Mortgage Servicing Rights

9 Months Ended

Sep. 30, 2023

Mortgage Servicing Rights [Abstract]

Mortgage Servicing Rights

Mortgage Servicing Rights

Certain of the reverse mortgage loans originated by the Company are ineligible for inclusion in HMBS, and are not guaranteed by the FHA ("Proprietary reverse mortgage loans"). The Company has entered into a Sale and Servicing Agreement (the "Sale and Servicing Agreement) with a third party (the "Proprietary Loan Purchaser") whereby the Company originated reverse mortgage loans based on specific proprietary criteria and committed to sell such loans to the Proprietary Loan Purchaser. Upon the sale of such loans to the Proprietary Loan Purchaser, the Company retained the rights and obligations of servicing such loans and an MSR asset was recorded.

Additionally, on July 1, 2023, the Company, through Longbridge, assumed the role as servicer for various private label securitization trusts collateralized by either proprietary reverse mortgage loans or HECM buyout loans. Longbridge was appointed servicer through the bankruptcy proceedings of the previous servicer, and the Company assumed the rights and obligations of servicing such loans. Such MSRs related to underlying reverse mortgage loans with an aggregate unpaid principal balance of $2.1 billion on July 1, 2023. For the three- and nine-month periods ended September 30, 2023, the Company recognized a change in unrealized gain (loss) of $23.9 million related to the MSRs it assumed which is included in Other, net on the Condensed Consolidated Statement of Operations.

As of September 30, 2023, the Company's MSRs related to underlying reverse mortgage loans with an aggregate unpaid principal balance of $2.8 billion, and the fair value of such MSRs was $29.7 million. As of December 31, 2022, the Company's MSRs related to underlying reverse mortgage loans with an aggregate unpaid principal balance of $774.6 million, and the fair value of such MSRs was $8.1 million.

The value of the Company's MSRs is driven by the net cash flows associated with servicing activities, which include contractually specified servicing fees, late fees, and other ancillary servicing revenue. The Company recognized a gain of $22.2 million and $21.5 million related to its MSRs for the three- and nine-month periods ended September 30, 2023, respectively, which is included in Other (net) on the Condensed Consolidated Statement of Operations. The Company did not hold any MSRs during the nine-month period ended September 30, 2022.