10-Q/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

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

For the quarterly period ended June 30, 2011

or

o 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: 333-171370

Nationstar Mortgage LLC

(Exact name of registrant as specified in its charter)

Delaware	75-2921540
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

350 Highland Drive
Lewisville, TX	75067
(Address of principal executive offices)	(Zip Code)

469-549-2000
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 þ      No o

     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 þ      No o

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

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer þ (Do not check if a smaller reporting company.) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No      þ

EXPLANATORY NOTE

     The purpose of this Amendment No. 1 on Form 10-Q/A to Nationstar Mortgage LLC’s Quarterly Report on Form 10-Q for the period ended June 30, 2011, filed with the Securities and Exchange Commission on September 19, 2011 (“the Form 10-Q”), is solely to furnish Exhibit 101 XBRL (eXtensible Business Reporting Language) interactive data files in accordance with Rule 405 (a)(2) of Regulation S-T.

     Included as Exhibit 101 to this report is the following information formatted in XBRL: (i) the consolidated balance sheets at June 30, 2011 (unaudited) and December 31, 2010, (ii) the unaudited consolidated statements of operations for the three and six months ended June 30, 2011 and 2010, (iii) the consolidated statements of members’ equity for the six-months ended June 30, 2011 (unaudited) and for the year ended December 31, 2010, (iv) the unaudited consolidated statements of cash flows for the six months ended June 30, 2011 and 2010, and (v) the notes to the consolidated financial statements (unaudited, tagged as blocks of text).

     No other changes have been made to the Form 10-Q, and this Form 10-Q/A does not does not reflect any subsequent events occurring after the original filing date of the Form 10-Q or modify or update any other disclosures made in the Form 10-Q.

     Pursuant to Rule 406T of Regulation S-T, the interactive data files contained in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Item 6. Exhibits

31.1	Certification by Chief Executive Officer pursuant to Rules 13a 14(a) and 15d 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification by Chief Financial Officer pursuant to Rules 13a 14(a) and 15d 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document **
101.SCH	XBRL Taxonomy Extension Schema Document **
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document **
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document **
101.LAB	XBRL Taxonomy Extension Label Linkbase Document **
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document **

*	Filed with Nationstar Mortgage LLC’s Quarterly Report on Form 10-Q filed on September 19, 2011 for the period ended June 30, 2011.
**	Furnished herewith.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NATIONSTAR MORTGAGE LLC.

/s/ Jay Bray Jay Bray

Chief Executive Officer, President and Chief Financial Officer

Date: October 18, 2011

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Assets
Restricted cash, subject to ABS non recourse debt	$ 1,417	$ 1,472
Accrued interest, subject to ABS non recourse debt	2,901	2,392
Allowance for loan losses of mortgage loans held for investment, subject to nonrecourse debt	4,426	3,298
Real estate owned, subject to ABS nonrecourse debt	11,787	17,509
Liabilities and members' equity
Accrued interest payable, subject to ABS nonrecourse debt	$ 59	$ 95

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues:
Servicing fee income	$ 52,886	$ 41,183	$ 110,353	$ 75,273
Other fee income	6,491	3,695	13,710	8,355
Total fee income	59,377	44,878	124,063	83,628
Gain on mortgage loans held for sale	22,822	13,489	43,328	25,918
Total revenues	82,199	58,367	167,391	109,546
Expenses and impairments:
Salaries, wages, and benefits	48,372	33,321	95,295	62,810
General and administrative	15,746	10,789	31,310	19,509
Provision for loan losses			1,128
Loss on foreclosed real estate	2,099		4,346
Occupancy	2,185	1,889	4,444	3,790
Total expenses and impairments	68,402	45,999	136,523	86,109
Other income (expense):
Interest income	16,727	28,261	35,045	59,594
Interest expense	(25,185)	(31,958)	(50,553)	(61,093)
Loss on interest rate swaps and caps		(4,424)		(7,203)
Fair value changes in ABS securitizations	(3,613)	(6,573)	(6,265)	(16,329)
Total other income (expense)	(12,071)	(14,694)	(21,773)	(25,031)
Net income/(loss)	$ 1,726	$ (2,326)	$ 9,095	$ (1,594)

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Subsequent Events

6 Months Ended

Jun. 30, 2011

Subsequent Events [Abstract]

Subsequent Events

17. Subsequent Events

In June 2011, Nationstar entered into an agreement to subservice approximately $26.2 billion unpaid principal balance of loans for a financial services company. Management of the Company expects to board the approximately 141,000 loans onto its system during the third quarter 2011 at which time the Company will begin its servicing responsibilities.

During July 2011, Nationstar entered into an amendment to a lease agreement for additional space in a building that it previously leased in October 2010. The term of the lease with respect to the additional 80,242 square feet of space is sixty eight months. Base rent payments for the new space will average approximately $101 thousand per month over the term of the lease. Nationstar expects to occupy the additional space beginning in August 2011. Additionally, the lease amendment extended the remaining lease term on the original 83,467 square feet of space from April 2016 to March 2017 to correspond to the term of the additional space.

In July 2011, Nationstar acquired the mortgage servicing rights of a $3.6 billion servicing portfolio from an unaffiliated third party for approximately $33.3 million. The acquired loans are expected to board onto Nationstar’s existing servicing platform in September 2011.

In September 2011, Nationstar completed the exchange offer of $250.0 million in 10.875% senior unsecured notes for new notes that have been registered under the Securities Act of 1933.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	Nationstar Mortgage LLC
Entity Central Index Key	0001507951
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	true
Amendment Description	Amendment to previous filing.
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer

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Mortgage Loans Held for Sale and Investment

6 Months Ended

Jun. 30, 2011

Mortgage Loans Held for Sale and Investment [Abstract]

Mortgage Loans Held for Sale and Investment

6. Mortgage Loans Held for Sale and Investment

Mortgage loans held for sale

Mortgage loans held for sale consist of the following (in thousands):

	June 30,		December 31,
	2011		2010
Mortgage loans held for sale — unpaid principal balance	$	254,183	$	366,880
Mark-to-market adjustment		8,414		4,280
Total mortgage loans held for sale	$	262,597	$	371,160

Mortgage loans held for sale on a nonaccrual status are presented in the following table for the periods indicated (in thousands):

	June 30,		December 31,
	2011		2010
Mortgage loans held for sale — Non-performing	$	1,925	$	2,016

A reconciliation of the changes in mortgage loans held for sale to the amounts presented in the consolidated statements of cash flows for the dates indicated is presented in the following table (in thousands):

	For the six months ended
	June 30, 2011			June 30, 2010
Mortgage loans held for sale — beginning balance	$	371,160		$	203,131
Mortgage loans originated and purchased, net of fees		1,378,039			1,192,333
Cost of loans sold, net of fees		(1,490,814	)		(1,128,200	)
Principal payments received on mortgage loans held for sale and other changes		4,500			8,388
Transfer of mortgage loans held for sale to real estate owned		(288	)		—
Mortgage loans held for sale — ending balance	$	262,597		$	275,652

Mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets, net

Mortgage loans held for investment principally consist of nonconforming or subprime mortgage loans securitized which serve as collateral for the issued debt. These loans were transferred on October 1, 2009, from mortgage loans held for sale at fair value on the transfer date, as determined by the present value of expected future cash flows, with no valuation allowance recorded. The difference between the undiscounted cash flows expected and the investment in the loan is recognized as interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at transfer are not recognized as a yield adjustment or as a loss accrual or a valuation allowance. Increases in expected cash flows subsequent to the transfer are recognized prospectively through adjustment of the yield on the loans over the remaining life. Decreases in expected cash flows subsequent to transfer are recognized as a valuation allowance.

An allowance for loan losses is established by recording a provision for loan losses in the consolidated statement of operations when management believes a loss has occurred on a loan held for investment. When management determines that a loan held for investment is partially or fully uncollectible, the estimated loss is charged against the allowance for loan losses. Recoveries on losses previously charged to the allowance are credited to the allowance at the time the recovery is collected.

Nationstar accounts for the loans that were transferred to held for investment from held for sale during October 2009 in a manner similar to ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. At the date of transfer, management evaluated such loans to determine whether there was evidence of deterioration of credit quality since acquisition and if it was probable that Nationstar would be unable to collect all amounts due according to the loan’s contractual terms. The transferred loans were aggregated into separate pools of loans based on common risk characteristics (loan delinquency). Nationstar considers expected prepayments, and estimates the amount and timing of undiscounted expected principal, interest, and other cash flows for each aggregated pool of loans. Nationstar determines the excess of the pool’s scheduled contractual principal and contractual interest payments over all cash flows expected as of the transfer date as an amount that should not be accreted (nonaccretable difference). The remaining amount is accreted into interest income over the remaining life of the pool of loans (accretable yield).

Over the life of the transferred loans, management continues to estimate cash flows expected to be collected. Nationstar evaluates at the balance sheet date whether the present value of the loans determined using the effective interest rates has decreased, and if so, records an allowance for loan loss. The present value of any subsequent increase in the transferred loans cash flows expected to be collected is used first to reverse any existing allowance for loan loss related to such loans. Any remaining increase in cash flows expected to be collected are used to adjust the amount of accretable yield recognized on a prospective basis over the remaining life of the loans.

Nationstar accounts for its allowance for loan losses for all other mortgage loans held for investment in accordance with ASC 450-20, Loss Contingencies. The allowance for loan losses represents management’s best estimate of probable losses inherent in the loans held for investment portfolio. Mortgage loans held for investment portfolio is comprised primarily of large groups of homogeneous residential mortgage loans. These loans are evaluated based on the loan’s present delinquency status. The estimate of probable losses on these loans considers the rate of default of the loans and the amount of loss in the event of default. The rate of default is based on historical experience related to the migration of these from each delinquency category to default over a twelvemonth period. The entire allowance is available to absorb probable credit losses from the entire held

for investment portfolio.

Mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets, net as of the dates indicated include (in thousands):

	June 30,			December 31,
	2011			2010
Mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets, net — unpaid principal balance	$	393,469		$	412,398
Transfer discount
Accretable		(23,867	)		(25,219	)
Non-accretable		(109,713	)		(117,041	)
Allowance for loan losses		(4,426	)		(3,298	)
Total mortgage loans held for investment, subject to nonrecourse debt-Legacy Assets, net	$	255,463		$	266,840

Over the life of the loan pools, Nationstar continues to estimate cash flows expected to be collected. Nationstar considers expected prepayments and estimates the amount and timing of undiscounted expected principal, interest, and other cash flows (expected as of the transfer date) for each aggregate pool of loans. Nationstar evaluates at the balance sheet date whether the present value of its loans determined using the effective interest rates has decreased and, if so, recognizes a valuation allowance subsequent to the transfer date. The present value of any subsequent increase in the loan pool’s actual cash flows expected to be collected is used first to reverse any existing valuation allowance for that loan pool. Any remaining increase in cash flows expected to be collected adjusts the amount of accretable yield recognized on a prospective basis over the loan pool’s remaining life.

The changes in accretable yield on loans transferred to mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets were as follows (in thousands):

	June 30,			December 31,
	2011			2010
Balance at the beginning of the period	$	25,219		$	22,040
Additions		—			—
Accretion		(2,177	)		(4,082	)
Reclassifications from (to) nonaccretable discount		825			7,261
Disposals		—			—
Balance at the end of the period	$	23,867		$	25,219

Nationstar may periodically modify the terms of any outstanding mortgage loans held for investment, subject to nonrecourse debt-Legacy Assets, net for loans that are either in default or in imminent default. Modifications often involve reduced payments by borrowers, modification of the original terms of the mortgage loans, forgiveness of debt and/or increased servicing advances. As a result of the volume of modification agreements entered into, the estimated average outstanding life in this pool of mortgage loans has been extended. Nationstar records interest income on the transferred loans on a level-yield method. To maintain a level-yield on these transferred loans over the estimated extended life, Nationstar reclassified approximately $0.8 million for the six months ended June 30, 2011 and $7.3 million from the twelve months ended December 31, 2010 from nonaccretable difference. Furthermore, the Company considers the decrease in principal, interest, and other cash flows expected to be collected arising from the transferred loans as an impairment, and Nationstar recorded a $1.1 million provision for loan losses for the six month period ended June 30, 2011, and a $3.3 million provision for loan losses for the twelve months ended December 31, 2010 on the transferred loans to reflect this impairment. No additional provision was required for the three month period ended June 30, 2011.

Nationstar collectively evaluates all mortgage loans held for investment, subject to nonrecourse debt-Legacy Assets for impairment. The changes in the allowance for loan losses on mortgage loans held for investment, subject to nonrecourse debt-Legacy Assets, net were as follows (in thousands) for the dates indicated:

	June 30, 2011
	Performing		Non-Performing		Total
Balance at the beginning of the period	$	829	$	2,469	$	3,298
Provision for loan losses		86		1,042		1,128
Recoveries on loans previously charged-off		—		—		—
Charge-offs		—		—		—
Balance at the end of the period	$	915	$	3,511	$	4,426
Ending balance — Collectively evaluated for impairment	$	309,863	$	83,606	$	393,469

	December 31, 2010
	Performing		Non-Performing		Total
Balance at the beginning of the period	$	—	$	—	$	—
Provision for loan losses		829		2,469		3,298
Recoveries on loans previously charged-off		—		—		—
Charge-offs		—		—		—
Balance at the end of the period	$	829	$	2,469	$	3,298
Ending balance — Collectively evaluated for impairment	$	311,122	$	101,276	$	412,398

Loan delinquency and Loan-to-Value Ratio (LTV) are common credit quality indicators that Nationstar monitors and utilizes in its evaluation of the adequacy of the allowance for loan losses, of which the primary indicator of credit quality is loan delinquency. LTV refers to the ratio of comparing the loan’s unpaid principal balance to the property’s collateral value. Loan delinquencies and unpaid principal balances are updated monthly based upon collection activity. Collateral values are updated from third party providers on a periodic basis. The collateral values used to derive the LTV’s shown below were obtained at various dates, but the majority were within the last twelve months and virtually all were obtained with the last eighteen months. For an event requiring a decision based at least in part on the collateral value, the Company takes its last known value provided by a third party and then adjusts the value based on the applicable home price index.

The following tables provide the outstanding unpaid principal balance of Nationstar’s mortgage loans held for investment by credit quality indicators as of June 30, 2011 and December 31, 2010.

	June 30,		December 31,
	2011		2010
	(in thousands)
Credit Quality by Delinquency Status
Performing	$	309,863	$	311,122
Non-Performing		83,606		101,276
Total	$	393,469	$	412,398
Credit Quality by Loan-to-Value Ratio
Less than 60	$	44,944	$	47,627
Less than 70 and more than 60		17,398		17,498
Less than 80 and more than 70		25,134		26,805
Less than 90 and more than 80		35,143		36,125
Less than 100 and more than 90		35,733		37,599
Greater than 100		235,117		246,744
Total	$	393,469	$	412,398

Performing loans refer to loans that are less than 90 days delinquent. Non-performing loans refer to loans that are greater than 90 days delinquent.

Mortgage loans held for investment, subject to ABS nonrecourse debt

Effective January 1, 2010, new accounting guidance eliminated the concept of a QSPE and all existing securitization trusts are considered VIEs and are now subject to new consolidation guidance provided in ASC 810. Upon consolidation of these VIEs, Nationstar recognized the securitized mortgage loans related to these securitization trusts as mortgage loans held for investment, subject to ABS nonrecourse debt (see Note 3). Additionally, Nationstar elected the fair value option provided for by ASC 825-10.

Mortgage loans held for investment, subject to ABS nonrecourse debt as of June 30, 2011 and December 31, 2010 includes (in thousands):

	June 30,			December 31,
	2011			2010
	(in thousands)
Mortgage loans held for investment, subject to ABS nonrecourse debt — unpaid principal balance	$	944,724		$	983,106
Fair value adjustment		(454,136	)		(444,666	)
Mortgage loans held for investment, subject to ABS nonrecourse debt, net	$	490,588		$	538,440

As of June 30, 2011 and December 31, 2010, respectively, approximately $218.8 million and $223.5 million of the unpaid principal balance of mortgage loans held for investment, subject to ABS nonrecourse debt were over 90 days past due. The fair value of such loans was approximately $110.0 million and $117.6 million, respectively.

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General and Administrative

6 Months Ended

Jun. 30, 2011

General and Administrative [Abstract]

General and Administrative

11. General and Administrative

General and administrative expense consists of the following for the dates indicated (in thousands):

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2011		2010		2011		2010
Depreciation and amortization	$	808	$	452	$	1,560	$	850
Advertising		1,204		1,131		2,053		2,566
Equipment		1,086		991		1,994		1,699
Servicing		4,573		1,791		9,219		2,965
Telecommunications		971		628		1,791		1,129
Legal and professional fees		1,541		1,629		4,637		2,596
Postage		898		910		2,415		1,941
Stationary and supplies		949		648		1,951		1,130
Travel		818		501		1,512		980
Insurance and Other		2,898		2,108		4,178		3,653
Total general and administrative expense	$	15,746	$	10,789	$	31,310	$	19,509

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Recent Accounting Developments

6 Months Ended

Jun. 30, 2011

Recent Accounting Developments [Abstract]

Recent Accounting Developments

2. Recent Accounting Developments

Accounting Standards Update No. 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring (Update No. 2011-02). Update No. 2011-02 is intended to reduce the diversity in identifying troubled debt restructurings (TDRs), primarily by clarifying certain factors around concessions and financial difficulty. In evaluating whether a restructuring constitutes a troubled debt restructuring, a creditor must separately conclude that: 1) the restructuring constitutes a concession; and 2) the debtor is experiencing financial difficulties. The clarifications will generally result in more restructurings being considered troubled. The amendments in this update will be effective for interim and annual periods beginning after June 15, 2011, with retrospective application to the beginning of the annual period of adoption. The adoption of Update No. 2011-02 is not expected to have a material impact on Nationstar’s financial condition, liquidity or results of operations.

Accounting Standards Update No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements (Update No. 2011-03). Update No. 2011-03 is intended to improve the accounting and reporting of repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. This amendment removes the criterion pertaining to an exchange of collateral such that it should not be a determining factor in assessing effective control, including (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. Other criteria applicable to the assessment of effective control are not changed by the amendments in the update. The amendments in this update will be effective for interim and annual periods beginning after December 15, 2011. The adoption of Update No. 2011-03 is not expected to have a material impact on Nationstar’s financial condition, liquidity or results of operations.

Accounting Standards Update No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (Update No. 2011-04). Update No. 2011-04 is intended to provide common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. The changes required in this update include changing the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments in this update are to be applied prospectively and are effective for interim and annual periods beginning after December 15, 2011. The adoption of Update No. 2011-04 is not expected to have a material impact on Nationstar’s financial condition, liquidity or results of operations.

Accounting Standards Update No. 2011-05, Presentation of Comprehensive Income (Update No. 2011-05). Update No. 2011-05 is intended to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. Update No. 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity and now requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This update does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments in this update are to be applied retrospectively and are effective for interim and annual periods beginning after December 15, 2011. The adoption of Update No. 2011-05 is not expected to have a material impact on Nationstar’s financial condition, liquidity or results of operations.

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Other Assets

6 Months Ended

Jun. 30, 2011

Other Assets [Abstract]

Other Assets

8. Other Assets

Other assets consisted of the following (in thousands):

	June 30,		December 31,
	2011		2010
Deferred financing costs	$	12,799	$	14,396
Derivative financial instruments		7,029		8,666
Prepaid expenses		2,939		3,379
Equity method investment		6,079		—
Margin call deposits		1,765		—
Other		4,724		3,095
Total other assets	$	35,335	$	29,536

In March 2011, Nationstar acquired a 22% interest in ANC Acquisition LLC (ANC) for $6.6 million. ANC is the parent company of National Real Estate Information Services, LP (NREIS), a real estate services company. As Nationstar is able to exercise significant influence, but not control, over the policies and procedures of the entity, and Nationstar owns less than 50% of the voting interests, Nationstar applies the equity method of accounting.

NREIS, an ancillary real estate services and vendor management company, offers comprehensive settlement and property valuation services for both origination and default management channels. Direct or indirect product offerings include title insurance agency, tax searches, flood certification, default valuations, full appraisals and broker price opinions.

A summary of the assets, liabilities, and operations of ANC as of June 30, 2011 are presented in the following tables (in thousands):

	June 30, 2011
ASSETS
Cash	$	918
Accounts receivable		4,625
Receivables from affiliates		289
Equity method investments		18,657
Property and equipment, net		1,748
Goodwill and other intangible assets		18,530
Other assets		937
Total Assets	$	45,704
LIABILITIES
Notes payable	$	4,542
Payables and accrued liabilities		15,436
Total Liabilities	$	19,978

	From Acquisition
	through
	June 30, 2011
REVENUES
Sales	$	12,201
Cost of sales		(10,722	)
Net sales revenues		1,479
OTHER INCOME/(EXPENSE)
Operating costs		(3,951	)
Income from equity method investments		405
Depreciation and amortization		(219	)
Other expenses		(53	)
Loss from discontinued operations		(27	)
Total Other income/(expense)		(3,845	)
Net loss	$	(2,366	)

Nationstar recorded a net charge to earnings of $521 thousand for the three and six months ended June 30, 2011, related to loss on equity method investments, which is included as a component of other fee income in Nationstar’s consolidated statement of operations.

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Capital Requirements

6 Months Ended

Jun. 30, 2011

Capital Requirements [Abstract]

Capital Requirements

13. Capital Requirements

Certain of Nationstar’s secondary market investors require various capital adequacy requirements, as specified in the respective selling and servicing agreements. To the extent that these mandatory, imposed capital requirements are not met, Nationstar’s secondary market investors may ultimately terminate Nationstar’s selling and servicing agreements, which would prohibit Nationstar from further originating or securitizing these specific types of mortgage loans. In addition, these secondary market investors may impose additional net worth or financial condition requirements based on an assessment of market conditions or other relevant factors.

Among Nationstar’s various capital requirements related to its outstanding selling and servicing agreements, the most restrictive of these requires Nationstar to maintain a minimum adjusted net worth balance of $119.8 million.

As of June 30, 2011, Nationstar was in compliance with all of its selling and servicing capital requirements. Additionally, Nationstar is required to maintain a minimum tangible net worth of at least $175 million as of each quarter-end related to its outstanding Master Repurchase Agreements on its outstanding repurchase facilities. As of June 30, 2011, Nationstar was in compliance with these minimum tangible net worth requirements.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2011

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

9. Derivative Financial Instruments

Nationstar enters into interest rate lock commitments (IRLCs) with prospective borrowers. These commitments are carried at fair value in accordance with ASC 815, Derivatives and Hedging. ASC 815 clarifies that the expected net future cash flows related to the associated servicing of a loan should be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. The estimated fair values of IRLCs are based on quoted market values and are recorded in other assets in the consolidated balance sheets. The initial and subsequent changes in the value of IRLCs are a component of gain (loss) on mortgage loans held for sale.

Nationstar actively manages the risk profiles of its IRLCs and mortgage loans held for sale on a daily basis. To manage the price risk associated with IRLCs, Nationstar enters into forward sales of mortgage backed securities (MBS) in an amount equal to the portion of the IRLC expected to close, assuming no change in mortgage interest rates. In addition, to manage the interest rate risk associated with mortgage loans held for sale, Nationstar enters into forward sales of MBS to deliver mortgage loan inventory to investors. The estimated fair values of forward sales of MBS and forward sale commitments are based on quoted market values and are recorded as a component of mortgage loans held for sale in the consolidated balance sheets. The initial and subsequent changes in value on forward sales of MBS are a component of gain (loss) on mortgage loans held for sale. Forward sales of MBS are a component of gain (loss) on mortgage loans held for sale.

Periodically, Nationstar has entered into interest rate swap agreements to hedge the interest payment on the warehouse debt and securitization of its mortgage loans held for sale. These interest rate swap agreements generally require Nationstar to pay a fixed interest rate and receive a variable interest rate based on LIBOR. Unless designated as an accounting hedge, Nationstar records losses on interest rate swaps as a component of loss on interest rate swaps and caps in Nationstar’s consolidated statements of operations. Unrealized losses on undesignated interest rate derivatives are separately disclosed under operating activities in the consolidated statements of cash flows.

On October 1, 2010, the Company designated an existing interest rate swap as a cash flow hedge against outstanding floating rate financing associated with the Nationstar Mortgage Advance Receivables Trust 2009-ADV1 financing. Under the swap agreement, the Company receives interest equivalent to one month LIBOR and pays a fixed rate of 2.0425% based on an amortizing notional of $292.0 million as of June 30, 2011, with settlements occurring monthly until November 2013. This interest rate swap is a cash flow hedge under ASC 815, Derivatives and Hedging, and is recorded at fair value on the Company’s consolidated balance sheet, with any changes in fair value being recorded as an adjustment to other comprehensive income. To qualify as a cash flow hedge, the hedge must be highly effective at reducing the risk associated with the exposure being hedged and must be formally designated at hedge inception. Nationstar considers a hedge to be highly effective if the change in fair value of the derivative hedging instrument is within 80% to 125% of the opposite change in the fair value of the hedged item attributable to the hedged risk. Ineffective portions of the cash flow hedge are reflected in earnings as they occur as a component of interest expense.

The Effect of Derivative Instruments on the Statement of Operations
(in thousands)

							Location of Gain
							(Loss) Recognized
							in Income on
	Amount of			Location of Gain	Amount of Gain		Derivative	Amount of Gain
	Gain (Loss)			(Loss)	(Loss)		(Ineffective	(Loss)
	Recognized in			Reclassified from	Reclassified from		Portion and	Recognized in
Derivatives in	OCI on			Accumulated	Accumulated		Amount Excluded	Income on
ASC815 Cash	Derivative			OCI into Income	OCI into Income		from	Derivative
Flow Hedging	(Effective			(Effective	(Effective		Effectiveness	(Ineffective
Relationships	Portion)			Portion)	Portion)		Testing)	Portion)
For the three months ended June 30, 2011
Interest Rate Swap	$	(1,210	)	Interest Expense	$	336	Interest Expense	$	514
For the six months ended June 30, 2011
Interest Rate Swap	$	(1,071	)	Interest Expense	$	582	Interest Expense	$	1,416
For the twelve months ended December 31, 2010
Interest Rate Swap	$	1,071		Interest Expense	$	—	Interest Expense	$	930

As of June 30, 2011, there are no credit risk related contingent features in any of the Company’s derivative agreements.

The following tables provide the outstanding notional balances and fair values of outstanding positions for the dates indicated, and recorded gains (losses) during the periods indicated (in thousands):

							Recorded
	Expiration		Outstanding				Gains /
	Dates		Notional		Fair Value		(Losses)
SIX MONTHS ENDED JUNE 30, 2011
MORTGAGE LOANS HELD FOR SALE
Loan sale commitments		2011	$	37,052	$	1,046	$	1,003
OTHER ASSETS
IRLCs		2011		561,122		7,029		2,326
LIABILITIES
Interest rate swaps and caps		2011-2013		365,500		7,456		1,416
Forward MBS trades		2011		438,200		758		(4,722	)
Interest rate swap, subject to ABS nonrecourse debt		2013		211,786		14,151		4,630
YEAR ENDED DECEMBER 31, 2010
MORTGAGE LOANS HELD FOR SALE
Loan sale commitments		2011	$	28,641	$	42	$	(1,397	)
OTHER ASSETS
IRLCs		2011		391,990		4,703		2,289
Forward MBS trades		2011		546,500		3,963		580
LIABILITIES
Interest rate swaps and caps		2011-2013		429,000		7,801		8,872
Interest rate swap, subject to ABS nonrecourse debt		2013		245,119		18,781		2,049

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Mortgage Servicing Rights (MSRs)

6 Months Ended

Jun. 30, 2011

Mortgage Servicing Rights (MSRs) [Abstract]

Mortgage Servicing Rights (MSRs)

7. Mortgage Servicing Rights (MSRs)

MSRs arise from contractual agreements between Nationstar and investors in mortgage securities and mortgage loans. Nationstar records MSR assets when it sells loans on a servicing-retained basis, at the time of securitization or through the acquisition or assumption of the right to service a financial asset. Under these contracts, Nationstar performs loan servicing functions in exchange for fees and other remuneration.

Nationstar accounts for MSRs at fair value in accordance with ASC 860-50, Servicing Assets and Liabilities. Nationstar identifies MSRs related to all existing residential mortgage loans transferred to a third party in a transfer that meets the requirements for sale accounting or through the acquisition of the right to service residential mortgage loans that do no relate to assets of Nationstar as a class of servicing rights. Nationstar elected to apply fair value accounting to these MSRs, with all changes in fair value recorded as a charge to servicing fee income. Presently, this class represents all of Nationstar’s MSRs.

Certain of the loans underlying the mortgage servicing rights that are owned by Nationstar are credit sensitive in nature and the value of these mortgage servicing rights is more likely to be affected from changes in credit losses than from interest rate movement. The remaining loans underlying Nationstar’s MSRs are prime agency and government conforming residential mortgage loans for which the value of these MSRs is more likely to be affected from interest rate movement than changes in credit losses.

Nationstar used the following weighted average assumptions in estimating the fair value of MSRs for the dates indicated:

Credit Sensitive MSRs	June 30, 2011			December 31, 2010
Discount rate		27.23	%		24.96	%
Total prepayment speeds		18.66	%		18.13	%
Expected weighted-average life	4.69 years			4.90 years
Credit losses		38.43	%		36.71	%

Interest Rate Sensitive MSRs	June 30, 2011			December 31, 2010
Discount rate		15.28	%		13.57	%
Total prepayment speeds		16.81	%		17.19	%
Expected weighted-average life	5.26 years			5.12 years
Credit losses		15.37	%		8.80	%

The activity of MSRs carried at fair value is as follows for the six month period ended June 30, 2011 and for the year ended December 31, 2010 (in thousands):

	June 30,			December 31,
	2011			2010
Fair value at the beginning of the period	$	145,062		$	114,605
Additions:
Servicing resulting from transfers of financial assets		17,985			26,253
Recognition of servicing assets from derecognition of variable interest entities		—			2,866
Purchases of servicing assets		232			17,812
Deductions:
Derecognition of servicing assets due to new accounting guidance on consolidation of variable interest entities		—			(10,431	)
Changes in fair value:
Due to changes in valuation inputs or assumptions used in the valuation model		(3,746	)		9,455
Other changes in fair value		(7,976	)		(15,498	)
Fair value at the end of the period	$	151,557		$	145,062
Unpaid principal balance of loans serviced for others
Originated or purchased mortgage loans
Credit sensitive loans	$	23,378,173		$	24,980,980
Interest sensitive loans		7,607,182			6,705,661
Total owned loans		30,985,355			31,686,641
Subserviced for others		33,007,483			30,649,472
Total unpaid principal balance of loans serviced for others	$	63,992,838		$	62,336,113

The following table shows the hypothetical effect on the fair value of the MSRs using various unfavorable variations of the expected levels of certain key assumptions used in valuing these assets at June 30, 2011 and December 31, 2011 (in thousands):

							Total Prepayment
	Discount Rate						Speeds						Credit Losses
	100 bps			200 bps			10%			20%			10%			20%
	Adverse			Adverse			Adverse			Adverse			Adverse			Adverse
	Change			Change			Change			Change			Change			Change
JUNE 30, 2011
Mortgage servicing rights	$	(2,466	)	$	(6,324	)	$	(6,998	)	$	(15,263	)	$	(2,797	)	$	(7,884	)
DECEMBER 31, 2010
Mortgage servicing rights	$	(3,828	)	$	(7,458	)	$	(8,175	)	$	(16,042	)	$	(4,310	)	$	(9,326	)

These sensitivities are hypothetical and should be evaluated with care. The effect on fair value of a 10% variation in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors (e.g., a decrease in total prepayment speeds may result in an increase in credit losses), which could impact the above hypothetical effects.

Total servicing and ancillary fees from Nationstar’s servicing portfolio of residential mortgage loans are presented in the following table for the periods indicated (in thousands):

	For the three months ended				For the six months ended
	June 30,		June 30,		June 30,		June 30,
	2011		2010		2011		2010
Servicing fees	$	42,060	$	22,051	$	85,197	$	44,549
Ancillary fees		18,719		21,198		37,076		34,391
Total servicing and ancillary fees	$	60,779	$	43,249	$	122,273	$	78,940

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Operating activities
Net income/(loss)	$ 9,095	$ (1,594)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Share-based compensation	10,526	419
Gain on mortgage loans held for sale	(43,328)	(25,918)
Provision for loan losses	1,128
Loss on foreclosed real estate	4,346
Loss on equity method investments	521
Loss/(gain) or ineffectiveness on interest rate swaps and caps	(1,416)	7,203
Fair value changes in ABS securitizations	6,265	16,329
Depreciation and amortization	1,560	850
Change in fair value on mortgage servicing rights	11,722	2,341
Amortization of debt discount	6,446	10,392
Amortization of premiums/discounts	(2,424)	(2,455)
Mortgage loans originated and purchased, net of fees	(1,378,039)	(1,192,333)
Cost of loans sold, net of fees	1,490,814	1,128,200
Principal payments/prepayments received and other changes in mortgage loans originated as held for sale	24,849	2,037
Changes in assets and liabilities:
Accounts receivable, net	(29,001)	69,460
Receivables from affiliates	1,642	9,417
Other assets	(2,319)	(1,554)
Payables and accrued liabilities	3,710	24,802
Net cash provided by operating activities	116,097	47,596
Investing activities
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt	14,285	13,434
Property and equipment additions, net of disposals	(8,833)	(1,853)
Acquisition of equity method investee	(6,600)
Purchase of mortgage servicing rights	(232)
Proceeds from sales of real estate owned	20,002	55,324
Net cash provided by investing activities	18,622	66,905
Financing activities
Transfers from/(to) restricted cash, net	6,794	1,760
Issuance of unsecured notes, net of issue discount		243,012
(Increase)/decrease in notes payable	(104,988)	(265,815)
Repayment of non-recourse debt - Legacy assets	(14,693)	(23,516)
Repayment of ABS nonrecourse debt	(29,085)	(67,059)
Distribution to parent	(3,900)
Debt financing costs	(2,729)	(11,714)
Tax related share-based settlement of units by members	(4,809)
Net cash used in financing activities	(153,410)	(123,332)
Net increase (decrease) in cash and cash equivalents	(18,691)	(8,831)
Cash and cash equivalents at beginning of period	21,223	41,645
Cash and cash equivalents at end of period	2,532	32,814
Supplemental disclosures of noncash activities
Transfer of mortgage loans held for investment, subject to nonrecourse debt - Legacy Assets to real estate owned	3,675	10,504
Transfer of mortgage loans held for sale to real estate owned	90
Transfer of mortgage loans held for investment, subject to ABS nonrecourse debt to real estate owned	9,616	27,332
Mortgage servicing rights resulting from sale or securitization of mortgage loans	$ 17,985	$ 9,749

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Variable Interest Entities and Securitizations

6 Months Ended

Jun. 30, 2011

Variable Interest Entities and Securitizations [Abstract]

Variable Interest Entities and Securitizations

3. Variable Interest Entities and Securitizations

Nationstar has been the transferor in connection with a number of securitizations or asset-backed financing arrangements, from which Nationstar has continuing involvement with the underlying transferred financial assets. Nationstar aggregates these securitizations or asset-backed financing arrangements into two groups: 1) securitizations of residential mortgage loans and 2) transfers accounted for as secured borrowings.

On securitizations of residential mortgage loans, Nationstar’s continuing involvement typically includes acting as servicer for the mortgage loans held by the trust and holding beneficial interests in the trust. Nationstar’s responsibilities as servicer include, among other things, collecting monthly payments, maintaining escrow accounts, providing periodic reports and managing insurance in exchange for a contractually specified servicing fee. The beneficial interests held consist of both subordinate and residual securities that were retained at the time of the securitization. Prior to January 1, 2010, each of these securitization trusts were considered QSPEs, and these trusts were excluded from Nationstar’s consolidated financial statements.

Nationstar also maintains various agreements with special purpose entities (SPEs), under which Nationstar transfers mortgage loans and/or advances on residential mortgage loans in exchange for cash. These SPEs issue debt supported by collections on the transferred mortgage loans and/or advances. These transfers do not qualify for sale treatment because Nationstar continues to retain control over the transferred assets. As a result, Nationstar accounts for these transfers as financings and continues to carry the transferred assets and recognizes the related liabilities on Nationstar’s consolidated balance sheets. Collections on the mortgage loans and/or advances pledged to the SPEs are used to repay principal and interest and to pay the expenses of the entity. The holders of these beneficial interests issued by these SPEs do not have recourse to Nationstar and can only look to the assets of the SPEs themselves for satisfaction of the debt.

Prior to January 1, 2010, Nationstar evaluated each SPE for classification as a QSPE. QSPEs were not consolidated in Nationstar’s consolidated financial statements. When an SPE was determined to not be a QSPE, Nationstar further evaluated it for classification as a VIE. When an SPE met the definition of a VIE, and when it was determined that Nationstar was the primary beneficiary, Nationstar included the SPE in its consolidated financial statements.

A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary, which is the entity that, through its variable interests has both the power to direct the activities of a VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Effective January 1, 2010, new accounting guidance eliminated the concept of a QSPE and all existing SPEs are now subject to new consolidation guidance. Upon adoption of this new accounting guidance, Nationstar identified certain securitization trusts where Nationstar, through its affiliates, continued to hold beneficial interests in these trusts. These retained beneficial interests obligate Nationstar to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant. In addition, Nationstar as Master Servicer on the related mortgage loans, retains the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE. When it is determined that Nationstar has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE, the assets and liabilities of these VIEs are included in Nationstar’s consolidated financial statements. Upon consolidation of these VIEs, Nationstar derecognized all previously recognized beneficial interests obtained as part of the securitization, including any retained investment in debt securities, mortgage servicing rights, and any remaining residual interests. In addition, Nationstar recognized the securitized mortgage loans as mortgage loans held for investment, subject to ABS nonrecourse debt, and the related asset-backed certificates (ABS nonrecourse debt) acquired by third parties as ABS nonrecourse debt on Nationstar’s consolidated balance sheet. The net effect of the accounting change on January 1, 2010 members’ equity was an $8.1 million charge to members’ equity.

As a result of market conditions and deteriorating credit performance on these consolidated VIEs, Nationstar expects minimal to no future cash flows on the economic residual. Under existing GAAP, Nationstar would be required to provide for additional allowances for loan losses on the securitization collateral as credit performance deteriorated, with no offsetting reduction in the securitization’s debt balances, even though any nonperformance of the assets will ultimately pass through as a reduction of amounts owed to the debt holders, once they are extinguished. Therefore, Nationstar would be required to record accounting losses beyond its economic exposure.

To more accurately represent the future economic performance of the securitization collateral and related debt balances, Nationstar elected the fair value option provided for by ASC 825-10, Financial Instruments-Overall. This option was applied to all eligible items within the VIE, including mortgage loans held for investment, subject to ABS nonrecourse debt, and the related ABS nonrecourse debt.

Subsequent to this fair value election, Nationstar no longer records an allowance for loan loss on mortgage loans held for investment, subject to ABS nonrecourse debt. Nationstar continues to record interest income in Nationstar’s consolidated statement of operations on these fair value elected loans until they are placed on a nonaccrual status when they are 90 days or more past due. The fair value adjustment recorded for the mortgage loans held for investment is classified within fair value changes of ABS securitizations in Nationstar’s consolidated statement of operations.

Subsequent to the fair value election for ABS nonrecourse debt, Nationstar continues to record interest expense in Nationstar’s consolidated statement of operations on the fair value elected ABS nonrecourse debt. The fair value adjustment recorded for the ABS nonrecourse debt is classified within fair value changes of ABS securitizations in Nationstar’s consolidated statement of operations.

Under the existing pooling and servicing agreements of these securitization trusts, the principal and interest cash flows on the underlying securitized loans are used to service the asset-backed certificates. Accordingly, the timing of the principal payments on this nonrecourse debt is dependent on the payments received on the underlying mortgage loans and liquidation of real estate owned.

Nationstar consolidates the SPEs created for the purpose of issuing debt supported by collections on loans and advances that have been transferred to it as VIEs, and Nationstar is the primary beneficiary of these VIEs. Nationstar consolidates the assets and liabilities of the VIEs onto its consolidated financial statements.

A summary of the assets and liabilities of Nationstar’s transactions with VIEs included in Nationstar’s consolidated financial statements as of June 30, 2011 and December 31, 2010 is presented in the following table (in thousands):

			Transfers
			Accounted for as
	Securitization		Secured
June 30, 2011	Trusts		Borrowings		Total
ASSETS
Restricted cash	$	1,417	$	34,086	$	35,503
Accounts receivable		2,901		255,563		258,464
Mortgage loans held for investment, subject to nonrecourse debt		—		246,800		246,800
Mortgage loans held for investment, subject to ABS nonrecourse debt		490,588		—		490,588
Real estate owned		11,787		5,366		17,153
Total Assets	$	506,693	$	541,815	$	1,048,508
LIABILITIES
Notes payable	$	—	$	210,704	$	210,704
Payables and accrued liabilities		59		1,035		1,094
Outstanding servicer advances(1)		31,662		—		31,662
Derivative financial instruments		—		7,456		7,456
Derivative financial instruments, subject to ABS nonrecourse debt		14,151		—		14,151
Nonrecourse debt—Legacy Assets		—		126,026		126,026
ABS nonrecourse debt		447,845		—		447,845
Total Liabilities	$	493,717	$	345,221	$	838,938

			Transfers
			Accounted for as
	Securitization		Secured
December 31, 2010	Trusts		Borrowings		Total
ASSETS
Restricted cash	$	1,472	$	32,075	$	33,547
Accounts receivable		2,392		286,808		289,200
Mortgage loans held for investment, subject to nonrecourse debt		—		261,305		261,305
Mortgage loans held for investment, subject to ABS nonrecourse debt		538,440		—		538,440
Real estate owned		17,509		9,505		27,014
Total Assets	$	559,813	$	589,693	$	1,149,506
LIABILITIES
Notes payable	$	—	$	236,808	$	236,808
Payables and accrued liabilities		95		1,173		1,268
Outstanding servicer advances(1)		32,284		—		32,284
Derivative financial instruments		—		7,801		7,801
Derivative financial instruments, subject to ABS nonrecourse debt		18,781		—		18,781
Nonrecourse debt—Legacy Assets		—		138,662		138,662
ABS nonrecourse debt		497,289		—		497,289
Total Liabilities	$	548,449	$	384,444	$	932,893

(1) Outstanding servicer advances consists of principal and interest advances paid by Nationstar to cover scheduled payments and interest that have not been timely paid by borrowers. These outstanding servicer advances are eliminated upon the consolidation of the securitization trusts.

A summary of the outstanding collateral and certificate balances for securitization trusts, including any retained beneficial interests and mortgage servicing rights, that were not consolidated by Nationstar for the periods ending June 30, 2011 and December 31, 2010 is presented in the following table (in thousands).

	June 30, 2011		December 31, 2010
Total collateral balance	$	3,848,722	$	4,038,978
Total certificate balance		3,876,273		4,026,844
Total mortgage servicing rights at fair value		26,319		26,419

Nationstar has not retained any variable interests in the unconsolidated securitization trusts that were outstanding as of June 30, 2011 or 2010, and therefore does not have a significant maximum exposure to loss related to these unconsolidated VIEs.

A summary of mortgage loans transferred to unconsolidated securitization trusts that are 60 days or more past due and the credit losses incurred in the unconsolidated securitization trusts are presented below (in thousands):

	Six months Ended				Six months Ended
	June 30, 2011				June 30, 2010
	Principal Amount				Principal Amount
	of Loans				of Loans
	60 Days or More				60 Days or More
	Past Due		Credit Losses		Past Due		Credit Losses
Total securitization Trusts	$	751,431	$	120,290	$	811,515	$	104,471

Certain cash flows received from securitization trusts accounted for as sales for the dates indicated were as follows (in thousands):

For the three months ended

For the six months ended

June 30, 2011

June 30, 2010

June 30, 2011

June 30, 2010

Servicing

Servicing

Servicing

Servicing

Fees

Loan

Fees

Loan

Fees

Loan

Fees

Loan

Received

Repurchases

Received

Repurchases

Received

Repurchases

Received

Repurchases

Total securitization trusts

$

7,621

$—

$

5,469

$—

$

15,359

$—

$

12,497

$—

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Consolidated Statement of Cash Flows-Supplemental Disclosure

6 Months Ended

Jun. 30, 2011

Supplemental Cash Flow Elements [Abstract]

Consolidated Statement of Cash Flows-Supplemental Disclosure

4. Consolidated Statement of Cash Flows-Supplemental Disclosure

Total interest paid for the six months ended June 30, 2011 and 2010, was approximately $45.8 million and $60.4 million, respectively.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

12. Fair Value Measurements

ASC 820 provides a definition of fair value, establishes a framework for measuring fair value, and requires expanded disclosures about fair value measurements. The standard applies when GAAP requires or allows assets or liabilities to be measured at fair value and, therefore, does not expand the use of fair value in any new circumstance.

ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tiered fair value hierarchy based on the level of observable inputs used in the measurement of fair value (e.g., Level 1 representing quoted prices for identical assets or liabilities in an active market; Level 2 representing values using observable inputs other than quoted prices included within Level 1; and Level 3 representing estimated values based on significant unobservable inputs). In addition, ASC 820 requires an entity to consider all aspects of nonperformance risk, including its own credit standing, when measuring the fair value of a liability. Under ASC 820, related disclosures are segregated for assets and liabilities measured at fair value based on the level used within the hierarchy to determine their fair values.

The following describes the methods and assumptions used by Nationstar in estimating fair values:

Cash and Cash Equivalents, Restricted Cash, Notes Payable — The carrying amount reported in the consolidated balance sheets approximates fair value.

Mortgage Loans Held for Sale — Nationstar originates mortgage loans in the U.S. that it intends to sell to Fannie Mae, Freddie Mac, and Government National Mortgage Association (collectively, the Agencies). Additionally, Nationstar holds mortgage loans that it intends to sell into the secondary markets via whole loan sales or securitizations. Nationstar measures newly originated prime residential mortgage loans held for sale at fair value.

Mortgage loans held for sale are typically pooled together and sold into certain exit markets, depending upon underlying attributes of the loan, such as agency eligibility, product type, interest rate, and credit quality.

Mortgage loans held for sale are valued using a market approach by utilizing either: (i) the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted for credit risk and other individual loan characteristics. As these prices are derived from quoted market prices, Nationstar classifies these valuations as Level 2 in the fair value disclosures.

Mortgage Loans Held for Investment, subject to nonrecourse debt — Nationstar determines the fair value of loans held for investment using internally developed valuation models. These valuation models estimate the exit price Nationstar expects to receive in the loan’s principal market. Although Nationstar utilizes and gives priority to observable market inputs such as interest rates and market spreads within these models, Nationstar typically is required to utilize internal inputs, such as prepayment speeds, credit losses, and discount rates. These internal inputs require the use of judgment by Nationstar and can have a significant impact on the determination of the loan’s fair value.

Mortgage Loans Held for Investment, subject to ABS nonrecourse debt — Nationstar determines the fair value of loans held for investment, subject to ABS nonrecourse debt using internally developed valuation models. These valuation models estimate the exit price Nationstar expects to receive in the loan’s principal market. Although Nationstar utilizes and gives priority to observable market inputs such as interest rates and market spreads within these models, Nationstar typically is required to utilize internal inputs, such as prepayment speeds, credit losses, and discount rates. These internal inputs require the use of judgment by Nationstar and can have a significant impact on the determination of the loan’s fair value. As these prices are derived from a combination of internally developed valuation models and quoted market prices, Nationstar classifies these valuations as Level 3 in the fair value disclosures.

Mortgage Servicing Rights — Nationstar will typically retain the servicing rights when it sells loans into the secondary market. Nationstar estimates the fair value of its MSRs using a process that combines the use of a discounted cash flow model and analysis of current market data to arrive at an estimate of fair value. The cash flow assumptions and prepayment assumptions used in the model are based on various factors, with the key assumptions being mortgage prepayment speeds and discount rates. These assumptions are generated and applied based on collateral stratifications including product type, remittance type, geography, delinquency and coupon dispersion. These assumptions require the use of judgment by Nationstar and can have a significant impact on the determination of the MSR’s fair value. Periodically, management obtains third-party valuations of a portion of the portfolio to assess the reasonableness of the fair value calculations provided by the cash flow model. Because of the nature of the valuation inputs, Nationstar classifies these valuations as Level 3 in the fair value disclosures.

Real Estate Owned — Nationstar determines the fair value of real estate owned properties through the use of third-party appraisals and broker price opinions, adjusted for estimated selling costs. Such estimated selling costs include realtor fees and other anticipated closing costs. These values are adjusted to take into account factors that could cause the actual liquidation value of foreclosed properties to be different than the appraised values. This valuation adjustment is based upon Nationstar’s historical experience with real estate owned. Real estate owned is classified as Level 3 in the fair value disclosures.

Derivative Instruments — Nationstar enters into a variety of derivative financial instruments as part of its hedging strategy. The majority of these derivatives are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, Nationstar utilizes the exchange price or dealer market price for the particular derivative contract; therefore, these contracts are classified as Level 2. In addition, Nationstar enters into IRLCs with prospective borrowers. These commitments are carried at fair value based on fair value of related mortgage loans which is based on observable market data. Nationstar adjusts the outstanding IRLCs with prospective borrowers based on an expectation that it will be exercised and the loan will be funded. IRLCs are recorded in other assets in the consolidated balance sheets.

Unsecured Senior Notes — The fair value of unsecured senior notes is based on quoted market prices.

Nonrecourse Debt — Legacy Assets — Nationstar estimates fair value based on the present value of future expected discounted cash flows with the discount rate approximating current market value for similar financial instruments. As these prices are derived from a combination of internally developed valuation models and quoted market prices, Nationstar classifies these valuations as Level 3 in the fair value disclosures.

ABS Nonrecourse Debt — Nationstar estimates fair value based on the present value of future expected discounted cash flows with the discount rate approximating current market value for similar financial instruments. As these prices are derived from a combination of internally developed valuation models and quoted market prices, Nationstar classifies these valuations as Level 3 in the fair value disclosures.

The estimated carrying amount and fair value of Nationstar’s financial instruments and other assets and liabilities measured at fair value on a recurring basis is as follows for the dates indicated (in thousands):

					June 30, 2011
			Recurring Fair Value Measurements
	Total Fair Value		Level 1		Level 2		Level 3
ASSETS
Mortgage loans held for sale(1)	$	262,597	$	—	$	262,597	$	—
Mortgage loans held for investment, subject to ABS nonrecourse debt(1)		490,588		—		—		490,588
Mortgage servicing rights(1)		151,557		—		—		151,557
Other assets:
Interest Rate Lock Commitments (IRLC)		7,029		—		7,029		—
Total assets	$	911,771	$	—	$	269,626	$	642,145
LIABILITIES
Derivative financial instruments
Interest rate swaps and caps	$	7,456	$	—	$	7,456	$	—
Forward MBS trades		758		—		758		—
Derivative financial instruments, subject to ABS nonrecourse debt		14,151		—		14,151		—
ABS nonrecourse debt(1)		447,845		—		—		447,845
Total liabilities	$	470,210	$	—	$	22,365	$	447,845

(1) Based on the nature and risks of these assets and liabilities, the Company has determined that presenting them as a single class is appropriate.

					December 31, 2010
			Recurring Fair Value Measurements
	Total Fair Value		Level 1		Level 2		Level 3
ASSETS
Mortgage loans held for sale(1)	$	371,160	$	—	$	371,160	$	—
Mortgage loans held for investment, subject to ABS nonrecourse debt(1)		538,440		—		—		538,440
Mortgage servicing rights(1)		145,062		—		—		145,062
Other assets:
IRLCs		4,703		—		4,703		—
Forward MBS trades		3,963		—		3,963		—
Total assets	$	1,063,328	$	—	$	379,826	$	683,502
LIABILITIES
Derivative financial instruments
Interest rate swaps and caps	$	7,801	$	—	$	7,801	$	—
Derivative financial instruments, subject to ABS nonrecourse debt		18,781		—		18,781		—
ABS nonrecourse debt(1)		496,692		—		—		496,692
Total liabilities	$	523,274	$	—	$	26,582	$	496,692

(1) Based on the nature and risks of these assets and liabilities, the Company has determined that presenting them as a single class is appropriate.

The table below presents a reconciliation for all of Nationstar’s Level 3 assets and liabilities measured at fair value on a recurring basis for the dates indicated (in thousands):

	ASSETS									LIABILITIES
	Mortgage loans
	held for investment,
	subject to ABS			Mortgage						ABS non-
	nonrecourse debt			servicing rights			Total assets			recourse debt
THREE MONTHS ENDED JUNE 30, 2011
Beginning balance	$	535,590		$	151,159		$	686,749		$	489,321
Transfers into Level 3		—			—			—			—
Transfers out of Level 3		—			—			—			—
Total gains or losses
Included in earnings		(25,850	)		(7,938	)		(33,788	)		(12,908	)
Included in other comprehensive income		—			—			—			—
Purchases, issuances, sales and settlements
Purchases		—			232			232			—
Issuances		—			8,104			8,104			—
Sales		—			—			—			—
Settlements		(19,152	)		—			(19,152	)		(28,568	)
Ending balance	$	490,588		$	151,557		$	642,145		$	447,845

	ASSETS									LIABILITIES
	Mortgage loans
	held for investment,
	subject to ABS			Mortgage						ABS non-
	nonrecourse debt			servicing rights			Total assets			recourse debt
SIX MONTHS ENDED JUNE 30, 2011
Beginning balance	$	538,440		$	145,062		$	683,502		$	496,692
Transfers into Level 3		—			—			—			—
Transfers out of Level 3		—			—			—			—
Total gains or losses
Included in earnings		(9,469	)		(11,722	)		(21,191	)		(3,291	)
Included in other comprehensive income		—			—			—			—
Purchases, issuances, sales and settlements
Purchases		—			232			232			—
Issuances		—			17,985			17,985			—
Sales		—			—			—			—
Settlements		(38,383	)		—			(38,383	)		(45,556	)
Ending balance	$	490,588		$	151,557		$	642,145		$	447,845

	ASSETS									LIABILITIES
	Mortgage loans
	held for investment,
	subject to ABS			Mortgage						ABS non-
	nonrecourse debt			servicing rights			Total assets			recourse debt
YEAR ENDED DECEMBER 31, 2010
Beginning balance (1)	$	928,891		$	104,174		$	1,033,065		$	884,846
Transfers into Level 3		—			—			—			—
Transfers out of Level 3		—			—			—			—
Total gains or losses
Included in earnings		71,239			(6,043	)		65,196			16,938
Included in other comprehensive income		—			—			—			—
Purchases, issuances, sales and settlements
Purchases		—			17,812			17,812			—
Issuances		—			26,253			26,253			—
Sales		—			—			—			—
Settlements		(461,690	)		2,866			(458,824	)		(405,092	)
Ending balance	$	538,440		$	145,062		$	683,502		$	496,692

(1) Amounts include derecognition of previously retained beneficial interests and mortgage servicing rights upon adoption of ASC 810 related to consolidation of certain VIEs.

The table below presents the items which Nationstar measures at fair value on a nonrecurring basis (in thousands).

									Total Gains
	Nonrecurring Fair Value Measurements						Total Estimated		(Losses) Included
	Level 1		Level 2		Level 3		Fair Value		in Earnings
Three months ended June 30, 2011
Assets
Real estate owned(1)	$	—	$	—	$	17,249	$	17,249	$	(2,099	)
Total assets	$	—	$	—	$	17,249	$	17,249	$	(2,099	)
Six months ended June 30, 2011
Assets
Real estate owned(1)	$	—	$	—	$	17,249	$	17,249	$	(4,346	)
Total assets	$	—	$	—	$	17,249	$	17,249	$	(4,346	)
Year ended December 31, 2010
Assets
Real estate owned(1)	$	—	$	—	$	27,337	$	27,337	$	—
Total assets	$	—	$	—	$	27,337	$	27,337	$	—

(1) Based on the nature and risks of these assets and liabilities, the Company has determined that presenting them as a single class is appropriate.

The table below presents a summary of the estimated carrying amount and fair value of Nationstar’s financial instruments (in thousands).

	June 30,				December 31
	2011						2010
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	2,532	$	2,532	$	21,223	$	21,223
Restricted cash		84,331		84,331		91,125		91,125
Mortgage loans held for sale		262,597		262,597		371,160		371,160
Mortgage loans held for investment, subject to nonrecourse debt — Legacy assets		255,463		237,441		266,840		239,035
Mortgage loans held for investment, subject to ABS nonrecourse debt		490,588		490,588		538,440		538,440
Derivative instruments		7,029		7,029		8,666		8,666
Financial liabilities:
Notes payable		604,770		604,770		709,758		709,758
Unsecured senior notes		244,759		259,845		244,061		244,375
Derivative financial instruments		8,214		8,214		7,801		7,801
Derivative instruments, subject to ABS nonrecourse debt		14,151		14,151		18,781		18,781
Nonrecourse debt — Legacy assets		126,026		127,641		138,662		140,197
ABS nonrecourse debt		447,845		447,845		496,692		496,692

XML

Accounts Receivable

6 Months Ended

Jun. 30, 2011

Accounts Receivable [Abstract]

Accounts Receivable

5. Accounts Receivable

Accounts receivable consist primarily of accrued interest receivable on mortgage loans and securitizations, collateral deposits on surety bonds, and advances made to unconsolidated securitization trusts, as required under various servicing agreements related to delinquent loans, which are ultimately paid back to Nationstar from such trusts.

Accounts receivable consist of the following (in thousands):

	June 30,		December 31,
	2011		2010
Delinquency advances	$	163,302	$	148,752
Corporate and escrow advances		270,566		233,432
Insurance deposits		1,750		6,390
Accrued interest (includes $2,901 and $2,392, respectively, subject to ABS nonrecourse debt)		4,651		4,302
Receivables from trusts		8,016		30,095
Other		19,787		16,100
Total accounts receivable	$	468,072	$	439,071

XML

Guarantor Financial Statement Information

6 Months Ended

Jun. 30, 2011

Guarantor Financial Statement Information [Abstract]

Guarantor Financial Statement Information

15. Guarantor Financial Statement Information

In March 2010, Nationstar Mortgage LLC and Nationstar Capital Corporation (the “Issuers”), sold in a private offering $250.0 million aggregate principal amount of 10.875% senior unsecured notes which mature on April 1, 2015. In August 2011, the Company filed with the Securities and Exchange Commission a Form S-4 registration statement to exchange the privately placed notes with registered notes. The terms of the registered notes are substantially identical to those of the privately placed notes. The notes are jointly and severally guaranteed on a senior unsecured basis by all of the Issuer’s existing and future wholly-owned domestic restricted subsidiaries, with certain exceptions. All guarantor subsidiaries are 100% owned by the Issuer.

NATIONSTAR MORTGAGE LLC
CONSOLIDATING BALANCE SHEET
JUNE 30, 2011
(IN THOUSANDS)

	Issuer		Guarantor		Non-Guarantor
	(Parent)		(Subsidiaries)		(Subsidiaries)		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	2,378	$	154	$	—	$	—		$	2,532
Restricted cash		48,825		3		35,503		—			84,331
Accounts receivable, net		463,746		—		4,326		—			468,072
Mortgage loans held for sale		262,597		—		—		—			262,597
Mortgage loans held for investment, subject to nonrecourse debt—Legacy Asset, net		8,663		—		246,800		—			255,463
Mortgage loans held for investment, subject to ABS nonrecourse debt (at fair value)		—		—		490,588		—			490,588
Investment in debt securities—available-for-sale		713		—		—		(713	)		—
Investment in subsidiaries		150,928		—		—		(150,928	)		—
Receivables from affiliates		—		65,816		97,739		(156,204	)		7,351
Mortgage servicing rights		151,557		—		—		—			151,557
Property and equipment, net		14,832		835		—		—			15,667
Real estate owned, net		96		—		17,153		—			17,249
Other assets		35,335		—		—		—			35,335
Total Assets	$	1,139,670	$	66,808	$	892,109	$	(307,845	)	$	1,790,742
Liabilities and members’ equity
Notes payable	$	394,066	$	—	$	210,704	$	—		$	604,770
Unsecured senior notes		244,759		—		—		—			244,759
Payables and accrued liabilities		77,670		—		1,094		—			78,764
Payables to affiliates		156,204		—		—		(156,204	)		—
Derivative financial instruments		758		—		7,456		—			8,214
Derivative financial instruments, subject to ABS nonrecourse debt		—		—		14,151		—			14,151
Nonrecourse debt—Legacy Assets		—		—		126,026		—			126,026
ABS nonrecourse debt (at fair value)		—		—		448,558		(713	)		447,845
Total liabilities		873,457		—		807,989		(156,917	)		1,524,529
Total members’ equity		266,213		66,808		84,120		(150,928	)		266,213
Total liabilities and members’ equity	$	1,139,670	$	66,808	$	892,109	$	(307,845	)	$	1,790,742

CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2011
(IN THOUSANDS)

							Non-
	Issuer			Guarantor			Guarantor
	(Parent)			(Subsidiaries)			(Subsidiaries)			Eliminations			Consolidated
Revenues:
Servicing fee income	$	112,511		$	1,440		$	—		$	(3,598	)	$	110,353
Other fee income		7,377			5,653			680			—			13,710
Total fee income		119,888			7,093			680			(3,598	)		124,063
Gain on mortgage loans held for sale		43,328			—			—			—			43,328
Total Revenues		163,216			7,093			680			(3,598	)		167,391
Expenses and impairments:
Salaries, wages, and benefits		93,657			1,638			—			—			95,295
General and administrative		29,469			1,834			7			—			31,310
Loss on foreclosed real estate and other		202			—			4,144			—			4,346
Loan loss provision		724			—			404			—			1,128
Occupancy		4,346			98			—			—			4,444
Total expenses and impairments		128,398			3,570			4,555			—			136,523
Other income (expense):
Interest income		8,199			(5	)		23,253			3,598			35,045
Interest expense		(26,725	)		—			(23,828	)		—			(50,553	)
Fair value changes in ABS securitizations		—			—			(6,382	)		117			(6,265	)
Gain/(loss) from subsidiaries		(7,314	)		—			—			7,314			—
Total other income (expense)		(25,840	)		(5	)		(6,957	)		11,029			(21,773	)
Net income/(loss)	$	8,978		$	3,518		$	(10,832	)	$	7,431		$	9,095

CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011
(IN THOUSANDS)

							Non-
	Issuer			Guarantor			Guarantor
	(Parent)			(Subsidiaries)			(Subsidiaries)			Eliminations			Consolidated
Operating activities:
Net income/(loss)	$	8,978		$	3,518		$	(10,832	)	$	7,431		$	9,095
Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities:
Loss from subsidiaries		7,314			—			—			(7,314	)		—
Loss on equity method investments		521			—			—			—			521
Share-based compensation		10,526			—			—			—			10,526
Gain on mortgage loans held for sale		(43,328	)		—			—			—			(43,328	)
Fair value changes in ABS securitizations		—			—			6,382			(117	)		6,265
Provision for loan losses		724			—			404			—			1,128
Loss on foreclosed real estate and other		202			—			4,144			—			4,346
Loss/(gain) on derivative financial instruments		—			—			(1,416	)		—			(1,416	)
Depreciation and amortization		1,560			—			—			—			1,560
Change in fair value of mortgage servicing rights		11,722			—			—			—			11,722
Amortization of debt discount		4,389			—			2,057			—			6,446
Amortization of premiums/discounts		—			—			(2,424	)		—			(2,424	)
Mortgage Loans originated and purchased, net of fees		(1,378,039	)		—			—			—			(1,378,039	)
Cost of loans sold, net of fees		1,490,814			—			—			—			1,490,814
Principal Payments/Prepayments Received and other changes in mortgage loans originated as held for sale		19,387			—			5,462			—			24,849
Changes in assets and liabilities:
Accounts receivable		(28,650	)		—			(351	)		—			(29,001	)
Receivables from/(payables to) affiliates		(29,292	)		(3,680	)		34,614			—			1,642
Other assets		(2,319	)		—			—			—			(2,319	)
Accounts payable and accrued liabilities		3,885			—			(175	)		—			3,710
Net cash provided by/(used) in operating activities		78,394			(162	)		37,865			—			116,097

							Non-
	Issuer			Guarantor			Guarantor
	(Parent)			(Subsidiaries)			(Subsidiaries)			Eliminations		Consolidated
Investing activities:
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt		—			—			14,285			—		14,285
Property and equipment additions, net of disposals		(8,833	)		—			—			—		(8,833	)
Acquisition of equity method investment		(6,600	)		—			—			—		(6,600	)
Purchase of mortgage servicing rights		(232	)		—			—			—		(232	)
Proceeds from sales of real estate owned		313			—			19,689			—		20,002
Net cash provided by/(used) in investing activities		(15,352	)		—			33,974			—		18,622
Financing activities:
Transfers to/from restricted cash		8,754			(3	)		(1,957	)		—		6,794
Decrease in notes payable, net		(78,884	)		—			(26,104	)		—		(104,988	)
Repayment of non-recourse debt—Legacy assets		—			—			(14,693	)		—		(14,693	)
Repayment of ABS non-recourse debt		—			—			(29,085	)		—		(29,085	)
Distribution to parent		(3,900	)		—			—			—		(3,900	)
Debt financing costs		(2,729	)		—			—			—		(2,729	)
Tax related share-based settlement of units by members		(4,809	)		—			—			—		(4,809	)
Net cash used in financing activities		(81,568	)		(3	)		(71,839	)		—		(153,410	)
Net increase (decrease) in cash		(18,526	)		(165	)		—			—		(18,691	)
Cash and cash equivalents at beginning of period		20,904			319			—			—		21,223
Cash and cash equivalents at end of period	$	2,378		$	154		$	—		$	—	$	2,532

CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2010
(IN THOUSANDS)

	Issuer		Guarantor		Non-Guarantor
	(Parent)		(Subsidiaries)		(Subsidiaries)		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	20,904	$	319	$	—	$	—		$	21,223
Restricted cash		57,579		—		33,546		—			91,125
Accounts receivable, net		435,096		—		3,975		—			439,071
Mortgage loans held for sale		371,160		—		—		—			371,160
Mortgage loans held for investment, subject to nonrecourse debt, Legacy Assets, net		5,536		—		261,304		—			266,840
Mortgage loans held for investment, subject to ABS nonrecourse debt (at fair value)		—		—		538,440		—			538,440
Investment in debt securities—available-for-sale		597		—		—		(597	)		—
Investment in subsidiaries		158,276		—		—		(158,276	)		—
Receivables from affiliates		—		62,171		132,353		(185,531	)		8,993
Mortgage servicing rights		145,062		—		—		—			145,062
Property and equipment, net		7,559		835		—		—			8,394
Real estate owned, net		323		—		27,014		—			27,337
Other assets		29,536		—		—		—			29,536
Total Assets	$	1,231,628	$	63,325	$	996,632	$	(344,404	)	$	1,947,181
Liabilities and members’ equity
Notes payable	$	472,950	$	—	$	236,808	$	—		$	709,758
Unsecured senior notes		244,061		—		—		—			244,061
Payables and accrued liabilities		73,785		—		1,269		—			75,054
Payables to affiliates		185,531		—		—		(185,531	)		—
Derivative financial instruments		—		—		7,801		—			7,801
Derivative financial instruments, subject to ABS nonrecourse debt		—		—		18,781		—			18,781
Nonrecourse debt—Legacy Assets		—		—		138,662		—			138,662
ABS nonrecourse debt (at fair value)		—		—		497,289		(597	)		496,692
Total liabilities		976,327		—		900,610		(186,128	)		1,690,809
Total members’ equity		255,301		63,325		96,022		(158,276	)		256,372
Total liabilities and members’ equity	$	1,231,628	$	63,325	$	996,632	$	(344,404	)	$	1,947,181

CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2010
(IN THOUSANDS)

						Non-
	Issuer			Guarantor		Guarantor
	(Parent)			(Subsidiaries)		(Subsidiaries)			Eliminations			Consolidated
Revenues:
Servicing fee income	$	78,582		$	882	$	—		$	(4,191	)	$	75,273
Other fee income		4,445			3,636		274			—			8,355
Total fee income		83,027			4,518		274			(4,191	)		83,628
Gain on mortgage loans held for sale		25,918			—		—			—			25,918
Total Revenues		108,945			4,518		274			(4,191	)		109,546
Expenses and impairments:
Salaries, wages, and benefits		61,688			1,122		—			—			62,810
General and administrative		18,895			674		(60	)		—			19,509
Occupancy		3,718			72		—			—			3,790
Total expenses and impairments		84,301			1,868		(60	)		—			86,109
Other income (expense):
Interest income		8,276			—		47,127			4,191			59,594
Interest expense		(26,008	)		—		(35,085	)		—			(61,093	)
Loss on interest rate swaps and caps		—			—		(7,203	)		—			(7,203	)
Fair value changes in ABS securitizations		22			—		(16,568	)		217			(16,329	)
Gain/(loss) from subsidiaries		(1,904	)		—		—			1,904			—
Total other income (expense)		(19,614	)		—		(11,729	)		6,312			(25,031	)
Net income/(loss)	$	5,030		$	2,650	$	(11,395	)	$	2,121		$	(1,594	)

CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2010
(IN THOUSANDS)

	Issuer			Guarantor			Non-Guarantor
	(Parent)			(Subsidiaries)			(Subsidiaries)			Eliminations			Consolidated
Operating activities:
Net income/(loss)	$	(1,811	)	$	2,650		$	(11,395	)	$	8,962		$	(1,594	)
Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities:
Loss from subsidiaries		8,745			—			—			(8,745	)		—
Share-based compensation		419			—			—			—			419
Gain on mortgage loans held for sale		(25,918	)		—			—			—			(25,918	)
Fair value changes in ABS securitizations		—			—			16,546			(217	)		16,329
Loss/(gain) on derivative financial instruments		—			—			7,203			—			7,203
Depreciation and amortization		850			—			—			—			850
Change in fair value of mortgage servicing rights		2,341			—			—			—			2,341
Amortization of debt discount		7,099			—			3,293			—			10,392
Amortization of premiums/discounts		(2,455	)		—			—			—			(2,455	)
Mortgage Loans originated and purchased, net of fees		(1,192,333	)		—			—			—			(1,192,333	)
Cost of loans sold, net of fees		1,128,200			—			—			—			1,128,200
Principal Payments/Prepayments Received and other changes in mortgage loans originated as held for sale		17,457			—			(15,420	)		—			2,037
Changes in assets and liabilities:
Accounts receivable		114,054			3			(44,597	)		—			69,460
Receivables from/(payables to) affiliates		(60,982	)		(2,428	)		72,827			—			9,417
Other assets		(1,554	)		—			—			—			(1,554	)
Accounts payable and accrued liabilities		24,793			(23	)		32			—			24,802
Net cash provided by/(used) in operating activities		18,905			202			28,489			—			47,596
Investing activities:
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt		—			—			13,434			—			13,434
Property and equipment additions, net of disposals		(1,853	)		—			—			—			(1,853	)
Proceeds from sales of real estate owned		—			—			55,324			—			55,324
Net cash provided by/(used) in investing activities		(1,853	)		—			68,758			—			66,905

	Issuer			Guarantor		Non-Guarantor
	(Parent)			(Subsidiaries)		(Subsidiaries)			Eliminations		Consolidated
Financing activities
Transfers to/from restricted cash		(1,859	)		—		3,619			—		1,760
Issuance of unsecured notes, net of issue discount		243,012			—		—			—		243,012
Decrease in notes payable, net		(255,378	)		—		(10,437	)		—		(265,815	)
Repayment of non-recourse debt—Legacy assets		—			—		(23,516	)		—		(23,516	)
Repayment of ABS non-recourse debt		(146	)		—		(66,913	)		—		(67,059	)
Debt financing costs		(11,714	)		—		—			—		(11,714	)
Net cash used in financing activities		(26,085	)		—		(97,247	)		—		(123,332	)
Net increase (decrease) in cash		(9,033	)		202		—			—		(8,831	)
Cash and cash equivalents at beginning of period		41,243			402		—			—		41,645
Cash and cash equivalents at end of period	$	32,210		$	604	$	—		$	—	$	32,814

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Consolidated Statement of Members' Equity and Comprehensive Income (Unaudited) (USD $) In Thousands	Total	Members' Units	Accumulated Other Comprehensive Income
Balance at Dec. 31, 2009	$ 263,823	$ 263,823	$ 0
Cumulative effect of change in accounting principles as of January 1, 2010 related to adoption of new accounting guidance on consolidation of variable interest entities	(8,068)	(8,068)
Share-based compensation	12,856	12,856
Tax related share-based settlement of units by members	(3,396)	(3,396)
Comprehensive income(loss)
Net income/(loss)	(9,914)	(9,914)
Change in value of cash flow hedge	1,071		1,071
Total comprehensive loss	(8,843)
Balance at Dec. 31, 2010	256,372	255,301	1,071
Share-based compensation	10,526	10,526
Distribution to parent	(3,900)	(3,900)
Tax related share-based settlement of units by members	(4,809)	(4,809)
Comprehensive income(loss)
Net income/(loss)	9,095	9,095
Change in value of cash flow hedge	(1,071)		(1,071)
Total comprehensive loss	8,024
Balance at Jun. 30, 2011	$ 266,213	$ 266,213	$ 0

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Related Party Disclosures

6 Months Ended

Jun. 30, 2011

Related Party Disclosures [Abstract]

Related Party Disclosures

16. Related Party Disclosures

In September 2010, Nationstar entered into a marketing agreement with Springleaf Home Equity, Inc., formerly known as American General Home Equity, Inc., Springleaf General Financial Services of Arkansas, Inc., formerly known as American General Financial Services of Arkansas, Inc. and MorEquity, Inc. (collectively “Springleaf”), each of which are indirectly owned by investment funds managed by affiliates of Fortress Investment Group LLC. Pursuant to this agreement, Nationstar markets mortgage origination products to customers of Springleaf, and is compensated by the origination fees of loans that Nationstar refinances. The marketing agreement has an initial term of six months. Additionally, in January 2011, Nationstar entered into three agreements to act as the loan sub-servicer for Springleaf for a whole loan portfolio and two securitized loan portfolios totaling $4.4 billion for which Nationstar receives a monthly per loan sub-servicing fee and other performance incentive fees subject to the agreements with Springleaf. For the three and six month periods ended June 30, 2011, Nationstar recognized revenue of $2.7 million and $4.9 million, respectively, in additional servicing and other performance incentive fees related to these portfolios. At June 30, 2011, Nationstar had an outstanding receivable from Springleaf of $0.9 million which was included as a component of accounts receivable.

Nationstar is the loan servicer for two securitized loan portfolios managed by Newcastle Investment Corp., which is managed by an affiliate of Fortress, for which Nationstar receives a monthly net servicing fee equal to 0.50% per annum on the unpaid principal balance of the portfolios. For the three months ended June 30, 2011 and 2010, Nationstar received servicing fees and other performance incentive fees of $0.1 million and $0.1 million, respectively. For the six months ended June 30, 2011 and 2010, Nationstar received servicing fees and other performance incentive fees of $0.1 million and $0.2 million, respectively.

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Nature of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2011

Nature of Business and Basis of Presentation [Abstract]

Nature of Business and Basis of Presentation

1. Nature of Business and Basis of Presentation

Nature of Business

Nationstar Mortgage LLC’s (Nationstar or the Company) principal business is the origination and selling or securitization of single-family conforming mortgage loans to government-sponsored entities and the servicing of residential mortgage loans for others.

The sale or securitization of mortgage loans typically involves Nationstar retaining the right to service the mortgage loans that it sells. The servicing of mortgage loans includes the collection of principal and interest payments and the assessment of ancillary fees related to the servicing of mortgage loans. Additionally, Nationstar may occasionally obtain additional servicing rights through the acquisition of servicing portfolios from third parties.

Basis of Presentation

The interim consolidated financial statements include the accounts of Nationstar, formerly Centex Home Equity Company, LLC (CHEC), a Delaware limited liability company, and its wholly owned subsidiaries and those variable interest entities (VIEs) where Nationstar is the primary beneficiary. Nationstar applies the equity method of accounting to investments when the entity is not a VIE and Nationstar is able to exercise significant influence, but not control, over the policies and procedures of the entity but owns less than 50% of the voting interests. Intercompany balances and transactions have been eliminated. Results of operations, assets and liabilities of VIEs are included from the date that the Company became the primary beneficiary. Nationstar is a subsidiary of FIF HE Holdings LLC (FIF), a subsidiary of Fortress Private Equity Funds III and IV (Fortress). In addition, certain prior period amounts have been reclassified to conform to the current period presentation.

The interim consolidated financial statements are unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results of the interim periods have been included. The consolidated interim financial statements of Nationstar have been prepared in accordance with generally accepted accounting principles (GAAP) for interim information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form S-4 Registration Statement dated August 10, 2011. The results of operations for the three and six month periods ended June 30, 2011, are not necessarily indicative of the results that may be expected for the year ended December 31, 2011. Nationstar evaluated subsequent events through the date these interim consolidated financial statements were issued.

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Indebtedness

6 Months Ended

Jun. 30, 2011

Indebtedness [Abstract]

Indebtedness

10. Indebtedness

Notes Payable

A summary of the balances of notes payable for the dates indicated is presented below (in thousands).

	June 30, 2011				December 31, 2010
			Collateral				Collateral
	Outstanding		Pledged		Outstanding		Pledged
Financial institutions repurchase facility (2011)	$	15,428	$	16,709	$	—	$	—
Financial institutions repurchase facility (2010)		26,521		28,547		43,059		45,429
Financial services company repurchase facility		164,507		173,210		209,477		223,119
Financial institutions repurchase facility (2009)		25,510		26,572		39,014		40,640
Financial services company 2009-ADV1 advance facility		210,703		254,138		236,808		285,226
Financial institutions 2010-ADV1 advance facility		—		—		—		—
GSE MSR facility		12,956		17,636		15,733		18,951
GSE ASAP+ facility		1,451		1,440		51,105		53,230
GSE EAF facility		147,694		174,450		114,562		142,327
Total notes payable	$	604,770	$	692,702	$	709,758	$	808,922

In March 2011, Nationstar executed a Master Repurchase Agreement (MRA) with a financial institution, under which Nationstar may enter into transactions, for an aggregate amount of $50 million, in which Nationstar agrees to transfer to the same financial institution certain mortgage loans and certain securities against the transfer of funds by the same financial institution, with a simultaneous agreement by the same financial institution to transfer such mortgage loans and securities to Nationstar at a date certain, or on demand by Nationstar, against the transfer of funds from Nationstar. The interest rate is based on LIBOR plus a spread of 1.45% to 3.95%, which varies based on the underlying transferred collateral. The maturity date of this MRA is March 2012.

In February 2010, Nationstar executed a MRA with a financial institution, which expires in October 2011. The MRA states that from time to time Nationstar may enter into transactions, for an aggregate amount of $75 million, in which Nationstar agrees to transfer to the same financial institution certain mortgage loans against the transfer of funds by the same financial institution, with a simultaneous agreement by the same financial institution to transfer such mortgage loans to Nationstar at a date certain, or on demand by Nationstar, against the transfer of funds from Nationstar. The interest rate is based on LIBOR plus a spread ranging from 2.75% to 3.50%, with a minimum interest rate of 4.75%.

Nationstar has a MRA with a financial services company, which expires in February 2012. The MRA states that from time to time Nationstar may enter into transactions, for an aggregate amount of $300 million, in which Nationstar agrees to transfer to the financial services company certain mortgage loans or mortgage-backed securities against the transfer of funds by the financial services company, with a simultaneous agreement by the financial services company to transfer such mortgage loans or mortgage-backed securities to Nationstar at a certain date, or on demand by Nationstar, against the transfer of funds from Nationstar. The interest rate is based on LIBOR plus a margin of 3.25%.

In October 2009, Nationstar executed a MRA with a financial institution. This MRA states that from time to time Nationstar may enter into transactions, for an aggregate amount of $100 million, in which Nationstar agrees to transfer to the financial institution certain mortgage loans against the transfer of funds by the financial institution, with a simultaneous agreement by the financial institution to transfer such mortgage loans to Nationstar at a certain date, or on demand by Nationstar, against the transfer of funds from Nationstar. The interest rate is based on LIBOR plus a spread of 3.50%. The maturity date of this MRA with the financial institution is December 2011.

Nationstar maintains a facility with a financial services company, the 2009-ADV1 Advance Facility. This facility has the capacity to purchase up to $350 million of advance receivables. The interest rate is based on LIBOR plus a spread ranging from 3.00% to 12.00%. The maturity date of this facility with the financial services company is December 2011. This debt is nonrecourse to Nationstar.

In December 2010, Nationstar executed the 2010-ADV1 Advance Facility with a financial institution. This facility has the capacity to purchase up to $200 million of advance receivables. The interest rate is based on LIBOR plus a spread of 3.00%. This facility matured in July 2011.

In connection with the October 2009 mortgage servicing rights acquisition, Nationstar executed a four-year note agreement with a government-sponsored enterprise (GSE). As collateral for this note, Nationstar has pledged Nationstar’s rights, title, and interest in the acquired servicing portfolio. The interest rate is based on LIBOR plus 2.50%. The maturity date of this facility is October 2013.

During 2009, Nationstar began executing As Soon As Pooled Plus agreements with a GSE, under which Nationstar transfers to the GSE eligible mortgage loans that are to be pooled into the GSE MBS against the transfer of funds by the GSE. The interest rate is based on LIBOR plus a spread of 1.50%. These agreements typically have a maturity of up to 45 days.

In September 2009, Nationstar executed a one-year committed facility agreement with a GSE, under which Nationstar agrees to transfer to the GSE certain servicing advance receivables against the transfer of funds by the GSE. This facility has the capacity to purchase up to $275 million in eligible servicing advance receivables. The interest rate is based on LIBOR plus a spread of 2.50%. The maturity date of this facility is December 2011.

Senior Unsecured Notes

In March 2010, Nationstar completed the offering of $250 million of unsecured senior notes, which were issued with an issue discount of $7.0 million for net cash proceeds of $243.0 million, with a maturity date of April 2015. These unsecured senior notes pay interest biannually at an interest rate of 10.875%.

The indenture for the unsecured senior notes contains various covenants and restrictions that limit Nationstar’s, or certain of its subsidiaries’, ability to incur additional indebtedness, pay dividends, make certain investments, create liens, consolidate, merge or sell substantially all of their assets, or enter into certain transactions with affiliates.

Nonrecourse Debt—Legacy Assets

In November 2009, Nationstar completed the securitization of approximately $222 million of asset-backed securities, which was structured as a secured borrowing. This structure resulted in Nationstar carrying the securitized loans as mortgages on Nationstar’s consolidated balance sheet and recognizing the asset-backed certificates acquired by third parties as nonrecourse debt, totaling approximately $126.0 million and $138.7 million at June 30, 2011 and December 31, 2010, respectively. The principal and interest on these notes are paid using the cash flows from the underlying mortgage loans, which serve as collateral for the debt. The interest rate paid on the outstanding securities is 7.50%, which is subject to an available funds cap. The total outstanding principal balance on the underlying mortgage loans serving as collateral for the debt was approximately $399.0 million and $430.0 million at June 30, 2011 and December 31, 2010, respectively. Accordingly, the timing of the principal payments on this nonrecourse debt is dependent on the payments received on the underlying mortgage loans. The unpaid principal balance on the outstanding notes was $146.5 million and $161.2 million at June 30, 2011 and December 31, 2010, respectively.

ABS Nonrecourse Debt

Effective January 1, 2010, new accounting guidance eliminated the concept of a QSPE, and all existing securitization trusts are considered VIEs and are now subject to new consolidation guidance provided in ASC 810. Upon consolidation of these VIEs, Nationstar derecognized all previously recognized beneficial interests obtained as part of the securitization. In addition, Nationstar recognized the securitized mortgage loans as mortgage loans held for investment, subject to ABS nonrecourse debt, and the related asset-backed certificates acquired by third parties as ABS nonrecourse debt on Nationstar’s consolidated balance sheet (see Note 3). Additionally, Nationstar elected the fair value option provided for by ASC 825-10. The principal and interest on these notes are paid using the cash flows from the underlying mortgage loans, which serve as collateral for the debt. The interest rate paid on the outstanding securities is based on LIBOR plus a spread ranging from 0.13% to 2.00%, which is subject to an interest rate cap. The total outstanding principal balance on the underlying mortgage loans and real estate owned serving as collateral for the debt was approximately $968.6 million and $1,025.3 million at June 30, 2011 and December 31, 2010, respectively. The timing of the principal payments on this ABS nonrecourse debt is dependent on the payments received on the underlying mortgage loans. The outstanding principal balance on the outstanding notes related to these consolidated securitization trusts was $977.7 million and $1,037.9 million at June 30, 2011 and December 31, 2010, respectively.

Financial Covenants

As of June 30, 2011, Nationstar was in compliance with its covenants on Nationstar’s borrowing arrangements and credit facilities. These covenants generally relate to Nationstar’s tangible net worth, liquidity reserves, and leverage requirements.

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Business Segment Reporting

6 Months Ended

Jun. 30, 2011

Business Segment Reporting [Abstract]

Business Segment Reporting

14. Business Segment Reporting

Nationstar currently conducts business in two separate operating segments: Servicing and Originations. The Servicing segment provides loan servicing on Nationstar’s total servicing portfolio, including the collection of principal and interest payments and the assessment of ancillary fees related to the servicing of mortgage loans. The Originations segment involves the origination, packaging, and sale of agency mortgage loans into the secondary markets via whole loan sales or securitizations. Nationstar reports the activity not related to either operating segment in the Legacy Portfolio and Other column. The Legacy Portfolio and Other column includes primarily all sub-prime mortgage loans originated in the latter portion of 2006 and during 2007 or acquired from CHEC and consolidated VIEs which were consolidated pursuant to the adoption of new consolidation guidance related to VIEs adopted on January 1, 2010.

Nationstar’s segments are based upon Nationstar’s organizational structure which focuses primarily on the services offered. The accounting policies of each reportable segment are the same as those of Nationstar except for 1) expenses for consolidated back-office operations and general overhead-type expenses such as executive administration and accounting and 2) revenues generated on inter-segment services performed. Expenses are allocated to individual segments based on the estimated value of services performed, including estimated utilization of square footage and corporate personnel as well as the equity invested in each segment. Revenues generated or inter-segment services performed are valued based on similar services provided to external parties.

To reconcile to Nationstar’s consolidated results, certain inter-segment revenues and expenses are eliminated in the “Elimination” column in the following tables.

The following tables are a presentation of financial information by segment for the periods indicated (in thousands):

	Three Months Ended June 30, 2011
										Legacy
							Operating			Portfolio
	Servicing			Originations			Segments			and Other			Eliminations			Consolidated
REVENUES:
Servicing fee income	$	53,990		$	—		$	53,990		$	670		$	(1,774	)	$	52,886
Other fee income		2,141			3,825			5,966			525			—			6,491
Total fee income		56,131			3,825			59,956			1,195			(1,774	)		59,377
Gain (loss) on mortgage loans held for sale		—			22,911			22,911			—			(89	)		22,822
Total revenues		56,131			26,736			82,867			1,195			(1,863	)		82,199
Total expenses and impairments		39,896			23,702			63,598			4,893			(89	)		68,402
Other income (expense):
Interest income		655			2,901			3,556			11,397			1,774			16,727
Interest expense		(13,491	)		(2,510	)		(16,001	)		(9,184	)		—			(25,185	)
Fair value changes in ABS securitizations		—			—			—			(3,613	)		—			(3,613	)
Total other income (expense)		(12,836	)		391			(12,445	)		(1,400	)		1,774			(12,071	)
NET INCOME (LOSS)	$	3,399		$	3,425		$	6,824		$	(5,098	)	$	—		$	1,726
Depreciation and amortization	$	396		$	298		$	694		$	115		$	—		$	809
Total assets		702,501			305,023			1,007,524			783,218			—			1,790,742

	Six Months Ended June 30, 2011
										Legacy
							Operating			Portfolio
	Servicing			Originations			Segments			and Other			Eliminations			Consolidated
REVENUES:
Servicing fee income	$	112,714		$	—		$	112,714		$	1,237		$	(3,598	)	$	110,353
Other fee income		4,535			7,869			12,404			1,306			—			13,710
Total fee income		117,249			7,869			125,118			2,543			(3,598	)		124,063
Gain (loss) on mortgage loans held for sale		—			43,480			43,480			—			(152	)		43,328
Total revenues		117,249			51,349			168,598			2,543			(3,750	)		167,391
Total expenses and impairments		80,303			45,514			125,817			10,858			(152	)		136,523
Other income (expense):
Interest income		1,622			5,504			7,126			24,321			3,598			35,045
Interest expense		(26,948	)		(4,491	)		(31,439	)		(19,114	)		—			(50,553	)
Fair value changes in ABS securitizations		—			—			—			(6,265	)		—			(6,265	)
Total other income (expense)		(25,326	)		1,013			(24,313	)		(1,058	)		3,598			(21,773	)
NET INCOME (LOSS)	$	11,620		$	6,848		$	18,468		$	(9,373	)	$	—		$	9,095
Depreciation and amortization	$	768		$	567		$	1,335		$	225		$	—		$	1,560
Total assets		702,501			305,023			1,007,524			783,218			—			1,790,742

	Three Months Ended June 30, 2010
										Legacy
							Operating			Portfolio
	Servicing			Originations			Segments			and Other			Eliminations			Consolidated
REVENUES:
Servicing fee income	$	42,719		$	—		$	42,719		$	521		$	(2,057	)	$	41,183
Other fee income		1,778			1,568			3,346			349			—			3,695
Total fee income		44,497			1,568			46,065			870			(2,057	)		44,878
Gain (loss) on mortgage loans held for sale		—			13,543			13,543			—			(54	)		13,489
Total revenues		44,497			15,111			59,608			870			(2,111	)		58,367
Total expenses and impairments		23,120			19,653			42,773			3,280			(54	)		45,999
Other income (expense):
Interest income		130			3,461			3,591			22,613			2,057			28,261
Interest expense		(14,422	)		(2,399	)		(16,821	)		(15,137	)		—			(31,958	)
Loss on interest rate swaps		(4,424	)		—			(4,424	)		—			—			(4,424	)
Fair value changes in ABS Securitizations		—			—			—			(6,573	)		—			(6,573	)
Total other income (expense)		(18,716	)		1,062			(17,654	)		903			2,057			(14,694	)
NET INCOME (LOSS)	$	2,661		$	(3,480	)	$	(819	)	$	(1,507	)	$	—		$	(2,326	)
Depreciation and amortization	$	233		$	173		$	406		$	46		$	—		$	452

	Six Months Ended June 30, 2010
										Legacy
							Operating			Portfolio
	Servicing			Originations			Segments			and Other			Eliminations			Consolidated
REVENUES:
Servicing fee income	$	78,485		$	—		$	78,485		$	979		$	(4,191	)	$	75,273
Other fee income		3,562			3,234			6,796			1,559			—			8,355
Total fee income		82,047			3,234			85,281			2,538			(4,191	)		83,628
Gain (loss) on mortgage loans held for sale		—			25,989			25,989			—			(71	)		25,918
Total revenues		82,047			29,223			111,270			2,538			(4,262	)		109,546
Total expenses and impairments		44,402			35,590			79,992			6,188			(71	)		86,109
Other income (expense):
Interest income		350			5,090			5,440			49,963			4,191			59,594
Interest expense		(25,068	)		(3,707	)		(28,775	)		(32,318	)		—			(61,093	)
Loss on interest rate swaps		(7,203	)		—			(7,203	)		—			—			(7,203	)
Fair value changes in ABS Securitizations		—			—			—			(16,329	)		—			(16,329	)
Total other income (expense)		(31,921	)		1,383			(30,538	)		1,316			4,191			(25,031	)
NET INCOME (LOSS)	$	5,724		$	(4,984	)	$	740		$	(2,334	)	$	—		$	(1,594	)
Depreciation and amortization	$	447		$	314		$	761		$	89		$	—		$	850

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Consolidated Balance Sheets (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Assets
Cash and cash equivalents	$ 2,532	$ 21,223
Restricted cash (includes $1,417 and $1,472, respectively, of restricted cash, subject to ABS nonrecourse debt)	84,331	91,125
Accounts receivable (includes $2,901 and $2,392, respectively, of accrued interest, subject to ABS nonrecourse debt)	468,072	439,071
Mortgage loans held for sale	262,597	371,160
Mortgage loans held for investment, subject to nonrecourse debt - Legacy Assets, net of allowance for loan losses of $4,426 and $3,298 respectively	255,463	266,840
Mortgage loans held for investment, subject to ABS nonrecourse debt (at fair value)	490,588	538,440
Receivables from affiliates	7,351	8,993
Mortgage servicing rights	151,557	145,062
Property and equipment, net	15,667	8,394
Real estate owned, net (includes $11,787 and $17,509, respectively, of real estate owned, subject to ABS nonrecourse debt)	17,249	27,337
Other assets	35,335	29,536
Total assets	1,790,742	1,947,181
Liabilities and members' equity
Secured Notes Payable	604,770	709,758
Unsecured senior notes	244,759	244,061
Payables and accrued liabilities(includes $59 and $95, respectively, of accrued interest payable, subject to ABS nonrecourse debt)	78,764	75,054
Derivative financial instruments	8,214	7,801
Derivative financial instruments, subject to ABS nonrecourse debt	14,151	18,781
Nonrecourse debt - Legacy Assets	126,026	138,662
ABS nonrecourse debt (at fair value)	447,845	496,692
Total liabilities	1,524,529	1,690,809
Commitments and contingencies
Total members' equity	266,213	256,372
Total liabilities and members' equity	$ 1,790,742	$ 1,947,181