GOODWILL AND INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2013

9. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

Goodwill primarily relates to the acquisitions of Equator, MPA, Springhouse, LLC and Tracmail. Changes in goodwill during the years ended December 31, 2013 and 2012 are summarized below:

	Mortgage		Financial		Technology
(in thousands)	Services		Services		Services		Total

Balance, January 1, 2012 and December 31, 2012	$	10,919	$	2,378	$	1,618	$	14,915
Acquisition of Equator	—		—		82,460		82,460

Balance, December 31, 2013	$	10,919	$	2,378	$	84,078	$	97,375

Intangible Assets, Net

Intangible assets relate to our acquisitions of the Homeward and ResCap fee-based businesses, Equator, MPA and Nationwide Credit, Inc. (“NCI”) (see Note 5). No impairment charges were taken during the periods presented.

Intangible assets, net consist of the following as of December 31, 2013 and 2012:

	Weighted
	average
	estimated					Accumulated
	useful life	Gross carrying amount				amortization						Net book value
(dollars in thousands)	(years)	2013		2012		2013			2012			2013		2012

Definite lived intangible assets
Trademarks	14	$	12,249	$	10,614	$	(4,534	)	$	(4,060	)	$	7,715	$	6,554
Customer-related intangible assets	10	284,484		38,366		(44,208		)	(18,567		)(a)	240,276		19,799
Operating agreement	20	35,000		35,000		(6,854		)	(5,104		)	28,146		29,896
Non-compete agreement	4	1,300		1,300		(1,275		)	(963		)	25		337

Total		$	333,033	$	85,280	$	(56,871	)	$	(28,694	)	$	276,162	$	56,586

(a) Prior to our acquisition of NCI in 2007, NCI completed an acquisition which created tax-deductible goodwill that amortizes for tax purposes over time. When we acquired NCI in 2007, we recorded a lesser amount of goodwill for financial reporting purposes than what had previously been recorded at NCI for tax purposes. This difference between the amount of goodwill recorded for financial reporting purposes and the amount recorded for taxes is referred to as “Component 2” goodwill and resulted in our recording periodic reductions first to our book goodwill balance in our consolidated financial statements. As our book goodwill balance was fully written off at December 31, 2010, we continued to amortize the remaining Component 2 goodwill for United States tax purposes by reducing certain intangible assets by the remaining tax benefits of the Component 2 goodwill as they are realized in our tax returns. The reduction in intangible assets was $3.3 million and $3.4 million for the years ended December 31, 2012 and 2011, respectively. Component 2 goodwill was fully amortized in 2012.

Amortization expense for definite lived intangible assets was $28.2 million, $5.0 million and $5.3 million for the years ended December 31, 2013, 2012 and 2011, respectively. Expected annual amortization for 2014 through 2018, is $44.2 million, $40.3 million, $34.4 million, $29.1 million and $24.0 million, respectively.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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