual Report on Form 10-K for the year ended December 31, 2014. On April 29, 2015, our shares were delisted from Nasdaq and began being quoted on the OTC Pink Marketplace under the symbol “HLSSF.”

On March 23, 2015, the Company received a subpoena from the SEC requesting that it provide information concerning communications between the Company and certain investment advisors and hedge funds. The SEC also requested documents relating to the Company’s structure, certain governance documents and any investigations or complaints connected to trading in the Company’s securities. The Company is cooperating with the SEC in this matter.

1B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Use of Estimates

We prepared the accompanying unaudited Interim Condensed Consolidated Financial Statements in conformity with the instructions of the Securities and Exchange Commission (“SEC”) to Form 10-Q for interim financial statements. In our opinion, the accompanying unaudited financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“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 materially differ from those estimates. Material estimates that are particularly significant relate to our fair value measurements of Notes receivable – Rights to MSRs.

Certain disclosures included in the Company’s Annual Report are not required to be included on an interim basis in the Company’s Quarterly Reports on Forms 10-Q. The Company has condensed or omitted these disclosures. Therefore, this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on April 6, 2015 (the "2014 Form 10-K").

Going-Concern Basis of Accounting – Periods Prior to April 6, 2015

The Interim Condensed Consolidated Financial Statements for the quarter-to-date and year-to-date periods ended April 5, 2015, as of December 31, 2014 and for the three and six months ended June 30, 2014 were prepared on the going-concern basis of accounting, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Prior period financial statements have not been restated under the liquidation basis of accounting.

Liquidation Basis of Accounting – Periods Beginning on and Subsequent to April 6, 2015

On April 6, 2015, the Company adopted the Liquidation Plan; therefore, the Company has applied the liquidation basis of accounting on a prospective basis from the date of adoption of the Liquidation Plan in accordance with GAAP. The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the plan of liquidation and requires management to make estimates that affect the amounts reported in the financial statements and the related notes. To the extent there are any changes in the Company’s initial estimates, there will be changes reflected in the Interim Condensed Statement of Changes in Net Assets (Liquidation Basis). As cash is received or paid, consistent with the Company’s initial estimates, there will be no change to the Net assets. Results could differ from these estimates and may affect the net assets in liquidation and actual cash flows.

Effective April 6, 2015, the Company adopted the provisions of Accounting Standards Update ("ASU") 2013-07, which clarifies when an entity should apply the liquidation basis of accounting. In addition, the ASU provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting.

In accordance with the liquidation basis of accounting, the Company has accrued anticipated income and expense through the wind-down period. Estimated income to be earned during liquidation includes interest income on operating cash accounts of $17. Reserve for estimated costs during the period of liquidation includes Compensation and benefits of $176, legal and professional fees of $255 and general operating expenses during wind-down period of $29. All obligations are expected to be settled in cash.

The Company expects to complete its wind-down during October 2015; however, the actual date of completion may be significantly different.

Principles of Consolidation

Our financial statements prior to April 6, 2015 include the accounts of Home Loan Servicing Solutions, Ltd. and its former wholly owned subsidiaries as well as four variable interest entities (“VIE”) of which we ~~are~~were the primary beneficiary. We ~~eliminate~~eliminated intercompany accounts and transactions in consolidation. Upon the consummation of the Asset Sale, the Company

We evaluate each special purpose entity (“SPE”) for classification as a VIE. When a SPE meets the definition of a VIE and we determine that HLSS is the primary beneficiary, we include the SPE in our Interim Condensed Consolidated Financial Statements.

Our Match funded advances are in two SPEs along with related Match funded liabilities (the "Match Funded Advance SPEs"). We determined that these SPEs are VIEs of which we are the primary beneficiaries. The accounts of these SPEs are included in our Interim Condensed Consolidated Financial Statements.

Match funded advances on loans serviced for others result from our transfers of residential loan servicing advances to SPEs in exchange for cash. The SPEs issue debt supported by collections on the transferred advances. We made these transfers under the terms of our advance facility agreements. These transfers do not qualify for sale accounting because we retain control over the transferred assets. As a result, we account for these transfers as financings and classify the transferred advances on our Interim Condensed Consolidated Balance Sheet as Match funded advances and the related liabilities as Match funded liabilities. We use collections on the Match funded advances pledged to the SPEs to repay principal and to pay interest and the expenses of the SPEs. Holders of the debt issued by the SPEs can look only to the assets of the entity itself for satisfaction of the debt and have no recourse against HLSS.

As of March 31, 2015, our Loans held for sale are in one SPE along with the related Other borrowings (the "Mortgage Loans SPEs"). As of December 31, 2014, those loans were classified as Loans held for investment and were in two SPEs along with the related Other borrowings. We determined that these SPEs are VIEs of which we are the primary beneficiaries. The accounts of these SPEs are included in our Interim Condensed Consolidated Financial Statements. (See discussion of the reclassification of our loans to held for sale below.)

Our whole loans were transferred to SPEs in exchange for cash, and the SPEs issued debt collateralized by these loans. These transfers do not qualify for sale accounting because we retain control over the transferred assets. As a result, we account for these transfers as financings and classify the transferred loans on our Interim Condensed Consolidated Balance Sheet as Loans held for

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~~sale~~divested ~~and the related liabilities as Other borrowings. We use collections on our whole loans pledged to the SPEs to repay principal and to pay interest and the expenses~~ of ~~the~~all ~~SPEs. Holders~~ of ~~the~~its ~~debt~~former ~~issued~~wholly byowned ~~the~~subsidiaries, ~~SPEs~~including ~~can look beyond~~ the ~~assets~~VIEs. ofAccordingly, the ~~SPEs~~financial ~~for~~statements ~~satisfaction~~beginning ofon ~~the debt~~ and ~~therefore~~subsequent ~~have~~to ~~recourse~~April ~~against~~6, ~~HLSS. It~~2015 isinclude ~~our~~only ~~expectation that~~ the ~~cash~~accounts ~~flows~~ of ~~the~~Home ~~SPEs~~Loan ~~will~~Servicing beSolutions, ~~sufficient to meet all claims of the debt holders~~Ltd. ~~HLSS is responsible for making any principal or interest payments to the debt holders not covered by the cash flows of the SPEs.~~

~~The~~We ~~following~~evaluated ~~tables~~each ~~summarize~~special purpose entity (“SPE”) for classification as a VIE. When a SPE met the ~~assets~~definition of a VIE and ~~liabilities~~we ofdetermined ~~our~~that ~~consolidated~~HLSS ~~SPEs~~was atthe primary beneficiary, we included the ~~dates~~SPE ~~indicated:~~in our Interim Condensed Consolidated Financial Statements.

At March 31, 2015	Match Funded Advance SPEs		Mortgage Loans SPEs		Total
Match funded advances	$	5,808,796	$	—	$	5,808,796
Loans held for sale	—		421,257		421,257
Related party receivables (1)	92,138		6,051		98,189
Other assets (2)	92,109		143,523		235,632
Total assets	$	5,993,043	$	570,831	$	6,563,874
Match funded liabilities	$	5,274,318	$	—	$	5,274,318
Other borrowings (3)	—		486,828		486,828
Other liabilities	4,808		3,448		8,256
Total liabilities	$	5,279,126	$	490,276	$	5,769,402

Our Match funded advances were in two SPEs along with related Match funded liabilities (the "Match Funded Advance SPEs"). We determined that these SPEs were VIEs of which we were the primary beneficiaries. The accounts of these SPEs were included in our Interim Condensed Consolidated Financial Statements.

At December 31, 2014	Match Funded Advance SPEs		Mortgage Loans SPEs		Total
Match funded advances	$	6,121,595	$	—	$	6,121,595
Loans held for investment	—		815,663		815,663
Related party receivables (1)	—		3,885		3,885
Other assets (2)	134,955		139,114		274,069
Total assets	$	6,256,550	$	958,662	$	7,215,212
Match funded liabilities	$	5,624,088	$	—	$	5,624,088
Other borrowings (3)	—		815,986		815,986
Related party payables	—		—		—
Other liabilities	4,951		4,308		9,259
Total liabilities	$	5,634,324	$	821,088	$	6,455,412

Match funded advances on loans serviced for others resulted from our transfers of residential loan servicing advances to SPEs in exchange for cash. The SPEs issued debt supported by collections on the transferred advances. We made these transfers under the terms of our advance facility agreements. These transfers did not qualify for sale accounting because we retained control over the transferred assets. As a result, we accounted for these transfers as financings and classified the transferred advances on our Interim Condensed Consolidated Balance Sheet as Match funded advances and the related liabilities as Match funded liabilities. We used collections on the Match funded advances pledged to the SPEs to repay principal and to pay interest and the expenses of the SPEs. Holders of the debt issued by the SPEs could look only to the assets of the entity itself for satisfaction of the debt and had no recourse against HLSS.

~~(1)~~As ~~Related~~of ~~party~~December ~~receivables~~31, ~~principally~~2014, ~~include~~our ~~Match~~Loans ~~funded~~held ~~advance~~for ~~collections~~investment were in two SPEs along with the related Other borrowings (the "Mortgage Loans SPEs"). We determined that these SPEs were ~~in-transit~~VIEs toof ~~pay~~which ~~down~~we ~~our~~were ~~Match~~the ~~funded~~primary ~~liabilities~~beneficiaries. asThe accounts of ~~each~~these ~~presented~~SPEs ~~period~~were included in our Interim Condensed Consolidated Financial Statements. (See ~~Note~~discussion 17of ~~for~~the ~~more~~reclassification ~~information~~of ~~about~~ our ~~Related~~loans ~~party~~to ~~receivables~~held for sale below.)

~~(2)~~Our ~~Other~~whole ~~assets~~loans ~~principally~~were ~~include~~transferred ~~debt~~to ~~service~~SPEs ~~accounts,~~in ~~claims~~exchange ~~receivable~~for ~~from~~cash, and the ~~FHA~~SPEs ~~and~~issued debt ~~issuance~~collateralized ~~costs~~by these loans. ~~See~~These ~~Note~~transfers 6did not qualify for ~~more~~sale ~~information~~accounting ~~about~~because we retained control over the transferred assets. As a result, we accounted for these transfers as financings and classified the transferred loans on our Interim Condensed Consolidated Balance Sheet at December 31, 2014 as Loans held for investment and the related liabilities as Other borrowings. We used collections on our whole loans pledged to the SPEs to repay principal and to pay interest and the expenses of the SPEs. Holders of the debt issued by the SPEs could look beyond the assets of the SPEs for satisfaction of the debt and therefore had recourse against HLSS. It was our expectation that the cash flows of the SPEs would be sufficient to meet all claims of the debt holders. HLSS was responsible for making any principal or interest payments to the debt holders not covered by the cash flows of the SPEs.

(3) Other borrowings include the carrying value of our borrowings to acquire Loans held for investment. See Note 8 for more information about our Other borrowings.

Loans Held for Sale

Effective March 31, 2015, we reclassified our Loans held for investment to Loans held for sale based on a change in management’s intention and a decision to actively market the GNMA EBO loans for sale. Loans held for sale are reported at the lower of cost or fair value. As of December 31, 2014, both the portfolio of RPLs and GNMA EBO loans were classified as Loans held for investment based on management’s intent to hold these loans for investment. As further discussed below, we sold our RPL portfolios during the first quarter of 2015.

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The ~~Company~~following ~~evaluates~~tables ~~purchased~~summarize ~~loans that are not deemed impaired upon acquisition in accordance with~~ the ~~provisions~~assets ~~of Accounting Standards Codification ("ASC") 310-20, Receivables - Nonrefundable Fees~~ and ~~Other~~liabilities ~~Costs.~~of ~~Only~~ our ~~GNMA~~consolidated ~~EBO~~SPEs ~~loans are accounted for under ASC 310-20; therefore, interest income is accrued~~ at ~~the~~December ~~amount that we are guaranteed to receive under either the related purchase agreement or by the Federal Housing Administration ("FHA")~~31, ~~which~~2014: ~~is the amount of interest we ultimately expect to receive.~~



At December 31, 2014	Match Funded Advance SPEs		Mortgage Loans SPEs		Total

Match funded advances	$	6,121,595	$	—	$	6,121,595
Loans held for investment	—		815,663		815,663
Related party receivables (1)	—		3,885		3,885
Other assets (2)	134,955		139,114		274,069
Total assets	$	6,256,550	$	958,662	$	7,215,212

Match funded liabilities	$	5,624,088	$	—	$	5,624,088
Other borrowings (3)	—		815,986		815,986
Related party payables	5,285		794		6,079
Other liabilities	4,951		4,308		9,259
Total liabilities	$	5,634,324	$	821,088	$	6,455,412


(1)	Related party receivables principally included Match funded advance collections that were in-transit to pay down our Match funded liabilities as of each presented period. See Note 17 for more information about our Related party receivables.


(2)	Other assets principally included debt service accounts, claims receivable from the FHA and debt issuance costs. See Note 6 for more information about our Other assets.


(3)	Other borrowings included the carrying value of our borrowings to acquire Loans held for investment. See Note 8 for more information about our Other borrowings.

Loans Held for Sale

Effective March 31, 2015, we reclassified our Loans held for investment to Loans held for sale based on a change in management’s intention and a decision to actively market the Government National Mortgage Association (“GNMA”) early buy-out (“EBO”) loans for sale. Loans held for sale were reported at the lower of cost or fair value. As of December 31, 2014, both the portfolio of re-performing loans (“RPLs”) and GNMA EBO loans were classified as Loans held for investment based on management’s intent to hold these loans for investment. As further discussed below, we sold our RPL portfolios during the first quarter of 2015.

The Company evaluated purchased loans that were not deemed impaired upon acquisition in accordance with the provisions of Accounting Standards Codification ("ASC") 310-20, Receivables - Nonrefundable Fees and Other Costs. Only our GNMA EBO loans were accounted for under ASC 310-20; therefore, interest income was accrued at the amount that we were guaranteed to receive under either the related purchase agreement or by the Federal Housing Administration ("FHA"), which was the amount of interest we ultimately expected to receive.

In connection with the reclassification of the GNMA EBO loans to held for sale, we recorded a valuation allowance of $7,654 to record the loans at the lower of cost or fair value. Fair value was determined by reference to counterparty quotations.

Effective December 31, 2014, we adopted the provisions of ~~Accounting Standards Update ("~~ASU") 2014-04. This ASU requires that when an in substance repossession or foreclosure occurs; that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. This amendment did not have a material impact on our Interim Condensed Consolidated Financial Statements.

Effective December 31, 2014, we adopted the provisions of ASU 2014-14. Therefore, upon foreclosure of GNMA EBO loans for which we have made or intend to make a claim on the FHA guarantee, we reclassify the carrying amount of the loan to Claims receivable from FHA, which is recorded within Other assets on our Interim Condensed Consolidated Balance Sheets. As a result of our adoption of this ASU, we ~~have~~ classified foreclosed properties and outstanding FHA claims as Claims receivable from FHA within our Other assets. See Note 6 for further information.

On February 20, 2015, we sold our RPL portfolio to an unrelated third party purchaser for a total purchase price of $337.6 million, subject to a 5% holdback pending completion of the purchaser's due diligence. A portion of the sale proceeds were used to terminate the RPL Facility. We recognized an immaterial gain on this sale.

Recent Accounting Pronouncements

ASU 2015-01, Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This ASU eliminates the concept of an extraordinary item from GAAP. To be considered an extraordinary item under existing GAAP, an event or transaction must be unusual in nature and must occur infrequently. As a result, an entity will no longer (1) segregate an extraordinary item from the results of ordinary operations; (2) separately present an extraordinary item on its income statement, net of tax, after income from continuing operations; and (3) disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, the ASU does not affect the reporting and disclosure requirements for an event that is unusual in nature or that occurs infrequently. The ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods, any may be applied prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted if the guidance is applied as of the beginning of the annual period of adoption. The adoption of ASU 2015-01 is not expected to have a material impact on the Company’s Interim Condensed Consolidated Financial Statements.

ASU 2015-02, Amendments to the Consolidation Analysis. This ASU is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations (public and private companies and not-for-profit organizations) that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the ASU places more emphasis on risk of loss when determining a controlling financial interest. A reporting organization may no longer have to consolidate a legal entity in certain circumstances based solely on its fee arrangement, when certain criteria are met, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a VIE, changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for periods beginning after December 15, 2015, and early adoption is permitted, including adoption in an interim period. The adoption of this ASU is not expected to have a material impact on the Company’s Interim Condensed Consolidated Financial Statements.

ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this ASU will require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of related debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by these amendments. This ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods, and early adoption is permitted. Had the Company adopted the provisions of this ASU as of March 31, 2015, the impact to the Interim Condensed Consolidated Balance Sheets would have

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~~been~~On toFebruary ~~reduce~~20, ~~Other~~2015, ~~assets~~we ~~and~~sold ~~Total~~our ~~assets~~RPL ~~each~~portfolio byto ~~$18,294~~an ~~(December~~unrelated ~~31,~~third ~~2014:~~party ~~each~~purchaser byfor ~~$16,706),~~a tototal ~~reduce~~purchase ~~Match~~price ~~funded~~of ~~liabilities by~~ $~~14,085~~337.6 ~~(December 31~~million, ~~2014:~~subject ~~$11,534),~~ to ~~reduce~~a ~~Other borrowings by $4,209 (December 31, 2014: $~~5~~,172)~~% ~~and~~holdback topending ~~reduce~~completion ~~Total~~of ~~liabilities~~the bypurchaser's ~~$18,294~~due ~~(December~~diligence. ~~31,~~A ~~2014:~~portion ~~$16,706).~~of ~~The~~the ~~ASU~~sale isproceeds ~~not~~were ~~expected~~used to ~~have~~terminate a ~~material~~facility ~~impact~~to onpartially ~~the~~finance ~~Company's~~our ~~Interim~~RPLs ~~Condensed~~(the ~~Consolidated~~"RPL ~~Statements~~Facility"). ofWe ~~Operations,~~recognized ~~Statements~~an ofimmaterial ~~Comprehensive~~gain ~~Income,~~on ~~Statements~~this ~~of Changes in Equity or Statements of Cash Flows~~sale.

~~Certain~~Recent ~~disclosures~~Accounting included in the Company’s Annual Report are not required to be included on an interim basis in the Company’s Quarterly Reports on Forms 10-Q. The Company has condensed or omitted these disclosures. Therefore, this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on April 6, 2015 (the "2014 Form 10-K").Pronouncements

ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, the amendments in this ASU will require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of related debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by these amendments. This ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods, and early adoption is permitted. Had the Company adopted the provisions of this ASU, the impact to the Interim Condensed Statement of Net Assets would have been immaterial, and the impact to the Interim Condensed Consolidated Balance Sheet as of December 31, 2014 would have been to reduce Other assets and Total assets each by $16,706, to reduce Match funded liabilities by $11,534, to reduce Other borrowings by $5,172 and to reduce Total liabilities by $16,706.

2. ASSET ACQUISITIONS

With the exception of servicing advances purchased in the ordinary course ~~under~~of ~~existing~~our ~~agreements~~prior business activities with Ocwen, we did not conduct any asset acquisitions during ~~the three months ended March 31,~~ 2015.

On March 3, 2014, we acquired GNMA EBO loans with UPB of $549,411 from Ocwen. Because these loans earn interest at a rate that is higher than current market rates, the loans were purchased at a premium to par, resulting in a total purchase price of $556,618. These loans ~~are~~were insured by the FHA, making the collectability of the entire balance of these loans reasonably assured. At acquisition and at December 31, 2014, we accounted for these GNMA EBO loans as Loans held for investment. Effective ~~for~~ March 31, 2015, we reclassified the GNMA EBO loans to Loans held for sale.

Ocwen initially acquired these loans through the GNMA early buy-out program, which allows servicers of federally insured or guaranteed loans to buy delinquent loans from the applicable loan securitization pools. We also financed the GNMA EBO servicing advances related to the GNMA EBO loans, and we ~~account~~accounted for this arrangement as a financing transaction because Ocwen retained title and all other rights and rewards associated with the GNMA EBO servicing advances. Collectively, the purchase of GNMA EBO loans and financing of the related advances are referred to as the “EBO Pool 1 Transaction.”

Our GNMA EBO loans are in a Mortgage Loans SPE along with the related financing facility (the "EBO Facility"), which is more fully described in Note 8. The accounts of this SPE are included in our Interim Condensed Consolidated Financial Statements. These transfers to the SPE do not qualify for sale accounting because we retain control over the transferred assets. As a result, we account for these transfers as financings and classify the transferred GNMA EBO loans on our Interim Condensed Consolidated Balance Sheet as Loans held for sale (at December 31, 2014, as Loans held for investment) and the related liabilities as Other borrowings. We use collections on the GNMA EBO loans pledged to the SPE to repay principal and to pay interest and the expenses of the entity. The holders of the debt issued by this SPE can look beyond the assets of the SPE for satisfaction of the debt and therefore have recourse against HLSS. It is our expectation that, since our GNMA EBO loans are insured by the FHA, the cash flows of this SPE will be sufficient to meet all claims of the debt holders. HLSS is responsible for making any principal or interest payments to the debt holders not covered by the cash flows of the SPE.

The following table summarizes the purchase price of assets we acquired during the three months ended March 31, 2014 and reconciles the cash used to acquire such assets:

GNMA EBO loans purchase price (1)	$	556,618
Sources:
Cash on hand	$	83,884
Other borrowings	472,734
Total cash used	$	556,618

(1) The cash used to purchase these assets is shown within “Purchase of loans held for investment” of the 2014 Interim Condensed Consolidated Statement of Cash Flows.

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Our GNMA EBO loans were in a Mortgage Loans SPE along with the related financing facility (the "EBO Facility"), which is more fully described in Note 8. The accounts of this SPE were included in our Interim Condensed Consolidated Financial Statements for periods prior to April 6, 2015. These transfers to the SPE did not qualify for sale accounting because we retained control over the transferred assets. Prior to April 6, 2015, we accounted for these transfers as financings and classified the transferred GNMA EBO loans on our Interim Condensed Consolidated Balance Sheet as Loans held for sale (at December 31, 2014, as Loans held for investment) and the related liabilities as Other borrowings. We used collections on the GNMA EBO loans pledged to the SPE to repay principal and to pay interest and the expenses of the entity. The holders of the debt issued by this SPE could look beyond the assets of the SPE for satisfaction of the debt and therefore had recourse against HLSS. It was our expectation that, since our GNMA EBO loans were insured by the FHA, the cash flows of this SPE would be sufficient to meet all claims of the debt holders. HLSS was responsible for making any principal or interest payments to the debt holders not covered by the cash flows of the SPE.

On June 27, 2014, HLSS purchased a portfolio of RPLs from a third party seller with a UPB of $396,939 (the "RPL Transaction"). Because RPLs have historically experienced default conditions, are not insured by any agency and earn interest at a rate that is lower than current market rates, the loans were purchased at a discount of par equivalent to thirty percent of UPB, resulting in a total purchase price of $276,248. These loans were purchased credit impaired. In accordance with ASC 310-30, we recognized the excess cash flows over the purchase price as interest income on a level yield basis. We accounted for these RPLs as Loans held for investment at December 31, 2014.

Ocwen serviced the RPLs prior to the RPL Transaction, and Ocwen remained the servicer subsequent to the RPL Transaction.

Our RPLs were in a Mortgage Loans SPE along with the related financing facility (the “RPL Facility”), which is more fully described in Note 8. The accounts of this SPE were included in our Interim Condensed Consolidated Financial Statements for periods prior to April 6, 2015. The transfers to the SPE did not qualify for sale accounting because we retained control over the transferred assets. Prior to April 6, 2015, we accounted for these transfers as financing and classified the transferred RPLs on our Interim Condensed Consolidated Balance Sheet as Loans held for investment and the related liabilities as Other borrowings. We used collections on the RPLs pledged to the SPE to repay principal and to pay interest and the expenses of the entity. The holders of the debt issued by this SPE could look beyond the assets of the SPE for satisfaction of the debt and therefore had recourse against HLSS. It was our expectation that the cash flows of this SPE would be sufficient to meet all claims of the debt holders. HLSS was responsible for making any principal or interest payments to the debt holders not covered by the cash flows of the SPE.

The following table summarizes the purchase price of assets we acquired during the six months ended June 30, 2014 and reconciles the cash used to acquire such assets:



GNMA EBO loans purchase price (1)	$	556,618
RPL purchase price (1)	276,248
Total cash required	$	832,866
Sources:
Cash on hand	$	141,214
Other borrowings	691,652
Total cash used	$	832,866


(1)	The cash used to purchase these assets is shown within “Purchase of loans held for investment” of the 2014 Interim Condensed Consolidated Statement of Cash Flows.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

We ~~estimate~~estimated fair value based on a hierarchy that ~~maximizes~~maximized the use of observable inputs and ~~minimizes~~minimized the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions 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 assessment of 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 and gives the highest priority to Level 1 inputs and the lowest to Level 3 inputs.

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The three broad categories are:


•	Level 1: Quoted prices in active markets for identical assets or liabilities;


•	Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and


•	Level 3: Unobservable inputs for the asset or liability.

Where available, we ~~utilize~~utilized quoted market prices or observable inputs rather than unobservable inputs to determine fair value. We ~~classify~~classified assets and liabilities in their entirety based on the lowest level of input that iswas significant to the fair value measurement.

We describe the methodologies that we ~~use~~used and key assumptions that we ~~make~~made to assess the fair value of instruments in more detail below.

Notes Receivable – Rights to MSRs

We established the value of the Notes receivable – Rights to MSRs based on appraisals prepared by independent valuation firms. These appraisals are prepared on a quarterly basis. Significant inputs into the valuation ~~as of March 31, 2015~~ include the following:

• Discount rates reflecting the risk of earning the future income streams from the Notes receivable – Rights to MSRs ~~ranging from 14% to 22%~~;

• Interest rate used for calculating the cost of financing servicing advances ~~of 1-Month LIBOR plus 3.50%~~;

• Mortgage loan prepayment projections ~~ranging from 13% to 29% of the related mortgage lifetime projected prepayment rate~~; and

• Delinquency rate projections ~~ranging from 15% to 35% of the aggregate unpaid balance of the underlying mortgage loans~~.

The independent valuation firms reviewed the collateral attributes and the historical payment performance of the underlying mortgage servicing portfolio and compared them with similar mortgage servicing portfolios and with standard industry mortgage performance benchmarks ~~to arrive at the assumptions set forth above~~. The selected collateral attributes and performance comparisons utilized were the voluntary prepayment performance, delinquency and foreclosure performance, operational cost comparison, average loan balance, weighted average coupon and note rate distribution, loan product type classification, geographic distribution and servicing advance behavior.

The unobservable inputs that ~~have~~had the most significant effect on the fair value of Notes receivable – Rights to MSRs ~~are~~were the mortgage loan prepayment rate projections and delinquency rate projections; however, any significant increase (decrease) in discount rates, interest rates, mortgage loan prepayment projections or delinquency rate projections, each in isolation, would result in a substantially lower (higher) valuation.

Loans Held for Sale

Effective March 31, 2015, we reclassified all of our Loans held for investment to Loans held for sale. Loans held for sale ~~are~~were reported at the lower of cost or fair market value, which was determined by reference to counterparty quotations. The fair value measurements for Loans held for sale were categorized as Level 3.

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Derivative Financial Instruments

Our derivatives ~~are~~were not exchange-traded, and therefore quoted market prices or other observable inputs ~~are~~were not available. The fair value of our interest rate swap agreements iswas based on certain information provided by third-party pricing sources. Third-party valuations ~~are~~were derived from proprietary models based on inputs that ~~include~~included yield curves and contractual terms such as fixed interest rates and payment dates. We ~~have~~did not ~~adjusted~~adjust the information obtained from the third-party pricing sources; however, we ~~review~~reviewed this information to ensure that it ~~provides~~provided a reasonable basis for estimating fair value. Our review iswas designed to identify information that ~~appears~~appeared stale, information that ~~has~~had changed significantly from the prior period and other indicators that the information may not behave been accurate. We determined that potential credit and counterparty risks had an immaterial impact on the valuation of our derivatives. See Note 11 for additional information on our derivative financial instruments.

The following tables present assets by level within the fair value hierarchy that are measured at fair value on a recurring and non-recurring basis:

At March 31, 2015:	Fair Value		Level 1		Level 2		Level 3
Measured at fair value on a recurring basis:
Assets:
Notes receivable – Rights to MSRs	$	594,417	$	—	$	—	$	594,417
Derivative financial instruments	466		—		—		466
Total assets	$	594,883	$	—	$	—	$	594,883
Liabilities:
Derivative financial instruments	$	1,696	$	—	$	—	$	1,696
Total liabilities	$	1,696	$	—	$	—	$	1,696
Measured at fair value on a non-recurring basis:
Assets:
Loans held for sale	$	421,257	$	—	$	—	$	421,257

At December 31, 2014:	Fair Value		Level 1		Level 2		Level 3
Measured at fair value on a recurring basis:
Assets:
Notes receivable – Rights to MSRs	$	614,465	$	—	$	—	$	614,465
Derivative financial instruments	1,370		—		—		1,370
Total assets	$	615,835	$	—	$	—	$	615,835
Liabilities:
Derivative financial instruments	$	211	$	—	$	—	$	211
Total liabilities	$	211	$	—	$	—	$	211

No transfers between levels occurred during the three months ended March 31, 2015 and March 31, 2014.

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The following tables present assets by level within the fair value hierarchy that were measured at fair value on a recurring basis. At December 31, 2014, we had no assets measured at fair value on a non-recurring basis.



At December 31, 2014:	Fair Value		Level 1		Level 2		Level 3
Measured at fair value on a recurring basis:
Assets:
Notes receivable – Rights to MSRs	$	614,465	$	—	$	—	$	614,465
Derivative financial instruments	1,370		—		—		1,370
Total assets	$	615,835	$	—	$	—	$	615,835
Liabilities:
Derivative financial instruments	$	211	$	—	$	—	$	211
Total liabilities	$	211	$	—	$	—	$	211

No transfers between levels occurred during the quarter-to-date and year-to-date periods ended April 5, 2015 or the three and six months ended June 30, 2014.

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

	2015						2014
	For the period April 1, 2015 to April 5, 2015						For the three months ended June 30, 2014
For the three months ended March 31,	Notes receivable – Rights to MSRs			DerivativeFinancialInstruments			Notes receivable – Rights to MSRs			DerivativeFinancialInstruments
	Notes receivable – Rights to MSRs			DerivativeFinancialInstruments			Notes receivable – Rights to MSRs			DerivativeFinancialInstruments
Beginning balance	$	~~614~~594,~~465~~417		$	(1,~~159~~230	)	$	~~633~~637,~~769~~794		$	3,~~306~~079
Purchases and reductions:
Purchases	—			—			—			—
Reductions	(161,~~369~~129		)	—			—(4,190		)	—
	(16,369		)	—			—			—
	(1,129		)	—			(4,190		)	—
Changes in fair value :
Changes in fair value:
Included in net income (1)	~~(3,679~~—		)	—(440		)	(4,025		)	—
Included in other comprehensive income (2)	—			~~(2,389~~—		)	—			(~~227~~1,778		)
	(3,679		)	(2,389		)	4,025			(227		)
	—			(440		)	(4,025		)	(1,778		)
Transfers in or out of Level 3	—			—			—			—
Ending balance	$	~~594~~593,~~417~~288		$	(1,~~230~~670	)	$	~~637~~629,~~794~~579		$	31,~~079~~301

(1) At each reporting date, we determine the fair value of our Notes receivable – Rights to MSRs and adjust the carrying value to this amount, and these changes in fair value are included in Interest income in the Interim Condensed Consolidated Statements of Operations. See Note 12 for additional information regarding our Interest income.

(2) These pre-tax gains (losses) are attributable to derivatives still held at March 31, 2015, and March 31, 2014, respectively.

The following table shows the effect on the fair value of the Notes receivable – Rights to MSRs assuming adverse changes to certain key assumptions used in valuing these assets at March 31, 2015, and December 31, 2014:

	Discount Rate						Prepayment Speeds						Delinquency Rates
	100 bps adverse change			200 bps adverse change			10% adverse change			20% adverse change			10% adverse change			20% adverse change
At March 31, 2015:
Notes receivable – Rights to MSRs	$	(9,716	)	$	(19,287	)	$	(17,257	)	$	(33,643	)	$	(54,091	)	$	(106,006	)
At December 31, 2014:
Notes receivable – Rights to MSRs	$	(10,061	)	$	(19,821	)	$	(17,719	)	$	(34,537	)	$	(55,410	)	$	(108,567	)

This sensitivity analysis above assumes a change is made to one key input while holding all other inputs constant. As many of these inputs are correlated, a change in one input will likely impact other inputs, which would ultimately impact the overall valuation.

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The following table provides additional quantitative information on our significant inputs used for valuing our Notes receivable – Rights to MSRs as of March 31, 2015, and December 31, 2014, respectively:



	For the period January 1, 2015 to April 5, 2015						For the six months ended June 30, 2014
	Notes receivable – Rights to MSRs			Derivative Financial Instruments			Notes receivable – Rights to MSRs			Derivative Financial Instruments

Beginning balance	$	614,465		$	1,159		$	633,769		$	3,306
Purchases and reductions:
Purchases	—			—			—			—
Reductions	(17,498		)	—			(4,190		)	—
	(17,498		)	—			(4,190		)	—
Changes in fair value:
Included in net income (1)	(3,679		)	(440		)	—			—
Included in other comprehensive income (2)	—			(2,389		)	—			(2,005		)
	(3,679		)	(2,829		)	—			(2,005		)
Transfers in or out of Level 3	—			—			—			—
Ending balance	$	593,288		$	(1,670	)	$	629,579		$	1,301

(1) At ~~March~~each 31reporting date, we determined the fair value of our Notes receivable – Rights to MSRs and adjusted the carrying value to this amount, and these changes in fair value were included in Interest income in the Interim Condensed Consolidated Statements of Operations prior to April 6, 2015:. See Note 12 for additional information regarding our Interest income.

Asset	Unobservable Input	Low		High		Weighted Average
Notes receivable – Rights to MSRs	Discount Rate	14	%	22	%	19	%
	Prepayment Speeds	13	%	29	%	19	%
	Delinquency Rates	15	%	35	%	23	%


(2)	For the quarter-to-date and year-to-date periods ended April 5, 2015, none of the pre-tax losses were attributable to derivatives still held at the end of the period. For the three and six months ended June 30, 2014, all of the pre-tax gains (losses) were attributable to derivatives still held at the end of the period.

AtThe ~~December~~following table shows the effect on the fair value of the Notes receivable – Rights to MSRs assuming adverse changes to certain key assumptions used in valuing these assets at December 31, 2014:



	Discount Rate						Prepayment Speeds						Delinquency Rates
	100 bps adverse change			200 bps adverse change			10% adverse change			20% adverse change			10% adverse change			20% adverse change
At December 31, 2014:
Notes receivable – Rights to MSRs	$	(10,061	)	$	(19,821	)	$	(17,719	)	$	(34,537	)	$	(55,410	)	$	(108,567	)

This sensitivity analysis above assumed a change was made to one key input while holding all other inputs constant. As many of these inputs were correlated, a change in one input would likely have impacted other inputs, which ultimately would have impacted the overall valuation.

The following table provides additional quantitative information on our significant inputs used for valuing our Notes receivable – Rights to MSRs as of December 31, 2014:



Asset	Unobservable Input	Low		High		Weighted Average
Notes receivable – Rights to MSRs	Discount Rate	14	%	22	%	19	%
	Prepayment Speeds	13	%	29	%	19	%
	Delinquency Rates	15	%	35	%	25	%

~~Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value at the dates indicated:~~19

	March 31, 2015		March 31, 2015		December 31, 2014		December 31, 2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Match funded advances	$	5,808,796	$	5,808,796	$	6,121,595	$	6,121,595
Loans held for investment	—		—		815,663		822,298
Total financial assets	$	5,808,796	$	5,808,796	$	6,937,258	$	6,943,893
Financial liabilities:
Match funded liabilities	$	5,274,318	$	5,255,403	$	5,624,088	$	5,618,263
Other borrowings	852,419		845,818		1,182,328		1,167,267
Total financial liabilities	$	6,126,737	$	6,101,221	$	6,806,416	$	6,785,530

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Presented below are the carrying values and fair value estimates of financial instruments not carried at fair value:



	December 31, 2014		December 31, 2014
	Carrying Value		Fair Value
Financial assets:
Match funded advances	$	6,121,595	$	6,121,595
Loans held for investment	815,663		822,298
Total financial assets	$	6,937,258	$	6,943,893
Financial liabilities:
Match funded liabilities	$	5,624,088	$	5,618,263
Other borrowings	1,182,328		1,167,267
Total financial liabilities	$	6,806,416	$	6,785,530

Match Funded Advances

The carrying value of our Match funded advances ~~approximates~~approximated fair value. This iswas because our Match funded advances ~~have~~had no stated maturity, generally ~~are~~were realized within a relatively short period of time and dodid not bear interest. The fair value measurements for Match funded advances ~~are~~were categorized as Level 3.

Loans Held for Investment

The fair value estimate of our Loans held for investment ~~were~~was determined by using internal cash flow models that required us to make assumptions regarding various inputs, including default rates, delinquency rates, interest rates and prepayment speeds. Additionally, we made assumptions related to severity for our RPLs. The fair value measurements for Loans held for investment were categorized as Level 3.

Match Funded Liabilities

Match funded liabilities ~~include~~included various series of term notes, variable funding notes and other fixed rate liabilities. The fair value estimate of the Company’s term notes and other fixed rate liabilities was determined by using broker quotes. We concluded that no adjustments were required to the quoted prices. The level of trading, both in number of trades and amount of term notes traded, iswas at a level that the Company ~~believes~~believed broker quotes to be a reasonable representation of the current fair market value of the term notes. All other Match funded liabilities ~~are~~were short term in nature, and the carrying value generally ~~approximates~~approximated the fair value. The fair value measurements for Match funded liabilities ~~are~~were categorized as Level 3.

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Other Borrowings

Other borrowings ~~include~~included a senior secured term loan facility, ~~a facility to partially finance our EBO loans (~~the "EBO Facility"), ~~a facility to partially finance our RPLs (~~the "RPL Facility") and a servicing advance note facility (the "Note Facility"). The fair value estimate of the senior secured term loan facility was determined by using broker quotes. We concluded that no adjustments were required to the quoted price. Trading iswas at a level that the Company ~~believes~~believed broker quotes to be a reasonable representation of the current fair market value of this facility. The EBO Facility, the RPL Facility and the Note Facility ~~are~~were short term in nature, and the carrying values generally ~~approximate~~approximated the fair values. The fair value measurements for these facilities ~~are~~were categorized as Level 3. We repaid the RPL Facility in full on February 20, 2015 in conjunction with the sale of our RPL portfolios.

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4. MATCH FUNDED ADVANCES

Match funded advances on residential loans ~~are~~were comprised of the following ~~at the dates indicated~~:

	March 31, 2015			December 31, 2014
		December 31, 2014
Principal and interest advances	$	~~2,361,161~~$	2,539,532	$	~~2,539,532~~
Taxes and insurance advances	~~2,654,811~~	2,748,700		~~2,748,700~~
Corporate advances	~~792,824~~	833,363		~~833,363~~
	$	~~5,808,796~~$	6,121,595	$	~~6,121,595~~

5. LOANS HELD FOR SALE

~~Effective~~Our ~~March~~Loans held for investment at December 31, ~~2015,~~2014 werelated ~~reclassified~~to ~~all~~our ofGNMA ~~our~~EBO ~~Loans~~loans ~~held~~and ~~for~~RPLs, ~~investment~~which towere ~~Loans~~our ~~held~~only ~~for~~classes ~~sale.~~of Loans held for ~~sale~~investment. ~~are~~Effective ~~reported~~March at31, ~~the~~2015, ~~lower~~we ofreclassified ~~cost~~all orof ~~fair market value and include only~~ our ~~GNMA~~Loans ~~EBO~~held ~~loans~~for asinvestment ofto ~~March~~Loans ~~31,~~held ~~2015~~for sale.

	March 31, 2015			December 31, 2014
		December 31, 2014
Loans held for sale:
Loans held for investment:
GNMA EBO loans	$	~~421,257~~$	477,016	$	—
Loans held for sale	$	421,257		$	—
RPLs		338,647
Loans held for investment:
Loans held for investment		$	815,663
GNMA EBO loans	$	—		$	477,016
RPLs	—			338,647
Loans held for investment	$	—		$	815,663

Upon acquisition, the Company reviewed whole loans to determine if there was evidence of credit deterioration since origination in accordance with the provisions of ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Any loan acquired was considered impaired if there was evidence of credit deterioration since origination and if it was probable that not all contractually required payments would be collected.

We accounted for acquired Loans held for investment that were not deemed to be impaired at acquisition under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs.

GNMA EBO Loans

We initially accounted for our GNMA EBO loans as Loans held for investment under ASC 310-20, Receivables - Nonrefundable Fees and Other Costs. In accordance with ASC 310-20-30-5, these loans were initially recorded at the UPB plus or minus a purchase premium or discount, which is the amount we paid to purchase these loans. Effective March 31, 2015, we reclassified these loans to Loans held for sale, which ~~are~~were carried at the lower of cost or fair market value.

During the ~~three~~year-to-date ~~months~~period ended ~~March~~April 315, 2015, we recognized a decrease in the fair value of $7,654. ~~At March 31, 2015, we maintained a valuation allowance of $7,654 for unrealized losses on our GNMA EBO loans.~~

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At March 31, 2015, GNMA EBO loans with a total UPB of $267.4 million were in the process of foreclosure.

At March 31, 2015, we had outstanding and in-process claims on FHA guarantees of $98.7 million related to our GNMA EBO loans for which foreclosure has been completed and for which we have made or intend to make a claim on the FHA guarantee. We include these receivables in Other assets. See also Note 6, Other Assets.

RPLs

We accounted for our RPLs under ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. The Company evaluated all of the RPLs at acquisition in accordance with the provisions of ASC 310-30, and all RPLs were deemed to be impaired loans at acquisition. The RPLs were not insured against loss, and the borrowers, all of ~~which~~whom had been previously delinquent, may have been more likely to be in economic distress, to have become unemployed or bankrupt or to otherwise be unable or unwilling to make payments when due. Also, a portion of these loans featured future step-ups in the required payment.

The RPLs were grouped into pools based on common risk characteristics, and the pools were recorded at their estimated fair values, which incorporated estimated credit losses at the acquisition date. The RPL pools were systematically reviewed by the Company to determine the risk of losses that may have exceeded those identified at the time of the acquisition. No individual RPLs were classified as nonperforming assets at any time while held by the Company as the loans were accounted for on a pooled basis, and the pools were considered to be performing. No RPL pools evaluated by the Company were determined to have experienced impairment in the estimated credit quality or cash flows since acquisition.

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The amount of the estimated cash flows expected to be received from the RPL pools in excess of the fair values recorded for the RPL pools was referred to as the accretable yield. The accretable yield was recognized as interest income over the estimated lives of the RPL pools. The Company made no adjustments to the accretable yield.

Changes in the carrying amount of the accretable yield for RPL pools were as follows for the ~~three~~periods ~~months ended March 31, 2015~~indicated:

	Three months ended March 31, 2015
	Three months ended June 30, 2014
	Accretable Yield			Carrying Amount
Beginning balance	$	~~168,968~~—		$	~~338,647~~—
Additions	—146,885			—276,248
Accretable yield adjustments	—			—
Accretion	(~~1,595~~159		)	~~1,595~~159
Payments and other reductions, net	—			(~~3,588~~569		)
Sale of RPL portfolios	(167,373		)	(336,654		)
Ending balance	$	146,726		$	275,838
Ending balance	$	—		$	—



	For the period January 1, 2015 to April 5, 2015						Six months ended June 30, 2014
	Accretable Yield			Carrying Amount			Accretable Yield			Carrying Amount
Beginning balance	$	168,968		$	338,647		$	—		$	—
Additions	—			—			146,885			276,248
Accretable yield adjustments	—			—			—			—
Accretion	(1,595		)	1,595			(159		)	159
Payments and other reductions, net	—			(3,588		)	—			(569		)
Sale of RPL portfolios	(167,373		)	(336,654		)	—			—
Ending balance	$	—		$	—		$	146,726		$	275,838

At the acquisition date of June 27, 2014, the loans acquired had contractually required payments receivable of $622.1 million and a fair value of $276.2 million. The cash flows expected to be collected were $423.1 million at the acquisition date.

At the acquisition date of July 31, 2014, the loans acquired had contractually required payments receivable of $144.8 million and a fair value of $67.6 million. The cash flows expected to be collected were $99.5 million at the acquisition date.

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6. OTHER ASSETS

Other assets consisted of the following at ~~the~~December ~~dates~~31, ~~indicated~~2014:

	March 31, 2015			December 31, 2014
		December 31, 2014
Debt service accounts (1)	$	~~78,267~~$	128,525	$	~~128,525~~
Claims receivable from FHA (2)	~~98,714~~	109,586		~~109,586~~
Debt issuance costs (3)	~~18,294~~	16,706		~~16,706~~
Accrued interest income (4)	~~26,334~~	22,661		~~22,661~~
Purchase price holdback on RPL sale	16,824			—
Interest-earning collateral deposits (5)		1,077
Interest-earning collateral deposits (5)	1,866			1,077
Derivative financial instruments (6)		1,370
Derivative financial instruments (6)	466			1,370
Other		1,550
Other	3,718			1,550
		$	281,475
	$	244,483		$	281,475

(1) Under our advance funding facilities, we ~~are~~were contractually required to remit collections of Match funded advances to the trustee within two days of receipt. We dodid not use the collected funds to reduce the related Match funded liabilities until the payment dates specified in the indenture. The balance also ~~includes~~included amounts that we set aside to provide for possible shortfalls in the funds available to pay certain expenses and interest. Lastly, ~~at March 31, 2015~~ this balance ~~includes~~included collections on our ~~Loans~~whole ~~held for sale (at December 31~~loans, ~~2014, collections on our Loans held for investment),~~ which ~~will~~were be used to pay down a portion of our Other borrowings on the first funding date following quarter end.

(2) Claims receivable from FHA ~~relate~~related to GNMA EBO loans for which foreclosure ~~has~~had been completed and for which we ~~have~~ made or ~~intend~~intended to make a claim on the FHA guarantee.

(3) Debt issuance costs ~~relate~~related to Match funded liabilities and Other borrowings. We ~~amortize~~amortized these costs to the earlier of the scheduled amortization date, contractual maturity date or prepayment date of the debt.

(4) Accrued interest income ~~represents~~represented interest earned but not yet collected on our whole loans.

(5) Interest-earning collateral deposits ~~represent~~represented cash collateral held by our counterparty as part of our interest rate swap agreements.


(6)	See Notes 3 and 11 for more information regarding our use of derivatives.

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7. MATCH FUNDED LIABILITIES

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

						Balance Outstanding
Borrowing Type (1)	Interest Rate(2)	Maturity(3)	Amortization Date (3)	Unused Borrowing Capacity (4)		March 31, 2015		December 31, 2014
Series 2012 T2 Term Notes	199 – 494 bps	Oct. 2045	Oct. 2015	$	—	$	450,000	$	450,000
Series 2013 T1 Term Notes	150 – 323 bps	Jan. 2046	Jan. 2016	—		350,000		350,000
Series 2013 T1 Term Notes	229 – 446 bps	Jan. 2048	Jan. 2018	—		150,000		150,000
Series 2013 T2 Term Notes	115 – 239 bps	May 2044	May 2015	—		375,000		375,000
Series 2013 T3 Term Notes	179 – 313 bps	May 2046	May 2017	—		475,000		475,000
Series 2013 T5 Term Notes	198 – 331 bps	Aug. 2046	Aug. 2016	—		200,000		200,000
Series 2013 T7 Term Notes	198 – 302 bps	Nov. 2046	Nov. 2016	—		300,000		300,000
Series 2014 T1 Term Notes	124 – 229 bps	Jan. 2045	Jan. 2015	—		—		600,000
Series 2014 T2 Term Notes	222 – 311 bps	Jan. 2047	Jan. 2017	—		200,000		200,000
Series 2014 T3 Term Notes	281 bps	Jun. 2048	Jun. 2018	—		363,000		363,000
Series 2012 VF 1 Notes	1-Month LIBOR + 110 – 340 bps	Aug. 2045	Aug. 2015	171,218		628,782		556,327
Series 2012 VF 2 Notes	1-Month LIBOR + 110 – 340 bps	Aug. 2045	Aug. 2015	171,218		628,782		556,327
Series 2012 VF 3 Notes	1-Month LIBOR + 110 – 340 bps	Aug. 2045	Aug. 2015	171,218		628,782		556,327
Series 2013 VF 1 Notes	1-Month LIBOR + 150 - 245 bps	Feb. 2045	Dec. 2015	28		524,972		492,107
				$	513,682	$	5,274,318	$	5,624,088

(1) Each term note and variable funding note issuance has four classes, an A, B, C, and D class, with the exception of the Series 2014 T3 Term Notes which have only an A and B class. The Series 2014 T3 Class B Term Notes may be exchanged for notes in three separate classes: BX, CX and DX.

(2) The weighted average interest rate at March 31, 2015 was 1.85%. We pay interest monthly.

(3) The amortization date 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 due date for all outstanding balances. After the amortization date, all collections that represent the repayment of Match funded advances pledged to the facilities must be applied to reduce the balance of the note outstanding, and any new advances are ineligible to be financed.

(4) Our unused borrowing capacity is available to us if we have additional eligible collateral to pledge and meet other borrowing conditions. We pay a 0.50% or 0.625% fee on the unused borrowing capacity, which varies by facility.

The debt covenants for our advance facilities require that we maintain minimum levels of liquid assets. Failure to comply with these covenants could result in restrictions on new borrowings or the early termination of our advance facilities.

The debt covenants for our advance facilities require us to maintain total cash and excess borrowing capacity of the lesser of $100,000 and the greater of $25,000 or 0.01% of total UPB outstanding plus 3.25% of total Match funded advances outstanding. The minimum cash and excess borrowing capacity requirement at March 31, 2015, was $100,000 which was exceeded by both our unrestricted cash of $183,373 (which includes our interest-earning collateral deposits) and our excess borrowing capacity of $513,682.

Certain of our financing facilities include adverse adjustments to our advance rates if specified servicer or subservicer ratings are not maintained, and failure by our servicers or subservicers to maintain the minimum rating could result in adverse adjustments to our advance rates, liquidity and profitability. In addition, some PSAs may also require that the servicer or subservicer maintain specified servicer ratings. The failure to maintain the specified rating may result in the termination of the

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~~servicer under such PSAs~~7. ~~Any~~MATCH ~~such~~FUNDED ~~downgrade could have an adverse effect on our business, financing activities, financial condition or results of operations.~~LIABILITIES

~~See~~Match ~~Note~~funded 1Aliabilities ~~for~~were ~~discussion~~comprised of ~~a downgrade in our credit rating,~~ the ~~alleged~~following ~~events~~at ofDecember ~~default of certain of the advance funding facilities and cross default provisions to Ocwen’s senior secured term facility within our advance funding facilities and EBO Facility~~31, ~~further~~2014: ~~discussed in Note 8.~~

Analysis of Borrowing by Expected Maturity (1):

Borrowing Type (1)

Interest Rate

Maturity

(2)

Amortization Date (2)

Unused Borrowing Capacity (3)

Balance Outstanding

Series 2012 T2 Term Notes

199 – 494 bps

Oct. 2045

Oct. 2015

—

450,000

Series 2013 T1 Term Notes

150 – 323 bps

Jan. 2046

Jan. 2016

—

350,000

Series 2013 T1 Term Notes

229 – 446 bps

Jan. 2048

Jan. 2018

—

150,000

Series 2013 T2 Term Notes

115 – 239 bps

May 2044

May 2015

—

375,000

Series 2013 T3 Term Notes

179 – 313 bps

May 2046

May 2017

—

475,000

Series 2013 T5 Term Notes

198 – 331 bps

Aug. 2046

Aug. 2016

—

200,000

Series 2013 T7 Term Notes

198 – 302 bps

Nov. 2046

Nov. 2016

—

300,000

Series 2014 T1 Term Notes

124 – 229 bps

Jan. 2045

Jan. 2015

—

600,000

Series 2014 T2 Term Notes

222 – 311 bps

Jan. 2047

Jan. 2017

—

200,000

Series 2014 T3 Term Notes

281 bps

Jun. 2048

Jun. 2018

—

363,000

Series 2012 VF 1 Notes

1-Month LIBOR + 110 – 340 bps

Aug. 2045

Aug. 2015

143,673

556,327

Series 2012 VF 2 Notes

1-Month LIBOR + 110 – 340 bps

Aug. 2045

Aug. 2015

143,673

556,327

Series 2012 VF 3 Notes

1-Month LIBOR + 110 – 340 bps

Aug. 2045

Aug. 2015

143,673

556,327

Series 2013 VF 1 Notes

1-Month LIBOR + 150 - 245 bps

Feb. 2045

Dec. 2015

57,893

492,107

488,912

5,624,088

Year of Expected Maturity Date	As of March 31, 2015
2015	$	3,236,318
2016	850,000
2017	675,000
2018	513,000
2019 and thereafter	—
Total	$	5,274,318


(1)	Each term note and variable funding note issuance had four classes, an A, B, C, and D class, with the exception of the Series 2014 T3 Term Notes which had only an A and B class. The Series 2014 T3 Class B Term Notes was exchangeable for notes in three separate classes: BX, CX and DX.

(12) The ~~expected~~amortization ~~maturity~~ date iswas the date on which the revolving period ~~ends~~ended under each advance facility note and repayment of the outstanding balance ~~must~~began ~~begin~~ if the note iswas not renewed or extended. The maturity date was the due date for all outstanding balances. After the amortization date, all collections that represented the repayment of Match funded advances pledged to the facilities were applied to reduce the balance of the note outstanding, and any new advances were ineligible to be financed.


(3)	Our unused borrowing capacity was available to us if we had additional eligible collateral to pledge and met other borrowing conditions. We paid a 0.50% or 0.625% fee on the unused borrowing capacity, which varied by facility.

In conjunction with the Asset Sale, Home Loan Servicing Solutions, Ltd. ceased to be party to the Match funded liabilities.

8. OTHER BORROWINGS

Other borrowings consisted of the following at the dates indicated:

	March 31, 2015		December 31, 2014
Senior secured term loan facility (1)	$	339,946	$	340,636
EBO Facility (2)	486,828		544,513
RPL Facility (3)	—		271,473
Note Facility (4)	25,645		25,706
	$	852,419	$	1,182,328

(1) On June 27, 2013, we entered into a $350,000 senior secured term loan facility, which was issued at a discount to par. The senior secured term loan facility has a maturity date of June 27, 2020 and an interest rate of 1-Month LIBOR plus 350 bps, with a 1.00% LIBOR floor. As of March 31, 2015, the interest rate on our senior secured term loan facility was 4.50%. This facility is carried net of an original issuance discount of $3,929. The senior secured term loan facility was repaid in full at par on April 6, 2015.

(2) On March 3, 2014, we entered into the EBO Facility to finance the purchase of our initial portfolio of GNMA EBO loans at an interest rate of 1-Month LIBOR plus 305 bps. On October 16, 2014, we amended the EBO Facility to increase the maximum principal balance to partially finance the purchase of a second pool of GNMA EBO loans at an interest rate of 1-Month LIBOR plus 180 bps. This facility has a maturity date of May 1, 2015.

(3) On June 26, 2014, we entered into the RPL Facility to partially finance the purchase of our RPLs. The facility had a maturity date of June 26, 2014 and an interest rate of 1-Month LIBOR plus 250 bps. We repaid the RPL Facility in full on February 20, 2015 in conjunction with the sale of our RPL portfolios.

(4) On June 24, 2014, we entered into the Note Facility to partially finance the purchase of $37,000 of notes retained as part of the Series 2014 T3 Term Note issuance on June 18, 2014. The Note Facility matures quarterly with a next maturity date of June 23, 2015. The Note Facility has an interest rate of 1-Month LIBOR plus 115 bps.

The weighted average interest rate for our Other borrowings was 3.52% as of March 31, 2015.

The debt covenants for our Other borrowings require that we maintain minimum levels of liquid assets. Failure to comply with these covenants could result in restrictions on new borrowings or the early termination of our advance facilities.

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~~The debt covenants for our Other borrowings require us to maintain total cash and excess borrowing capacity of the lesser of $100,000 and the greater of $25,000 or 0~~8.~~01%~~ ofOTHER total UPB outstanding plus 3.25% of total Match funded advances outstanding. The minimum cash and excess borrowing capacity requirement at March 31, 2015, was $100,000 which was exceeded by both our unrestricted cash of $183,373 (which includes our interest-earning collateral deposits) and our excess borrowing capacity of $513,682.BORROWINGS

~~The~~Other ~~debt~~borrowings ~~covenants~~consisted ~~for our senior secured term loan facility place restrictions on other unsecured indebtedness, require a minimum debt to tangible equity ratio~~ of ~~less~~the ~~than~~following 6at toDecember 131, minimum borrowing base coverage ratio of 1.5 to 1 and mandate the delivery of certified financial reports to our lender. Should we be deemed to be in default under the provisions of our senior secured term loan facility the unpaid principal amount of and accrued interest on the senior secured term loan facility would immediately become due.2014:

Under the provisions of our senior secured term loan facility our restrictions on unsecured indebtedness include:



	December 31, 2014
Senior secured term loan facility (1)	$	340,636
EBO Facility (2)	544,513
RPL Facility (3)	271,473
Note Facility (4)	25,706
	$	1,182,328

•(1) ~~Unsecured~~On ~~indebtedness~~June ~~not~~27, 2013, we entered into a $350,000 senior secured term loan facility, which was issued at a discount to ~~exceed~~par. ~~the~~The ~~greater~~senior secured term loan facility had a maturity date of 0June 27, 2020 and an interest rate of 1-Month LIBOR plus 350 bps, with a 1.7500% ofLIBOR ~~consolidated~~floor. ~~total~~As ~~assets~~of orDecember ~~$50~~31,~~000;~~ ~~and~~2014, the interest rate on our senior secured term loan facility was 4.50%.

•(2) ~~Unsecured~~On ~~indebtedness~~March ~~under~~3, ~~any~~2014, ~~working~~we ~~capital~~entered ~~facility~~into inthe EBO Facility to partially finance the purchase of our initial portfolio of GNMA EBO loans at an ~~outstanding~~interest ~~principal~~rate ~~amount~~of ~~not~~1-Month toLIBOR ~~exceed~~plus ~~$50~~305 bps. On October 16,~~000~~ 2014, we amended the EBO Facility to increase the maximum principal balance to partially finance the purchase of a second pool of GNMA EBO loans at ~~any~~an ~~time~~interest rate of 1-Month LIBOR plus 180 bps. This facility had a maturity date of May 1, 2015.

We(3) On June 26, 2014, we entered into the RPL Facility to partially finance the purchase of our RPLs. The facility had noa ~~unsecured~~maturity ~~indebtedness~~date asof June 26, 2014 and an interest rate of ~~March 31~~1-Month LIBOR plus 250 bps. We repaid the RPL Facility in full on February 20, 2015 ~~other~~in ~~than~~conjunction ~~our~~with ~~senior~~the ~~secured~~sale ~~term~~of ~~loan~~our ~~facility~~RPL portfolios.

~~See~~(4) On June 24, 2014, we entered into the Note 1AFacility ~~for~~to apartially ~~discussion~~finance the purchase of a$37,000 ~~downgrade~~of innotes ~~our~~retained ~~credit~~as ~~rating~~part ~~and~~of ~~cross~~the ~~default~~Series ~~provisions~~2014 toT3 ~~Ocwen’s~~Term ~~senior~~Note ~~secured~~issuance ~~term~~on ~~facility~~June ~~contained~~18, ~~within~~2014. ~~our~~The ~~debt~~Note ~~agreements~~Facility matured quarterly and had an interest rate of 1-Month LIBOR plus 115 bps.

Analysis of Other Borrowing by Expected Repayment Date (1):

Year of Expected Payment Date	As of March 31, 2015
2015	$	515,098
2016	3,500
2017	3,500
2018	3,500
2019 and thereafter	330,750
Total (2)	$	856,348

(1) The EBO Facility and the Note Facility expected payment dates are based on the current outstanding balance and maturity date of these facilities.

(2) The total expected payments include the full face value of the senior secured term loan, which has a current original issuance discount balance of $3,929.

Immediately prior to the Asset Sale, we repaid our senior secured term loan facility in full at par. In conjunction with the Asset Sale, Home Loan Servicing Solutions, Ltd. ceased to be party to the Other borrowings.

9. ORDINARY SHARES

As of ~~March~~June 3130, 2015, we had authorized 200,000,000 ordinary shares, par value of $0.01, of which 71,016,771 were issued and outstanding. There were no changes in the number of ordinary shares issued during the ~~three~~period ~~months~~April 6, 2015 to June 30, 2015, the quarter-to-date and year-to-date periods ended ~~March 31~~April 5, 2015, or the three and six months ended June 30, 2014.

10. EARNINGS PER SHARE ("EPS")

Basic EPS iswas computed by dividing reported Net income available to ordinary shareholders by weighted average number of ordinary shares outstanding during each period. Diluted EPS iswas computed by dividing reported Net income by the sum of the weighted average ordinary shares and all potential dilutive ordinary shares outstanding during the period. Potential dilutive ordinary shares ~~includes~~included ordinary share equivalents consisting of incremental ordinary shares deemed outstanding from the assumed exercise of stock options.

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The following ~~table~~tables ~~reconciles~~reconcile the numerators and denominators of the basic and diluted EPS for the ~~three~~periods ~~months ended~~indicated:

(In thousands, except per share data)	~~March~~For 31the period April 1, 2015 to April 5, 2015						~~March~~For 31the three months ended June 30, 2014
	Net Income			Shares	Earnings Per Share Amount		Net Income		Shares	Earnings Per Share Amount
Basic EPS:
Net income available to common shareholders	$	15,260		71,016,771			$	64,360	71,016,771
Net (loss) income available to common shareholders	$	1,198		71,016,771			$	50,660	71,016,771
Less: Net income allocated to participating securities	(247		)	—			—		—
Adjusted net income available to common shareholders	151,~~236~~191			71,016,771	$	0.2102	6450,~~360~~660		71,016,771	$	0.9171
Dilutive Securities:
Plus: Net income allocated to participating securities	247			—			—		—
Less: Net income re-allocated to participating securities	(247		)	—			—		—
Incremental ordinary shares deemed outstanding	—			7212,~~958~~500			—		—
Diluted EPS:
Income allocated to common shares and assumed share conversions	$	151,~~236~~191		71,~~089~~029,~~729~~271	$	0.2102	$	6450,~~360~~660	71,016,771	$	0.9171

At March 31, 2015, we excluded from our calculation of diluted EPS i) 50,000 stock options that were anti-dilutive because their exercise price was greater than the average market price of our stock and ii) 50,000 stock options that are issuable upon the achievement of certain performance criteria related to our stock price and an annualized rate of return to investors. Note 14 provides details of our share-based compensation.



(In thousands, except per share data)	For the period January 1, 2015 to April 5, 2015						For the six months ended June 30, 2014
(In thousands, except per share data)	Net Income			Shares	Earnings Per Share Amount		Net Income		Shares	Earnings Per Share Amount
Basic EPS:
Net income available to common shareholders	$	16,458		71,016,771			$	115,020	71,016,771
Less: Net income allocated to participating securities	(21		)	—			—		—
Adjusted net income available to common shareholders	16,437			71,016,771	$	0.23	115,020		71,016,771	$	1.62

Dilutive Securities:
Plus: Net income allocated to participating securities	21			—			—		—
Less: Net income re-allocated to participating securities	(21		)	—			—		—
Incremental ordinary shares deemed outstanding	—			67,539			—		—

Diluted EPS:
Income allocated to common shares and assumed share conversions	$	16,437		71,084,310	$	0.23	$	115,020	71,016,771	$	1.62

11. DERIVATIVE FINANCIAL INSTRUMENTS

We are party to interest rate swap agreements that we recognize on our Interim Condensed Consolidated Balance Sheets at fair value within Other assets and Other liabilities. On the date we entered into the interest rate swap agreements, we designated and documented them as hedges of the variable cash flows payable for floating rate interest expense on our borrowings (cash flow hedge). To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the hedged exposure. In addition, the documentation must include the risk management objective and strategy. On a quarterly basis we assess and document the derivatives’ effectiveness and expected effectiveness in offsetting the changes in the fair value or the cash flows of the hedged items. To assess effectiveness, we use statistical methods, such as regression analysis, as well as nonstatistical methods including dollar-offset analysis. For a cash flow hedge, to the extent that it is effective, we record changes in the estimated fair value of the derivative in accumulated other comprehensive income ("AOCI"). We subsequently reclassify these changes in estimated fair value to net income in the same period that the hedged transaction affects earnings and in the same financial statement category as the hedged item.

If a derivative instrument in a cash flow hedge is terminated or the hedge designation is removed, we reclassify related amounts in AOCI into earnings in the same period during which the cash flows that were hedged affect earnings. In a period where we determine that it is probable that a hedged forecasted transaction will not occur, such as variable-rate interest payments on debt that has been repaid in advance, any related amounts in AOCI are reclassified into earnings in that period.

Because our current derivative agreements are not exchange-traded, we are exposed to credit loss in the event of nonperformance by the counterparty to the agreement. We control this risk through counterparty credit monitoring procedures including financial analysis, dollar limits and other monitoring procedures. The notional amounts of our contracts do not represent our exposure to credit loss. See Note 3 for additional information regarding our use of derivatives.

Our interest rate swaps were terminated during April 2015 in conjunction with the Asset Sale.

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Stock options excluded from the computation of diluted EPS were as follows for the periods indicated:



	For the period April 1, 2015 to April 5, 2015	For the three months ended June 30, 2014	For the period January 1, 2015 to April 5, 2015	For the six months ended June 30, 2014
Anti-dilutive (1)	37,500	640,000	37,500	640,000
Market-based (2)	50,000	640,000	50,000	640,000


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


(2)	Shares that were issuable upon the achievement of certain performance criteria related to our stock price and an annualized rate of return to investors. Note 14 provides details of our share-based compensation.

11. DERIVATIVE FINANCIAL INSTRUMENTS

We were party to interest rate swap agreements that we recognized on our Interim Condensed Consolidated Balance Sheets prior to April 6, 2015 at fair value within Other assets and Other liabilities. On the date we entered into the interest rate swap agreements, we designated and documented them as hedges of the variable cash flows payable for floating rate interest expense on our borrowings (cash flow hedge). To qualify for hedge accounting, a derivative must have been highly effective at reducing the risk associated with the hedged exposure. In addition, the documentation must have included the risk management objective and strategy. On a quarterly basis, we assessed and documented the derivatives’ effectiveness and expected effectiveness in offsetting the changes in the fair value or the cash flows of the hedged items. To assess effectiveness, we used statistical methods, such as regression analysis, as well as nonstatistical methods, including dollar-offset analysis. For a cash flow hedge, to the extent that it is effective, we recorded changes in the estimated fair value of the derivative in accumulated other comprehensive income ("AOCI"). We subsequently reclassified these changes in estimated fair value to net income in the same period that the hedged transaction affected earnings and in the same financial statement category as the hedged item.

If a derivative instrument in a cash flow hedge was terminated or the hedge designation was removed, we reclassified related amounts in AOCI into earnings in the same period during which the cash flows that were hedged affected earnings. In a period where we determined that it is probable that a hedged forecasted transaction would not occur, such as variable-rate interest payments on debt that has been repaid in advance, any related amounts in AOCI were reclassified into earnings in that period. During April 2015, we terminated all of our interest rate swaps, which resulted in the reclassification of $440 of accumulated other comprehensive losses into earnings.

Because our derivative agreements were not exchange-traded, we were exposed to credit loss in the event of nonperformance by the counterparty to the agreement. We controlled this risk through counterparty credit monitoring procedures, including financial analysis, dollar limits and other monitoring procedures. The notional amounts of our contracts did not represent our exposure to credit loss. See Note 3 for additional information regarding our use of derivatives.

Interest Rate Management

We executed a hedging strategy designed to mitigate the impact of changes in variable interest rates on the excess of interest rate sensitive liabilities over interest rate sensitive assets. We entered into interest rate swaps to hedge against the effects of a change in 1-Month LIBOR.

Purpose	Date Opened	Effective Date (1)	Maturity	We Pay		We Receive	Balance Sheet Location	Notional Amount		Fair Value
Designated as hedges (2) (3):
Hedge the effects of changes in 1-Month LIBOR	September 2012	September 2012	August 2017	0.5188	%	1-Month LIBOR	Other assets	$	58,345	$	466
Total asset derivatives designated as hedges as of March 31, 2015								$	58,345	$	466
Total asset derivatives as of March 31, 2015								$	58,345	$	466

Purpose	Date Opened	Effective Date (1)	Maturity	We Pay		We Receive	Balance Sheet Location	Notional Amount		Fair Value
Designated as hedges (2) (3):
Hedge the effects of changes in 1-Month LIBOR	March 2012	March 2012	March 2016	0.6325	%	1-Month LIBOR	Other liabilities	$	76,921	$	(220	)
Hedge the effects of changes in 1-Month LIBOR	May 2012	May 2012	May 2016	0.607	%	1-Month LIBOR	Other liabilities	15,538		(33		)
Hedge the effects of changes in 1-Month LIBOR	January 2013	January 2016	December 2017	1.3975	%	1-Month LIBOR	Other liabilities	338,009		(1,443		)
Total liability derivatives designated as hedges as of March 31, 2015								$	430,468	$	(1,696	)
Total liability derivatives as of March 31, 2015								$	430,468	$	(1,696	)

Purpose	Date Opened	Effective Date (1)	Maturity	We Pay		We Receive	Balance Sheet Location	Notional Amount		Fair Value
Designated as hedges (3):
Hedge the effects of changes in 1-Month LIBOR	September 2012	September 2012	August 2017	0.5188	%	1-Month LIBOR	Other assets	$	73,888	$	877
Hedge the effects of changes in 1-Month LIBOR	January 2013	January 2016	December 2017	1.3975	%	1-Month LIBOR	Other assets	338,009		493
Total asset derivatives designated as hedges as of December 31, 2014								$	411,897	$	1,370
Total asset derivatives as of December 31, 2014								$	411,897	$	1,370

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Purpose	Date Opened	Effective Date (1)	Maturity	We Pay		We Receive	Balance Sheet Location	Notional Amount		Fair Value
Designated as hedges (3):
Hedge the effects of changes in 1-Month LIBOR	March 2012	March 2012	March 2016	0.6325	%	1-Month LIBOR	Other liabilities	$	81,506	$	(209	)
Hedge the effects of changes in 1-Month LIBOR	May 2012	May 2012	May 2016	0.6070	%	1-Month LIBOR	Other liabilities	17,502		(2		)
Total liability derivatives designated as hedges as of December 31, 2014								$	99,008	$	(211	)
Total liability derivatives as of December 31, 2014								$	99,008	$	(211	)

The following tables provide information about our interest rate swaps at December 31, 2014:

(1) The effective date of the swap is the date from which monthly net settlements begin to be computed.



Purpose	Date Opened	Effective Date (1)	Maturity	We Pay		We Receive	Balance Sheet Location	Notional Amount		Fair Value
Designated as hedges (2) (3):
Hedge the effects of changes in 1-Month LIBOR	September 2012	September 2012	August 2017	0.5188	%	1-Month LIBOR	Other assets	$	73,888	$	877
Hedge the effects of changes in 1-Month LIBOR	January 2013	January 2016	December 2017	1.3975	%	1-Month LIBOR	Other assets	338,009		493
Total asset derivatives designated as hedges as of December 31, 2014								$	411,897	$	1,370
Total asset derivatives as of December 31, 2014								$	411,897	$	1,370



Purpose	Date Opened	Effective Date (1)	Maturity	We Pay		We Receive	Balance Sheet Location	Notional Amount		Fair Value
Designated as hedges (2) (3):
Hedge the effects of changes in 1-Month LIBOR	March 2012	March 2012	March 2016	0.6325	%	1-Month LIBOR	Other liabilities	$	81,506	$	(209	)
Hedge the effects of changes in 1-Month LIBOR	May 2012	May 2012	May 2016	0.6070	%	1-Month LIBOR	Other liabilities	17,502		(2		)
Total liability derivatives designated as hedges as of December 31, 2014								$	99,008	$	(211	)
Total liability derivatives as of December 31, 2014								$	99,008	$	(211	)


(1)	The effective date of the swap was the date from which monthly net settlements began to be computed.


(2)	Our interest rate swaps were terminated during April 2015 in conjunction with the Asset Sale. The net settlements upon termination were $1,587 payable to the counterparties.

(3) There was an unrealized pre-tax ~~gain~~loss of $~~466~~1,778 and ~~an unrealized pre-tax loss of~~ $12,~~696~~005 related to our interest rate swaps included in AOCI for the three ~~months ended March 31, 2015. There was an unrealized pre-tax gain of $3,523~~ and ansix ~~unrealized pre-tax loss of $444 related to our interest rate swaps included in AOCI for the three~~ months ended ~~March~~June 3130, 2014.

The following table summarizes our use of derivatives during the ~~three~~periods ~~months ended March 31~~indicated:

	2015			2014
	For the period January 1, 2015 to April 5, 2015			For the six months ended June 30, 2014
Notional balance at beginning of period	$	510,905		$	953,195
Additions	—			—
Maturities	—			—
Terminations	—(488,813		)	—
Amortization	(22,092		)	(~~144~~315,~~937~~451		)
Notional balance at end of period	$	~~488,813~~—		$	~~808~~637,~~258~~744

We ~~recognize~~recognized the right to reclaim cash collateral or the obligation to return cash collateral as part of our hedge agreements. At ~~March 31, 2015, we have the right to reclaim cash collateral of $1,866 and had no obligation to return cash collateral as part of our hedge agreements. At~~ December 31, 2014, we had the right to reclaim cash collateral of $1,077 and were obligated to return cash collateral of $1,370 as part of our hedge agreements.

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12. INTEREST INCOME

Interest Income – Notes Receivable – Rights to MSRs

Our primary source of revenue iswas the fees we ~~are~~were entitled to receive in connection with the servicing of mortgage loans. We ~~account~~accounted for these fees as interest income, which has been included in the Interim Condensed Consolidated Statements of Operations as a component of Net income from discontinued operations (see Note 1A).

The following table shows how we calculated Interest income – notes receivable – Rights to MSRs for the ~~three~~periods ~~months ended March 31~~indicated:

	Three Months
	For the periodApril 1, 2015 to April 5, 2015			For the three months ended June 30, 2014			For the period January 1, 2015 to April 5, 2015			For the six months ended June 30, 2014
	2015			2014
Servicing fees collected	$	12,587		$	185,690		$	192,884		$	374,847
Servicing fees collected	$	180,297		$	189,157
Subservicing fee payable to Ocwen	(6,097		)	(90,901		)	(97,039		)	(181,545		)
Subservicing fee payable to Ocwen	(90,942		)	(90,644		)
Net servicing fees retained by HLSS	6,490			94,789			95,845			193,302
Net servicing fees retained by HLSS	89,355			98,513
Reduction in Notes receivable – Rights to MSRs	(1,128		)	(4,190		)	(17,497		)	(4,190		)
Reduction in Notes receivable – Rights to MSRs	(16,369		)	—
Servicing transfers (1)	—			—			1,899			—
Servicing transfers (1)	1,899			—
Increase (decrease) in the fair value of Notes receivable – Rights to MSRs	—			(4,025		)	(3,679		)	—
Increase (decrease) in the fair value of Notes receivable – Rights to MSRs	(3,679		)	4,025
	$	5,362		$	86,574		$	76,568		$	189,112
	$	71,206		$	102,538

(1) Ocwen iswas required to reimburse us in the event of a transfer of servicing at predetermined contractual rates. These amounts ~~represent~~represented amounts payable by Ocwen related to servicing transfers.

Interest Income – Other

Additional sources of revenue for us ~~are~~were the interest we ~~earn~~earned on our GNMA EBO loans, interest we ~~earn~~earned on our RPLs, financing of GNMA EBO and other advances and interest we ~~earn~~earned on operating bank accounts and the custodial account balances related to the mortgage loans serviced that ~~are~~were not included in our Interim Condensed Consolidated Balance Sheets. The following table shows our Interest income – other for the ~~three~~periods ~~months ended March 31~~indicated:

	Three Months
	For the periodApril 1, 2015 to April 5, 2015		For the three months ended June 30, 2014		For the period January 1, 2015 to April 5, 2015		For the six months ended June 30, 2014
	2015		2014
Continuing operations:
Loan interest (1)	$	7,408	$	1,784
Bank account interest (1)	$	1	$	13	$	25	$	30
Advance financing interest (2)	1,027		202
Discontinued operations:
Bank account interest	1,041		975
Loan interest (2)	435		5,770		7,843		7,554
	$	9,476	$	2,961
Advance financing interest (3)	67		952		1,094		1,154
Bank account interest (4)	40		1,055		1,057		2,013
	$	542	$	7,777	$	9,994	$	10,721

(1) ~~Represents~~These ~~interest~~amounts ~~earned~~were onincluded ~~GNMA~~in ~~EBO~~the ~~loans~~Interim ~~and~~Condensed ~~the~~Consolidated ~~accretion~~Statements of ~~the~~Operations ~~accretable~~as ~~yield~~Interest onincome ~~our~~– ~~pools of RPLs~~other.

(2) ~~Represents~~Represented interest earned on ~~servicing~~GNMA ~~advance~~EBO ~~financing~~loans weand ~~provided~~the toaccretion ~~Ocwen~~of atthe aaccretable ~~rate~~yield on our pools of ~~1-Month~~RPLs ~~LIBOR~~and ~~plus~~was included in the Interim Condensed Consolidated Statements of Operations as a ~~spread~~component ~~ranging~~of Net income from ~~450~~discontinued ~~bps~~operations to(see ~~550~~Note ~~bps~~1A).


(3)	Represented interest earned on servicing advance financing we provided to Ocwen at a rate of 1-Month LIBOR plus a spread ranging from 450 bps to 550 bps. These amounts were included in the Interim Condensed Consolidated Statements of Operations as a component of Net income from discontinued operations (see Note 1A).


(4)	These amounts were included in the Interim Condensed Consolidated Statements of Operations as a component of Net income from discontinued operations (see Note 1A).

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13. INTEREST EXPENSE

The following table presents the components of Interest expense, ~~for~~which is included in the ~~three~~Interim ~~months~~Condensed ~~ended~~Consolidated ~~March~~Statements 31of Operations as a component of Net income from discontinued operations (see Note 1A), for the periods indicated:

	2015		2014
	For the periodApril 1, 2015 to April 5, 2015		For the three months ended June 30, 2014		For the period January 1, 2015 to April 5, 2015		For the six months ended June 30, 2014
Match funded liabilities	$	272,~~281~~266	$	2627,~~830~~126	$	29,547	$	53,956
Other borrowings	~~8,987~~543		57,~~323~~961		9,530		13,284
Amortization of debt issuance costs	~~4,378~~209		4,~~962~~598		4,587		9,560
Interest rate swaps	~~167~~—		~~396~~316		167		712
	$	403,~~813~~018	$	3740,~~511~~001	$	43,831	$	77,512

14. SHARE-BASED COMPENSATION

On December 5, 2013, the Board of Directors of HLSS adopted the 2013 Equity Incentive Plan (the “Plan”), subject to the approval of the shareholders. At the Annual Meeting of Shareholders on May 13, 2014, the shareholders approved the Plan.

The Plan was administered by the Compensation Committee, which could authorize the award of options, restricted shares, share appreciation rights, performance awards or other share-based awards to our employees of an amount not exceeding 2,000,000 ordinary shares, in aggregate. Other than share options with vesting terms, the Compensation Committee did not grant restricted shares, share appreciation rights, performance awards or other share-based awards under the Plan. Each award under the Plan was evidenced by a written award agreement between the participant and HLSS. The award agreement described the award and stated the terms and conditions to which the award was subject.

Shares issued under the Plan may have been from shares acquired under the Company's share repurchase program, shares acquired through open market purchases or newly issued shares.

~~Outstanding share~~Share-based ~~compensation~~awards granted under the Plan consisted of stock option grants that were a combination of service-based and market-based options.

Service-Based Options. These options were granted at fair value on the date of grant. The options generally vested evenly in four annual increments beginning with the first anniversary of the agreement date, and the options generally expired on the earlier of 10 years after the date of grant or following termination of service. ~~A total of 50,000 service-based awards were outstanding at March 31, 2015.~~

Market-Based Options. These options were subject to market-based vesting. One-fourth of the options would have vested immediately on the first date as of which both of the following market-based criteria had been met: i) the per share price was be equal to or exceed 1.25 times the strike price and ii) investors achieved a 12.5% annualized rate of return from the agreement date based on the strike price and dividends received. Thereafter, the remaining options would have vested evenly on each of the next three anniversaries of the initial date of vesting. ~~A total of 50,000 market-based awards were outstanding at March 31, 2015.~~

Both Service-Based Options and Market-Based Options that were vested and outstanding were entitled to receive payments equal to the amount of the then current dividend as if the underlying shares were issued at the ex-dividend date. We recognized $26 of reductions to Retained earnings related to this feature during the ~~three~~year-to-date ~~months~~period ended ~~March~~April 315, 2015.

The fair value of the Service-Based Options was determined using the Black-Scholes option pricing model, and a lattice (binomial) model was used to determine the fair value of the Market-Based Options as of the grant date. No awards were granted for the three months ended March 31, 2015 or 2014.

The net benefit from forfeitures of share-based compensation was $129. Share-based compensation is recognized net of an estimated forfeiture rate of 4%.

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AThe ~~summary~~fair value of the Service-Based Options was determined using the Black-Scholes option ~~activity~~pricing ~~under~~model, and a lattice (binomial) model was used to determine the ~~Plan~~fair ~~for~~value of the ~~three~~Market-Based ~~months~~Options ~~ended~~using ~~March~~the ~~31,~~following ~~2015~~assumptions isas ~~presented~~of ~~below.~~the grant date for the six months ended June 30, 2014:

	Shares			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)
		For the six months ended June 30, 2014
Outstanding at December 31, 2014	1,280,000			$	22.51		9.1	$	—
		Black-Scholes			Binomial
Granted	—			—
Risk-free interest rate		2.13	%		0.13% - 3.23%
Exercised	—			—
Expected stock price volatility		19.62	%		19.62	%
Forfeited or expired	(1,180,000	)		22.46
Expected dividend yield		7.82	%		7.82	%
Outstanding at March 31, 2015	100,000			$	23.12		8.7	$	—
Expected option life (in years)		6.5			2.7 - 3.5
Exercisable at March 31, 2015	12,500			$	23.12		8.7	$	—
Contractual life (in years)		10			10
Fair Value		$0.87 - $1.27			$0.53 - $1.43

No awards were granted during 2015.

The net benefit from forfeitures of share-based compensation was $145 for the year-to-date period ended April 5, 2015. We recognized share-based compensation expense of $64 for the six months ended June 30, 2014. Share-based compensation is recognized net of an estimated forfeiture rate of 4%.

A summary of option activity under the Plan for the year-to-date period ended April 5, 2015 is presented below.



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (1)
Outstanding at December 31, 2014	1,280,000		$	22.51	9.1	$	—
Granted	—		—
Exercised	—		—
Forfeited or expired	(1,280,000	)	22.51
Outstanding at April 5, 2015	—		$	—	0.0	$	—

Exercisable at April 5, 2015	—		$	—	0.0	$	—


(1)	Intrinsic value represents the difference between the Company’s closing stock price and the exercise price multiplied by the number of options outstanding and exercisable at a price below that closing price.

AsNo ofshares ~~March 31, 2015, the Company had $37 of total unrecognized compensation expense related to non-~~vested ~~share~~during ~~option awards granted under~~ the ~~Plan. The total expense was expected~~ year-to ~~be recognized over the weighted~~-~~average~~date ~~requisite service~~ period ~~of 3.1 years. No shares vested during the three months~~ ended ~~March~~April 315, 2015.

NoDuring ~~option~~February ~~awards~~2015, ~~whether~~as ~~vested~~consideration orfor ~~non-vested~~participation under the Change in Control Retention Bonus and Severance Plan, ~~were~~certain ~~outstanding~~participants ~~for~~in the ~~three~~Plan ~~months~~agreed ~~ended~~to ~~March~~unconditionally ~~31,~~relinquish ~~2014,~~any and noall ~~option~~rights ~~activity~~that ~~occurred~~the ~~during~~participant ~~this~~possessed ~~period~~under the Plan and agreed to the cancellation of such participant’s stock options.

During February 2015, as consideration for participation under the Change in Control Retention Bonus and Severance Plan, certain participants in the Plan agreed to unconditionally relinquish any and all rights that the Participant possessed under the Plan and agreed to the cancellation of such Participant’s stock options.

On April 6, 2015, the Plan was terminated in conjunction with the Asset Sale.

15. INCOME TAXES

Income taxes were provided for based upon the tax laws and rates in the countries in which we conduct operations and earn related income. Our effective tax rate for the ~~three~~period ~~months~~April ~~ended~~6, ~~March 31~~2015 to June 30, 2015 was 0.0%, and ~~2014~~our effective tax rate for the quarter-to-date and year-to-date periods ended April 5, 2015 was 0.0% and 0.0%, respectively (0.0% and 0.1% for the three and six months ended June 30, 2014, respectively). We are a Cayman Islands exempted company, and the Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. As of ~~March~~June 3130, 2015, the Company did not have any unrecognized tax benefits related to the current period or any previous period. We recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We did not accrue interest or penalties associated with any unrecognized tax benefits, nor was any interest expense or penalty recognized during the period or in previous periods.

16. BUSINESS SEGMENT REPORTING

Our business strategy focuses on acquiring Rights to MSRs and the related servicing advances, Loans held for investment and other residential mortgage-related assets. As of March 31, 2015, we operate a single reportable business segment that holds Residential Mortgage Assets.

17. RELATED PARTY TRANSACTIONS

We entered into various agreements with Ocwen and Altisource in connection with our Initial Public Offering on March 5, 2012. William C. Erbey, our founder and the former Chairman of our Board of Directors, was also the Chairman of the Board of Directors of Ocwen and Altisource.

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benefits as a component of income tax expense. We did not accrue interest or penalties associated with any unrecognized tax benefits, nor was any interest expense or penalty recognized during the period or in previous periods.

16. BUSINESS SEGMENT REPORTING

Prior to the Asset Sale, our business strategy focused on acquiring Rights to MSRs and the related servicing advances, whole loans and other residential mortgage-related assets. We operated as a single reportable business segment that held Residential Mortgage Assets.

17. RELATED PARTY TRANSACTIONS

Effective April 6, 2015, Home Loan Servicing Solutions, Ltd. became externally managed pursuant to a Services Agreement with HLSS Advances. As a result, NRZ, Merger Sub, HLSS Advances and HLSS MSR-EBO were determined to be related parties. At June 30, 2015, Related party receivables consisted of a receivable from NRZ for certain expenses paid by the Company subsequent to the Asset Sale in the amount of $2,170.

We acquired all of our Notes receivable – Rights to MSRs and our EBO Pool 1 Transaction loans from Ocwen. Refer to Note 2 for a description of our recent acquisitions from Ocwen.

As the named servicer of the loans underlying our Notes receivable – Rights to MSRs, Ocwen ~~remains~~remained obligated to perform as servicer under the related PSAs, and we ~~are~~were required to pay Ocwen a monthly fee for the servicing activities it ~~performs~~performed. We ~~are~~were also required to purchase any servicing advances that Ocwen iswas required to make pursuant to such PSAs.

Ocwen iswas also the named servicer on the ~~GNMA~~ EBO Pool 1 Transaction loans and RPLs, and we ~~are~~were required to pay Ocwen a monthly fee for the servicing activities it ~~performs~~performed.

We ~~provide~~provided financing of certain servicing advances to Ocwen. In conjunction with the EBO Pool 1 Transaction on May 3, 2014, we agreed to finance $20,157 of servicing advances for Ocwen and to finance future advances. We ~~receive~~received interest income on these receivables at a rate of 1-month LIBOR plus 450 to 550 bps. We ~~record~~recorded this interest income as Interest income – other in the Interim Condensed Consolidated Statements of Operations. During the ~~three~~quarter-to-date ~~months~~and year-to-date periods ended ~~March~~April 315, 2015 ~~and 2014~~, we earned interest income on financing of servicing advances of $~~1,027~~67 and $01,094, respectively. ~~Ocwen~~($952 ~~owed~~and us $~~335~~1,154 ~~for~~during ~~interest~~the ~~accrued~~three onand ~~financing~~six ofmonths ~~servicing~~ended ~~advances~~June as30, ~~of March 31~~2014, ~~2015~~respectively).

The following table summarizes our transactions with Ocwen related to our Notes receivable – Rights to MSRs for the ~~three~~periods ~~months ended March 31~~indicated:

	2015			2014
	For the periodApril 1, 2015 to April 5, 2015			For the three months ended June 30, 2014			For the period January 1, 2015 to April 5, 2015			For the six months ended June 30, 2014
Servicing fees collected	$	~~180~~12,~~297~~587		$	~~189~~185,~~157~~690		$	192,884		$	374,847
Subservicing fee payable to Ocwen	(906,~~942~~097		)	(90,~~644~~901		)	(97,039		)	(181,545		)
Net servicing fees retained by HLSS (1)	896,~~355~~490			9894,~~513~~789			95,845			193,302
Servicing advances purchased from Ocwen in the ordinary course of business	$	3,501,183		$	3,503,375
Servicing advances purchased from Ocwen in the ordinary course of prior business activities	$	55,378		$	3,368,379		$	3,556,561		$	6,871,754

(1) Net servicing fees retained by HLSS ~~are~~were included in the Interim Condensed Consolidated Statements of Operations as a component of ~~Interest~~Net income from discontinued operations. See Note 12 for additional information regarding our Interest income.

Our Notes receivable – Rights to MSRs resulted from transactions with Ocwen. At March 31, 2015, as a result of servicing activities related to our Notes receivable – Right to MSRs, Ocwen owed us $5,649 for servicing fees collected but not remitted to us, and we owed Ocwen $5,860 for the subservicing fee earned by Ocwen in March 2015.32

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Ocwen Professional Services Agreement

WeOur ~~have~~former subsidiary, HLSS Management LLC (“HLSS Management”), has a professional services agreement with Ocwen (“Professional Services Agreement”) that enables usHLSS Management to provide certain services to Ocwen and for Ocwen to provide certain services to usHLSS Management. Services provided by usHLSS Management under this agreement may include valuation and analysis of mortgage servicing rights, capital markets activities, advance financing management, treasury management, legal services and other similar services. Services provided by Ocwen under this agreement may include business strategy, legal, tax, licensing and regulatory compliance support services, risk management services and other similar services. The services provided by the parties under this agreement are on an as-needed basis, and the fees represent actual costs incurred plus an additional markup of 15%. Home Loan Servicing Solutions, Ltd. continues to benefit from this agreement.

AtDuring ~~March 31,~~the ~~2015,~~quarter-to-date ~~Ocwen~~and ~~owed us $0 for professional services provided pursuant~~ year-to-date ~~the~~periods ~~Professional Services Agreement. During the three months~~ ended ~~March 31~~April 5, 2015 ~~and 2014~~, we earned fees of $504 and $~~628~~54, respectively, for services provided to Ocwen pursuant to the Professional Services Agreement. ~~Additionally~~($773 and $1,401 ~~during~~for the three and six months ended ~~March 31~~June 30, ~~2015~~2014, respectively). Additionally, during the quarter-to-date and ~~2014~~year-to-date periods ended April 5, 2015, we incurred fees of $0 ~~and $154, respectively,~~ for services received from Ocwen pursuant to the Professional Services Agreement ($225 and $379 for the three and six months ended June 30, 2014, respectively).

Altisource Administrative Services Agreement

WeOur ~~have~~former subsidiary, HLSS Management, has an administrative services agreement with Altisource (“Altisource Administrative Services Agreement”) that enables Altisource to provide certain administrative services to usHLSS Management. Services provided ~~to us~~ under this agreement may include human resources administration (benefit plan design, recruiting, hiring and training and compliance support), legal and regulatory compliance support services, general business consulting, corporate services (facilities management, security and travel services), finance and accounting support services (financial analysis, financial reporting and tax services), risk management services, vendor management and other related services. The services Altisource provides under this agreement are on an as-needed basis, and the fees HLSS Management pays Altisource are based on the actual costs incurred by Altisource plus an additional markup of 15%. Home Loan Servicing Solutions, Ltd. continues to benefit from this agreement.

32During the quarter-to-date and year-to-date periods ended April 5, 2015, we incurred fees of $76 for services provided to us pursuant to the Altisource Administrative Services Agreement ($271 and $489 for the three and six months ended June 30, 2014, respectively).

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vendor management and other related services. The services Altisource provides to us under this agreement are on an as-needed basis, and the fees we pay Altisource are based on the actual costs incurred by them plus an additional markup of 15%. During the three months ended March 31, 2015 and 2014, we incurred fees of $76 and $218, respectively, for services provided to us pursuant to the Altisource Administrative Services Agreement.

Receivables from and Payables to Related Parties

The following table summarizes amounts receivable from and payable to related parties at ~~the~~December ~~dates~~31, ~~indicated~~2014:

	March 31, 2015			December 31, 2014
		December 31, 2014
Servicing advance financing receivables (1)	$	~~78,695~~$	84,107	$	~~84,107~~
Servicing fees collected (2)	~~5,649~~	5,686		~~5,686~~
Professional services (3)	—	33		33
Advance collections (4)	92,138			—
Loan collections in transit (4)		3,885
Loan collections in transit (5)	1,687			3,885
Other		690
Receivable from servicing transfers (6)	1,899			—
Receivables from Ocwen		$	94,401
Other	4,999			690
Subservicing fees payable (5)		$	7,999
Receivables from Ocwen	$	185,067		$	94,401
Advance purchases (6)		5,285
Subservicing fees payable (7)	$	5,860		$	7,999
Other		1,133
Advance purchases (8)	—			5,285
Payables to Ocwen		$	14,417
Other	2,937			1,133
Payables to Altisource		$	86
Payables to Ocwen	$	8,797		$	14,417
Payables to Altisource	$	38		$	86

(1) We provided financing to Ocwen for servicing advances. We ~~receive~~received interest income at a rate of 1-Month LIBOR plus a spread ranging from 450 bps to 550 bps.

(2) Ocwen iswas required to remit to us servicing fees it ~~collects~~collected on our behalf within two business days. The amount due from Ocwen ~~at March 31, 2015,~~ represents servicing fees collected but not remitted at the end of the month. ~~We record servicing fees we collect less the subservicing fee we pay to Ocwen less the reduction in Notes receivable – Rights to MSRs as Interest income as shown in Note 12.~~

(3) ~~The~~Represented ~~respective~~the ~~amounts~~amount ~~are~~due for professional services provided that were outstanding as of the ~~dates~~end ~~indicated~~of the period.

(4) Upon collection, Ocwen iswas contractually obligated to remit ~~Match~~collections ~~funded~~of ~~advance~~our ~~collections~~Loans toheld ~~pay~~for ~~down~~sale ~~our~~or ~~Match~~Loans ~~funded~~held ~~liabilities~~for investment to a custodial account. This receivable represents the portion of ~~Match~~these ~~funded advance~~ collections that were ~~in-transit~~not toyet ~~pay~~deposited ~~down~~into ~~our Match funded liabilities as of~~ the ~~dates~~custodial ~~indicated~~account.

(5) ~~Upon~~The ~~collection,~~base ~~Ocwen~~fee isand ~~contractually~~performance ~~obligated~~fee, toif ~~remit~~any, ~~collections~~that ofcomprised ~~our~~the ~~Loans~~subservicing ~~held~~fees ~~for~~payable ~~sale~~were orcalculated ~~Loans~~and ~~held~~paid ~~for investment~~ to aOcwen ~~custodial~~within ~~account.~~three ~~This~~business ~~receivable~~days ~~represents~~following the ~~portion~~end of ~~these collections that were not yet deposited into~~ the ~~custodial account~~month.

(6) ~~Ocwen~~We iswere ~~required~~contractually obligated to reimburse usadvances inmade by Ocwen. This payable represents the ~~event~~portion of aadvance ~~transfer~~payments ofthat ~~servicing~~were atdue ~~predetermined~~to ~~contractual~~Ocwen ~~rates~~on advances made by them.

(7) The base fee and performance fee, if any, that comprise the subservicing fees payable are calculated and paid to Ocwen within three business days following the end of the month.

(8) We are contractually obligated to reimburse advances made by Ocwen. This payable represents the portion of advance payments due to Ocwen on advances made by them.

18. COMMITMENTS AND CONTINGENCIES

The following material potential claims, lawsuits, and other proceedings, of which the Company is currently aware, are as follows. ~~The Company has not accrued losses in connection with these legal contingencies because management does not believe there is probable and reasonably estimable loss.~~

~~Three~~Legal putative class action lawsuits have been filed against the Company and certain of its current and former officers and directors in the United States District Court for the Southern District of New York entitled: (i) Oliveira v. Home Loan Servicing Matters

33Three putative class action lawsuits have been filed against the Company and certain of its current and former officers and directors in the United States District Court for the Southern District of New York entitled: (i) Oliveira v. Home Loan Servicing Solutions, Ltd., et al., No. 15-CV-652 (S.D.N.Y.), filed on January 29, 2015; (ii) Berglan v. Home Loan Servicing Solutions, Ltd., et al., No. 15-CV-947 (S.D.N.Y.), filed on February 9, 2015; and (iii) W. Palm Beach Police Pension Fund v. Home Loan Servicing Solutions, Ltd., et al., No. 15-CV-1063 (S.D.N.Y.), filed on February 13, 2015. On April 2, 2015, these lawsuits were consolidated into a single action, which is referred to as the “New York Action.” On April 28, 2015, lead plaintiff, lead counsel and liaison counsel were appointed in the New York Action. On July 17, 2015, lead plaintiffs filed their consolidated class action complaint.

The New York Action names as defendants HLSS, former HLSS Chairman William C. Erbey, HLSS Director, President, and Chief Executive Officer John P. Van Vlack, and HLSS Chief Financial Officer James E. Lauter. The New York Action asserts causes of action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on certain public disclosures made by the Company relating to, among others, our relationship with Ocwen and our risk management and internal controls. More specifically, the consolidated class action complaint alleges that a series of statements in HLSS’s disclosures were materially false and misleading, including statements about (i) Ocwen’s servicing capabilities; (ii) HLSS’s contingencies and legal proceedings;

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~~Solutions, Ltd., et al., No. 15-CV-652~~ (~~S.D.N.Y.~~iii), ~~filed~~its onrisk ~~January~~management ~~29,~~and ~~2015;~~internal controls and (iiiv) ~~Berglan~~certain v.related ~~Home~~party ~~Loan~~transactions. The ~~Servicing~~consolidated ~~Solutions,~~class ~~Ltd.,~~action etcomplaint ~~al.,~~also ~~No.~~appears ~~15-CV-947~~to ~~(S.D.N.Y.),~~allege ~~filed~~that onHLSS’s ~~February~~financial 9,statements ~~2015;~~for ~~and~~the ~~(iii)~~years W.ended ~~Palm~~2012 ~~Beach~~and ~~Police~~2013, ~~Pension~~and ~~Fund~~the v.first ~~Home~~quarter ~~Loan~~ended ~~Servicing~~March ~~Solutions~~30, ~~Ltd.~~2014, etwere ~~al.,~~false ~~No.~~and ~~15-CV-1063~~misleading ~~(S.D.N.Y.),~~based ~~filed~~ on ~~February~~the 13Company’s August 18, ~~2015~~2014 restatement. OnLead ~~April~~plaintiffs 2,in ~~2015,~~the ~~these~~New ~~lawsuits~~York ~~were~~Action ~~consolidated~~also ~~into~~allege athat ~~single~~the ~~action,~~Company ~~which~~misled isinvestors ~~referred~~by failing to asdisclose, ~~the~~among ~~“New~~other ~~York~~things, ~~Action.”~~information Onregarding ~~April~~governmental ~~28,~~investigations ~~2015,~~of ~~lead~~Ocwen’s ~~plaintiff,~~business ~~lead~~practices. ~~counsel~~The ~~and~~Company ~~liaison~~intends ~~counsel~~to ~~were~~vigorously ~~appointed~~defend in the New York Action.

The New York Action names as defendants HLSS, former HLSS Chairman William C. Erbey, HLSS Director, President, and Chief Executive Officer John P. Van Vlack, and HLSS Chief Financial Officer James E. Lauter. The New York Action asserts causes of action under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on certain public disclosures made by the Company relating to our relationship with Ocwen. This action alleges that HLSS misled investors by failing to disclose, among other things, the extent of HLSS’s dependence on Ocwen, information regarding governmental investigations of Ocwen’s business practices, and the Company’s own purportedly inadequate internal controls. The Company intends to vigorously defend the New York Action.

Two shareholder derivative actions have been filed purportedly on behalf of Ocwen Financial Corporation naming as defendants the Company and certain current and former directors and officers of Ocwen, including former HLSS Chairman William C. Erbey, entitled (i) Sokolowski v. Erbey, et al., No. 9:14-CV-81601 (S.D. Fla.), filed on December 24, 2014 (the “Sokolowski Action”), and (ii) Moncavage v. Faris, et al., No. 2015CA003244 (Fla. Palm Beach Cty. Ct.), filed on March 20, 2015 (collectively, with the Sokolowski Action, the “Ocwen Derivative Actions”). The original complaint in the Sokolowski Action named as defendants certain current and former directors and officers of Ocwen, including former HLSS Chairman William C. Erbey. On February 11, 2015, plaintiff in the Sokolowski Action filed an amended complaint naming additional defendants, including HLSS. The Ocwen Derivative Actions assert a cause of action for aiding and abetting certain alleged breaches of fiduciary duty under Florida law against HLSS and others, and claims that HLSS (i) substantially assisted Ocwen’s alleged wrongful conduct by purchasing Ocwen’s mortgage servicing rights and (ii) received improper benefits as a result of its business dealings with Ocwen due to Mr. Erbey’s purported control over both HLSS and Ocwen. Additionally, the Sokolowski Action asserts a cause of action for unjust enrichment against HLSS and others. The Company intends to vigorously defend the Ocwen Derivative Actions.

On March 11, 2015, plaintiff David Rattner filed a shareholder derivative action purportedly on behalf of the Company entitled Rattner v. Van Vlack, et al., No. 2015CA002833 (Fla. Palm Beach Cty. Ct.) (the “HLSS Derivative Action”). The lawsuit names as defendants HLSS directors John P. Van Vlack, Robert J. McGinnis, Kerry Kennedy, Richard J. Lochrie, and David B. Reiner (collectively, the “Director Defendants”), New Residential Investment Corp., and Hexagon Merger Sub, Ltd. The HLSS Derivative Action alleges that the Director Defendants breached their fiduciary duties of due care, diligence, loyalty, honesty and good faith and the duty to act in the best interests of the Company under Cayman law and claims that the Director Defendants approved a proposed merger with New Residential Investment Corp. that (i) provided inadequate consideration to the Company’s shareholders, (ii) included unfair deal protection devices, (iii) and was the result of an inadequate process due to conflicts of interest. ~~The~~On ~~Company~~July ~~intends~~8, to2015, ~~vigorously~~the ~~defend~~complaint ~~the~~was ~~HLSS~~voluntarily ~~Derivative~~dismissed ~~Action~~without prejudice.

On May 22, 2015, plaintiff Chester County Employees’ Retirement Fund filed an action in the Court of Chancery in Delaware bringing individual, class and derivative claims purportedly on behalf of NRZ naming as defendants HLSS, NRZ, FIG LLC, Fortress Investment Group LLC and certain directors of NRZ, entitled Chester Cnty. Emp. Ret. Fund v. New Residential Inv. Corp., No. 11058 (Del. Ch.) (the “Chester County Action”). On July 13, 2015, HLSS filed its motion to dismiss the complaint.

The Chester County Action seeks monetary, equitable and declaratory relief against HLSS and certain defendants based on alleged violations of the NYSE Listed Company Manual and the interpretation of certain transaction documents, and claims, among other things, that the defendants deprived plaintiff and the class of a vote on the issuance of stock to HLSS and options to FIG LLC in NRZ’s acquisition of HLSS. HLSS intends to vigorously defend the Chester County Action.

The Company has not accrued losses in connection with the above legal contingencies because management does not believe there is probable and reasonably estimable loss.

Regulatory Matters

On September 15, 2014, the Company received a subpoena from the SEC requesting that it provide certain information related to the Company’s prior accounting conventions for and valuations of our Notes receivable – Rights to MSRs that resulted in the restatement of our consolidated financial statements for the years ended December 31, 2013 and 2012 and for the quarter ended March 31, 2014 during August 2014. On December 22, 2014, the Company received a subpoena from the SEC requesting that it provide information related to certain governance documents and transactions and certain communications regarding the same. The Company is cooperating with the SEC in these matters.

See Note 1A for discussion of a downgrade in our credit rating, the alleged events of default of certain of the advance funding facilities and cross default provisions to Ocwen’s senior secured term facility within our advance funding facilities and EBO Facility.35

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19. SUBSEQUENT EVENTS

~~Subsequent~~We tohave ~~our~~evaluated ~~balance~~events ~~sheet~~occurring ~~date~~subsequent ofto ~~March~~June 3130, 2015: and have determined that no subsequent events require disclosure in the notes to the financial statements.

• On April 6, 2015, HLSS, HLSS Holdings and Ocwen entered into an amendment to the Purchase Agreement and the sale supplements (effective upon completion of the Asset Sale) to, among other things, (i) obtain Ocwen's consent to the assignment by HLSS of its interest under the Purchase Agreement and each sale supplement, (ii) provide that HLSS Holdings will not become the named servicer in connection with any Rights to MSRs, or direct the replacement of Ocwen as named servicer, before April 6, 2017 except under certain limited circumstances, (iii) extend the scheduled term of Ocwen's servicing appointment under each sale supplement until the earlier of eight years from the date of such sale supplement and April 30, 2020, and (iv) provide that Ocwen will reimburse HLSS Holdings for certain increased financing costs resulting from servicer rating downgrades of Ocwen. In addition, under such amendment (x) Ocwen agreed to exercise any “clean-up call” rights under any servicing agreement related to Rights to MSRs only at the direction of HLSS Holdings and to sell to HLSS Holdings, on an “as-is” basis, the economic beneficial interest in the right to purchase the mortgage loans and other assets in the trust for each designated servicing agreement pursuant to such clean-up call rights and (y) HLSS Holdings agreed to pay to Ocwen a fee equal to 0.50% of the outstanding balance of the performing mortgage loans purchased in connection with any such exercise and to pay Ocwen’s related costs and expenses of exercise.36

• On April 6, 2015, to best address concerns relating to our ability to operate as a going concern and the associated impact on our business on an expedited basis, we agreed with NRZ and Merger Sub to terminate the Old Merger Agreement and immediately complete the Asset Sale. The Asset Sale was made in accordance with the terms and conditions of the NRZ Purchase Agreement. In connection with the Asset Sale, among other things, (i) HLSS MSR-EBO acquired substantially all of the assets of the Company (including all of the issued share capital of Luxco 1B) and (ii) HLSS Advances acquired all of the issued share capital of Luxco 1A and assumed substantially all of the liabilities of the Company, including certain post-closing liabilities of the Company. In exchange, the Company received an amount in cash equal to approximately $1.0 billion plus 28,286,980 newly issued shares of NRZ common stock with a par value $0.01 per share. In conjunction with the Asset Sale, our senior secured term loan facility was retired.

• Concurrently with the execution of the NRZ Purchase Agreement, our Board of Directors adopted and approved the Liquidation Plan, pursuant to which we will (1) cease our business activities other than such activities that are necessary to carry out the provisions of the Liquidation Plan, (2) pay or make adequate provision for operating expenses expected to be incurred through the completion of the Liquidation Plan and (3) distribute to our shareholders in one or more distributions, (a) the cash received by the Company in the Asset Sale and the net proceeds from the sale of NRZ common stock received by the Company in the Asset Sale, less (b) amounts used to pay the liabilities of the Company and less a reserve in the amount of $50 million that will be held by the Company at the discretion of the Board to ensure that the Company will be able to meet known and unknown liabilities up to the date of the consummation of the transactions contemplated by the New Merger or, if the transactions contemplated by the New Merger are not consummated, the date of the final liquidating distribution after settlement of the liabilities and to ensure that the Company has available resources in the event that it is necessary to enforce against third parties any contractual or other rights of the Company or its officers or directors. If the New Merger is consummated, our shares will be converted automatically into the right to the Merger Consideration. If the New Merger is not consummated and post-closing expenses and liabilities do not exceed $50 million, it is anticipated that a further cash distribution will be made to shareholders.

• Immediately following the closing of the Asset Sale contemplated by the NRZ Purchase Agreement, we entered into: (i) the New Merger Agreement with NRZ and Merger Sub, pursuant to which, among other things, the Company will be merged with and into Merger Sub, with the Company ceasing its corporate existence and Merger Sub surviving the New Merger, (ii) a Services Agreement, pursuant to which HLSS Advances Acquisition Corp. will provide us with certain services following the consummation of the Asset Sale, including, among other things, handling (including defending, prosecuting or resolving) all claims, disputes or controversies (including any litigation, arbitration, governmental investigations or inquiries or any other proceedings or negotiations) in which the Company is a party or may otherwise be involved and (iii) a Registration Rights Agreement to memorialize certain rights relating to the registration of shares of NRZ common stock to be held by the Company upon the closing of the Asset Sale. On the terms and subject to the conditions set forth in the New Merger Agreement, at the Effective Time each of the Company Shares issued and outstanding immediately prior to the Effective Time (other than Company Shares owned by any direct or indirect wholly-owned subsidiary of NRZ (other than Merger Sub) or of Merger Sub and Company Shares as to which dissenters’ rights have been properly exercised) will be converted automatically into the right to receive the Merger Consideration. The parties’ obligations to consummate the New Merger are subject to certain closing conditions,

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including approval of the New Merger by the requisite vote of the shareholders, the absence of any legal restraints that would prohibit the consummation of the New Merger and other conditions customary for a transaction of this type. Each of us, NRZ and Merger Sub has made certain customary representations, warranties and covenants in the New Merger Agreement, including, among other things, covenants related to the conduct of our business during the interim period between the execution of the New Merger Agreement and the consummation of the New Merger. The New Merger Agreement provides for certain termination rights for both us and NRZ, including, if approval of the New Merger by the requisite vote of the shareholders is not obtained or if the New Merger is not consummated by the nine month anniversary of the date of the New Merger Agreement.

• On April 10, 2015, we paid cash dividends of $12,783 or $0.18 per ordinary share.

• On April 10, 2015, we declared a distribution of $16.613 per ordinary share payable on April 27, 2015, to shareholders of record as of April 20, 2015.

• On April 27, 2015, we distributed to our shareholders approximately $1.2 billion or $16.613 per ordinary share.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands unless otherwise stated, except share data)

FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. Important factors that could cause actual results to differ materially include, but are not limited to, the following:


•	Our ordinary shares may continue to trade even though we are in the process of winding down, and distributions to shareholders may be below any trading price;

• The amount of the final distribution and our ability to cease reporting depends upon whether our shareholders approve the ~~New~~ Merger;

• The ability to close the ~~New~~ Merger on the proposed terms and within the anticipated time period, or at all, which is dependent on the parties’ ability to satisfy certain closing conditions;


•	The exact amount or timing of any final distribution to our shareholders;


•	The ability to maintain our passive foreign investment company (“PFIC”) status;


•	Government regulations and policies;


•	General economic and market conditions; and


•	Other risks detailed in the Company's reports and filings with the SEC.

You should not place undue reliance on such forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

For more information on the uncertainty of forward-looking statements see Part I, Item 1A, “Risk Factors” of the Company's Annual Report on Form 10-K filed with the SEC on April 6, 2015.

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INTRODUCTION

The following discussion of our results of operations and changes in financial condition and liquidity should be read in conjunction with our Interim Condensed Consolidated Financial Statements and the related notes, all included elsewhere in this report on Form 10-Q for the three months ended March 31, 2015 and with our 2014 Form 10-K.

Events Prior to March 31, 2015

We are dependent on Ocwen as the subservicer for the Notes receivable – Rights to MSRs, and Ocwen’s servicing practices may impact the value of certain of our assets. Ocwen has been and is subject to certain federal and state regulatory matters and other challenges and uncertainties associated with its business. We may be adversely impacted:

• By regulatory actions taken against Ocwen;

• By a default by Ocwen under its debt agreements;

• By further downgrades in Ocwen's servicer rating;

• If Ocwen fails to ensure its servicing advances comply with the terms of its PSAs;

• If Ocwen were terminated as servicer under certain PSAs;

• If Ocwen becomes subject to a bankruptcy proceeding; or

• If Ocwen fails to meet its obligations or is deemed to be in default under the indenture governing Notes issued by the HSART Trust, including the allegations of certain events of default related to the Ocwen servicer downgrade and other regulatory matters by BlueMountain.

A summary of such matters, the related impact on our business and the Company's plan to address such matters are as follows.

Ocwen Regulatory Matters

Ocwen has publicly announced that, on December 19, 2013, Ocwen reached an agreement involving the CFPB, various state attorneys general and other agencies that regulate the mortgage servicing industry, which agreement was approved by consent judgment by the U.S. District Court for the District of Columbia on February 26, 2014. According to Ocwen's disclosure, the key elements of the agreement are as follows:

• A commitment by Ocwen to service loans in accordance with specified servicing guidelines and to be subject to oversight by an independent national monitor for three years;

• A payment of $127.3 million to a consumer relief fund to be disbursed by an independent administrator to eligible borrowers. In May 2014, Ocwen satisfied this obligation with regard to the consumer relief fund, $60.4 million of which is the responsibility of former owners of certain servicing portfolios acquired by Ocwen pursuant to indemnification and loss sharing provisions in the applicable agreements; and

• A commitment by Ocwen to continue its principal forgiveness modification programs to delinquent and underwater borrowers in an aggregate amount of $2.0 billion over three years.

On December 22, 2014, Ocwen announced that it had reached a settlement agreement with the NY DFS related to investigations into Ocwen's mortgage servicing practices in the State of New York. According to Ocwen's disclosure, the key elements of the agreement are as follows:

• Payment of $100 million to the NY DFS to be used by the State of New York for housing, foreclosure relief and community redevelopment programs;

• Payment of $50 million as restitution to certain New York borrowers;

• Requirements that Ocwen will not share any common officers or employees with any related party and will not share risk, internal audit or vendor oversight functions with any related party;

• Requirements that certain Ocwen employees, officers and directors be recused from negotiating or voting to approve certain transactions with a related party;

• Resignation of Ocwen's Chairman of the Board from the Board of Directors of Ocwen and at related companies, including HLSS; and

• Restrictions on Ocwen's ability to acquire new mortgage servicing rights.

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On January 23, 2015, Ocwen announced that it had reached a settlement agreement with the CA DBO in relation to an action dated October 3, 2014, in the State of California. According to Ocwen's disclosure, the key elements of the agreement are as follows:INTRODUCTION

•The ~~Payment~~following discussion of ~~$2.5~~our ~~million;~~results of operations and changes in financial condition and liquidity should be read in conjunction with our Interim Condensed Consolidated Financial Statements and the related notes, all included elsewhere in this Quarterly Report on Form 10-Q and with our 2014 Form 10-K.

•Recent ~~Engagement of an independent auditor to assess Ocwen’s compliance with laws and regulations impacting California borrowers for a period of at least two years; and~~Developments

•On ~~Prevention~~April 6, 2015, we sold substantially all of ~~Ocwen~~our ~~from~~assets ~~acquiring~~(the ~~additional~~“Asset ~~mortgage~~Sale”) ~~servicing~~pursuant ~~rights~~to ~~for~~a ~~loans~~Share ~~secured~~and inAsset Purchase Agreement entered into on such date (the ~~State~~“NRZ Purchase Agreement”) among us, New Residential Investment Corp. (“NRZ”), Hexagon Merger Sub, Ltd. (“Merger Sub”), MSR-EBO Acquisitions LLC (“HLSS MSR-EBO”) and HLSS Advances Acquisition Corp. (“HLSS Advances”). In connection with the Asset Sale, among other things, (i) HLSS MSR-EBO acquired substantially all of ~~California~~the ~~until~~assets of the CACompany ~~DBO~~(including isall ~~satisfied~~of ~~that~~the ~~Ocwen~~issued ~~can~~share ~~satisfactorily~~capital ~~respond~~of toHLSS Luxco 1B S.à r.l. (“Luxco 1B”)) and (ii) HLSS Advances acquired all of the ~~requests~~issued ~~for~~share ~~information~~capital of HLSS Luxco 1A S.à r.l. (“Luxco 1A”) and ~~documentation~~assumed ~~made~~substantially inall of the ~~course~~liabilities of the Company, including certain post-closing liabilities of the Company. In exchange, the Company received an amount in cash equal to approximately $1.0 billion plus 28,286,980 newly issued shares of NRZ common stock with a ~~regulatory~~par ~~exam~~value $0.01 per share. All of such shares were sold in a registered public offering, and we realized net proceeds of approximately $422,749. In conjunction with the Asset Sale, our senior secured term loan facility was retired.

~~According~~Concurrently towith ~~Ocwen's~~the ~~public~~execution ~~disclosure,~~of onthe ~~April~~NRZ ~~28,~~Purchase ~~2014~~Agreement, ~~Ocwen~~our ~~received~~Board aof ~~letter~~Directors ~~from~~adopted ~~the~~and ~~staff~~approved a plan of complete liquidation and dissolution (the ~~New~~“Liquidation ~~York~~Plan”), ~~Regional~~pursuant ~~Office~~to ofwhich ~~the~~we ~~SEC~~agreed ~~informing~~to ~~Ocwen~~(1) ~~that~~cease ~~the~~our ~~SEC~~business ~~was~~activities ~~conducting~~other anthan ~~investigation~~such ~~relating~~activities that are necessary to ~~Ocwen~~carry ~~and~~out ~~making~~the aprovisions ~~request~~of the Liquidation Plan, (2) pay or make adequate provision for ~~voluntary~~operating ~~production~~expenses expected to be incurred through the completion of ~~documents~~the Liquidation Plan and ~~information~~(3) ~~relating~~distribute to ~~the~~our ~~April~~shareholders 22in one or more distributions, ~~2014~~(a) ~~surrender~~the ofcash ~~certain~~received ~~options~~by tothe ~~purchase~~Company ~~its~~in the Asset Sale and the net proceeds from the sale of NRZ common stock received by ~~Mr.~~the ~~Erbey,~~Company ~~its~~in ~~former~~the ~~Executive~~Asset ~~Chairman~~Sale, ~~including~~less (b) amounts used to pay the ~~2007~~liabilities ~~Equity~~of ~~Incentive~~the ~~Plan~~Company and less a reserve in the ~~related~~amount ~~option~~of ~~grant~~$50 ~~and~~million ~~surrender~~that ~~documents.~~will Onbe ~~June~~held ~~12,~~by ~~2014,~~the ~~Ocwen~~Company ~~received~~at athe ~~subpoena~~discretion ~~from~~of the ~~SEC~~Board ~~requesting~~to ~~production~~ensure ofthat ~~various~~the ~~documents~~Company ~~relating~~will be able to ~~its~~meet ~~business~~known ~~dealings~~and ~~with~~unknown ~~HLSS,~~liabilities ~~Altisource~~up to the date of the consummation of the transactions contemplated by the Merger (as defined below) or, ~~Altisource~~if ~~Asset~~the ~~Management~~transactions ~~Corporation~~contemplated ~~AAMC~~by ~~and~~the ~~Residential~~Merger ~~and~~are not consummated, the ~~interests~~date of ~~its~~the ~~directors~~final ~~and~~liquidating ~~executive~~distribution ~~officers~~after insettlement ~~these~~of ~~companies.~~the ~~Ocwen~~liabilities ~~has~~and ~~also~~to ~~disclosed~~ensure that itthe ~~received~~Company anhas ~~additional~~available ~~subpoena~~resources ~~from~~in the ~~SEC~~event ~~related~~that toit ~~its~~is ~~amendments~~necessary to ~~its~~enforce ~~Annual~~against ~~Report~~third onparties ~~Form~~any ~~10-K~~contractual ~~for~~or other rights of the ~~fiscal~~Company ~~year~~or ~~ended~~its ~~December~~officers 31or directors. If the Merger is consummated, ~~2013~~our ~~and~~shares ~~its~~will ~~Quarterly~~be ~~Report~~converted onautomatically ~~Form~~into ~~10-Q~~the ~~for~~right to receive $0.704059 per share in cash without interest (the ~~quarter~~“Merger ~~ended~~Consideration”). If ~~March~~the 31Merger is not consummated, ~~2014~~it is anticipated that a further cash distribution will be made to shareholders.

~~Other~~Immediately ~~Ocwen~~following ~~Matters~~the closing of the Asset Sale contemplated by the NRZ Purchase Agreement, we entered into, among other things: (i) an Agreement and Plan of Merger (the “Merger Agreement”) with NRZ and Merger Sub, pursuant to which, among other things, the Company will be merged with and into Merger Sub (the “Merger”), with the Company ceasing its corporate existence and Merger Sub surviving the Merger and (ii) a Services Agreement, pursuant to which HLSS Advances provides us with certain services, including, among other things, handling (including defending, prosecuting or resolving) all claims, disputes or controversies (including any litigation, arbitration, governmental investigations or inquiries or any other proceedings or negotiations) in which the Company is a party or may otherwise be involved. On the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each ordinary share, par value $0.01 per share, of the Company (the “Company Shares”) issued and outstanding immediately prior to the Effective Time (other than Company Shares owned by any direct or indirect wholly-owned subsidiary of NRZ (other than Merger Sub) or of Merger Sub and Company Shares as to which dissenters’ rights have been properly exercised) will be converted automatically into the right to receive the Merger Consideration. The parties’ obligations to consummate the Merger are subject to certain closing conditions, including approval of the Merger by the requisite vote of the shareholders, the absence of any legal restraints that would prohibit the consummation of the Merger and other conditions customary for a transaction of this type. Each of us, NRZ and Merger Sub has made certain customary representations, warranties and covenants in the Merger Agreement, including, among other things, covenants related to the conduct of our business during the interim period between the execution of the Merger Agreement and the consummation of the Merger. The Merger Agreement provides for certain termination rights for both us and NRZ, including, if approval of the Merger by the requisite vote of the shareholders is not obtained or if the Merger is not consummated by the nine month anniversary of the date of the Merger Agreement.

~~S&P,~~Subsequent Moody’s, Fitch and Morningstar rate Ocwen as a mortgage servicer. Each of these rating agencies has downgraded Ocwen’s servicer rating within the last six months. On January 29, 2015, Moody’s downgraded Ocwen’s SQ assessment from “SQ3+” to “SQ3-” as a primary servicer of subprime residential loans and as a special servicer of residential mortgage loans. During February 2015, Fitch downgraded Ocwen's residential primary servicer rating for subprime products from “RPS3” to “RPS4,” and Morningstar downgraded its rating to “MOR RS3.” Three of these rating agencies currently have Ocwen’s ratings outlook as “negative” or “on review for downgrade.” Additionally, Ocwen is subject to quantitative and qualitative agency servicer rating criteria which may have subjective interpretations. Certain of our advance financing facilities require that our servicers or subservicers maintain specified servicer ratings, and failure by our servicers or subservicers to maintain the ~~minimum~~Asset ~~rating could result in adverse adjustments to our advance rates~~Sale, liquidity and profitability. Failure to maintain minimum or specified ratings could adversely affect dealings with contractual counterparties, including GSEs and regulators. In addition, some PSAs also require that the ~~servicer~~Company orhas ~~subservicer~~no ~~maintain~~meaningful ~~specified~~sources ~~servicer ratings. The failure to maintain the specified rating could result in the termination~~ of ~~the~~revenue ~~servicer under such PSAs. If Ocwen is terminated as servicer,~~ and ~~if Ocwen~~ is ~~unable~~in ~~to make any applicable indemnification payments owed to us, we could lose a substantial portion or all of~~ the ~~value~~process of ~~the~~winding ~~related~~down ~~Notes receivable – Rights to MSRs (see discussion of the BlueMountain allegations that follow)~~operations.

During February and March 2015, Ocwen received two notices of servicer termination affecting four separate PSAs underlying our Notes receivable – Rights to MSRs due to servicer rating downgrades. While we believe the financial impact of the termination of servicing under these four PSAs would be immaterial to our overall financial condition, Ocwen could be subject to further terminations as a result of its failure to maintain required minimum servicer ratings, which could have an adverse effect on our business, financing activities, financial condition and results of operations.

Additionally, if Ocwen fails to ensure its servicing advances comply with the terms of the PSAs, then any such improperly made servicing advances may not be eligible for financing under our advance financing facilities and/or may not be reimbursable by the related securitization trusts or other owners of the mortgage loans. Ocwen may be unwilling or unable to make indemnification payments for losses we incur related to unrecoverable advances.

Our advance financing facilities and certain Other borrowings have cross default provisions to Ocwen’s senior secured term facility, and there may occur an event of default under Ocwen's senior secured debt facility.

• A sale of Residential Mortgage Assets or other assets could be re-characterized in an Ocwen bankruptcy proceeding as a financing secured by such Residential Mortgage Assets. If such a recharacterization occurs, the validity or priority of our security interest in the Residential Mortgage Assets or other assets could be challenged in a bankruptcy proceeding of

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~~Ocwen.~~On IfApril 27, 2015, in accordance with the ~~sale~~Liquidation ofPlan, ~~Residential~~we ~~Mortgage~~distributed ~~Assets~~to orour ~~other~~shareholders ~~assets~~approximately is$1.2 ~~recharacterized~~billion asor a$16.613 ~~secured~~per ~~financing~~ordinary share, ~~payments~~which ~~made~~amount byrepresented ~~Ocwen~~the tonet usproceeds ~~prior~~received toby ~~Ocwen~~the ~~commencing~~Company ~~its~~in ~~bankruptcy~~connection ~~proceeding~~with ~~could~~the beAsset ~~challenged~~Sale, ~~and~~less ~~subject~~a tocash ~~recovery~~reserve asin ~~preferential~~the ~~transfers;~~amount of $50 million.

•On ~~Payments~~April ~~made~~29, to2015, usour byshares ~~Ocwen,~~were ordelisted ~~obligations~~from ~~incurred~~The byNasdaq ~~Ocwen~~Stock toMarket ~~us,~~LLC ~~could~~and bebegan ~~challenged~~being asquoted ~~fraudulent~~on ~~conveyances;~~the OTC Pink Marketplace under the symbol “HLSSF” and were subsequently deregistered under Section 12(b) of the Securities Exchange Act of 1934, as amended.

~~• The Purchase Agreement could be rejected in an Ocwen bankruptcy proceeding;~~Proxy

•On AMay ~~bankruptcy~~1, ~~court~~2015 ~~could~~we ~~stay~~filed a ~~transfer~~preliminary proxy statement with the SEC with respect to our calling of ~~servicing~~a special meeting of our shareholders pursuant to ~~another~~which ~~servicer;~~we will seek approval of the Merger. We intend to file with the SEC a definitive proxy statement to solicit shareholder approval of the Merger. We have not yet determined when our definitive proxy statement will be distributed, or the record date to be used for purposes of determining stockholders entitled to vote at the special meeting. The definitive proxy statement will be sent or given to the shareholders of the Company and will contain important information about the Merger and related matters. The Company’s shareholders are urged to read the preliminary proxy statement and, when available, the definitive proxy statement and other relevant materials when they become available because they will contain important information about the Company, NRZ and the Merger. Investors may obtain a free copy of these materials (when they are available) and other documents filed by the Company with the SEC at the SEC’s website at www.sec.gov, at the Company’s website at www.HLSS.com or by sending a written request to the Company at Home Loan Servicing Solutions, Ltd. c/o Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands, Attention: Secretary.

•The ~~Ocwen~~Company, ~~could~~NRZ ~~discontinue~~and ~~servicing;~~their respective directors, executive officers and certain other members of management and employees may be deemed to be participants in soliciting proxies from the shareholders of the Company in favor of the Merger. Information regarding the persons who may, under the rules of the SEC, be considered to be participants in the solicitation of the Company’s shareholders in connection with the Merger, and any interest they have in the Merger, will be set forth in the definitive proxy statement when it is filed with the SEC. Additional information regarding the Company’s directors and officers is included in the Amendment No. 1 to the Annual Report on Form 10-K filed with the SEC on April 30, 2015. Additional information regarding NRZ’s directors and officers is included in NRZ’s Notice of the 2015 Annual Meeting of Stockholders filed with the SEC on April 17, 2015.

•RESULTS ~~The~~OF ~~automatic stay under the United States Bankruptcy Code may prevent the ongoing receipt of servicing fees or other amounts due; or~~OPERATIONS

•Due Ato ~~bankruptcy~~the adoption of ~~Ocwen~~the ~~defaults~~liquidation ~~our~~basis ~~advance~~of ~~financing~~accounting ~~facilities~~as of April 6, 2015, the comparability of the results of operations of current year periods to prior year periods is limited. The liquidation basis of accounting requires the Company to estimate net cash flows from operations and ~~negatively~~to ~~impacts~~accrue ~~our~~all ~~ability~~costs associated with implementing and completing the plan of liquidation and requires management to ~~continue~~make estimates that affect the amounts reported in the financial statements and the related notes. To the extent there are any changes in the Company’s initial estimates, there will be changes reflected in the Interim Condensed Statement of Changes in Net Assets. As cash is received or paid, consistent with the Company’s initial estimates, there will be no change to ~~purchase~~the ~~servicing~~Net ~~advances~~assets. Results could differ from these estimates and may affect the net assets in liquidation and actual cash flows.

Any of the foregoing events could have a material adverse effect on our financial condition and operating results.

On January 23, 2015, counsel to BlueMountain, which has represented that it is the investment manager of funds that hold certain of the Notes sent a letter to HLSS Holdings, the HSART Trust, Ocwen and the Indenture Trustee, asserting certain alleged events of default under the indenture governing Notes issued by the HSART Trust. BlueMountain has publicly stated that it has taken a “short position” on behalf of certain funds in the stock of HLSS and Ocwen. On February 20, 2015, counsel to BlueMountain sent another letter asserting certain alleged events of default under the indenture governing Notes issued by the HSART Trust. The alleged defaults are related to the Ocwen servicer downgrade and other regulatory matters described above. An event of default under the HSART Trust could result in the revolving facilities within HSART Trust to cease revolving, which would impact our ability to fund the purchase of advances.

On February 17, 2015, HLSS Holdings and the Depositor entered into the Agreement with the Indenture Trustee. Pursuant to the Agreement, the parties agreed, among other things, that during the term of the Agreement the Indenture Trustee will not commence a judicial proceeding to seek judicial guidance regarding the allegations made in the BlueMountain letter prior to April 15, 2015, and HLSS Holdings and the Depositor agreed to allow the Indenture Trustee to withhold from distribution certain excess funds that would otherwise be distributable to the Depositor in an amount up to the Interest Accrual Differential for the related interest accrual period under the HSART Trust indenture. The “Interest Accrual Differential” means, with respect to any interest accrual period under the HSART Trust indenture beginning with the interest accrual period relating to the February 17, 2015 monthly payment date thereunder and any class of HSART Trust notes issued prior to January 17, 2014, an amount equal to the excess of (a) the Non-FAE Rate plus 3.00% per annum over (b) the related interest accrual for such class of notes at the Non-FAE Rate. The Depositor and HLSS Holdings subsequently agreed to allow the Indenture Trustee to withhold on the same basis with respect to HSART Trust notes issued on or after January 17, 2014. The effect of this agreement will be to increase the amount deposited and held in Debt service accounts by approximately $11.8 million per month. In conjunction with the Asset Sale, Home Loan Servicing Solutions, Ltd. disposed of its interest in HLSS Holdings and the Depositor.

Management's Plan

On February 22, 2015, we entered into the Old Merger Agreement with NRZ and Merger Sub, pursuant to which, subject to the satisfaction or waiver of certain conditions, Merger Sub would merge with and into us.

During the month of February 2015, our management developed a management plan that included the following elements:

• Entering into the Old Merger Agreement with NRZ;

• Negotiating certain commitments from various lenders for replacement advance financing, though never consummated;

• Selling our entire portfolio of RPLs for an immaterial gain and concurrently repaying the related borrowings in full;

• Marketing our GNMA EBO loan portfolios and extending the maturity of the related borrowings to allow for continued marketing;

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OnThe ~~March~~below 3,tables ~~2015,~~summarizes wethe ~~filed~~changes ain ~~Form 12b-25 indicating that additional time to complete~~ our ~~Annual~~Net ~~Report~~assets onduring ~~Form 10-K for~~ the ~~year~~period ~~ended~~April ~~December 31~~6, ~~2014~~2015 ~~was necessary in order~~ to ~~complete~~June ~~the~~30, ~~assessment of recent events related to our business and determine the impact on our financial statements and related disclosures.~~2015:

On March 18, 2015, we filed a Form 8-K indicating that we required additional time to prepare information related to our ability to operate as a going concern and to provide such information to our auditors for the purposes of their audit of our financial statements for the year ended December 31, 2014.



Net assets at April 6, 2015	$	1,268,081

Changes in net assets
Interest income
Interest income – other (1)	107

Operating expenses
Compensation and benefits (2)	366
General and administrative expenses (3)	3,297
Total operating expenses	3,663

Other expenses
Loss on extinguishment of senior secured term loan facility (4)	8,083
Loss on disposal of discontinued operations (5)	29,614
Total other expenses	37,697

Liquidating distributions to shareholders	1,179,802

Change in net assets during the period	(1,221,055		)

Net assets at June 30, 2015	$	47,026

~~Developments~~(1) ~~After~~Interest ~~March~~income ~~31,~~– ~~2015~~other includes interest on our operating cash account earned during the period of $90 and expected to be earned through the wind-down period of $17.

~~On April 6, 2015, HLSS, HLSS Holdings and Ocwen entered into an amendment to the Purchase Agreement and the sale supplements~~ (~~effective upon completion of the Asset Sale described below~~2) ~~to,~~Compensation ~~among~~and ~~other~~benefits ~~things,~~includes ~~(i) obtain Ocwen's consent to~~ the ~~assignment~~incurred ~~by HLSS of its interest under the Purchase Agreement~~ and ~~each~~expected ~~sale~~expense ~~supplement,~~related ~~(ii) provide that HLSS Holdings will not become the named servicer in connection with any Rights~~ to ~~MSRs,~~our orBoard ~~direct the replacement~~ of ~~Ocwen~~Directors' asfees ~~named servicer, before April 6, 2017 except under certain limited circumstances,~~ (~~iii)~~$107 ~~extend the~~incurred ~~scheduled term of Ocwen's servicing appointment under each sale supplement until the earlier of 8 years from the date of such sale supplement~~ and ~~April~~ ~~30,~~$107 ~~2020,~~expected) and ~~(iv)~~fees ~~provide that Ocwen will reimburse HLSS Holdings for certain increased financing costs resulting~~ from ~~servicer~~contract ~~rating~~employees ~~downgrades of Ocwen. In addition, under such amendment~~ (x)$83 ~~Ocwen~~incurred ~~agreed to exercise any “clean-up call” rights under any servicing agreement related to Rights to MSRs only at the direction of HLSS Holdings~~ and to$69 sell to HLSS Holdings, on an “as-is” basis, the economic beneficial interest in the right to purchase the mortgage loans and other assets in the trust for each designated servicing agreement pursuant to such clean-up call rights and (yexpected) ~~HLSS Holdings agreed to pay to Ocwen a fee equal to 0~~.~~50% of the outstanding balance of the performing mortgage loans purchased in connection with any such exercise and to pay Ocwen’s related costs and expenses of exercise.~~

On(3) ~~April 6,~~General ~~2015, to best address concerns relating to our ability to operate as a going concern~~ and ~~the~~administrative ~~associated~~expenses ~~impact~~include ~~on our business on an expedited basis, we agreed with NRZ and Merger Sub to terminate~~ the ~~Old~~incurred ~~Merger Agreement~~ and ~~immediately~~expected ~~complete~~expense ~~the~~related ~~Asset~~to ~~Sale. The~~legal ~~Asset Sale was made in accordance with the terms~~ and ~~conditions~~professional offees ~~the NRZ Purchase Agreement. In connection with the Asset Sale, among other things,~~ (i)$432 ~~HLSS~~incurred ~~MSR-EBO~~and ~~acquired~~$255 ~~substantially all of the assets of the Company (including all of the issued share capital of Luxco 1B~~expected) and ~~(ii)~~general ~~HLSS~~operating ~~Advances~~expenses ~~acquired~~during ~~all of the issued share capital of Luxco 1A and assumed substantially all of the liabilities of the Company, including certain post~~wind-~~closing~~down ~~liabilities~~period ~~of the Company. In exchange, the Company received an amount in cash equal to approximately~~ ($~~1.0 billion plus 28~~2,~~286,980~~581 ~~newly~~incurred ~~issued~~and ~~shares of NRZ common stock with a par value~~ $~~0.01~~29 ~~per share~~expected). ~~In conjunction with the Asset Sale, our senior secured term loan facility was retired.~~

~~Concurrently with the execution of the NRZ Purchase Agreement, our Board of Directors adopted and approved the Liquidation Plan, pursuant to which we will~~ (14) ~~cease~~In ~~our~~conjunction ~~business~~with ~~activities other than such activities that are necessary to carry out~~ the provisions of the Liquidation Plan, (2) pay or make adequate provision for operating expenses expected to be incurred through the completion of the Liquidation Plan and (3) distribute to our shareholders in one or more distributions, (a) the cash received by the Company in the Asset Sale ~~and the net proceeds from the sale of NRZ common stock received by the Company in the Asset Sale~~, ~~less~~we ~~(b)~~terminated ~~amounts~~our ~~used~~senior tosecured ~~pay~~term ~~the~~loan ~~liabilities~~facility ~~of the Company and less a reserve in the amount of $50 million that will be held by the Company~~ at ~~the~~par. ~~discretion~~Upon ~~of the Board to ensure that the Company will be able to meet known and unknown liabilities up to the date of the consummation of the transactions contemplated by the New Merger or~~termination, ifwe ~~the~~derecognized ~~transactions contemplated by~~ the ~~New~~unamortized ~~Merger~~balance ~~are not consummated, the date~~ of the ~~final~~original ~~liquidating~~issuance ~~distribution~~discount ~~after settlement~~ of ~~the~~$3,916 ~~liabilities~~ and ~~to ensure that~~ the ~~Company~~unamortized ~~has~~balance ~~available~~of ~~resources~~deferred indebt ~~the~~issuance ~~event~~costs ~~that it is necessary to enforce against third parties any contractual or other rights~~ of the Company or its officers or directors. If the New Merger is consummated, our shares will be converted automatically into the right to the Merger Consideration. If the New Merger is not consummated and post-closing expenses and liabilities do not exceed $~~50 million~~4, ~~it is anticipated that a further cash distribution will be made to shareholders~~167.

~~Immediately following the closing of the Asset Sale contemplated by the NRZ Purchase Agreement, we entered into:~~ (i5) ~~the~~See ~~New~~Part ~~Merger Agreement with NRZ and Merger Sub~~I, ~~pursuant~~Item ~~to which~~I, ~~among~~"Interim ~~other~~Condensed ~~things,~~Consolidated ~~the~~Financial ~~Company~~Statements ~~will~~– beNote ~~merged with and into Merger Sub~~1A, ~~with~~Organization; the Company ceasing its corporate existence and Merger Sub surviving the New Merger, (ii) a Services Agreement, pursuant to which HLSS Advances Acquisition Corp. will provide us with certain services following the consummation of the Asset Sale,; ~~including,~~Discontinued ~~among~~Operations; ~~other~~Related ~~things,~~Parties; ~~handling~~Other ~~(including~~Recent ~~defending,~~Developments" ~~prosecuting~~for orfurther ~~resolving)~~information ~~all~~about ~~claims,~~our ~~disputes~~discontinued or controversies (including any litigation, arbitration, governmental investigations or inquiries or any other proceedings or negotiations) in which the Company is a party or may otherwise be involved and (iii) a Registration Rights Agreement to memorialize certain rights relating to the registration of shares of NRZ common stock to be held by the Company upon the closing of the Asset Saleoperations. ~~On the terms and subject to the conditions set forth in the New Merger Agreement, at the~~

LIQUIDITY AND CAPITAL RESOURCES

The liquidation basis of accounting requires the Company to estimate net cash flows from operations and to accrue all costs associated with implementing and completing the Liquidation Plan and requires management to make estimates that affect the amounts reported in the financial statements and the related notes. Actual results could differ from these estimates and may affect Net assets and actual cash flows.

The Company’s liquidity generally depends on cash on hand. The Company’s cash flow is dependent on a number of variables, including, but not limited to, operating costs and expenses to affect the wind-down period and the timing of the consummation of the Merger or the ability to consummate the Merger at all. Upon adoption of the Liquidation Plan, the Company determined to reserve $50 million to satisfy liabilities of the Company through the liquidation period. At June 30, 2015, the Company had $46.1 million of this reserve remaining. This reduction of $3.9 million during the period April 6, 2015 to June 30, 2015 relates primarily to legal and professional fees associated with the Asset Sale and Merger. In the event that the Merger is not consummated, we expect to be reimbursed by NRZ for $2.2 million of these expenses as of June 30, 2015. For more information regarding the Company's actual and estimated cash flows during the wind-down period, see Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments,” which is incorporated herein by reference.

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Effective Time each of the Company Shares issued and outstanding immediately prior to the Effective Time (other than Company Shares owned by any direct or indirect wholly-owned subsidiary of NRZ (other than Merger Sub) or of Merger Sub and Company Shares as to which dissenters’ rights have been properly exercised) will be converted automatically into the right to receive the Merger Consideration. The parties’ obligations to consummate the New Merger are subject to certain closing conditions, including approval of the New Merger by the requisite vote of the shareholders, the absence of any legal restraints that would prohibit the consummation of the New Merger and other conditions customary for a transaction of this type. Each of us, NRZ and Merger Sub has made certain customary representations, warranties and covenants in the New Merger Agreement, including, among other things, covenants related to the conduct of our business during the interim period between the execution of the New Merger Agreement and the consummation of the New Merger. The New Merger Agreement provides for certain termination rights for both us and NRZ, including, if approval of the New Merger by the requisite vote of the shareholders is not obtained or if the New Merger is not consummated by the nine month anniversary of the date of the New Merger Agreement.

On April 27, 2015, we distributed to our shareholders approximately $1.2 billion or $16.613 per ordinary share.

Other Recent Developments

As a result of Ocwen’s settlement agreement with the NY DFS, on January 16, 2015, William C. Erbey stepped down as non-executive Chairman of the Board of Directors of the Company, Ocwen, Altisource, AAMC and Residential. Concurrently, Robert J. McGinnis was appointed as non-executive Chairman of HLSS.

On January 14, 2015, our Moody's credit rating was downgraded to B3/Negative and on January 16, 2015, S&P affirmed its credit rating of B+ but downgraded our outlook from Stable to Negative. On February 24, 2015, Moody’s announced that it would review our credit rating for potential upgrade subsequent to our announcement of the Old Merger Agreement on February 22, 2015.

On March 18, 2015, we received notification from Nasdaq stating that the Company is no longer in compliance with Nasdaq Listing Rule 5250(c)(1) for continued listing due to the Company not having timely filed its Annual Report on Form 10-K for the year ended December 31, 2014. On April 29, 2015, our shares were delisted from Nasdaq and began being quoted on the OTC Pink Marketplace under the symbol “HLSSF.”

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The following discussion of results of operations is as of March 31, 2015 and prior to the Asset Sale.

Changes in Results of Operations Summary

The following table summarizes our condensed consolidated operating results for the three months ended March 31:

	Three Months
	2015		2014
Revenue	$	82,172	$	106,127
Operating expenses	18,440		4,256
Income from operations	63,732		101,871
Interest expense	48,467		37,511
Income before income taxes	15,265		64,360
Income tax expense	5		—
Net income	$	15,260	$	64,360

Three Months Ended March 31, 2015 versus 2014. Revenue primarily includes interest income recorded on Notes receivable – Rights to MSRs and interest earned on whole loans. Our Interest income from our Notes receivable – Rights to MSRs decreased by $31,332 for the three months ended March 31, 2015 compared to same period in 2014 due to a decrease in the average UPB underlying our Notes receivable – Rights to MSRs for the three months ended March 31, 2015 to $158.4 billion from $178.0 billion for the same period in 2014. In addition, higher prepayment speeds for the UPB tied to our Notes receivable – Rights to MSRs contributed to decreased Interest income during 2015; average prepayment speeds were 10.6% for the three months ended March 31, 2015 compared to 9.9% for the same period in 2014. We also recorded a decrease in Interest income of $3,679 for the three months ended March 31, 2015 as a result of changes in the fair value of our Notes receivable – Rights to MSRs compared to an increase of $20,686 for same period in 2014. Lastly, the interest earned on our whole loan portfolios during the three months ended March 31, 2015 contributed to the increase in interest income due to increased average UPB on whole loans.

Operating expenses are primarily comprised of Compensation and benefits, Related party expenses and General and administrative expenses. Compensation and benefits increased due to increased senior headcount and costs associated with the Change in Control Retention Bonus and Severance Plan. General and administrative expenses increased period over period primarily because of increased legal and professional services fees associated with the Old Merger, the Asset Sale and the New Merger. The increases in Compensation and benefits and General and administrative expenses was partially offset by a decrease in Related party expenses due to decreased use of services under both the Ocwen Professional Services Agreement and the Altisource Administrative Services Agreement.

Increases in interest expense period over period were primarily due to increases in the weighted average rate paid on Match funded liabilities and increases in the average balance of Other borrowings outstanding, partially offset by decreases in the average balance of Match funded liabilities outstanding and a decrease in the weighted average rate paid on Other borrowings. For the three months ended March 31, 2015, the average outstanding balance of Match fund liabilities decreased to $5.4 billion from $5.7 billion for the same period in 2014 while the weighted average interest rates on those liabilities increased to 1.80% from 1.66% for the same period in 2014. For the three months ended March 31, 2015, the average outstanding balance of Other borrowings increased to $1.0 billion from $0.5 billion for the same period in 2014 while the weighted average interest rates on those liabilities decreased to 3.41% from 4.13% for the same period in 2014.

Our tax expense for both periods was largely impacted by our status as a Cayman Islands exempted company. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation.

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Summary Operating Information

We operate the business as a single reportable segment: Residential Mortgage Assets. For purposes of our internal management reporting, we separately report the components of Interest income – notes receivable – Rights to MSRs, which include Servicing fee revenue, Servicing expense, Amortization of Notes receivable – Rights to MSRs and Change in fair value of Notes receivable – Rights to MSRs. We provide a reconciliation of our reported results to our internal management reporting for the three months ended March 31, 2015 and March 31, 2014 in the following tables.

We executed our agreements with Ocwen with the intent that we would receive the total amount of the servicing fees collected and that we would pay Ocwen a subservicing fee that is determined based on its collections and advance ratio performance. We evaluate our operating performance and manage our business considering servicing fees collected, subservicing fees paid, amortization of Notes receivable – Rights to MSRs and changes in fair value of Notes receivable – Rights to MSRs, and we maintain our internal management reporting on this basis. The following table presents our consolidated results of operations in accordance with GAAP reconciled to our internally reported financial results.

Our total revenue, total operating expenses and income from operations as presented in our Management Reporting shown below should be considered in addition to, and not as a substitute for, total revenue, total operating expenses and income from operations determined in accordance with GAAP.

	Condensed Consolidated Results (GAAP)		Adjustments			Management Reporting (Non-GAAP)
For the three months ended March 31, 2015
Revenue
Servicing fee revenue (1)	$	—	$	180,297		$	180,297
Interest income – notes receivable – Rights to MSRs (2)	71,206		(71,206		)	—
Interest income – other	9,476		—			9,476
Related party revenue	50		—			50
Other revenue	1,440		—			1,440
Total revenue	82,172		109,091			191,263
Operating expenses
Compensation and benefits	2,078		—			2,078
Servicing expense (3)	—		90,942			90,942
Amortization of Notes receivable – Rights to MSRs (4)	—		14,470			14,470
Change in fair value of Notes receivable – Rights to MSRs (5)	—		3,679			3,679
Related party expenses	76		—			76
General and administrative expenses	16,286		—			16,286
Total operating expenses	18,440		109,091			127,531
Income from operations	$	63,732	$	—		$	63,732

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	Condensed Consolidated Results (GAAP)		Adjustments			Management Reporting (Non-GAAP)
For the three months ended March 31, 2014
Revenue
Servicing fee revenue (1)	$	—	$	189,157		$	189,157
Interest income – notes receivable – Rights to MSRs (2)	102,538		(102,538		)	—
Interest income – other	2,961		—			2,961
Related party revenue	628		—			628
Total revenue	106,127		86,619			192,746
Operating expenses
Compensation and benefits	1,599		—			1,599
Servicing expense (3)	—		90,644			90,644
Amortization of Notes receivable – Rights to MSRs (4)	—		16,661			16,661
Change in fair value of Notes receivable – Rights to MSRs (5)	—		(20,686		)	(20,686		)
Related party expenses	372		—			372
General and administrative expenses	2,285		—			2,285
Total operating expenses	4,256		86,619			90,875
Income from operations	$	101,871	$	—		$	101,871

(1) Servicing fee revenue reflects servicing fees received under our agreements with Ocwen.

(2) Interest income – notes receivable – Rights to MSRs represents the net amount of servicing fees received less servicing fees paid, amortization of the Notes receivable – Rights to MSRs and changes in the fair value of Notes receivable – Rights to MSRs. We exclude this interest income from our Management Reporting and instead report the individual components, including Servicing fee revenue, Servicing expense, Amortization of Notes receivable – Rights to MSRs and Change in fair value of Notes receivable – Rights to MSRs.

(3) Servicing expense reflects the fee we incurred under the agreements with Ocwen.

(4) Amortization of Notes receivable – Rights to MSRs reflects reductions in the value of the Notes receivable – Rights to MSRs based on the run-off of the portfolio.

(5) Our methodology of determining the fair value of Notes receivable – Rights to MSRs is described in Part I, Item I, "Interim Condensed Consolidated Financial Statements – Note 3, Fair Value of Financial Instruments." In our Interim Condensed Consolidated Statements of Operations, we record changes in fair value as a component of Interest income – notes receivable – Rights to MSRs.

Three months ended March 31, 2015 versus 2014. Servicing fee revenue decreased period over period because we owned the servicing rights for lower average UPB during 2015. Servicing fee revenue is a function of principal and interest collected during the period and the contractual servicing fee rate. Average UPB for the three months ended March 31, 2015 was $158.4 billion compared to $178.0 billion for the same period in 2014.

The servicing expense paid to Ocwen during the three months ended March 31, 2015 included base fees of $21,635 and incentive fees of $69,307. The servicing expense paid to Ocwen during the comparable 2014 period included base fees of $22,699 and incentive fees of $67,945. The difference is primarily attributable to lower average UPB period over period, which was offset by incentive fee reductions in 2015 as a result of excess servicing advances. We are compensated for the cost of excess servicing advances because the performance-based incentive fee payable to Ocwen in any month is reduced by an amount equal to 1-Month LIBOR plus 275 bps per annum of the amount of any such excess servicing advances when the advance ratio exceeds a predetermined level for that month. Amortization of Notes receivable – Rights to MSRs relates to reduction in UPB due to portfolio run-off and is greater during 2015 due to higher prepayment speeds in 2015. Lastly, there was a decrease in the fair value of the Notes receivable – Rights to MSRs for the three months ended March 31, 2015 of $3,679 compared to an increase of $20,686 for the same period in 2014.

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In evaluating our performance, our management considers our Core earnings, which is a non-GAAP financial measure. In calculating Core earnings, we remove the impact of changes in the fair value of our Notes receivable – Rights to MSRs and our Loans held for sale from Net income. In addition, we have excluded certain non-recurring expenses associated with the Old Merger, the Asset Sale and the New Merger. We believe that Core earnings provides a meaningful measure of our profitability by removing the non-cash impacts of changes in the fair value of our Residential Mortgage Assets and significant non-recurring expenses from Net income, which improves comparability of our results of operations from period to period. The following table reconciles our Net income and EPS to our Core earnings and Core earnings per share for the three months ended March 31:

For the three months ended March 31:	2015		2014
Net income	$	15,260	$	64,360
Adjustments
Change in fair value of Notes receivable – Rights to MSRs	3,679		(20,686		)
Change in fair value of Loans held for sale	7,654		—
Non-recurring costs associated with strategic transactions	13,156		—
Core earnings (Non-GAAP)	$	39,749	$	43,674
Basic Earnings per Share	$	0.21	$	0.91
Adjustments
Change in fair value of Notes receivable – Rights to MSRs	0.05		(0.30		)
Change in fair value of Loans held for sale	0.11		—
Non-recurring costs associated with strategic transactions	0.19		—
Basic Core Earnings per Share (Non-GAAP)	$	0.56	$	0.61
Diluted Earnings per Share	$	0.21	$	0.91
Adjustments
Change in fair value of Notes receivable – Rights to MSRs	0.05		(0.30		)
Change in fair value of Loans held for sale	0.11		—
Non-recurring costs associated with strategic transactions	0.19		—
Diluted Core Earnings per Share (Non-GAAP)	$	0.56	$	0.61

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes certain items does not represent the amount that effectively accrues directly to shareholders (i.e., these items are included in earnings and shareholders’ equity).

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The following table presents the components of our Interest income - notes receivable - Rights to MSRs in both dollars and as a percentage of average UPB:

	2015					2014
	Dollars			Basis Points of Average UPB		Dollars			Basis Points of Average UPB
Servicing fees collected	$	180,297		11.38		$	189,157		10.63
Subservicing fees payable to Ocwen	(90,942		)	(5.74	)	(90,644		)	(5.09	)
Net servicing fees retained by HLSS	89,355			5.64		98,513			5.54
Amortization of Notes receivable – Rights to MSRs (1)	(14,470		)	(0.91	)	(16,661		)	(0.94	)
Change in fair value of Notes receivable – Rights to MSRs (2)	(3,679		)	(0.23	)	$	20,686		1.16
	$	71,206		4.50		$	102,538		5.76

(1) Amortization of Notes receivable – Rights to MSRs reflects reductions in the value of the Notes receivable – Rights to MSRs based on the run-off of the portfolio.

(2) Our methodology of determining the fair value of Notes receivable – Rights to MSRs is described in Part I, Item 1, "Interim Condensed Consolidated Financial Statements – Note 3, Fair Value of Financial Instruments." In our Interim Condensed Consolidated Statements of Operations, we record changes in fair value as a component of Interest income – notes receivable – Rights to MSRs.

Three months ended March 31, 2015 versus 2014. Our Servicing fees collected and Subservicing fees payable to Ocwen decreased period over period primarily because our average UPB for the three months ended March 31, 2015 and 2014 decreased to $158.4 billion from $178.0 billion, respectively, while Servicing fees collected increased in basis points of average UPB due to increases in prepayment speeds for the three months ended March 31, 2015 to 10.6% from 9.9% for the same period in 2014. Subservicing fees payable to Ocwen increased in total dollars and in basis points of average UPB due to lower contractual retained fee rates and due to the pass-through of higher collections in excess of the retained fee.

Amortization of Notes Receivable – Rights to MSRs decreased in total dollars and as a percentage of average UPB due to the lower average UPB during the three months ended March 31, 2015 compared to the same period in 2014, partially offset by higher average prepayment speeds for the UPB tied to our Notes receivable – Rights to MSRs, which increased to 10.6% for the three months ended March 31, 2015 from 9.9% for the same period in 2014.

The Changes in the fair value of Notes receivable – Rights to MSRs are based on appraisals prepared by independent valuation firms. Factors that attributed to the decrease in fair value during 2015 include adjustments to the assumptions used by the valuation firms, including the discount rates applied ranging from 14% to 22% (2014: 15% to 22%), the interest rate used for calculating the cost of servicing advances of 1-Month LIBOR plus 3.50% (2014: 1-month LIBOR plus 3.50%), the prepayment projections over the lifetime of the portfolio ranging from 13% to 29% (2014: 12% to 28%) and the delinquency rate projections of the portfolio ranging from 15% to 35% (2014: 15% to 35%) and changes to the mix of assets underlying our Notes receivable – Rights to MSRs.

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The following table provides selected statistics related to our Notes receivable – Rights to MSRs as of March 31 (1):

(In thousands, except for loan count data)	2015			2014			% Change
Residential Assets Serviced
Unpaid principal balance:
Performing loans (2)	$	129,697,462		$	141,325,033		-8	%
Non-performing loans	23,274,426			31,075,264			-25	%
Non-performing real estate	3,286,606			3,366,449			-2	%
Total residential assets serviced	$	156,258,494		$	175,766,746		-11	%
Percent of total UPB:
Non-performing residential assets serviced	17.0		%	19.6		%	-13	%
Number of:
Performing loans (2)	881,691			946,997			-7	%
Non-performing loans	117,985			156,963			-25	%
Non-performing real estate	18,226			18,445			-1	%
Total number of residential assets serviced	1,017,902			1,122,405			-9	%
Percent of total number:
Non-performing residential assets serviced	13.4		%	17.5		%	-23	%

(1) This table only includes the UPB related to our Notes receivable - Rights to MSRs.

(2) Performing loans include those loans that are current or have been delinquent for less than 90 days in accordance with their original terms and those loans for which borrowers are making scheduled payments under loan modification, forbearance or bankruptcy plans. Performing loans also include loans for which we have master servicing rights that are reported based on scheduled UPB. We consider all other loans to be non-performing.

The following table provides selected portfolio statistics related to our Notes receivable – Rights to MSRs for the three months ended March 31:

(In thousands, except for loan count data)	2015			2014			% Change
Average residential assets serviced		$158,368,860			$177,977,591		-11	%
Prepayment speed (average CPR) (1)	10.6		%	9.9		%	7	%
Average number of residential assets serviced	1,027,468			1,133,082			-9	%

(1) The conditional prepayment rate ("CPR") is equal to the proportion of the principal of a pool of loans, assumed to be paid off, in each period.

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The following tables provide information regarding changes in our portfolio of Notes receivable – Rights to MSRs serviced for the three months ended March 31:

(In thousands, except for loan count data)	UPB			Loan Count
Servicing portfolio at December 31, 2014	$	160,785,280		1,040,488
Additions	—			—
Runoff	(3,970,816		)	(19,131	)
Servicing transfers	(555,970		)	(3,455	)
Servicing portfolio at March 31, 2015	$	156,258,494		1,017,902

(In thousands, except for loan count data)	UPB			Loan Count
Servicing portfolio at December 31, 2013	$	180,403,208		1,148,193
Additions	—			—
Runoff	(4,636,462		)	(25,788	)
Servicing portfolio at March 31, 2014	$	175,766,746		1,122,405

Change in Financial Condition Summary

The overall decrease in total assets of $701,576 and total liabilities of $676,756 during the three months ended March 31, 2015, primarily resulted from:

• The sale of RPLs on February 20, 2015 and the concurrent retirement of the RPL Facility; and

• We received $312,799 in net Match funded advance remittances and had net repayments of Match funded liabilities of $349,771.

Our assets at March 31, 2015 include Notes receivable – Rights to MSRs which had a balance of $594,417 representing 8.0% of total assets at March 31, 2015. Notes receivable – Rights to MSRs are carried at fair value which is determined based on appraisals prepared by independent valuation firms and which require the use of significant unobservable inputs. The most significant assumptions used in the appraisals as of March 31, 2015 are:

• Discount rates reflecting the risk of earning the future income streams ranging from 14% to 22%;

• Interest rate used for calculating the cost of servicing advances of 1-Month LIBOR plus 3.50%;

• Mortgage loan prepayment projections ranging from 13% to 29% of the related mortgage lifetime projected prepayment rate; and

• Delinquency rate projections ranging from 15% to 35% of the aggregate unpaid balance of the underlying mortgage loans.

The independent valuation firms reviewed the collateral attributes and the historical payment performance of the underlying mortgage servicing portfolio and compared them with similar mortgage servicing portfolios and with standard industry mortgage performance benchmarks to arrive at the assumptions set forth above. The selected collateral attributes and performance comparisons utilized were the voluntary prepayment performance, delinquency and foreclosure performance, operational cost comparison, average loan balance, weighted average coupon and note rate distribution, loan product type classification, geographic distribution and servicing advance behavior.

The unobservable inputs that have the most significant effect on the fair value of Notes receivable – Rights to MSRs are the mortgage loan prepayment rate projections and delinquency rate projections; however, any significant increase (decrease) in discount rates, interest rates, mortgage loan prepayment projections or delinquency rate projections, each in isolation, would result in a substantially lower (higher) valuation.

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LIQUIDITY AND CAPITAL RESOURCES

On April 6, 2015, to best address concerns relating to our ability to operate as a going concern and the associated impact on our business on an expedited basis, we agreed with NRZ and Merger Sub to terminate the Old Merger Agreement and immediately complete the Asset Sale. The Asset Sale was made in accordance with the terms and conditions of the NRZ Purchase Agreement. In connection with the Asset Sale, among other things, (i) HLSS MSR-EBO acquired substantially all of the assets of the Company (including all of the issued share capital of Luxco 1B) and (ii) HLSS Advances acquired all of the issued share capital of Luxco 1A and assumed substantially all of the liabilities of the Company, including certain post-closing liabilities of the Company. In exchange, the Company received an amount in cash equal to approximately $1.0 billion plus 28,286,980 newly issued shares of NRZ common stock with a par value $0.01 per share. In conjunction with the Asset Sale, our senior secured term loan facility was retired.

Concurrently with the execution of the NRZ Purchase Agreement, our Board of Directors adopted and approved the Liquidation Plan, pursuant to which we will (1) cease our business activities other than such activities that are necessary to carry out the provisions of the Liquidation Plan, (2) pay or make adequate provision for operating expenses expected to be incurred through the completion of the Liquidation Plan and (3) distribute to our shareholders in one or more distributions, (a) the cash received by the Company in the Asset Sale and the net proceeds from the sale of NRZ common stock received by the Company in the Asset Sale, less (b) amounts used to pay the liabilities of the Company and less a reserve in the amount of $50 million that will be held by the Company at the discretion of the Board to ensure that the Company will be able to meet known and unknown liabilities up to the date of the consummation of the transactions contemplated by the New Merger or, if the transactions contemplated by the New Merger are not consummated, the date of the final liquidating distribution after settlement of the liabilities and to ensure that the Company has available resources in the event that it is necessary to enforce against third parties any contractual or other rights of the Company or its officers or directors. If the New Merger is consummated, our shares will be converted automatically into the right to the Merger Consideration. If the New Merger is not consummated and post-closing expenses and liabilities do not exceed $50 million, it is anticipated that a further cash distribution will be made to shareholders.

Immediately following the closing of the Asset Sale contemplated by the NRZ Purchase Agreement, we entered into: (i) the New Merger Agreement with NRZ and Merger Sub, pursuant to which, among other things, the Company will be merged with and into Merger Sub, with the Company ceasing its corporate existence and Merger Sub surviving the New Merger, (ii) a Services Agreement, pursuant to which HLSS Advances Acquisition Corp. will provide us with certain services following the consummation of the Asset Sale, including, among other things, handling (including defending, prosecuting or resolving) all claims, disputes or controversies (including any litigation, arbitration, governmental investigations or inquiries or any other proceedings or negotiations) in which the Company is a party or may otherwise be involved and (iii) a Registration Rights Agreement to memorialize certain rights relating to the registration of shares of NRZ common stock to be held by the Company upon the closing of the Asset Sale. On the terms and subject to the conditions set forth in the New Merger Agreement, at the Effective Time each of the Company Shares issued and outstanding immediately prior to the Effective Time (other than Company Shares owned by any direct or indirect wholly-owned subsidiary of NRZ (other than Merger Sub) or of Merger Sub and Company Shares as to which dissenters’ rights have been properly exercised) will be converted automatically into the right to receive the Merger Consideration. The parties’ obligations to consummate the New Merger are subject to certain closing conditions, including approval of the New Merger by the requisite vote of the shareholders, the absence of any legal restraints that would prohibit the consummation of the New Merger and other conditions customary for a transaction of this type. Each of us, NRZ and Merger Sub has made certain customary representations, warranties and covenants in the New Merger Agreement, including, among other things, covenants related to the conduct of our business during the interim period between the execution of the New Merger Agreement and the consummation of the New Merger. The New Merger Agreement provides for certain termination rights for both us and NRZ, including, if approval of the New Merger by the requisite vote of the shareholders is not obtained or if the New Merger is not consummated by the nine month anniversary of the date of the New Merger Agreement.

On April 27, 2015, we distributed to our shareholders approximately $1.2 billion or $16.613 per ordinary share.

Liquidity (Prior to Asset Sale)

We define liquidity as unencumbered cash balances plus unused, collateralized financing capacity. Our liquidity as of March 31, 2015 as measured by cash and available credit, was $181,507, a decrease of $28,502 from December 31, 2014. At March 31, 2015 our cash position was $181,507 compared to $210,009 at December 31, 2014. We had no collateralized available capacity at March 31, 2015 and December 31, 2014. Regarding the investment of cash, our investment policies emphasize principal preservation and availability by limiting the investment to demand deposit accounts.

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Investment policy and funding strategy. Our primary sources of funds for near-term liquidity are:

• Interest income – notes receivable – Rights to MSRs;

• Proceeds from liquidation of Loans held for sale;

• Proceeds from Match funded liabilities; and

• Proceeds from Other borrowings.

Potential long-term sources of liquidity include proceeds from the issuance of debt or equity.

Our primary uses of funds are:

• Payments for advances in excess of collections on our existing servicing portfolio;

• Payments of interest and operating costs;

• Purchases of Residential Mortgage Assets; and

• Repayments of borrowings.

In managing our liquidity position, our primary focus is on maintaining sufficient cash and unused borrowing capacity to meet our advancing obligations, pay expenses and purchase additional Residential Mortgage Assets. We regularly monitor and project our cash position and borrowing capacity, and we consider this in sizing asset purchases.

At March 31, 2015, $513,682 of our total maximum borrowing capacity on our advance facilities remained unused. We maintain unused borrowing capacity for three reasons:

• As a protection should advances increase due to increased delinquencies;

• As capacity to retire our term notes as they mature; and

• To provide capacity for the acquisition of additional Residential Mortgage Assets.

Outlook. We believe that our cash balance and unused advance financing capacity are sufficient to meet foreseeable requirements. Immediately prior to the Asset Sale, we repaid our senior secured term loan facility in full at par. In conjunction with the Asset Sale, HLSS MSR-EBO and HLSS Advances assumed substantially all of the liabilities of the Company, including certain post-closing liabilities of the Company. Refer also to discussions within Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments,” which is incorporated herein by reference.

Debt and Match funded liability summary. As of March 31, 2015, we had $513,682 of unused borrowing capacity on our advance facilities. Our ability to continue to pledge collateral under our advance facilities depends on the performance of the collateral. Currently, the large majority of our collateral qualifies for financing. The debt covenants for our advance facilities, senior secured term loan facility, the EBO Facility, the Note Facility and the RPL Facility (collectively, our “Facilities”) require that we maintain minimum levels of liquid assets. Failure to comply with these covenants could result in restrictions on new borrowings or the early termination of our Facilities. We believe we are in compliance with these covenants and do not expect them to restrict our activities.

During the three months ended March 31, 2015, we amended our Series 2012 variable funding notes to modify the advance rates and to increases the maximum principal balance by $300 million in aggregate for the period commencing January 15, 2015 and ending April 15, 2015. In addition, we modified the Series 2013 variable funding notes (i) to extend the expected repayment date from February 13, 2015 to December 3, 2015, (ii) to incorporate additional designated servicing agreements as collateral, and (iii) to set the maximum principal balance at $525 million and to prescribe the circumstances whereby the maximum principal balance will be increased by $100 million to $625 million for a period of six months and, after the expiration of such period, then reduced to $550 million. Further, we extended the maturity date of the EBO Facility from March 2, 2015 to May 1, 2015. Lastly, we modified our senior secured term loan facility to extend the deadline to furnish annual financial statements to April 10, 2015, to amend certain terms of cross-default to our advance financing facilities, and to obtain consent to permit certain amendments to our subservicing agreement with Ocwen.

During the three months ended March 31, 2015, we redeemed $600.0 million of term notes, and we repaid the RPL Facility in full in conjunction with the sale of the RPL portfolios on February 20, 2015.

See Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments,” for discussion of a downgrade in our credit rating, the alleged events of default of certain of the advance funding facilities and cross default provisions to Ocwen’s senior secured term facility within our advance funding facilities and EBO Facility.

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Liquidity Risk. We are exposed to liquidity risk should the cash required to make new advances pursuant to servicing contracts and our agreements with Ocwen exceed the amount of advance repayments. In general, we finance our operations through operating cash flows and have advance financing facilities in place with sufficient capacity to cover the majority of cash required to make new advances. However, our Facilities contain borrowing conditions that, if not met, could affect our ability to borrow on new advances and affect our liquidity.

We are also exposed to liquidity risk related to our Loans held for sale. We have leveraged our Loans held for sale acquired to date in repurchase agreements with maturities of one year or less which we expect to renew upon maturity. Repurchase agreements are subject to margin calls that could adversely affect our liquidity by requiring us to repay a portion of the outstanding borrowing.

Refer also to discussions within Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments,” which is incorporated herein by reference.

Cash flows for the three months ended March 31. The following table presents a summary of our cash flows for the three months ended March 31:

	2015			2014
Net income	$	15,260		$	64,360
Adjustments for non-cash items	14,354			1,570
Changes in assets and liabilities	289,687			37,837
Cash flows from operating activities	319,301			103,767
Cash flows from investing activities	376,374			(608,794		)
Cash flows from financing activities	(724,177		)	493,051
Net decrease in cash	(28,502		)	(11,976		)
Cash at beginning of period	210,009			87,896
Cash at end of period	$	181,507		$	75,920

Three months ended March 31, 2015. Our operating activities provided $319,301 of cash. Components of operating cash flows included amounts provided by a decrease in assets and liabilities of $289,687 and by our Net income of $15,260, adjusted for amortization of debt issuance costs of $4,377, accretion of our original issuance discount related to our senior secured term loan facility of $185, net amortization of our whole loan purchase premiums and discounts of $183, accretion of the accretable yield on our RPLs of $1,595, a decrease in the fair value of the Notes receivable – Rights to MSRs of $3,679 and an increase in the unrealized loss on our GNMA EBO loan portfolios of $7,654 and the benefit from net forfeitures of share-based compensation expense of $129. The primary contributors to the changes in assets and liabilities were reductions in Match funded advances of $312,799 and debt service accounts of $50,258, offset by an increase in Related party receivables of $90,666 and a decrease in Related party payables of $5,668. The remainder of the changes in assets and liabilities relates to a net decrease in cash flows from operations due to movements in other assets and other liabilities of $22,964, primarily attributable to increases in our accrued interest income on GNMA EBO loans and the purchase price holdback on the sale of our RPL portfolios.

The primary driver of the increase in Related party receivables was attributable to the change in Match funded advance collections due from Ocwen of $92,138. The decrease in Related party payables was primarily attributable to the decrease in subservicing fees payable to Ocwen of $2,139 and a decrease in advances made by Ocwen that we had not yet purchased of $5,285. A portion of our Match funded advance collections of $312,799 were immediately used to pay down our outstanding Match funded liabilities. Refer to the financing activities discussion below for more details regarding Match funded liability cash movements during the current period. Lastly, the decrease in debt service accounts primarily relates to the timing of payments made to the trustees of our advance financing facilities. The trustees release these funds to pay down our Match funded liabilities on scheduled funding dates.

Our investing activities provided $376,374 of cash during the three months ended March 31, 2015 which primarily related to the sale of RPLs to a third party buyer for a total purchase price of $337,553. In addition, we received $17,040 from repayments

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of our GNMA EBO loans and our RPLs, and we received $5,412 from the recovery of advance financing receivables. Finally, we had a reduction in Notes receivable – Rights to MSRs of $16,369 due to principal reductions from runoff in the UPB of the mortgage loans serviced.

Our financing activities used $724,177 of cash. We had net payments to Match funded liabilities of $349,771 during the period. In addition, we received $2,481 of proceeds from our Other borrowings, offset by the repayments of our Other borrowings of 332,575, including the repayment in full of our RPL Facility in conjunction with the sale of our RPL portfolios. We also used cash in the payment of debt issuance costs of $5,963. Lastly, we paid dividends of $38,349.

Three months ended March 31, 2014. Our operating activities provided $103,767 of cash. Components of operating cash flows included amounts provided by changes in assets and liabilities of $37,837 and by our Net income of $64,360, adjusted for amortization of debt issuance costs of $4,962 and accretion of our original issuance discount related to our senior secured term loan facility of $185. The primary contributors to the changes in assets and liabilities were reductions in Match funded advances of $44,384 and decreases in Related party receivables of $2,450 offset by increases in debt service accounts of $3,077 and increases in related party payables of $(2,847). The remainder of the changes in assets and liabilities relates to a net increase in cash flows from operations due to movements in other assets and other liabilities of $(3,073).

The primary driver of the change in Related party receivables was Match funded advance collections due from Ocwen of $21,265. Increases in related party payables were primarily attributable to subservicing fees payable to Ocwen of $4,212 for March 31, 2014, subservicing activity and an amount due to Ocwen of $27,668 for advances made on our behalf as of March 31, 2014. The collection of Match funded advances of $44,384 was used to pay down $643,585 of our Match funded liabilities, which resulted in net cash provided of $19,392. Refer to the financing activities discussion below for more details regarding Match funded liability cash movements during the period. Lastly, the increase in debt service accounts primarily relates to payments made to the trustees of our advance financing facilities. The trustees release these funds to pay down our Match funded liabilities on scheduled funding dates.

Our investing activities used $608,794 of cash during the period, which primarily related to our acquisition of Rights to MSRs and related Match funded advances associated with two asset purchases from Ocwen. We paid $387,300 to Ocwen for Notes receivable – Rights to MSRs and $3,492,489 for Match funded advances. Finally, we had a reduction in Notes receivable – Rights to MSRs of $0 due to UPB runoff .

Our financing activities provided $493,051 of cash. New ordinary share issuances during the period provided $0 of cash, net of underwriting fees. We borrowed $3,140,192 on our Match funded advance financing facility related to our asset purchases from Ocwen, and overall, we had net proceeds from Match funded liabilities of $59,558 during the period. We received $472,734 in proceeds in connection with the issuance of debt under our senior secured term loan facility to help fund our Follow On 3 purchase from Ocwen. These amounts were offset by payments of debt issue costs totaling $6,408 and a quarterly principal payment of $875 on our senior secured term loan facility. Additionally, we paid dividends equal to $31,958. Finally, we paid offering costs of $0 associated with our issuance of ordinary shares during the period.

TOTAL EQUITY

Total equity amounted to $1,266,459 at March 31, 2015, as compared to $1,291,279 at December 31, 2014. This decrease of $24,820 is primarily due to net income of $15,260, offset by dividends declared of $38,349. In addition, we recorded reductions of $155 in relation to share-based compensation and $1,576 of unrealized losses (net of tax) on interest rate swaps that we designated as cash flow hedges.

DIVIDENDS AND DISTRIBUTIONS

During 2015, we declared the following dividends:



Record Date	Payment Date	Amount per Ordinary Share
January 30, 2015	February 10, 2015	$0.18
February 27, 2015	March 10, 2015	$0.18
March 31, 2015	April 10, 2015	$0.18

52On April 27, 2015, in accordance with the Liquidation Plan, we paid a liquidating distribution in the aggregate amount of approximately $1.2 billion or $16.613 per share (the "Distribution Amount") to holders of record at the close of business on April 20, 2015. The Distribution Amount represented the net proceeds received by the Company in connection with the Asset Sale, less a cash reserve in the amount of $50 million.

~~Table~~If ofthe ~~Contents~~Merger is consummated, our shares will be converted automatically into the right to receive $0.704059 per share in cash without interest, being the Merger Consideration. If the Merger is not consummated, it is anticipated that a further cash distribution will be made to shareholders.

On April 27, 2015, we paid a liquidating distribution in the aggregate amount of approximately $1.2 billion or $16.613 per share (the "Distribution Amount") to holders of record at the close of business on April 20, 2015. The Distribution Amount represented the net proceeds received by the Company in connection with the Asset Sale, less a cash reserve in the amount of $50 million.

If the New Merger is consummated, our shares will be converted automatically into the right to receive $0.704059 per share in cash without interest, being the Merger Consideration. If the New Merger is not consummated and post-closing expenses and liabilities do not exceed $50 million, it is anticipated that a further cash distribution will be made to shareholders.

CONTRACTUAL OBLIGATIONS, OFF-BALANCE SHEET ARRANGEMENTS AND OTHER MATTERS

~~Contractual~~We ~~Obligations~~did not enter into any significant contractual obligations or off-balance sheet arrangements that require ongoing future payments during 2015.

WeUpon ~~believe~~the ~~that~~consummation weof ~~have~~the ~~adequate~~Asset ~~resources~~Sale, toHome ~~fund~~Loan ~~all~~Servicing ~~unfunded~~Solutions, ~~commitments~~Ltd. ceased to be party to the ~~extent~~contractual ~~required~~obligations and tooff-balance ~~meet~~sheet ~~all~~arrangements ~~contractual~~of ~~obligations~~its asformer ~~they~~subsidiaries. ~~come~~At ~~due.~~June ~~Such~~30, ~~contractual~~2015, ~~obligations~~the ~~include~~Company ~~payments~~had onno ~~our~~significant ~~Other~~contractual ~~borrowings~~obligations ~~and~~or ~~operating~~off-balance ~~leases.~~sheet arrangements.

We exclude our Match funded liabilities from our contractual obligations because they represent non-recourse debt that has been collateralized by Match funded advances which are not available to satisfy general claims against HLSS. Holders of the notes issued by the Match Funded Advance SPEs have no recourse against any assets other than the Match funded advances that serve as collateral for the securitized debt.

During the three months ended March 31, 2015, we did not enter into any significant contractual obligations or off-balance sheet arrangements that require ongoing future payments.

Off-Balance Sheet Arrangements

In the normal course of business, we may engage in transactions with a variety of financial institutions and other companies that we do not reflect on our Interim Condensed Consolidated Balance Sheet. We are subject to potential financial loss if the counterparties to our off-balance sheet transactions are unable to complete an agreed-upon transaction. We seek to limit counterparty risk through financial analysis, dollar limits and other monitoring procedures. We may also entered into non-cancelable operating leases principally for our office facilities.

Derivatives. We record all derivative transactions at fair value on our Interim Condensed Consolidated Balance Sheet. We use these derivatives primarily to manage our interest rate risk. The notional amounts of our derivative contracts do not reflect our exposure to credit loss.

Involvement with SPEs. We use SPEs in the financing of our Match funded advances and Loans held for investment. We use securitization facilities to finance these assets. The SPEs to which these assets are transferred in these securitization transactions are included in our Interim Condensed Consolidated Financial Statements because we are the primary beneficiary of the SPEs, which are also VIEs. The holders of the debt of the Match Funded Advance SPEs can look only to the assets of the SPEs for satisfaction of the debt and have no recourse against HLSS. The holders of the debt of the Mortgage Loans SPEs have recourse against HLSS if the assets of the SPE are not able to satisfy the debt of the SPE.

VIEs. If we determine that we are the primary beneficiary of a VIE, we report the VIE in our Interim Condensed Consolidated Financial Statements. As of March 31, 2015, all of our VIEs are fully consolidated.

Related Parties

We have entered into various agreements with Ocwen and Altisource. William C. Erbey, our founder and the former Chairman of our Board of Directors, was also the Chairman of the Board of Directors of Ocwen and Altisource.

For the three months ended March 31, 2015, we earned servicing fees of $180,297, of which we paid subservicing fees to Ocwen of $90,942. For the three months ended March 31, 2014, we earned servicing fees of $189,157, of which we paid subservicing fees to Ocwen of $90,644.

At March 31, 2015, Ocwen owed us $0 for professional services provided pursuant to the Professional Services Agreement. During the three months ended March 31, 2015 we earned fees of $50 for services provided to Ocwen pursuant to the

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Professional Services Agreement (compared to $628 for the same period in 2014). Additionally, during the three months ended March 31, 2015, we incurred expenses of $0 for services received from Ocwen pursuant to the Professional Services Agreement (compare to $154 for the same period in 2014). Revenue and expenses from the Professional Services Agreement are included within Related party revenue and Related party expenses, respectively.

During the three months ended March 31, 2015, we incurred expenses of $76 for services provided to us pursuant to the Altisource Administrative Services Agreement (compared to $218 for the same period in 2014). We reported these amounts within Related party expenses for each period then ended.

We use actual costs incurred plus a 15% mark-up for our revenues and expenses related to our Professional Services Agreement with Ocwen and for expenses related to our Altisource Administrative Services Agreement. See Part I, Item 1, "Interim Condensed Consolidated Financial Statements – Note 17, Related Party Transactions" for more information regarding our related party transactions.

CRITICAL ACCOUNTING POLICIES

Except as described in Part I, Item I, “Interim Condensed Consolidated Financial Statements – Note 1B, Summary of Significant Accounting Policies” in relation to our adoption of the liquidation basis of accounting and our reclassification of our Loans held for investment to Loans held for sale, there were no significant changes to the accounting policies that we believe are the most critical to an understanding of our results of operations and financial condition that are disclosed in our 2014 Form 10-K.

RECENT ACCOUNTING DEVELOPMENTS

See Part I, Item 1, “Interim Condensed Consolidated Financial Statements – Note 1B, Summary of Significant Accounting Policies – Recent Accounting Pronouncements.”

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Dollars in thousands)

Market risk includes liquidity risk and interest rate risk. Market risk also reflects the risk of decline in the valuation of financial instruments and the collateral underlying loans. Our Investment Committee reviews significant transactions that may impact market risk and is authorized to utilize a wide variety of techniques and strategies to manage market risk including, in particular, interest rate risk.

Liquidity Risk

See the Part I, Item 2, “Liquidity and Capital Resources” for additional discussion of liquidity and related risks.

Interest Rate Risk

Interest rate risk is a function of (i) the timing and (ii) the dollar amount of assets and liabilities that re-price at various points in time. WeBecause ~~are~~we ~~exposed~~no tolonger carry interest-bearing ~~rate~~liabilities ~~risk~~and toour ~~the~~interest-earning ~~extent~~assets ~~that~~are ~~our~~at ~~interest~~fixed ~~rate~~rates, ~~sensitive~~we ~~liabilities~~are ~~mature~~not orexposed ~~re-price~~to atinterest ~~different~~rate ~~speeds,~~risk. orAt ~~different~~June 30, ~~bases~~2015, ~~than~~we ~~our~~held $46,070 of interest-earning ~~assets~~cash accounts.

Our primary strategy to manage the impact of changes in interest rates is to borrow at fixed rates on the term notes in our Match funded liability structure. We also receive the floating rate interest earned on custodial account balances related to the mortgage loans serviced under our subservicing agreement with Ocwen. Further, we executed a hedging strategy aimed at mitigating the impact of changes in variable interest rates within a certain period based on the projected excess of interest rate sensitive liabilities over interest rate sensitive assets. Future variances between the projected excess of interest rate sensitive liabilities over interest rate sensitive assets and actual results could cause us to become over-hedged or under-hedged. Lastly, we are partially compensated for the cost of excess servicing advances because the performance-based incentive fee payable to Ocwen in any month will be reduced by an amount equal to 1-Month LIBOR plus 275 bps per annum of the amount of any such excess servicing advances if the advance ratio exceeds a predetermined level for that month.41

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If interest rates increase by 1% on our variable-rate borrowing and interest-earning account balances, we estimate a net positive impact of approximately $11,881 resulting from an increase of $15,584 in annual interest income compared to an increase of $2,603 in annual interest expense based on March 31, 2015 balances.

	March 31, 2015
Variable-rate borrowings outstanding (1)	$	690,183
Fixed-rate borrowings outstanding	2,863,000
Custodial account balances (2)	1,005,469
Notional balance of interest rate swaps (2) (3)	488,813

(1) A portion of this balance is attributable to our senior secured term loan facility, which has an interest rate of 1-Month LIBOR plus 3.50% with a 1.00% LIBOR floor. We also include the outstanding balance of our EBO Facility, which has an interest rate of 1-Month LIBOR plus 3.05%. We use the EBO Facility to partially finance our GNMA EBO loans, which are primarily fixed rate loans. Because we finance our fixed rate GNMA EBO loans using variable rate borrowings, we face interest rate risk related to our GNMA EBO loans in a rising interest rate environment; however, this risk is partially offset by the interest earned on our variable rate custodial account balances. This balance also includes the Note Facility, which has an interest rate of 1-Month LIBOR plus 1.15%. Lastly, we adjusted this balance to exclude financing of advances over the predetermined advance ratio because the performance-based incentive fee payable to Ocwen in any month will be reduced by an amount equal to 1-Month LIBOR plus 275 bps per annum of the amount of any such excess servicing advances if the advance ratio exceeds a predetermined level for that month.

(2) Custodial account balances represent collections related to our Rights to MSRs that earn interest at a variable rate. These balances are in transit to the owners of the mortgage loans underlying our Rights to MSRs and are therefore excluded from our Interim Condensed Consolidated Balance Sheet.

(3) This amount relates to the non-forward starting interest rate swaps that we use to hedge our exposure to rising interest rates on a portion of our outstanding variable-rate borrowings. This amount is excluded from our Interim Condensed Consolidated Balance Sheet.

Our Interim Condensed Consolidated Balance Sheet at March 31, 2015, includes $181,507 of interest-earning cash accounts and $1,866 of interest-earning collateral accounts.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's filings under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and to ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, under the supervision of and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of ~~March~~June 3130, 2015. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of ~~March~~June 3130, 2015 our disclosure controls and procedures (1) were designed and functioning effectively to ensure that material information relating to HLSS, ~~including its consolidated subsidiaries,~~ is made known to our Chief Executive Officer and Chief Financial Officer by others within those entities particularly during the period in which this report was being prepared and (2) were operating effectively in that they provided reasonable assurance that information required to be disclosed by HLSS in the reports that it files or submits under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time three months ended specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including the Chief Executive Officer or Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) occurred during the fiscal quarter ended ~~March~~June 3130, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 1, “Interim Condensed Consolidated Financial Statements – Note 18, Commitments and Contingencies," for information regarding legal proceedings as of ~~March~~June 3130, 2015.

ITEM 1A. RISK FACTORS

As of ~~March~~June 3130, 2015, there had been no material changes in our risk factors from those disclosed in our 2014 Form 10-K, Part I, Item 1A, where we include a discussion of our principal risks and uncertainties that affect or could affect our business operations.

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ITEM 6. EXHIBITS

Exhibit Index



2.1	Agreement and Plan of Merger, dated as of February 22, 2015, by and among Home Loan Servicing Solutions, Ltd., New Residential Investment Corp. and Hexagon Merger Sub, Ltd. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on February 23, 2015.

2.2	Share and Asset Purchase Agreement, dated as of April 6, 2015, by and among Home Loan Servicing Solutions, Ltd., MSR-EBO Acquisition LLC, HLSS Advances Acquisition Corp. and New Residential Investment Corp. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on April 13, 2015.

2.3	Plan of Complete Liquidation and Dissolution, dated as of April 6, 2015. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on April 13, 2015.

2.4	Agreement and Plan of Merger, dated as of April 6, 2015, by and among Home Loan Servicing Solutions, Ltd., New Residential Investment Corp. and Hexagon Merger Sub, Ltd. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on April 13, 2015.

2.5	Services Agreement, dated as of April 6, 2015, by and among Home Loan Servicing Solutions, Ltd. and HLSS Advances Acquisition Corp. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on April 13, 2015.

2.6	Registration Rights Agreement, dated as of April 6, 2015, by and among Home Loan Servicing Solutions, Ltd. and New Residential Investment Corp. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on April 13, 2015.

2.7	Termination Agreement, dated as of April 6, 2015, by and among Home Loan Servicing Solutions, Ltd., New Residential Investment Corp. and Hexagon Merger Sub, Ltd. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on April 13, 2015.

10.1	Amendment No. 6 to the Second Amended and Restated Series 2012-VF1 Indenture Supplement dated as of August 30, 2013 and the Second Amended and Restated Note Purchase Agreement dated as of August 30, 2013. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on January 15, 2015.

10.2	Amendment No. 6 to the Second Amended and Restated Series 2012-VF2 Indenture Supplement dated as of August 30, 2013 and the Second Amended and Restated Note Purchase Agreement dated as of August 30, 2013. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on January 15, 2015.

10.3	Amendment No. 6 to the Second Amended and Restated Series 2012-VF3 Indenture Supplement dated as of August 30, 2013 and the Second Amended and Restated Note Purchase Agreement dated as of August 30, 2013. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on January 15, 2015.

10.4	Third Amended and Restated Indenture by and among HLSS Servicer Advance Receivables Trust II; Deutsche Bank National Trust Company; HLSS Holdings, LLC; Ocwen Loan Servicing, LLC and Barclays Bank PLC. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on January 21, 2015.

10.5	Third Amended and Restated Indenture Supplement by and among HLSS Servicer Advance Receivables Trust II; Deutsche Bank National Trust Company; HLSS Holdings, LLC; Ocwen Loan Servicing, LLC and Barclays Bank PLC. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on January 21, 2015.

10.6	Agreement with Deutsche Bank National Trust Company dated February 17, 2015. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on February 18, 2015.

10.7	Home Loan Servicing Solutions, Ltd. Change in Control Retention Bonus and Severance Plan. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on February 23, 2015.

10.8	Mortgage Loan Purchase and Sale Agreement by and among HLSS Mortgage Master Trust II and Securitized Mortgage Asset Loan Trust 2015-1 dated February 20, 2015. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on February 23, 2015.

10.9	Amendment No. 4 to Master Repurchase Agreement among HLSS Mortgage Master Trust, Barclays Bank PLC, Sutton Funding LLC and Home Loan Servicing Solutions, Ltd. dated as of February 27, 2015. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on March 3, 2015.

10.10	Consent, Waiver and Amendment among Home Loan Servicing Solutions, Ltd., certain subsidiaries of Home Loan Servicing Solutions, Ltd., JPMorgan Chase Bank, N.A. and each lender from time to time party thereto dated as of March 20, 2015. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on March 23, 2015.

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10.11	Amendment No. 2 to the Master Servicing Rights Purchase Agreement and Sale Supplements, dated as of April 6, 2015, by and among Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, Home Loan Servicing Solutions, Ltd. and HLSS MSR-EBO Acquisition LLC. Incorporated by reference to the Registrant's Current Report on Form 8-K filed on April 13, 2015.

11.1	Computation of earnings per share. Incorporated by reference from “PART I – FINANCIAL INFORMATION; ITEM 1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)” on page 3 herein.

31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS	XBRL Instance Document (filed herewith)

101.SCH	XBRL Taxonomy Extension Schema Document (filed herewith)

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)

101.LAB	XBRL Taxonomy Extension Label Linkbase Document (filed herewith)

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)

* Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		HOME LOAN SERVICING SOLUTIONS, LTD.
Date:	~~May~~August 117, 2015	By:/s/ James E. Lauter
		James E. Lauter
		Chief Financial Officer and Chief Accounting Officer
		(On behalf of the Registrant and as its principal financial officer)

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