þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 75-2921540 | |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
350 Highland Drive Lewisville, TX (Address of principal executive offices) |
75067 (Zip Code) |
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer þ (Do not check if a smaller reporting company.) | Smaller reporting company o |
| the impact of the ongoing implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 on our business activities and practices, costs of operations and overall results of operations; |
| the impact on our servicing practices of enforcement consent orders entered into by 14 of the largest servicers and four federal agencies; |
| the continued deterioration of the residential mortgage market, increase in monthly payments on adjustable rate mortgage loans, adverse economic conditions, decrease in property values or increase in delinquencies and defaults; |
| our ability to compete successfully in the mortgage loan servicing and mortgage loan originations industry; |
| our ability to maintain the size of our servicing portfolio by successfully identifying attractive acquisition opportunities, including mortgage servicing rights, subservicing contracts, servicing platforms and origination platforms; |
| our ability to scale-up appropriately and integrate our acquisitions to realize the anticipated benefits of any such potential future acquisitions; |
| our ability to obtain sufficient capital to meet our financing requirements; |
| our ability to grow our loan origination volume; |
| the termination of our servicing rights and subservicing contracts; |
| changes to federal, state and local laws and regulations concerning loan servicing, loan origination, loan modification or the licensing of entities that engage in these activities; |
| changes in accounting standards; |
| our ability to meet certain criteria or characteristics under the indentures governing our securitized pools of loans; |
| our ability to follow the specific guidelines of government-sponsored enterprises or a significant change in such guidelines; |
| delays in our ability to collect or be reimbursed for servicing advances; |
| changes to the Home Affordable Modification Program, the Make Home Affordable Plan or other similar government programs; |
| loss of our licenses; |
2
| changes in our business relationships with Fannie Mae, Freddie Mac, Ginnie Mae and others that facilitate the issuance of mortgage-backed securities; |
| changes to the nature of the guarantees of Fannie Mae and Freddie Mac and the market implications of such changes; |
| errors in our financial models or changes in assumptions; |
| requirement to write down the value of certain assets; |
| changes in prevailing interest rates; |
| our ability to successfully mitigate our risks through hedging strategies; |
| changes to our servicer ratings; |
| the accuracy and completeness of information about borrowers and counterparties; |
| our ability to maintain our technology systems and our ability to adapt such systems for future operating environments; |
| failure of our internal security measures or breach of our privacy protections; |
| failure of our vendors to comply with servicing criteria; |
| the loss of the services of our senior managers; |
| changes to our income tax status; |
| failure to attract and retain a highly skilled work force; |
| increase in legal proceedings and related costs; |
| changes in public opinion concerning mortgage originators or debt collectors; and |
| conflicts of interest with Fortress and the holders of our senior unsecured notes. |
3
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EX-2.1 | ||||||||
EX-31.1 | ||||||||
EX-32.1 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
4
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 24,005 | $ | 21,223 | ||||
Restricted cash (includes $69 and $1,472, respectively, of restricted cash,
subject to ABS nonrecourse debt) |
72,813 | 91,125 | ||||||
Accounts receivable (includes $2,431 and $2,392, respectively, of accrued
interest, subject to ABS nonrecourse debt) |
471,474 | 441,275 | ||||||
Mortgage loans held for sale |
377,932 | 369,617 | ||||||
Mortgage loans held for investment, subject to nonrecourse debt - Legacy Assets,
net of allowance for loan losses of $5,303 and $3,298, respectively |
246,159 | 266,320 | ||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt (at fair value) |
477,748 | 538,440 | ||||||
Receivables from affiliates |
6,082 | 8,993 | ||||||
Mortgage servicing rights |
246,916 | 145,062 | ||||||
Property and equipment, net |
20,990 | 8,394 | ||||||
Real estate owned, net (includes $11,169 and $17,509, respectively, of real estate
owned, subject to ABS nonrecourse debt) |
15,411 | 27,337 | ||||||
Other assets |
44,795 | 29,395 | ||||||
Total assets |
$ | 2,004,325 | $ | 1,947,181 | ||||
Liabilities and members equity |
||||||||
Notes payable |
$ | 738,783 | $ | 709,758 | ||||
Unsecured senior notes |
245,109 | 244,061 | ||||||
Payables and accrued liabilities (includes $75 and $95, respectively, of accrued
interest payable, subject to ABS nonrecourse debt) |
177,452 | 75,054 | ||||||
Derivative financial instruments |
15,778 | 7,801 | ||||||
Derivative financial instruments, subject to ABS nonrecourse debt |
11,889 | 18,781 | ||||||
Nonrecourse debt - Legacy Assets |
116,200 | 138,662 | ||||||
ABS nonrecourse debt (at fair value) |
434,326 | 496,692 | ||||||
Total liabilities |
1,739,537 | 1,690,809 | ||||||
Commitments and contingencies See Note 15 |
||||||||
Total members equity |
264,788 | 256,372 | ||||||
Total liabilities and members equity |
$ | 2,004,325 | $ | 1,947,181 | ||||
5
For the Three Months Ended | For the Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Servicing fee income |
$ | 55,283 | $ | 35,646 | $ | 165,636 | $ | 110,919 | ||||||||
Other fee income |
5,408 | 3,496 | 19,118 | 11,851 | ||||||||||||
Total fee income |
60,691 | 39,142 | 184,754 | 122,770 | ||||||||||||
Gain on mortgage loans held for sale |
30,232 | 25,836 | 73,560 | 51,754 | ||||||||||||
Total revenues |
90,923 | 64,978 | 258,314 | 174,524 | ||||||||||||
Expenses and impairments: |
||||||||||||||||
Salaries, wages, and benefits |
50,904 | 41,879 | 146,199 | 104,689 | ||||||||||||
General and administrative |
25,397 | 15,422 | 56,707 | 34,931 | ||||||||||||
Provision for loan losses |
877 | | 2,005 | | ||||||||||||
Loss on foreclosed real estate |
2,558 | | 6,904 | | ||||||||||||
Occupancy |
3,458 | 2,212 | 7,902 | 6,002 | ||||||||||||
Total expenses and impairments |
83,194 | 59,513 | 219,717 | 145,622 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
16,201 | 22,425 | 51,246 | 82,019 | ||||||||||||
Interest expense |
(26,376 | ) | (28,205 | ) | (76,929 | ) | (89,298 | ) | ||||||||
Loss on interest rate swaps and caps |
| (2,714 | ) | | (9,917 | ) | ||||||||||
Fair value changes in ABS
securitizations |
(654 | ) | (2,786 | ) | (6,919 | ) | (19,115 | ) | ||||||||
Total other income (expense) |
(10,829 | ) | (11,280 | ) | (32,602 | ) | (36,311 | ) | ||||||||
Net income/(loss) |
$ | (3,100 | ) | $ | (5,815 | ) | $ | 5,995 | $ | (7,409 | ) | |||||
6
Accumulated Other | Total Members | |||||||||||
Members | Comprehensive | Units and | ||||||||||
Units | Income | Members Equity | ||||||||||
Balance at January 1, 2010 |
$ | 263,823 | $ | | $ | 263,823 | ||||||
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 loss: |
||||||||||||
Net loss |
(9,914 | ) | | (9,914 | ) | |||||||
Change in value of cash flow hedge |
| 1,071 | 1,071 | |||||||||
Total comprehensive loss |
(8,843 | ) | ||||||||||
Balance at December 31, 2010 |
255,301 | 1,071 | 256,372 | |||||||||
(unaudited) |
||||||||||||
Share-based compensation |
12,201 | | 12,201 | |||||||||
Distribution to parent |
(3,900 | ) | | (3,900 | ) | |||||||
Tax related share-based settlement
of units by members |
(4,809 | ) | | (4,809 | ) | |||||||
Comprehensive income: |
||||||||||||
Net income |
5,995 | | 5,995 | |||||||||
Change in value of cash flow hedge |
| (1,071 | ) | (1,071 | ) | |||||||
Total comprehensive income |
4,924 | |||||||||||
Balance at September 30, 2011 |
$ | 264,788 | $ | | $ | 264,788 | ||||||
7
Nine Months | ||||||||
Ended September 30, | ||||||||
2011 | 2010 | |||||||
Operating activities |
||||||||
Net income / (loss) |
$ | 5,995 | $ | (7,409 | ) | |||
Adjustments to reconcile net income / (loss) to net cash provided by operating activities: |
||||||||
Share-based compensation |
12,201 | 7,459 | ||||||
Gain on mortgage loans held for sale |
(73,560 | ) | (51,754 | ) | ||||
Provision for loan losses |
2,005 | | ||||||
Loss on foreclosed real estate |
6,904 | | ||||||
Loss on equity method investments |
971 | | ||||||
(Gain) / loss on ineffectiveness on interest rate swaps and caps |
(2,032 | ) | 9,917 | |||||
Fair value changes in ABS securitizations |
6,919 | 19,115 | ||||||
Depreciation and amortization |
2,551 | 1,450 | ||||||
Change in fair value on mortgage servicing rights |
30,757 | 11,499 | ||||||
Amortization of debt discount |
10,324 | 15,168 | ||||||
Amortization of discounts |
(4,001 | ) | (3,561 | ) | ||||
Mortgage loans originated and purchased, net of fees |
(2,285,558 | ) | (1,960,089 | ) | ||||
Cost of loans sold, net of fees |
2,287,430 | 1,831,708 | ||||||
Principal payments/prepayments received and other changes in mortgage loans originated as held for sale |
45,534 | 8,112 | ||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable, net |
(30,199 | ) | 58,656 | |||||
Receivables from affiliates |
2,911 | 3,607 | ||||||
Other assets |
(5,050 | ) | 2,700 | |||||
Payables and accrued liabilities |
35,840 | 77,892 | ||||||
Net cash provided by operating activities |
49,942 | 24,470 | ||||||
8
Nine months ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
Investing activities |
||||||||
Principal payments received and other changes on mortgage
loans held for investment, subject to ABS nonrecourse debt |
$ | 29,395 | $ | 36,401 | ||||
Property and equipment additions, net of disposals |
(15,147 | ) | (3,177 | ) | ||||
Acquisition of equity method investee |
(6,600 | ) | | |||||
Purchase of mortgage servicing rights, net of liabilities incurred |
(40,305 | ) | (5,863 | ) | ||||
Proceeds from sales of real estate owned |
22,897 | 58,506 | ||||||
Net cash
provided by/ (used in) investing activities |
(9,760 | ) | 85,867 | |||||
Financing activities |
||||||||
Transfers from restricted cash, net |
18,312 | 6,560 | ||||||
Issuance of unsecured notes, net of issue discount |
| 243,012 | ||||||
Increase / (decrease) in notes payable |
29,025 | (239,585 | ) | |||||
Repayment of non-recourse debt Legacy assets |
(26,119 | ) | (37,240 | ) | ||||
Repayment of ABS nonrecourse debt |
(47,175 | ) | (85,386 | ) | ||||
Distribution to parent |
(3,900 | ) | | |||||
Debt financing costs |
(2,734 | ) | (11,894 | ) | ||||
Tax related share-based settlement of units by members |
(4,809 | ) | | |||||
Net cash used in financing activities |
(37,400 | ) | (124,533 | ) | ||||
Net increase / (decrease) in cash and cash equivalents |
2,782 | (14,196 | ) | |||||
Cash and cash equivalents at beginning of period |
21,223 | 41,645 | ||||||
Cash and cash equivalents at end of period |
$ | 24,005 | $ | 27,449 | ||||
Supplemental disclosures of noncash activities |
||||||||
Transfer of mortgage loans held for investment, subject to nonrecourse debt Legacy Assets to
real estate owned |
$ | 4,875 | $ | 15,034 | ||||
Transfer of mortgage loans held for sale to real estate owned |
90 | 124 | ||||||
Transfer of mortgage loans held for investment, subject to ABS nonrecourse debt to real estate owned |
13,712 | 34,775 | ||||||
Mortgage servicing rights resulting from sale or securitization of mortgage loans |
25,748 | 16,761 | ||||||
Liabilities incurred from purchase of mortgage servicing rights |
66,558 | 5,156 |
9
10
11
12
Transfers | ||||||||||||
Accounted for as | ||||||||||||
Securitization | Secured | |||||||||||
September 30, 2011 | Trusts | Borrowings | Total | |||||||||
ASSETS |
||||||||||||
Restricted cash |
$ | 69 | $ | 20,134 | $ | 20,203 | ||||||
Accounts receivable |
2,431 | 251,615 | 254,046 | |||||||||
Mortgage loans held for investment, subject to nonrecourse debt |
| 240,256 | 240,256 | |||||||||
Mortgage loans held for investment, subject to ABS nonrecourse
debt |
477,748 | | 477,748 | |||||||||
Real estate owned |
11,169 | 4,184 | 15,353 | |||||||||
Total Assets |
$ | 491,417 | $ | 516,189 | $ | 1,007,606 | ||||||
LIABILITIES |
||||||||||||
Notes payable |
$ | | $ | 203,596 | $ | 203,596 | ||||||
Payables and accrued liabilities |
75 | 988 | 1,063 | |||||||||
Outstanding servicer advances(1) |
32,961 | | 32,961 | |||||||||
Derivative financial instruments, subject to ABS nonrecourse debt |
11,889 | | 11,889 | |||||||||
Nonrecourse debtLegacy Assets |
| 116,200 | 116,200 | |||||||||
ABS nonrecourse debt |
434,326 | | 434,326 | |||||||||
Total Liabilities |
$ | 479,251 | $ | 320,784 | $ | 800,035 | ||||||
13
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 debtLegacy 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. |
September 30, 2011 |
December 31, 2010 |
|||||||
Total collateral balance |
$ | 3,751,789 | $ | 4,038,978 | ||||
Total certificate balance |
3,738,836 | 4,026,844 | ||||||
Total mortgage servicing
rights at fair value |
24,227 | 26,419 |
Nine months ended | Nine months ended | |||||||||||||||
September 30, 2011 | September 30, 2010 | |||||||||||||||
Principal Amount | Principal Amount | |||||||||||||||
of Loans | of Loans | |||||||||||||||
60 Days or | 60 Days or | |||||||||||||||
More Past Due | Credit Losses | More Past Due | Credit Losses | |||||||||||||
Total Securitization Trusts |
$ | 801,216 | $ | 182,991 | $ | 855,981 | $ | 177,077 |
14
For the three months ended | For the nine months ended | |||||||||||||||||||||||||||||||
September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | |||||||||||||||||||||||||||||
Servicing | Servicing | Servicing | Servicing | |||||||||||||||||||||||||||||
Fees | Fees | Loan | Fees | Loan | Fees | Loan | ||||||||||||||||||||||||||
Received | Loan Repurchases | Received | Repurchases | Received | Repurchases | Received | Repurchases | |||||||||||||||||||||||||
Total securitization trusts |
$ | 5,870 | $ | | $ | 6,055 | $ | | $ | 21,221 | $ | | $ | 21,414 | $ | |
September
30, 2011 |
December 31, 2010 |
|||||||
Delinquency advances |
$ | 157,438 | $ | 148,751 | ||||
Corporate and escrow advances |
274,912 | 241,618 | ||||||
Insurance deposits |
1,750 | 6,390 | ||||||
Accrued interest (includes
$2,431 and $2,392,
respectively, subject to ABS
nonrecourse debt) |
3,971 | 4,302 | ||||||
Receivables from trusts |
6,348 | 21,910 | ||||||
Other |
27,055 | 18,304 | ||||||
Total accounts receivable |
$ | 471,474 | $ | 441,275 | ||||
September 30, 2011 |
December 31, 2010 |
|||||||
Mortgage loans held for sale unpaid principal balance |
$ | 364,403 | $ | 365,337 | ||||
Mark-to-market adjustment |
13,529 | 4,280 | ||||||
Total mortgage loans held for sale |
$ | 377,932 | $ | 369,617 | ||||
15
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Mortgage loans held for sale Non-performing |
$ | | $ | 371 | ||||
For the nine months ended | ||||||||
September 30, 2011 | September 30, 2010 | |||||||
Mortgage loans held for sale beginning balance |
$ | 369,617 | $ | 203,131 | ||||
Mortgage loans originated and purchased, net of fees |
2,285,558 | 1,960,089 | ||||||
Cost of loans sold, net of fees |
(2,287,430 | ) | (1,831,708 | ) | ||||
Principal payments received on mortgage loans
held for sale and other changes |
10,475 | 11,254 | ||||||
Transfer of mortgage loans held for sale to real
estate owned |
(288 | ) | | |||||
Mortgage loans held for sale ending balance |
$ | 377,932 | $ | 342,766 | ||||
16
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Mortgage loans held for
investment, subject to
nonrecourse debt- Legacy
Assets, net unpaid
principal balance |
$ | 379,418 | $ | 411,878 | ||||
Transfer discount |
||||||||
Accretable |
(22,764 | ) | (25,219 | ) | ||||
Non-accretable |
(105,192 | ) | (117,041 | ) | ||||
Allowance for loan losses |
(5,303 | ) | (3,298 | ) | ||||
Total mortgage loans
held for investment,
subject to nonrecourse
debt-Legacy Assets, net |
$ | 246,159 | $ | 266,320 | ||||
Nine months ended | Year ended | |||||||
September 30, 2011 | December 31, 2010 | |||||||
Balance at the beginning of the period |
$ | 25,219 | $ | 22,040 | ||||
Additions |
| | ||||||
Accretion |
(3,185 | ) | (4,082 | ) | ||||
Reclassifications from (to) nonaccretable discount |
730 | 7,261 | ||||||
Disposals |
| | ||||||
Balance at the end of the period |
$ | 22,764 | $ | 25,219 | ||||
17
Nine months ended | ||||||||||||
September 30, 2011 | ||||||||||||
Performing | Non-Performing | Total | ||||||||||
Balance at the beginning of the period |
$ | 829 | $ | 2,469 | $ | 3,298 | ||||||
Provision for loan losses |
134 | 1,871 | 2,005 | |||||||||
Recoveries on loans previously charged-off |
| | | |||||||||
Charge-offs |
| | | |||||||||
Balance at the end of the period |
$ | 963 | $ | 4,340 | $ | 5,303 | ||||||
Ending balance Collectively evaluated for impairment |
$ | 300,718 | $ | 78,700 | $ | 379,418 | ||||||
Year ended | ||||||||||||
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 |
$ | 310,730 | $ | 101,148 | $ | 411,878 | ||||||
18
September 30, 2011 | December 31, 2010 | |||||||
(in thousands) | ||||||||
Credit Quality by Delinquency Status |
||||||||
Performing |
$ | 300,718 | $ | 310,730 | ||||
Non-Performing |
78,700 | 101,148 | ||||||
Total |
$ | 379,418 | $ | 411,878 | ||||
Credit Quality by Loan-to-Value Ratio |
||||||||
Less than 60 |
$ | 43,156 | $ | 47,568 | ||||
Less than 70 and more than 60 |
16,923 | 17,476 | ||||||
Less than 80 and more than 70 |
24,575 | 26,771 | ||||||
Less than 90 and more than 80 |
33,811 | 36,079 | ||||||
Less than 100 and more than 90 |
33,802 | 37,551 | ||||||
Greater than 100 |
227,151 | 246,433 | ||||||
Total |
$ | 379,418 | $ | 411,878 | ||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(in thousands) | ||||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt
unpaid principal balance |
$ | 918,347 | $ | 983,106 | ||||
Fair value adjustment |
(440,599 | ) | (444,666 | ) | ||||
Mortgage loans held for investment, subject to ABS nonrecourse debt, net |
$ | 477,748 | $ | 538,440 | ||||
19
Credit Sensitive MSRs | September 30, 2011 | December 31, 2010 | ||||||
Discount rate |
25.64 | % | 24.96 | % | ||||
Total prepayment speeds |
15.20 | % | 18.13 | % | ||||
Expected weighted-average life |
5.37 | years | 4.90 | years | ||||
Credit losses |
36.38 | % | 36.71 | % | ||||
Interest Rate Sensitive MSRs | September 30, 2011 | December 31, 2010 | ||||||
Discount rate |
10.49 | % | 13.57 | % | ||||
Total prepayment speeds |
16.99 | % | 17.19 | % | ||||
Expected weighted-average life |
4.96 | years | 5.12 | years | ||||
Credit losses |
9.23 | % | 8.80 | % |
20
September 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 |
25,748 | 26,253 | ||||||
Recognition of servicing assets from derecognition of variable interest entities |
| 2,866 | ||||||
Purchases of servicing assets |
106,863 | 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 |
(15,511 | ) | 9,455 | |||||
Other changes in fair value |
(15,246 | ) | (15,498 | ) | ||||
Fair value at the end of the period |
$ | 246,916 | $ | 145,062 | ||||
Unpaid principal balance of loans serviced for others |
||||||||
Originated or purchased mortgage loans |
||||||||
Credit sensitive loans |
$ | 32,803,236 | $ | 24,980,980 | ||||
Interest sensitive loans |
11,360,987 | 6,705,661 | ||||||
Total owned loans |
44,164,223 | 31,686,641 | ||||||
Subserviced for others |
56,757,975 | 30,649,472 | ||||||
Total unpaid principal balance of loans serviced for others |
$ | 100,922,198 | $ | 62,336,113 | ||||
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 | |||||||||||||||||||
SEPTEMBER 30, 2011 |
||||||||||||||||||||||||
Mortgage servicing rights |
$ | (6,583 | ) | $ | (12,812 | ) | $ | (14,024 | ) | $ | (26,675 | ) | $ | (4,923 | ) | $ | (10,556 | ) | ||||||
DECEMBER 31, 2010 |
||||||||||||||||||||||||
Mortgage servicing rights |
$ | (3,828 | ) | $ | (7,458 | ) | $ | (8,175 | ) | $ | (16,042 | ) | $ | (4,310 | ) | $ | (9,326 | ) |
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Servicing fees |
$ | 48,141 | $ | 25,168 | $ | 133,338 | $ | 69,717 | ||||||||
Ancillary fees |
25,772 | 17,103 | 62,848 | 51,494 | ||||||||||||
Total servicing and ancillary fees |
$ | 73,913 | $ | 42,271 | $ | 196,186 | $ | 121,211 | ||||||||
21
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Derivative financial instruments |
$ | 16,272 | $ | 8,666 | ||||
Deferred financing costs |
10,425 | 14,396 | ||||||
Equity method investment |
5,629 | | ||||||
Margin call deposits |
5,240 | | ||||||
Prepaid expenses |
4,658 | 3,379 | ||||||
Unsecured loans |
1,843 | 2,064 | ||||||
Other |
728 | 890 | ||||||
Total other assets |
$ | 44,795 | $ | 29,395 | ||||
September 30, 2011 | ||||
ASSETS |
||||
Cash |
$ | 1,219 | ||
Accounts receivable |
6,239 | |||
Receivables from affiliates |
228 | |||
Equity method investments |
18,752 | |||
Property and equipment, net |
1,775 | |||
Goodwill and other intangible assets |
18,442 | |||
Other assets |
952 | |||
Total Assets |
$ | 47,607 | ||
LIABILITIES |
||||
Notes payable |
$ | 4,741 | ||
Payables and accrued liabilities |
18,789 | |||
Total Liabilities |
$ | 23,530 | ||
For the three | From Acquisition | |||||||
months ended | through | |||||||
September 30, 2011 | September 30, 2011 | |||||||
REVENUES |
||||||||
Sales |
$ | 13,181 | $ | 25,382 | ||||
Cost of sales |
(10,871 | ) | (21,593 | ) | ||||
Net sales revenues |
2,310 | 3,789 | ||||||
OTHER INCOME/(EXPENSE) |
||||||||
Operating costs |
(5,054 | ) | (9,004 | ) | ||||
Income from equity method investments |
771 | 1,176 | ||||||
Depreciation and amortization |
(180 | ) | (359 | ) | ||||
Other income / (expenses) |
136 | 39 | ||||||
Loss from discontinued operations |
(27 | ) | (54 | ) | ||||
Total Other income/(expense) |
(4,354 | ) | (8,202 | ) | ||||
Net loss |
$ | (2,044 | ) | $ | (4,413 | ) | ||
22
23
Location of Gain | ||||||||||||||||||||
(Loss) Recognized | ||||||||||||||||||||
in Income on | ||||||||||||||||||||
Derivative | Amount of Gain | |||||||||||||||||||
Amount of Gain | Location of Gain | Amount of Gain | (Ineffective | (Loss) Recognized | ||||||||||||||||
(Loss) Recognized | (Loss) Reclassified | (Loss) Reclassified | Portion and Amount | in Income on | ||||||||||||||||
in OCI on | from Accumulated | from Accumulated | Excluded from | Derivative | ||||||||||||||||
Derivative | OCI into Income | OCI into Income | Effectiveness | (Ineffective | ||||||||||||||||
Derivatives in ASC815 Cash Flow Hedging Relationships | (Effective Portion) | (Effective Portion) | (Effective Portion) | Testing) | Portion) | |||||||||||||||
For the three months ended September 30, 2011 | ||||||||||||||||||||
Interest Rate Swap |
$ | | Interest Expense | $ | | Interest Expense | $ | 617 | ||||||||||||
For the nine months ended September 30, 2011 | ||||||||||||||||||||
Interest Rate Swap |
$ | (1,071 | ) | Interest Expense | $ | 582 | Interest Expense | $ | 2,032 | |||||||||||
For the year ended December 31, 2010 | ||||||||||||||||||||
Interest Rate Swap |
$ | 1,071 | Interest Expense | $ | | Interest Expense | $ | 930 |
Recorded | ||||||||||||||||
Expiration | Outstanding | Gains / | ||||||||||||||
Dates | Notional | Fair Value | (Losses) | |||||||||||||
NINE MONTHS ENDED SEPTEMBER 30, 2011 |
||||||||||||||||
MORTGAGE LOANS HELD FOR SALE |
||||||||||||||||
Loan sale commitments |
2011 | $ | 28,305 | $ | 920 | $ | 878 | |||||||||
OTHER ASSETS |
||||||||||||||||
IRLCs |
2011 | 966,232 | 16,272 | 11,569 | ||||||||||||
LIABILITIES |
||||||||||||||||
Interest rate swaps and caps |
2011-2013 | 350,000 | 6,839 | 2,032 | ||||||||||||
Forward MBS trades |
2011 | 789,944 | 8,939 | (12,902 | ) | |||||||||||
Interest rate swap, subject to ABS nonrecourse debt |
2013 | 190,969 | 11,889 | 6,892 | ||||||||||||
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 |
24
September 30, 2011 | December 31, 2010 | |||||||||||||||
Collateral | Collateral | |||||||||||||||
Outstanding | Pledged | Outstanding | Pledged | |||||||||||||
Financial institutions repurchase facility (2011) |
$ | 10,587 | $ | 11,140 | $ | | $ | | ||||||||
Financial institutions repurchase facility (2010) |
41,801 | 44,923 | 43,059 | 45,429 | ||||||||||||
Financial services company repurchase facility |
259,593 | 274,684 | 209,477 | 223,119 | ||||||||||||
Financial institutions repurchase facility (2009) |
22,328 | 23,258 | 39,014 | 40,640 | ||||||||||||
Financial services company 2009-ADV1 advance
facility |
203,596 | 250,381 | 236,808 | 285,226 | ||||||||||||
Financial institutions 2010-ADV1 advance facility |
| | | | ||||||||||||
Financial institutions MSR Facility |
| | | | ||||||||||||
GSE MSR facility |
11,568 | 16,930 | 15,733 | 18,951 | ||||||||||||
GSE ASAP+ facility |
13,577 | 13,468 | 51,105 | 53,230 | ||||||||||||
GSE EAF facility |
175,733 | 179,442 | 114,562 | 142,327 | ||||||||||||
Total notes payable |
$ | 738,783 | $ | 814,226 | $ | 709,758 | $ | 808,922 | ||||||||
25
26
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Depreciation and amortization |
$ | 991 | $ | 600 | $ | 2,551 | $ | 1,450 | ||||||||
Advertising |
1,404 | 1,036 | 3,457 | 3,602 | ||||||||||||
Equipment |
1,251 | 1,027 | 3,246 | 2,726 | ||||||||||||
Servicing |
5,094 | 1,265 | 14,313 | 4,230 | ||||||||||||
Telecommunications |
955 | 613 | 2,746 | 1,742 | ||||||||||||
Legal and professional fees |
8,319 | 7,065 | 12,956 | 9,661 | ||||||||||||
Postage |
1,522 | 963 | 3,937 | 2,904 | ||||||||||||
Stationary and supplies |
945 | 672 | 2,896 | 1,802 | ||||||||||||
Travel |
871 | 519 | 2,383 | 1,499 | ||||||||||||
Insurance, Taxes, and Other |
4,045 | 1,662 | 8,222 | 5,315 | ||||||||||||
Total general and administrative expense |
$ | 25,397 | $ | 15,422 | $ | 56,707 | $ | 34,931 | ||||||||
27
28
September 30, 2011 | ||||||||||||||||
Recurring Fair Value Measurements | ||||||||||||||||
Total Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
ASSETS |
||||||||||||||||
Mortgage loans held for sale(1) |
$ | 377,932 | $ | | $ | 377,932 | $ | | ||||||||
Mortgage loans held for investment,
subject to ABS nonrecourse
debt(1) |
477,748 | | | 477,748 | ||||||||||||
Mortgage servicing rights(1) |
246,916 | | | 246,916 | ||||||||||||
Other assets: |
||||||||||||||||
Interest Rate Lock Commitments (IRLC) |
16,272 | | 16,272 | | ||||||||||||
Total assets |
$ | 1,118,868 | $ | | $ | 394,204 | $ | 724,664 | ||||||||
LIABILITIES |
||||||||||||||||
Derivative financial instruments |
||||||||||||||||
Interest rate swaps and caps |
$ | 6,839 | $ | | $ | 6,839 | $ | | ||||||||
Forward MBS trades |
8,939 | | 8,939 | | ||||||||||||
Derivative financial instruments, subject
to ABS nonrecourse debt |
11,889 | | 11,889 | | ||||||||||||
ABS nonrecourse debt(1) |
434,326 | | | 434,326 | ||||||||||||
Total liabilities |
$ | 461,993 | $ | | $ | 27,667 | $ | 434,326 | ||||||||
(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) |
$ | 369,617 | $ | | $ | 369,617 | $ | | ||||||||
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 |
$ | 1,061,785 | $ | | $ | 378,283 | $ | 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. |
29
ASSETS | LIABILITIES | |||||||||||||||
Mortgage loans | ||||||||||||||||
held for investment, | ||||||||||||||||
subject to ABS | Mortgage | ABS non- | ||||||||||||||
nonrecourse debt | servicing rights | Total assets | recourse debt | |||||||||||||
THREE MONTHS ENDED SEPTEMBER 30, 2011 |
||||||||||||||||
Beginning balance |
$ | 490,588 | $ | 151,557 | $ | 642,145 | $ | 447,845 | ||||||||
Transfers into Level 3 |
| | | | ||||||||||||
Transfers out of Level 3 |
| | | | ||||||||||||
Total gains or losses |
||||||||||||||||
Included in earnings |
18,531 | (19,035 | ) | (504 | ) | 19,069 | ||||||||||
Included in other
comprehensive income |
| | | | ||||||||||||
Purchases, issuances,
sales and settlements |
||||||||||||||||
Purchases |
| 106,631 | 106,631 | | ||||||||||||
Issuances |
| 7,763 | 7,763 | | ||||||||||||
Sales |
| | | | ||||||||||||
Settlements |
(31,371 | ) | | (31,371 | ) | (32,588 | ) | |||||||||
Ending balance |
$ | 477,748 | $ | 246,916 | $ | 724,664 | $ | 434,326 | ||||||||
ASSETS | LIABILITIES | |||||||||||||||
Mortgage loans | ||||||||||||||||
held for investment, | ||||||||||||||||
subject to ABS | Mortgage | ABS non- | ||||||||||||||
nonrecourse debt | servicing rights | Total assets | recourse debt | |||||||||||||
NINE MONTHS ENDED SEPTEMBER 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 |
9,062 | (30,757 | ) | (21,695 | ) | 15,778 | ||||||||||
Included in other
comprehensive income |
| | | | ||||||||||||
Purchases, issuances,
sales and settlements |
||||||||||||||||
Purchases |
| 106,863 | 106,863 | | ||||||||||||
Issuances |
| 25,748 | 25,748 | | ||||||||||||
Sales |
| | | | ||||||||||||
Settlements |
(69,754 | ) | | (69,754 | ) | (78,144 | ) | |||||||||
Ending balance |
$ | 477,748 | $ | 246,916 | $ | 724,664 | $ | 434,326 | ||||||||
30
ASSETS | LIABILITIES | |||||||||||||||
Mortgage loans | ||||||||||||||||
held for investment, | Mortgage | |||||||||||||||
subject to ABS | servicing | ABS non- | ||||||||||||||
nonrecourse debt | 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. |
Nonrecurring Fair Value Measurements | Total Estimated | Total Gains (Losses) Included |
||||||||||||||||||
Level 1 | Level 2 | Level 3 | Fair Value | in Earnings | ||||||||||||||||
Three months ended September 30, 2011 |
||||||||||||||||||||
Assets |
||||||||||||||||||||
Real estate owned(1) |
$ | | $ | | $ | 15,411 | $ | 15,411 | $ | (2,558 | ) | |||||||||
Total assets |
$ | | $ | | $ | 15,411 | $ | 15,411 | $ | (2,558 | ) | |||||||||
Nine months ended September 30, 2011 |
||||||||||||||||||||
Assets |
||||||||||||||||||||
Real estate owned(1) |
$ | | $ | | $ | 15,411 | $ | 15,411 | $ | (6,904 | ) | |||||||||
Total assets |
$ | | $ | | $ | 15,411 | $ | 15,411 | $ | (6,904 | ) | |||||||||
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. |
31
September 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Financial assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 24,005 | $ | 24,005 | $ | 21,223 | $ | 21,223 | ||||||||
Restricted cash |
72,813 | 72,813 | 91,125 | 91,125 | ||||||||||||
Mortgage loans held for sale |
377,932 | 377,932 | 369,617 | 369,617 | ||||||||||||
Mortgage
loans held for investment, subject to nonrecourse debt - Legacy assets |
246,159 | 229,050 | 266,320 | 238,515 | ||||||||||||
Mortgage
loans held for investment, subject to ABS nonrecourse debt |
477,748 | 477,748 | 538,440 | 538,440 | ||||||||||||
Derivative instruments |
16,272 | 16,272 | 8,666 | 8,666 | ||||||||||||
Financial liabilities: |
||||||||||||||||
Notes payable |
738,783 | 738,783 | 709,758 | 709,758 | ||||||||||||
Unsecured senior notes |
245,109 | 251,250 | 244,061 | 244,375 | ||||||||||||
Derivative financial instruments |
15,778 | 15,778 | 7,801 | 7,801 | ||||||||||||
Derivative instruments, subject to ABS nonrecourse debt |
11,889 | 11,889 | 18,781 | 18,781 | ||||||||||||
Nonrecourse debt Legacy assets |
116,200 | 118,038 | 138,662 | 140,197 | ||||||||||||
ABS nonrecourse debt |
434,326 | 434,326 | 496,692 | 496,692 |
32
September 17, 2010 | June 30, 2011 | June 30, 2012 | Total | |||||||||||||
Class A Units
|
93,494 | 182,016 | 182,016 | 457,526 | ||||||||||||
Class C Units
|
1,101,332 | 1,101,334 | 1,101,334 | 3,304,000 | ||||||||||||
Class D Units
|
1,116,000 | 1,116,000 | 1,116,000 | 3,348,000 |
For the three months ended | For the nine months ended | |||||
September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | |||
$1,676
|
$7,040 | $12,201 | $7,459 | |||
33
34
Three Months Ended September 30, 2011 | ||||||||||||||||||||||||
Legacy | ||||||||||||||||||||||||
Operating | Portfolio | |||||||||||||||||||||||
Servicing | Originations | Segments | and Other | Eliminations | Consolidated | |||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||
Servicing fee income |
$ | 56,276 | $ | | $ | 56,276 | $ | 715 | $ | (1,708 | ) | $ | 55,283 | |||||||||||
Other fee income |
1,716 | 3,114 | 4,830 | 578 | | 5,408 | ||||||||||||||||||
Total fee income |
57,992 | 3,114 | 61,106 | 1,293 | (1,708 | ) | 60,691 | |||||||||||||||||
Gain (loss) on mortgage loans
held for sale |
| 30,352 | 30,352 | | (120 | ) | 30,232 | |||||||||||||||||
Total revenues |
57,992 | 33,466 | 91,458 | 1,293 | (1,828 | ) | 90,923 | |||||||||||||||||
Total expenses and impairments |
47,874 | 25,890 | 73,764 | 9,550 | (120 | ) | 83,194 | |||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||
Interest income |
907 | 3,056 | 3,963 | 10,530 | 1,708 | 16,201 | ||||||||||||||||||
Interest expense |
(14,161 | ) | (2,989 | ) | (17,150 | ) | (9,226 | ) | | (26,376 | ) | |||||||||||||
Fair value changes in ABS Securitizations |
| | | (654 | ) | | (654 | ) | ||||||||||||||||
Total other income (expense) |
(13,254 | ) | 67 | (13,187 | ) | 650 | 1,708 | (10,829 | ) | |||||||||||||||
NET INCOME (LOSS) |
$ | (3,136 | ) | $ | 7,643 | $ | 4,507 | $ | (7,607 | ) | $ | | $ | (3,100 | ) | |||||||||
Depreciation and amortization |
$ | 525 | $ | 327 | $ | 852 | $ | 139 | $ | | $ | 991 | ||||||||||||
Total assets |
810,157 | 429,661 | 1,239,818 | 764,507 | | 2,004,325 |
Nine months ended September 30, 2011 | ||||||||||||||||||||||||
Legacy | ||||||||||||||||||||||||
Operating | Portfolio | |||||||||||||||||||||||
Servicing | Originations | Segments | and Other | Eliminations | Consolidated | |||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||
Servicing fee income |
$ | 168,990 | $ | | $ | 168,990 | $ | 1,952 | $ | (5,306 | ) | $ | 165,636 | |||||||||||
Other fee income |
6,251 | 10,983 | 17,234 | 1,884 | | 19,118 | ||||||||||||||||||
Total fee income |
175,241 | 10,983 | 186,224 | 3,836 | (5,306 | ) | 184,754 | |||||||||||||||||
Gain (loss) on mortgage loans
held for sale |
| 73,832 | 73,832 | | (272 | ) | 73,560 | |||||||||||||||||
Total revenues |
175,241 | 84,815 | 260,056 | 3,836 | (5,578 | ) | 258,314 | |||||||||||||||||
Total expenses and impairments |
128,177 | 71,404 | 199,581 | 20,408 | (272 | ) | 219,717 | |||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||
Interest income |
2,529 | 8,560 | 11,089 | 34,851 | 5,306 | 51,246 | ||||||||||||||||||
Interest expense |
(41,109 | ) | (7,480 | ) | (48,589 | ) | (28,340 | ) | | (76,929 | ) | |||||||||||||
Fair value changes in ABS Securitizations |
| | | (6,919 | ) | | (6,919 | ) | ||||||||||||||||
Total other income (expense) |
(38,580 | ) | 1,080 | (37,500 | ) | (408 | ) | 5,306 | (32,602 | ) | ||||||||||||||
NET INCOME (LOSS) |
$ | 8,484 | $ | 14,491 | $ | 22,975 | $ | (16,980 | ) | $ | | $ | 5,995 | |||||||||||
Depreciation and amortization |
$ | 1,293 | $ | 894 | $ | 2,187 | $ | 364 | $ | | $ | 2,551 | ||||||||||||
Total assets |
810,157 | 429,661 | 1,239,818 | 764,507 | | 2,004,325 |
35
Three Months Ended September 30, 2010 | ||||||||||||||||||||||||
Legacy | ||||||||||||||||||||||||
Operating | Portfolio | |||||||||||||||||||||||
Servicing | Originations | Segments | and Other | Eliminations | Consolidated | |||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||
Servicing fee income |
$ | 36,858 | $ | | $ | 36,858 | $ | 139 | $ | (1,351 | ) | $ | 35,646 | |||||||||||
Other fee income |
1,950 | 1,257 | 3,207 | 289 | | 3,496 | ||||||||||||||||||
Total fee income |
38,808 | 1,257 | 40,065 | 428 | (1,351 | ) | 39,142 | |||||||||||||||||
Gain (loss) on mortgage loans
held for sale |
| 25,898 | 25,898 | | (62 | ) | 25,836 | |||||||||||||||||
Total revenues |
38,808 | 27,155 | 65,963 | 428 | (1,413 | ) | 64,978 | |||||||||||||||||
Total expenses and impairments |
27,561 | 26,546 | 54,107 | 5,468 | (62 | ) | 59,513 | |||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||
Interest income |
7 | 3,237 | 3,244 | 17,830 | 1,351 | 22,425 | ||||||||||||||||||
Interest expense |
(13,655 | ) | (2,337 | ) | (15,992 | ) | (12,213 | ) | | (28,205 | ) | |||||||||||||
Loss on interest rate swaps |
(2,714 | ) | | (2,714 | ) | | | (2,714 | ) | |||||||||||||||
Fair value changes in ABS Securitizations |
| | | (2,786 | ) | | (2,786 | ) | ||||||||||||||||
Total other income (expense) |
(16,362 | ) | 900 | (15,462 | ) | 2,831 | 1,351 | (11,280 | ) | |||||||||||||||
NET INCOME (LOSS) |
$ | (5,115 | ) | $ | 1,509 | $ | (3,606 | ) | $ | (2,209 | ) | $ | | $ | (5,815 | ) | ||||||||
Depreciation and amortization |
$ | 306 | $ | 224 | $ | 530 | $ | 70 | $ | | $ | 600 |
Nine months ended September 30, 2010 | ||||||||||||||||||||||||
Legacy | ||||||||||||||||||||||||
Operating | Portfolio | |||||||||||||||||||||||
Servicing | Originations | Segments | and Other | Eliminations | Consolidated | |||||||||||||||||||
REVENUES: |
||||||||||||||||||||||||
Servicing fee income |
$ | 115,343 | $ | | $ | 115,343 | $ | 1,118 | $ | (5,542 | ) | $ | 110,919 | |||||||||||
Other fee income |
5,512 | 4,491 | 10,003 | 1,848 | | 11,851 | ||||||||||||||||||
Total fee income |
120,855 | 4,491 | 125,346 | 2,966 | (5,542 | ) | 122,770 | |||||||||||||||||
Gain (loss) on mortgage loans
held for sale |
| 51,887 | 51,887 | | (133 | ) | 51,754 | |||||||||||||||||
Total revenues |
120,855 | 56,378 | 177,233 | 2,966 | (5,675 | ) | 174,524 | |||||||||||||||||
Total expenses and impairments |
71,963 | 62,136 | 134,099 | 11,656 | (133 | ) | 145,622 | |||||||||||||||||
Other income (expense): |
||||||||||||||||||||||||
Interest income |
357 | 8,327 | 8,684 | 67,793 | 5,542 | 82,019 | ||||||||||||||||||
Interest expense |
(38,723 | ) | (6,044 | ) | (44,767 | ) | (44,531 | ) | | (89,298 | ) | |||||||||||||
Loss on interest rate swaps |
(9,917 | ) | | (9,917 | ) | | | (9,917 | ) | |||||||||||||||
Fair value changes in ABS Securitizations |
| | | (19,115 | ) | | (19,115 | ) | ||||||||||||||||
Total other income (expense) |
(48,283 | ) | 2,283 | (46,000 | ) | 4,147 | 5,542 | (36,311 | ) | |||||||||||||||
NET INCOME (LOSS) |
$ | 609 | $ | (3,475 | ) | $ | (2,866 | ) | $ | (4,543 | ) | $ | | $ | (7,409 | ) | ||||||||
Depreciation and amortization |
$ | 753 | $ | 538 | $ | 1,291 | $ | 159 | $ | | $ | 1,450 |
36
Issuer | Guarantor | Non-Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Assets |
||||||||||||||||||||
Cash and cash equivalents |
$ | 23,251 | $ | 754 | $ | | $ | | $ | 24,005 | ||||||||||
Restricted cash |
52,607 | 3 | 20,203 | | 72,813 | |||||||||||||||
Accounts receivable, net |
467,810 | 5 | 3,659 | | 471,474 | |||||||||||||||
Mortgage loans held for sale |
377,932 | | | | 377,932 | |||||||||||||||
Mortgage loans held for investment, subject to
nonrecourse debtLegacy Asset, net |
5,903 | | 240,256 | | 246,159 | |||||||||||||||
Mortgage loans held for investment, subject to
ABS nonrecourse debt (at fair value) |
| | 477,748 | | 477,748 | |||||||||||||||
Investment in debt securitiesavailable-for-sale |
613 | | | (613 | ) | | ||||||||||||||
Investment in subsidiaries |
151,518 | | | (151,518 | ) | | ||||||||||||||
Receivables from affiliates |
| 67,165 | 100,055 | (161,138 | ) | 6,082 | ||||||||||||||
Mortgage servicing rights |
246,916 | | | | 246,916 | |||||||||||||||
Property and equipment, net |
20,155 | 835 | | | 20,990 | |||||||||||||||
Real estate owned, net |
57 | | 15,354 | | 15,411 | |||||||||||||||
Other assets |
44,795 | | | | 44,795 | |||||||||||||||
Total Assets |
$ | 1,391,557 | $ | 68,762 | $ | 857,275 | $ | (313,269 | ) | $ | 2,004,325 | |||||||||
Liabilities and members equity |
||||||||||||||||||||
Notes payable |
$ | 535,187 | $ | | $ | 203,596 | $ | | $ | 738,783 | ||||||||||
Unsecured senior notes |
245,109 | | | | 245,109 | |||||||||||||||
Payables and accrued liabilities |
176,396 | | 1,056 | | 177,452 | |||||||||||||||
Payables to affiliates |
161,138 | | | (161,138 | ) | | ||||||||||||||
Derivative financial instruments |
8,939 | | 6,839 | | 15,778 | |||||||||||||||
Derivative financial instruments, subject to ABS
nonrecourse debt |
| | 11,889 | | 11,889 | |||||||||||||||
Nonrecourse debtLegacy Assets |
| | 116,200 | | 116,200 | |||||||||||||||
ABS nonrecourse debt (at fair value) |
| | 434,939 | (613 | ) | 434,326 | ||||||||||||||
Total liabilities |
1,126,769 | | 774,519 | (161,751 | ) | 1,739,537 | ||||||||||||||
Total members equity |
264,788 | 68,762 | 82,756 | (151,518 | ) | 264,788 | ||||||||||||||
Total liabilities and
members equity |
$ | 1,391,557 | $ | 68,762 | $ | 857,275 | $ | (313,269 | ) | $ | 2,004,325 | |||||||||
37
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Revenues: |
||||||||||||||||||||
Servicing fee income |
$ | 164,456 | $ | 2,624 | $ | 3,862 | $ | (5,306 | ) | $ | 165,636 | |||||||||
Other fee income |
9,932 | 8,245 | 941 | | 19,118 | |||||||||||||||
Total fee income |
174,388 | 10,869 | 4,803 | (5,306 | ) | 184,754 | ||||||||||||||
Gain on mortgage loans held for sale |
73,560 | | | | 73,560 | |||||||||||||||
Total Revenues |
247,948 | 10,869 | 4,803 | (5,306 | ) | 258,314 | ||||||||||||||
Expenses and impairments: |
||||||||||||||||||||
Salaries, wages, and benefits |
143,646 | 2,553 | | | 146,199 | |||||||||||||||
General and administrative |
50,054 | 2,705 | 3,948 | | 56,707 | |||||||||||||||
Loan loss provision |
2,005 | | | | 2,005 | |||||||||||||||
Loss on foreclosed real estate and other |
1,436 | | 5,468 | | 6,904 | |||||||||||||||
Occupancy |
7,765 | 137 | | | 7,902 | |||||||||||||||
Total expenses and impairments |
204,906 | 5,395 | 9,416 | | 219,717 | |||||||||||||||
Other income (expense): |
||||||||||||||||||||
Interest income |
11,070 | | 34,870 | 5,306 | 51,246 | |||||||||||||||
Interest expense |
(41,411 | ) | | (35,518 | ) | | (76,929 | ) | ||||||||||||
Fair value changes in ABS securitizations |
| | (6,935 | ) | 16 | (6,919 | ) | |||||||||||||
Gain/(loss) from subsidiaries |
(6,722 | ) | | | 6,722 | | ||||||||||||||
Total other income
(expense) |
(37,063 | ) | | (7,583 | ) | 12,044 | (32,602 | ) | ||||||||||||
Net income/(loss) |
$ | 5,979 | $ | 5,474 | $ | (12,196 | ) | $ | 6,738 | $ | 5,995 | |||||||||
38
Issuer | Guarantor | Non-Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Operating activities: |
||||||||||||||||||||
Net income/(loss) |
$ | 5,979 | $ | 5,474 | $ | (12,196 | ) | $ | 6,738 | $ | 5,995 | |||||||||
Adjustments to reconcile net income/(loss) to net
cash provided by (used in) operating activities: |
||||||||||||||||||||
Loss from subsidiaries |
6,722 | | | (6,722 | ) | | ||||||||||||||
Loss on equity method investments |
971 | | | | 971 | |||||||||||||||
Share-based compensation |
12,201 | | | | 12,201 | |||||||||||||||
Gain on mortgage loans held for sale |
(73,560 | ) | | | | (73,560 | ) | |||||||||||||
Fair value changes in ABS securitizations |
| | 6,935 | (16 | ) | 6,919 | ||||||||||||||
Provision for loan losses |
2,005 | | 0 | | 2,005 | |||||||||||||||
Loss on foreclosed real estate and other |
554 | | 6,350 | | 6,904 | |||||||||||||||
Loss/(gain) on derivative financial instruments |
| | (2,032 | ) | | (2,032 | ) | |||||||||||||
Depreciation and amortization |
2,551 | | | | 2,551 | |||||||||||||||
Change in fair value of mortgage servicing rights |
30,757 | | | | 30,757 | |||||||||||||||
Amortization of debt discount |
6,667 | | 3,657 | | 10,324 | |||||||||||||||
Amortization of premiums/(discounts) |
| | (4,001 | ) | | (4,001 | ) | |||||||||||||
Mortgage loans originated and purchased, net of fees |
(2,285,558 | ) | | | | (2,285,558 | ) | |||||||||||||
Cost of loans sold, net of fees |
2,287,430 | | | | 2,287,430 | |||||||||||||||
Principal payments/prepayments received and other
changes in mortgage loans originated as held for sale |
35,777 | | 9,757 | | 45,534 | |||||||||||||||
Changes in assets and liabilities: |
||||||||||||||||||||
Accounts receivable |
(30,510 | ) | (5 | ) | 316 | | (30,199 | ) | ||||||||||||
Receivables from/(payables to) affiliates |
(24,356 | ) | (5,031 | ) | 32,298 | | 2,911 | |||||||||||||
Other assets |
(5,050 | ) | | | | (5,050 | ) | |||||||||||||
Accounts payable and accrued liabilities |
36,053 | | (213 | ) | | 35,840 | ||||||||||||||
Net cash provided by/(used) in operating activities |
8,633 | 438 | 40,871 | | 49,942 | |||||||||||||||
Investing activities: |
||||||||||||||||||||
Principal payments received and other changes on
mortgage loans held for investment, subject to ABS
nonrecourse debt |
| | 29,395 | | 29,395 | |||||||||||||||
Property and equipment additions, net of disposals |
(15,147 | ) | | | | (15,147 | ) | |||||||||||||
Acquisition of equity method investment |
(6,600 | ) | | | | (6,600 | ) | |||||||||||||
Purchase of mortgage servicing rights |
(40,305 | ) | | | | (40,305 | ) | |||||||||||||
Proceeds from sales of real estate owned |
| | 22,897 | | 22,897 | |||||||||||||||
Net cash provided by/(used) in investing activities |
(62,052 | ) | | 52,292 | | (9,760 | ) | |||||||||||||
Financing activities: |
||||||||||||||||||||
Transfers to/from restricted cash |
4,972 | (3 | ) | 13,343 | | 18,312 | ||||||||||||||
Decrease in notes payable, net |
62,237 | | (33,212 | ) | | 29,025 | ||||||||||||||
Repayment of non-recourse debtLegacy assets |
| | (26,119 | ) | | (26,119 | ) | |||||||||||||
Repayment of ABS non-recourse debt |
| | (47,175 | ) | | (47,175 | ) | |||||||||||||
Distribution to parent |
(3,900 | ) | | | | (3,900 | ) | |||||||||||||
Debt financing costs |
(2,734 | ) | | | | (2,734 | ) | |||||||||||||
Tax related share-based settlement of units by members |
(4,809 | ) | | | | (4,809 | ) | |||||||||||||
Net cash provided by/(used) in financing activities |
55,766 | (3 | ) | (93,163 | ) | | (37,400 | ) | ||||||||||||
Net increase (decrease) in cash |
2,347 | 435 | | | 2,782 | |||||||||||||||
Cash and cash equivalents at beginning of period |
20,904 | 319 | | | 21,223 | |||||||||||||||
Cash and cash equivalents at end of period |
$ | 23,251 | $ | 754 | $ | | $ | | $ | 24,005 | ||||||||||
39
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 |
437,300 | | 3,975 | | 441,275 | |||||||||||||||
Mortgage loans held for sale |
369,617 | | | | 369,617 | |||||||||||||||
Mortgage loans held for investment, subject to
nonrecourse debt, Legacy Assets, net |
5,016 | | 261,304 | | 266,320 | |||||||||||||||
Mortgage loans held for investment, subject to
ABS nonrecourse debt (at fair value) |
| | 538,440 | | 538,440 | |||||||||||||||
Investment in debt securitiesavailable-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 |
29,395 | | | | 29,395 | |||||||||||||||
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 debtLegacy 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 | |||||||||
40
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Revenues: |
||||||||||||||||||||
Servicing fee income |
$ | 115,244 | $ | 1,217 | $ | | $ | (5,542 | ) | $ | 110,919 | |||||||||
Other fee income |
5,697 | 5,670 | 484 | | 11,851 | |||||||||||||||
Total fee income |
120,941 | 6,887 | 484 | (5,542 | ) | 122,770 | ||||||||||||||
Gain on mortgage loans held for sale |
51,754 | | | | 51,754 | |||||||||||||||
Total Revenues |
172,695 | 6,887 | 484 | (5,542 | ) | 174,524 | ||||||||||||||
Expenses and impairments: |
||||||||||||||||||||
Salaries, wages, and benefits |
102,927 | 1,762 | | | 104,689 | |||||||||||||||
General and administrative |
33,860 | 1,134 | (63 | ) | | 34,931 | ||||||||||||||
Occupancy |
5,888 | 114 | | | 6,002 | |||||||||||||||
Total expenses and impairments |
142,675 | 3,010 | (63 | ) | | 145,622 | ||||||||||||||
Other income (expense): |
||||||||||||||||||||
Interest income |
12,646 | | 63,831 | 5,542 | 82,019 | |||||||||||||||
Interest expense |
(39,643 | ) | | (49,655 | ) | | (89,298 | ) | ||||||||||||
Loss on interest rate swaps and caps |
| | (9,917 | ) | | (9,917 | ) | |||||||||||||
Fair value changes in ABS securitizations |
| | (19,115 | ) | | (19,115 | ) | |||||||||||||
Gain/(loss) from subsidiaries |
(10,432 | ) | | | 10,432 | | ||||||||||||||
Total other income
(expense) |
(37,429 | ) | | (14,856 | ) | 15,974 | (36,311 | ) | ||||||||||||
Net income/(loss) |
$ | (7,409 | ) | $ | 3,877 | $ | (14,309 | ) | $ | 10,432 | $ | (7,409 | ) | |||||||
41
Issuer | Guarantor | Non-Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Operating activities: |
||||||||||||||||||||
Net income/(loss) |
$ | (7,409 | ) | $ | 3,877 | $ | (14,309 | ) | $ | 10,432 | $ | (7,409 | ) | |||||||
Adjustments to reconcile net income/(loss) to net
cash provided by (used in) operating activities: |
||||||||||||||||||||
Loss from subsidiaries |
10,432 | | | (10,432 | ) | | ||||||||||||||
Share-based compensation |
7,459 | | | | 7,459 | |||||||||||||||
Gain on mortgage loans held for sale |
(51,754 | ) | | | | (51,754 | ) | |||||||||||||
Fair value changes in ABS securitizations |
| | 19,115 | | 19,115 | |||||||||||||||
Loss/(gain) on derivative financial instruments |
| | 9,917 | | 9,917 | |||||||||||||||
Depreciation and amortization |
1,441 | 9 | | | 1,450 | |||||||||||||||
Change in fair value of mortgage servicing rights |
11,499 | | | | 11,499 | |||||||||||||||
Amortization of debt discount |
9,954 | | 5,214 | | 15,168 | |||||||||||||||
Amortization of premiums/discounts |
| | (3,561 | ) | | (3,561 | ) | |||||||||||||
Mortgage Loans originated and purchased, net of fees |
(1,960,089 | ) | | | | (1,960,089 | ) | |||||||||||||
Cost of loans sold, net of fees |
1,831,708 | | | | 1,831,708 | |||||||||||||||
Principal Payments/Prepayments Received and other
changes in mortgage loans originated as held for
sale |
21,147 | | (13,035 | ) | | 8,112 | ||||||||||||||
Changes in assets and liabilities: |
||||||||||||||||||||
Accounts receivable |
91,535 | 3 | (32,882 | ) | | 58,656 | ||||||||||||||
Receivables from/(payables to) affiliates |
(54,382 | ) | (3,480 | ) | 61,469 | | 3,607 | |||||||||||||
Other assets |
2,700 | | | | 2,700 | |||||||||||||||
Accounts payable and accrued liabilities |
78,277 | (197 | ) | (188 | ) | | 77,892 | |||||||||||||
Net cash provided by/(used) in operating activities |
(7,482 | ) | 212 | 31,740 | | 24,470 | ||||||||||||||
Investing activities: |
||||||||||||||||||||
Principal payments received and other changes on
mortgage loans held for investment, subject to ABS
nonrecourse debt |
| | 36,401 | | 36,401 | |||||||||||||||
Purchase of mortgage servicing rights, net of
liabilities incurred |
(5,863 | ) | | | | (5,863 | ) | |||||||||||||
Property and equipment additions, net of disposals |
(3,169 | ) | (8 | ) | | | (3,177 | ) | ||||||||||||
Proceeds from sales of real estate owned |
| | 58,506 | | 58,506 | |||||||||||||||
Net cash provided by/(used) in investing activities |
(9,032 | ) | (8 | ) | 94,907 | | 85,867 | |||||||||||||
Financing activities |
||||||||||||||||||||
Transfers (to)/from restricted cash |
(4,408 | ) | | 10,968 | | 6,560 | ||||||||||||||
Issuance of unsecured notes, net of issue discount |
243,012 | | | | 243,012 | |||||||||||||||
Decrease in notes payable, net |
(224,451 | ) | | (15,134 | ) | | (239,585 | ) | ||||||||||||
Repayment of non-recourse debtLegacy assets |
| | | | | |||||||||||||||
Distributions to members |
(11,894 | ) | | | | (11,894 | ) | |||||||||||||
Repayment of ABS non-recourse debt |
| | (37,240 | ) | | (37,240 | ) | |||||||||||||
Debt financing costs |
(145 | ) | | (85,241 | ) | | (85,386 | ) | ||||||||||||
Net cash provided by financing activities |
2,114 | | (126,647 | ) | | (124,533 | ) | |||||||||||||
Net increase (decrease) in cash |
(14,400 | ) | 204 | | | (14,196 | ) | |||||||||||||
Cash and cash equivalents at beginning of period |
41,243 | 402 | | | 41,645 | |||||||||||||||
Cash and cash equivalents at end of period |
$ | 26,843 | $ | 606 | $ | | $ | | $ | 27,449 | ||||||||||
42
43
44
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(dollars in thousands) | ||||||||
Balance Sheet Data Consolidated |
||||||||
Cash and cash equivalents |
$ | 24,005 | $ | 21,223 | ||||
Mortgage servicing rights |
246,916 | 145,062 | ||||||
Total assets |
2,004,325 | 1,947,181 | ||||||
Notes payable |
738,783 | 709,758 | ||||||
Unsecured senior notes |
245,109 | 244,061 | ||||||
Nonrecourse debt-Legacy assets |
116,200 | 138,662 | ||||||
ABS nonrecourse debt |
434,326 | 496,692 | ||||||
Total liabilities |
1,739,537 | 1,690,809 | ||||||
Total members equity |
264,788 | 256,372 |
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(dollars in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Total revenues |
$ | 90,923 | $ | 64,978 | $ | 258,314 | $ | 174,524 | ||||||||
Total expenses and impairments |
83,194 | 59,513 | 219,717 | 145,622 | ||||||||||||
Total other income (expense) |
(10,829 | ) | (11,280 | ) | (32,602 | ) | (36,311 | ) | ||||||||
Net income (loss) |
$ | (3,100 | ) | $ | (5,815 | ) | $ | 5,995 | $ | (7,409 | ) | |||||
Other Data |
||||||||||||||||
Net cash provided by (used in): |
||||||||||||||||
Operating activities |
$ | (66,155 | ) | $ | (23,126 | ) | $ | 49,942 | $ | 24,470 | ||||||
Investing activities |
(28,382 | ) | 18,962 | (9,760 | ) | 85,867 | ||||||||||
Financing activities |
116,010 | (1,201 | ) | (37,400 | ) | (124,533 | ) | |||||||||
Adjusted EBITDA1 (non-GAAP measure) |
32,996 | 21,268 | 88,661 | 42,147 | ||||||||||||
Operating segments: |
||||||||||||||||
Interest expense from unsecured senior notes |
7,543 | 7,544 | 22,622 | 17,084 | ||||||||||||
Change in fair value of mortgage servicing
rights |
19,035 | 9,158 | 30,757 | 11,499 | ||||||||||||
Depreciation and amortization |
852 | 530 | 2,187 | 1,291 | ||||||||||||
Share-based compensation |
1,676 | 4,928 | 12,152 | 5,222 |
45
Notes |
Adjusted EBITDA is a key performance measure used by management in evaluating the performance of our segments. Adjusted EBITDA represents our Operating Segments income (loss), and excludes income and expenses that relate to the financing of the unsecured senior notes, depreciable (or amortizable) asset base of the business, income taxes (if any), exit costs from our 2007 restructuring and certain non-cash items. Adjusted EBITDA also excludes results from our legacy asset portfolio and certain securitization trusts that were consolidated upon adoption of the new accounting guidance eliminating the concept of a QSPE. |
| Financing arrangements for our Operating Segments are secured by assets that are allocated to these segments. Interest expense that relates to the financing of the unsecured senior notes is not considered in evaluating our operating performance because this obligation is serviced by the excess earnings from our Operating Segments after the debt obligations that are secured by their assets. | ||
| To monitor operating costs of each Operating Segment excluding the impact from depreciation, amortization and fair value change of the asset base, exit costs from our 2007 restructuring and non-cash operating expense, such as share-based compensation. Operating costs are analyzed to manage costs per our operating plan and to assess staffing levels, implementation of technology based solutions, rent and other general and administrative costs. |
| Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; | ||
| Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; | ||
| Adjusted EBITDA does not reflect the cash requirements necessary to service principal payments related to the financing of the business; | ||
| Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our corporate debt; | ||
| although depreciation and amortization and changes in fair value of mortgage servicing rights are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and | ||
| other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
46
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Income (Loss) from Operating Segments to
Adjusted EBITDA Reconciliation (dollars in
thousands): |
||||||||||||||||
Net income (loss) |
$ | (3,100 | ) | $ | (5,815 | ) | $ | 5,995 | $ | (7,409 | ) | |||||
Less: |
||||||||||||||||
Net loss from Legacy Portfolio and Other |
7,607 | 2,209 | 16,980 | 4,543 | ||||||||||||
Net income (loss) from Operating Segments |
4,507 | (3,606 | ) | 22,975 | (2,866 | ) | ||||||||||
Adjust for: |
||||||||||||||||
Interest expense from unsecured senior notes |
7,543 | 7,544 | 22,622 | 17,084 | ||||||||||||
Depreciation and amortization |
852 | 530 | 2,187 | 1,291 | ||||||||||||
Change in fair value of mortgage servicing rights |
19,035 | 9,158 | 30,757 | 11,499 | ||||||||||||
Share-based compensation |
1,676 | 4,928 | 12,152 | 5,222 | ||||||||||||
Fair value changes on interest rate swap(a) |
| 2,714 | | 9,917 | ||||||||||||
Ineffective portion of cash flow hedge |
(617 | ) | | (2,032 | ) | | ||||||||||
Adjusted EBITDA |
$ | 32,996 | $ | 21,268 | $ | 88,661 | $ | 42,147 | ||||||||
(a) | Relates to an interest rate swap agreement which was treated as an economic hedge under ASC 815 since trade execution to September 30, 2010. |
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Revenues: |
||||||||||||||||
Servicing fee income |
$ | 55,283 | $ | 35,646 | $ | 165,636 | $ | 110,919 | ||||||||
Other fee income |
5,408 | 3,496 | 19,118 | 11,851 | ||||||||||||
Total fee income |
60,691 | 39,142 | 184,754 | 122,770 | ||||||||||||
Gain on mortgage loans held for sale |
30,232 | 25,836 | 73,560 | 51,754 | ||||||||||||
Total revenues |
90,923 | 64,978 | 258,314 | 174,524 | ||||||||||||
Expenses and impairments: |
||||||||||||||||
Salaries, wages, and benefits |
50,904 | 41,879 | 146,199 | 104,689 | ||||||||||||
General and administrative |
25,397 | 15,422 | 56,707 | 34,931 | ||||||||||||
Provision for loan losses |
877 | | 2,005 | | ||||||||||||
Loss on sale of foreclosed real estate |
2,558 | | 6,904 | | ||||||||||||
Occupancy |
3,458 | 2,212 | 7,902 | 6,002 | ||||||||||||
Total expenses and impairments |
83,194 | 59,513 | 219,717 | 145,622 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
16,201 | 22,425 | 51,246 | 82,019 | ||||||||||||
Interest expense |
(26,376 | ) | (28,205 | ) | (76,929 | ) | (89,298 | ) | ||||||||
Gain/(loss) on interest rate swaps and caps |
| (2,714 | ) | | (9,917 | ) | ||||||||||
Fair value changes in ABS securitizations |
(654 | ) | (2,786 | ) | (6,919 | ) | (19,115 | ) | ||||||||
Total other income (expense) |
(10,829 | ) | (11,280 | ) | (32,602 | ) | (36,311 | ) | ||||||||
Net income/(loss) |
$ | (3,100 | ) | $ | (5,815 | ) | $ | 5,995 | $ | (7,409 | ) | |||||
47
48
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Revenues: |
||||||||||||||||
Servicing fee income |
$ | 56,276 | $ | 36,858 | $ | 168,990 | $ | 115,343 | ||||||||
Other fee income |
1,716 | 1,950 | 6,251 | 5,512 | ||||||||||||
Total fee income |
57,992 | 38,808 | 175,241 | 120,855 | ||||||||||||
Gain on mortgage loans held for sale |
| | | | ||||||||||||
Total revenues |
57,992 | 38,808 | 175,241 | 120,855 | ||||||||||||
Expenses and impairments: |
||||||||||||||||
Salaries, wages, and benefits |
30,889 | 21,279 | 90,301 | 55,796 | ||||||||||||
General and administrative |
15,667 | 5,125 | 33,905 | 12,982 | ||||||||||||
Occupancy |
1,318 | 1,157 | 3,971 | 3,185 | ||||||||||||
Total expenses and impairments |
47,874 | 27,561 | 128,177 | 71,963 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
907 | 7 | 2,529 | 357 | ||||||||||||
Interest expense |
(14,161 | ) | (13,655 | ) | (41,109 | ) | (38,723 | ) | ||||||||
Gain/(loss) on interest rate swaps and caps |
| (2,714 | ) | | (9,917 | ) | ||||||||||
Total other income (expense) |
(13,254 | ) | (16,362 | ) | (38,580 | ) | (48,283 | ) | ||||||||
Net income/(loss) |
$ | (3,136 | ) | $ | (5,115 | ) | $ | 8,484 | $ | 609 | ||||||
2011 Period | 2010 Period | |||||||
Servicing Portfolio (in millions) |
||||||||
Unpaid principal balance (by investor): |
||||||||
Special Servicing |
$ | 10,621 | $ | 4,052 | ||||
Government-sponsored enterprises |
62,085 | 23,853 | ||||||
Non-Agency
Securitizations |
19,821 | 7,277 | ||||||
Total
boarded unpaid principal balance |
$ | 92,527 | $ | 35,182 | ||||
Servicing
under contract |
10,189 | 2,204 | ||||||
Total
Servicing portfolio unpaid principal balance |
102,716 | 37,386 | ||||||
Average Servicing Portfolio |
$ | 78,351 | $ | 34,423 | ||||
49
2011 Period | 2010 Period | |||||||
($ in millions, except for average loan amount) | ||||||||
Loan count-servicing |
550,283 | 237,846 | ||||||
Ending unpaid principal balance |
$ | 92,527 | $ | 35,182 | ||||
Average unpaid principal balance |
$ | 78,351 | $ | 34,272 | ||||
Average loan amount |
$ | 168,144 | $ | 147,921 | ||||
Average coupon |
5.46 | % | 6.04 | % | ||||
Average FICO |
667 | 628 | ||||||
60+ delinquent (% of loans) (1) |
14.7 | % | 15.9 | % | ||||
Total prepayment speed (12 month CPR) |
12.5 | % | 13.4 | % |
(1) | Loan delinquency is based on the current contractual due date of the loan. In the case of a completed loan modification, delinquency is based on the modified due date of the loan. |
2011 Period | 2010 Period | |||||||
Service fees |
$ | 52,242 | $ | 27,988 | ||||
Loss mitigation and performance-based incentive fees |
3,803 | 4,688 | ||||||
Modification fees |
11,408 | 7,391 | ||||||
Late fees and other ancillary charges |
5,860 | 5,506 | ||||||
Other service fee related revenues |
1,998 | 443 | ||||||
Total service fee income before MSR fair value adjustments |
75,311 | 46,016 | ||||||
MSR fair value adjustments |
(19,035 | ) | (9,158 | ) | ||||
Total service fee income |
$ | 56,276 | $ | 36,858 | ||||
| Increase of $24.2 million due to higher average unpaid principal balance of $79.1 billion in the 2011 period compared to $34.8 billion in the comparable 2010 period. The increase in our servicing portfolio was primarily driven by an increase in average unpaid principal balance for loans serviced for government-sponsored enterprises and other subservicing contracts for third party investors of $56.4 billion in the 2011 period compared to $23.6 billion in the comparable 2010 period. In addition, we also experienced an increase in average unpaid principal balance for our private asset-backed securitizations portfolio, which increased to $13.3 billion in the 2011 period compared to $7.4 billion in the comparable 2010 period. | ||
| Increase of $4.0 million due to higher modification fees earned from HAMP and non-HAMP modifications. | ||
| Decrease of $9.8 million from change in fair value on mortgage servicing rights which was recognized in servicing fee income. The fair value of our mortgage servicing rights (MSRs) is based upon the present value of the expected future cash flows related to servicing these loans. The revenue components of the cash flows are servicing fees, interest earned on custodial accounts, and other ancillary income. The expense components include operating costs related to servicing the loans (including delinquency and foreclosure costs) and interest expenses on servicing advances. The expected future cash flows are primarily impacted by prepayment estimates, delinquencies, and market discount rates. Generally, the value of MSRs increases when interest rates increase and decreases when interest rates decline due to the effect those changes in interest rates have on prepayment estimates. Other factors affecting the MSR value includes the estimated effects of loan modifications on expected cash flows. Such modifications tend to positively impact cash flows by extending the expected life of the affected MSR and potentially producing additional revenue opportunities depending |
50
on the type of modification. In valuing the MSRs, we believe our assumptions are consistent with the assumptions other major market participants use. These assumptions include a level of future modification activity that we believe major market participants would use in their valuation of MSRs. Internally, we have modification goals that exceed the assumptions utilized in our valuation model. Nevertheless, were we to apply an assumption of a level of future modifications consistent with our internal goals to our MSR valuation, we do not believe the resulting increase in value would be material. Additionally, several state Attorneys General had requested that certain mortgage servicers, including us, suspend foreclosure proceedings pending internal review to ensure compliance with applicable law, and we received requests from four such state Attorneys General. Although we have since resumed those previously delayed proceedings, changes in the foreclosure process that may be required by government or regulatory bodies could increase the cost of servicing and diminish the value of our MSRs. We utilize assumptions of servicing costs that include delinquency and foreclosure costs that we believe major market participants would use to value their MSRs. We periodically compare our internal MSR valuation to third party valuation of our MSRs to help substantiate our market assumptions. We have considered the costs related to the delayed proceedings in our assumptions and we do not believe that any resulting decrease in the MSR was material given the expected short-term nature of the issue. |
51
2011 Period | 2010 Period | |||||||
Service fees |
$ | 145,444 | $ | 77,791 | ||||
Loss mitigation and performance-based incentive fees |
10,178 | 15,376 | ||||||
Modification fees |
22,303 | 14,410 | ||||||
Late fees and other ancillary charges |
17,958 | 17,795 | ||||||
Other service fee related revenues |
3,864 | 1,470 | ||||||
Total service fee income before MSR fair value adjustments |
199,747 | 126,842 | ||||||
MSR fair value adjustments |
(30,757 | ) | (11,499 | ) | ||||
Total service fee income |
$ | 168,990 | $ | 115,343 | ||||
| Increase of $67.6 million due to higher average unpaid principal balance of $78.4 billion in the 2011 period compared to $34.4 billion in the comparable 2010 period. The increase in our servicing portfolio was primarily driven by an increase in average unpaid principal balance for loans serviced for government-sponsored enterprises and other subservicing contracts for third party investors of $57.1 billion in the 2011 period compared to $24.0 billion in the comparable 2010 period. In addition, we also experienced an increase in average unpaid principal balance for our private asset-backed securitizations portfolio, which increased to $13.5 billion in the nine month period ended September 30, 2011 compared to $7.6 billion in the comparable 2010 period. | ||
| Increase of $7.9 million due to higher modification fees earned from HAMP and on non-HAMP modifications. | ||
| Decrease of $5.2 million due to decreased loss mitigation and performance-based incentive fees earned from a government-sponsored enterprise. | ||
| Decrease of $19.3 million from change in fair value on mortgage servicing rights which was recognized in servicing fee income. The fair value of our mortgage servicing rights (MSRs) is based upon the present value of the expected future cash flows related to servicing these loans. The revenue components of the cash flows are servicing fees, interest earned on custodial accounts, and other ancillary income. The expense components include operating costs related to servicing the loans (including delinquency and foreclosure costs) and interest expenses on servicing advances. The expected future cash flows are primarily impacted by prepayment estimates, delinquencies, and market discount rates. Generally, the value of MSRs increases when interest rates increase and decreases when interest rates decline due to the effect those changes in interest rates have on prepayment estimates. Other factors affecting the MSR value includes the estimated effects of loan modifications on expected cash flows. Such modifications tend to positively impact cash flows by extending the expected life of the affected MSR and potentially producing additional revenue opportunities depending on the type of modification. In valuing the MSRs, we believe our assumptions are consistent with the assumptions other major market participants use. These assumptions include a level of future modification activity that we believe major market participants would use in their valuation of MSRs. Internally, we have modification goals that exceed the assumptions utilized in our valuation model. Nevertheless, were we to apply an assumption of a level of future modifications consistent with our internal goals to our MSR valuation, we do not believe the resulting increase in value would be material. Additionally, several state Attorneys General have requested that certain mortgage servicers, including us, suspend foreclosure proceedings pending internal review to ensure compliance with applicable law, and we received requests from four such state Attorneys General. Although we have resumed those previously delayed proceedings, changes in the foreclosure process that may be required by government or regulatory bodies could increase the cost of servicing and diminish the value of our MSRs. We utilize assumptions of servicing costs that include delinquency and foreclosure costs that we believe major market participants would use to value their MSRs. We periodically compare our internal MSR valuation to third party valuation of our MSRs to help substantiate our market assumptions. We have considered the costs related to the delayed proceedings in our assumptions and we do not believe that any resulting decrease in the MSR was material given the expected short-term nature of the issue. |
52
53
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(dollars in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Revenues: |
||||||||||||||||
Servicing fee income |
$ | | $ | | $ | | $ | | ||||||||
Other fee income |
3,114 | 1,257 | 10,983 | 4,491 | ||||||||||||
Total fee income |
3,114 | 1,257 | 10,983 | 4,491 | ||||||||||||
Gain on mortgage loans held for sale |
30,352 | 25,898 | 73,832 | 51,887 | ||||||||||||
Total revenues |
33,466 | 27,155 | 84,815 | 56,378 | ||||||||||||
Expenses and impairments: |
||||||||||||||||
Salaries, wages, and benefits |
17,966 | 16,144 | 51,148 | 40,063 | ||||||||||||
General and administrative |
7,142 | 9,733 | 18,174 | 20,442 | ||||||||||||
Occupancy |
782 | 669 | 2,082 | 1,631 | ||||||||||||
Total expenses and impairments |
25,890 | 26,546 | 71,404 | 62,136 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
3,056 | 3,237 | 8,560 | 8,327 | ||||||||||||
Interest expense |
(2,989 | ) | (2,337 | ) | (7,480 | ) | (6,044 | ) | ||||||||
Total other income (expense) |
67 | 900 | 1,080 | 2,283 | ||||||||||||
Net income/(loss) |
$ | 7,643 | $ | 1,509 | $ | 14,491 | $ | (3,475 | ) | |||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Origination Volume ($ in millions): |
||||||||||||||||
Retail |
$ | 590.3 | $ | 449.1 | $ | 1,505.9 | $ | 1,127.6 | ||||||||
Wholesale |
317.2 | 318.8 | 779.7 | 832.5 | ||||||||||||
Total Originations |
$ | 907.5 | $ | 767.9 | $ | 2,285.6 | $ | 1,960.1 | ||||||||
54
2011 Period | 2010 Period | |||||||
Gain on sale |
$ | 16,270 | $ | 14,625 | ||||
Provision for repurchases |
(778 | ) | (244 | ) | ||||
Capitalized servicing rights |
7,762 | 7,011 | ||||||
Fair value mark-to-market adjustments |
6,161 | 766 | ||||||
Mark-to-market on derivatives/hedges |
937 | 3,740 | ||||||
Total gain on mortgage loans held for sale |
$ | 30,352 | $ | 25,898 | ||||
| Increase of $1.1 million from larger volume of originations, which increased from $767.9 million in 2010 to $907.5 million in the 2011 period. | ||
| Increase of $0.8 million from capitalized mortgage servicing rights due to the larger volume of originations and subsequent retention of servicing rights. | ||
| Increase of $5.4 million resulting from the change in fair value on newly-originated loans. | ||
| Decrease of $2.8 million from change in unrealized gains/losses on derivative financial instruments. These include interest rate lock commitments and forward sales of mortgage-backed securities. |
| Increase of $1.9 million in salaries, wages and benefits expense from increase in average headcount of 538 in 2010 to 799 in 2011 due to increases in origination volume. | ||
| Decrease of $2.6 million in general & administrative and occupancy expense. This decrease was primarily attributable to a settlement agreement and consent order with the North Carolina Office of the Commissioner of Banks resulting in an administrative penalty and refund of fees to borrowers of $4.4 million recorded during the three month period ended September 30, 2010. |
55
2011 Period | 2010 Period | |||||||
Gain on sale |
$ | 42,260 | $ | 30,418 | ||||
Provision for repurchases |
(2,978 | ) | (1,723 | ) | ||||
Capitalized servicing rights |
25,748 | 16,761 | ||||||
Fair value mark-to-market adjustments |
9,292 | 7,728 | ||||||
Mark-to-market on derivatives/hedges |
(490 | ) | (1,297 | ) | ||||
Total gain on mortgage loans held for sale |
$ | 73,832 | $ | 51,887 | ||||
| Increase of $10.6 million from larger volume of originations, which increased from $1,960.1 million in 2010 to $2,285.6 million in 2011, and higher margins earned on the sale of residential mortgage loans during the period. | ||
| Increase of $8.9 million from capitalized mortgage servicing rights due to the larger volume of originations and subsequent retention of servicing rights. | ||
| Increase of $1.6 million resulting from the change in fair value on newly-originated loans. | ||
| Increase of $0.8 million from change in unrealized gains/losses on derivative financial instruments. These include interest rate lock commitments and forward sales of mortgage-backed securities. |
| Increase of $11.0 million in salaries, wages and benefits expense from increase in average headcount of 537 in 2010 to 751 in 2011 and increases in performance-based compensation due to increases in origination volume. | ||
| Decrease of $2.2 million in general & administrative and occupancy expense primarily due to a settlement agreement and consent order with the North Carolina Office of the Commissioner of Banks resulting in an administrative penalty and refund of fees to borrowers of $4.4 million during the period ended September 30, 2010. These expenses were partially offset by an increase in our overhead expenses from the higher organization volume in the 2011 period. |
56
For the three months ended | For the nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(dollars in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Revenues: |
||||||||||||||||
Servicing fee income |
$ | 715 | $ | 139 | $ | 1,952 | $ | 1,118 | ||||||||
Other fee income |
578 | 289 | 1,884 | 1,848 | ||||||||||||
Total fee income |
1,293 | 428 | 3,836 | 2,966 | ||||||||||||
Gain on mortgage loans held for sale |
| | | | ||||||||||||
Total revenues |
1,293 | 428 | 3,836 | 2,966 | ||||||||||||
Expenses and impairments: |
||||||||||||||||
Salaries, wages, and benefits |
2,169 | 4,518 | 5,022 | 8,963 | ||||||||||||
General and administrative |
2,588 | 564 | 4,628 | 1,507 | ||||||||||||
Provision for loan losses |
877 | | 2,005 | | ||||||||||||
Loss on sale of foreclosed real estate |
2,558 | | 6,904 | | ||||||||||||
Occupancy |
1,358 | 386 | 1,849 | 1,186 | ||||||||||||
Total expenses and impairments |
9,550 | 5,468 | 20,408 | 11,656 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income |
10,530 | 17,830 | 34,851 | 67,793 | ||||||||||||
Interest expense |
(9,226 | ) | (12,213 | ) | (28,340 | ) | (44,531 | ) | ||||||||
Fair value changes in ABS securitizations |
(654 | ) | (2,786 | ) | (6,919 | ) | (19,115 | ) | ||||||||
Total other income (expense) |
650 | 2,831 | (408 | ) | 4,147 | |||||||||||
Net loss |
$ | (7,607 | ) | $ | (2,209 | ) | $ | (16,980 | ) | $ | (4,543 | ) | ||||
September 30, 2011 | September 30, 2010 | |||||||
Legacy Portfolio and Other Performance: |
||||||||
Performing - UPB |
$ | 969,541 | $ | 1,072,377 | ||||
Nonperforming (90+ Delinquency) - UPB |
302,866 | 348,061 | ||||||
Real Estate Owned - Estimated Fair Value |
15,411 | 29,384 | ||||||
Total Legacy Portfolio and Other - UPB |
$ | 1,287,818 | $ | 1,449,822 | ||||
57
58
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 24,005 | $ | 21,223 | ||||
Restricted cash |
72,813 | 91,125 | ||||||
Accounts receivable, net |
471,474 | 441,275 | ||||||
Mortgage loans held for sale |
377,932 | 369,617 | ||||||
Mortgage loans held for investment, subject to nonrecourse debt Legacy Assets |
246,159 | 266,320 | ||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt |
477,748 | 538,440 | ||||||
Receivables from affiliates |
6,082 | 8,993 | ||||||
Mortgage servicing rights |
246,916 | 145,062 | ||||||
Property and equipment, net |
20,990 | 8,394 | ||||||
Real estate owned, net (includes $11,169 and $17,509, respectively, of real
estate owned, subject to ABS nonrecourse debt) |
15,411 | 27,337 | ||||||
Other assets |
44,795 | 29,395 | ||||||
Total assets |
$ | 2,004,325 | $ | 1,947,181 | ||||
Liabilities and members equity |
||||||||
Notes payable |
$ | 738,783 | $ | 709,758 | ||||
Unsecured senior notes |
245,109 | 244,061 | ||||||
Payables and accrued liabilities |
177,452 | 75,054 | ||||||
Derivative financial instruments |
15,778 | 7,801 | ||||||
Derivative financial instruments, subject to ABS nonrecourse debt |
11,889 | 18,781 | ||||||
Nonrecourse debt Legacy Assets |
116,200 | 138,662 | ||||||
ABS nonrecourse debt |
434,326 | 496,692 | ||||||
Total liabilities |
1,739,537 | 1,690,809 | ||||||
Total members equity |
264,788 | 256,372 | ||||||
Total liabilities and members equity |
$ | 2,004,325 | $ | 1,947,181 | ||||
59
60
Nine months ended | Year Ended |
|||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Repurchase reserves, beginning of period |
$ | 7,321 | $ | 3,648 | ||||
Additions |
2,978 | 4,649 | ||||||
Charge-offs |
(2,939 | ) | (976 | ) | ||||
Repurchase reserves, end of period |
$ | 7,360 | $ | 7,321 | ||||
Nine months ended | Year Ended | |||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Beginning balance |
$ | 4.3 | $ | 1.3 | ||||
Repurchases & indemnifications |
(5.5 | ) | (1.9 | ) | ||||
Claims initiated |
21.6 | 10.8 | ||||||
Rescinded |
(12.6 | ) | (5.9 | ) | ||||
Ending balance |
$ | 7.8 | $ | 4.3 | ||||
Nine months ended | Year Ended | |||||||||||||||
September 30, 2011 | December 31, 2010 | |||||||||||||||
Count | $ | Count | $ | |||||||||||||
($ amounts in billions) | ||||||||||||||||
Loan sales |
11,677 | $ | 2.3 | 13,090 | $ | 2.6 |
61
62
| $455.7 million improvement in proceeds received from sale of originated loans, which provided $2,287.4 million and $1,831.7 million for the nine month periods ending September 30, 2011 and 2010, respectively, partially offset by $325.5 million increase in cash used to originate loans. Mortgage loans originated and purchased, net of fees, used $2,285.6 million and $1,960.1 million in the nine month period ending September 30, 2011 and 2010, respectively. | ||
| $139.4 million decrease in cash outflows provided by working capital, which provided $3.5 million cash for the nine months ended September 30, 2011 and provided $142.9 million during the same period in the prior year. |
63
64
65
Transfers | ||||||||||||
Accounted for as | ||||||||||||
Securitization | Secured | |||||||||||
September 30, 2011 | Trusts | Borrowings | Total | |||||||||
ASSETS |
||||||||||||
Restricted cash |
$ | 69 | $ | 20,134 | $ | 20,203 | ||||||
Accounts receivable |
2,431 | 251,615 | 254,046 | |||||||||
Mortgage loans held for investment, subject to nonrecourse debt |
| 240,256 | 240,256 | |||||||||
Mortgage loans held for investment, subject to ABS nonrecourse
debt |
477,748 | | 477,748 | |||||||||
Real estate owned |
11,169 | 4,184 | 15,353 | |||||||||
Total Assets |
$ | 491,417 | $ | 516,189 | $ | 1,007,606 | ||||||
LIABILITIES |
||||||||||||
Notes payable |
$ | | $ | 203,596 | $ | 203,596 | ||||||
Payables and accrued liabilities |
75 | 988 | 1,063 | |||||||||
Outstanding servicer advances(1) |
32,961 | | 32,961 | |||||||||
Derivative financial instruments, subject to ABS nonrecourse debt |
11,889 | | 11,889 | |||||||||
Nonrecourse debtLegacy Assets |
| 116,200 | 116,200 | |||||||||
ABS nonrecourse debt |
434,326 | | 434,326 | |||||||||
Total Liabilities |
$ | 479,251 | $ | 320,784 | $ | 800,035 | ||||||
(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, which excludes outstanding pool level advances of approximately $3.3 million. These outstanding servicer advances are eliminated upon the consolidation of the securitization trusts. |
September 30, 2011(1) | December 31, 2010 | |||||||
Total collateral balance |
$ | 3,751,789 | $ | 4,038,978 | ||||
Total certificate balance |
3,738,836 | 4,026,844 | ||||||
Total mortgage servicing
rights at fair value |
24,227 | 26,419 |
(1) | Unconsolidated securitization trusts consist of VIEs where we have neither the power to direct the activities that most significantly impact the VIEs economic performance or the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. |
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68
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| Revenue. An increase in delinquencies will result in lower revenue for loans that we service for GSEs because we only collect servicing fees from government-sponsored enterprises for performing loans. Additionally, while increased delinquencies generate higher ancillary fees, including late fees, these fees are not likely to be recoverable in the event that the related loan is liquidated. In addition, an increase in delinquencies lowers the interest income we receive on cash held in collection and other accounts. | |
| Expenses. An increase in delinquencies will result in a higher cost of service due to the increased time and effort required to collect payments from delinquent borrowers. It may also result in an increase in interest expense as a result of an increase in our advancing obligations. | |
| Liquidity. An increase in delinquencies also could negatively impact our liquidity because of an increase in borrowing under our advance facilities. |
73
| Valuation of mortgage servicing rights. We base the price we pay for mortgage servicing rights on, among other things, our projections of the cash flows from the related pool of mortgage loans. Our expectation of delinquencies is a significant assumption underlying those cash flow projections. If delinquencies were significantly greater than expected, the estimated fair value of our mortgage servicing rights could be diminished. When the estimated fair value of mortgage servicing rights is reduced, we would suffer a loss, which has a negative impact on our financial results. |
74
| the rates of prepayment and repayment within the underlying pools of mortgage loans; | |
| projected rates of delinquencies, defaults and liquidations; | |
| future interest rates; | |
| our cost to service the loans; | |
| ancillary fee income; and | |
| amounts of future servicing advances. |
75
| coordinating market functions; | |
| unanticipated issues in integrating information, communications and other systems; | |
| unanticipated incompatibility of purchasing, logistics, marketing and administration methods; | |
| retaining key employees; and | |
| the diversion of managements attention from ongoing business concerns. |
| limitations imposed on us under the notes and other financing agreements that contain restrictive covenants and borrowing conditions that may limit our ability to raise additional debt; | |
| the decline in liquidity in the credit markets; | |
| prevailing interest rates; | |
| the strength of the lenders from whom we borrow; |
76
| borrowing on advance facilities is limited by the amount of eligible collateral pledged and may be less than the borrowing capacity of the facility; and | |
| accounting changes that may impact calculations of covenants in our debt agreements. |
77
78
79
| our representations and warranties concerning loan quality and loan circumstances are inaccurate, including representations concerning the licensing of a mortgage broker; | |
| we fail to secure adequate mortgage insurance within a certain period after closing; | |
| a mortgage insurance provider denies coverage; and |
80
| we fail to comply, at the individual loan level or otherwise, with regulatory requirements in the current dynamic regulatory environment. |
81
| our staffing levels and other servicing practices; | |
| the servicing and ancillary fees that we may charge; | |
| our modification standards and procedures; and | |
| the amount of advances reimbursable. |
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83
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| an increase in prevailing interest rates could generate an increase in delinquency, default and foreclosure rates resulting in an increase in both operating expenses and interest expense and could cause a reduction in the value of our assets; | |
| a substantial and sustained increase in prevailing interest rates could adversely affect our loan origination volume because refinancing an existing loan would be less attractive for homeowners and qualifying for a loan may be more difficult for consumers; | |
| an increase in prevailing interest rates would increase the cost of servicing our outstanding debt, including our ability to finance servicing advances and loan originations; | |
| a decrease in prevailing interest rates may require us to record a decrease in the value of our mortgage servicing rights; and | |
| a change in prevailing interest rates could impact our earnings from our custodial deposit accounts. |
85
86
87
88
2.1
|
Mortgage Servicing Rights Purchase and Sale Agreement, dated and effective as of September 30, 2011, by and between the Company and Bank of America, National Association.*# | |
31.1
|
Certification by Chief Executive Officer and 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 and 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 herewith. | |
** | Furnished herewith, not filed. | |
# | The schedules (or similar attachments) referenced in this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule (or similar attachment) will be furnished supplementally to the Securities and Exchange Commission upon request. |
89
/s/ Jay Bray | ||||
Jay Bray Chief Executive Officer, President and Chief Financial Officer Date: November 14, 2011 |
90
Exhibit No. | Description | |
2.1
|
Mortgage Servicing Rights Purchase and Sale Agreement, dated and effective as of September 30, 2011, by and between the Company and Bank of America, National Association.*# | |
31.1
|
Certification by Chief Executive Officer and 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 and 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 herewith. | |
** | Furnished herewith, not filed. | |
# | The schedules (or similar attachments) referenced in this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule (or similar attachment) will be furnished supplementally to the Securities and Exchange Commission upon request. |
91
ARTICLE I DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES |
1 | |||
Section 1.01 Definitions |
1 | |||
Section 1.02 General Interpretive Principles |
5 | |||
ARTICLE II SALE AND TRANSFER OF SERVICING |
6 | |||
Section 2.01 Items to be Sold |
6 | |||
Section 2.02 Sale Date |
6 | |||
Section 2.03 Servicing Transfer Date |
6 | |||
ARTICLE III CONSIDERATION |
7 | |||
Section 3.01 Purchase Price |
7 | |||
Section 3.02 Payment |
7 | |||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER |
10 | |||
Section 4.01 Due Incorporation and Good Standing |
10 | |||
Section 4.02 Authority and Capacity |
10 | |||
Section 4.03 Title to the Servicing and Related Escrow Accounts |
10 | |||
Section 4.04 Related Escrow Accounts |
11 | |||
Section 4.05 Servicing Agreements; Applicable Laws |
11 | |||
Section 4.06 Accuracy of Servicing Information |
11 | |||
Section 4.07 Effective Agreements |
11 | |||
Section 4.08 No Accrued Liabilities |
11 | |||
Section 4.09 Seller/Servicer Standing |
11 | |||
ARTICLE V REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS |
12 | |||
Section 5.01 Servicing of the Mortgage Loans |
12 | |||
Section 5.02 Recourse Status |
12 | |||
Section 5.03 No Purchaser Responsibility |
12 | |||
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER |
12 | |||
Section 6.01 Due Incorporation and Good Standing |
12 | |||
Section 6.02 Authority and Capacity |
12 | |||
Section 6.03 Effective Agreements |
13 | |||
Section 6.04 Sophisticated Purchaser: |
13 | |||
Section 6.05 Seller/Servicer Standing |
13 | |||
Section 6.06 MERS Membership |
13 | |||
ARTICLE VII COVENANTS |
13 | |||
Section 7.01 Assignments |
13 | |||
Section 7.02 Investor Approval |
14 | |||
Section 7.03 Transfer Notices |
14 | |||
Section 7.04 Real Estate Taxing Authorities |
14 |
i
Section 7.05 Hazard, Mortgage, and Flood Insurance |
15 | |||
Section 7.06 Delivery of Mortgage Loan Documentation and Information |
15 | |||
Section 7.07 Delivery of Servicing System Information |
16 | |||
Section 7.08 Related Escrow Account Balances |
16 | |||
Section 7.09 Payoffs, Assumptions and Modifications |
16 | |||
Section 7.10 Mortgage Loan Payments and Trailing Bills Received After
Servicing Transfer Date |
17 | |||
Section 7.11 Misapplied and Returned Payments |
17 | |||
Section 7.12 Servicing Obligations |
17 | |||
Section 7.13 Solicitation Rights |
18 | |||
Section 7.14 Year End Tax Reporting |
18 | |||
Section 7.15 Cooperation |
18 | |||
Section 7.16 Supplemental Information |
19 | |||
Section 7.17 Access to Information |
19 | |||
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER |
20 | |||
Section 8.01 Correctness of Representations and Warranties |
20 | |||
Section 8.02 Compliance with Conditions |
20 | |||
Section 8.03 Corporate Resolution |
20 | |||
Section 8.04 No Material Adverse Change |
20 | |||
Section 8.05 No Actions |
20 | |||
Section 8.06 Consents |
20 | |||
Section 8.07 Freddie Mac Waiver of Representations and Warranties |
20 | |||
Section 8.08 Financing |
21 | |||
Section 8.09 Certificate of Seller |
21 | |||
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER |
21 | |||
Section 9.01 Correctness of Representations and Warranties |
21 | |||
Section 9.02 Compliance with Conditions |
21 | |||
Section 9.03 Corporate Resolution |
21 | |||
Section 9.04 Certificate of Purchaser |
21 | |||
Section 9.05 No Material Adverse Change |
22 | |||
Section 9.06 No Actions |
22 | |||
Section 9.07 Consents |
22 | |||
ARTICLE X INDEMNIFICATION; CURE OR REPURCHASE |
22 | |||
Section 10.01 Indemnification by Seller |
22 | |||
Section 10.02 Indemnification by Purchaser |
23 | |||
Section 10.03 Cure or Repurchase |
24 | |||
Section 10.04 Subsequent Transfer due to Repurchase |
24 | |||
ARTICLE XI MISCELLANEOUS |
25 | |||
Section 11.01 Costs and Expenses |
25 | |||
Section 11.02 Confidentiality |
25 | |||
Section 11.03 Brokers Fees |
26 |
ii
Section 11.04 Survival of Representations and Warranties |
26 | |||
Section 11.05 Notices |
26 | |||
Section 11.06 Waivers |
27 | |||
Section 11.07 Entire Agreement; Amendment |
27 | |||
Section 11.08 Binding Effect |
27 | |||
Section 11.09 Headings |
27 | |||
Section 11.10 Applicable Law |
27 | |||
Section 11.11 Incorporation of Exhibits |
27 | |||
Section 11.12 Counterparts |
28 | |||
Section 11.13 Severability of Provisions |
28 | |||
Section 11.14 Public Announcement |
28 | |||
Section 11.15 Assignment |
28 | |||
Section 11.16 Conflicts between Transaction Documents |
28 | |||
Section 11.17 Third Party Beneficiaries |
28 |
EXHIBIT A:
|
SCHEDULE OF MORTGAGE LOANS | |
EXHIBIT A-1:
|
ESTIMATED PURCHASE PRICE COMPUTATION WORKSHEET | |
EXHIBIT A-2:
|
PURCHASE PRICE COMPUTATION WORKSHEET | |
EXHIBIT B:
|
FORM OF TRANSFER CONFIRMATION | |
EXHIBIT C:
|
DATA TRANSFER SPECIFICATIONS | |
EXHIBIT D:
|
OFFICERS CERTIFICATE | |
EXHIBIT E:
|
SERVICING TRANSFER INSTRUCTIONS | |
EXHIBIT F:
|
PURCHASE PRICE PERCENTAGE | |
EXHIBIT G:
|
FORM OF INTERIM SERVICING AGREEMENT | |
EXHIBIT H:
|
FORM OF TRI-PARTY AGREEMENT |
iii
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NATIONSTAR MORTGAGE LLC Purchaser |
||||||
By: Name: |
/s/ Jay Bray
|
|||||
Title: | President/Chief Financial Officer | |||||
BANK OF AMERICA, NATIONAL ASSOCIATION Seller |
||||||
By: Name: |
/s/ Laurence P. Washington
|
|||||
Title: | Managing Director |
29
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2011 of Nationstar Mortgage LLC; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
c. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: November 14, 2011 | By: | /s/ Jay Bray | ||
Jay Bray | ||||
Title: | Chief Executive Officer, President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | ||
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated as of November 14, 2011 |
||||
By: | /s/ Jay Bray | |||
Jay Bray | ||||
Title: | Chief Executive Officer, President and Chief Financial Officer |
|||
Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Assets | ||
Restricted cash, subject to ABS non recourse debt | $ 69 | $ 1,472 |
Accrued interest, subject to ABS non recourse debt | 2,431 | 2,392 |
Allowance for loan losses of mortgage loans held for investment, subject to nonrecourse debt | 5,303 | 3,298 |
Real estate owned, subject to ABS nonrecourse debt | 11,169 | 17,509 |
Liabilities and members' equity | ||
Accrued interest payable, subject to ABS nonrecourse debt | $ 75 | $ 95 |
Consolidated Statements of Operations (Unaudited) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Revenues: | ||||
Servicing fee income | $ 55,283 | $ 35,646 | $ 165,636 | $ 110,919 |
Other fee income | 5,408 | 3,496 | 19,118 | 11,851 |
Total fee income | 60,691 | 39,142 | 184,754 | 122,770 |
Gain on mortgage loans held for sale | 30,232 | 25,836 | 73,560 | 51,754 |
Total revenues | 90,923 | 64,978 | 258,314 | 174,524 |
Expenses and impairments: | ||||
Salaries, wages, and benefits | 50,904 | 41,879 | 146,199 | 104,689 |
General and administrative | 25,397 | 15,422 | 56,707 | 34,931 |
Provision for loan losses | 877 | 2,005 | ||
Loss on foreclosed real estate | 2,558 | 6,904 | ||
Occupancy | 3,458 | 2,212 | 7,902 | 6,002 |
Total expenses and impairments | 83,194 | 59,513 | 219,717 | 145,622 |
Other income (expense): | ||||
Interest income | 16,201 | 22,425 | 51,246 | 82,019 |
Interest expense | (26,376) | (28,205) | (76,929) | (89,298) |
Loss on interest rate swaps and caps | (2,714) | (9,917) | ||
Fair value changes in ABS securitizations | (654) | (2,786) | (6,919) | (19,115) |
Total other income (expense) | (10,829) | (11,280) | (32,602) | (36,311) |
Net income/(loss) | $ (3,100) | $ (5,815) | $ 5,995 | $ (7,409) |
Guarantor Financial Statement Information | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor Financial Statement Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor Financial Statement Information |
17. 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, except for the transfer restrictions and registration rights that are not applicable
to the unregistered notes and certain administrative terms. 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.
Presented below are consolidating financial statements of Nationstar and the guarantor subsidiaries
for the periods indicated.
NATIONSTAR MORTGAGE LLC
CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2011 (IN THOUSANDS)
NATIONSTAR MORTGAGE LLC
CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (IN THOUSANDS)
NATIONSTAR MORTGAGE LLC
CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (IN THOUSANDS)
NATIONSTAR MORTGAGE LLC
CONSOLIDATING BALANCE SHEET DECEMBER 31, 2010 (IN THOUSANDS)
NATIONSTAR MORTGAGE LLC
CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 (IN THOUSANDS)
NATIONSTAR MORTGAGE LLC
CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 (IN THOUSANDS)
|
Document and Entity Information | 9 Months Ended |
---|---|
Sep. 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 | Sep. 30, 2011 |
Amendment Flag | false |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q3 |
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 | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 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):
Mortgage loans held for sale on a nonaccrual status are presented in the following table for the
periods indicated (in thousands):
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):
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 twelve month 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):
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):
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 $0.7 million for the nine
months ended September 30, 2011 and $7.3 million from the year 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 $0.9 million and $2.0 million
provision for loan losses for the three and nine months ended September 30, 2011, and a $3.3
million provision for loan losses for the year ended December 31, 2010 on the transferred loans to
reflect this impairment.
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:
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 September 30, 2011 and December 31,
2010.
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 September 30, 2011 and
December 31, 2010 includes (in thousands):
As of September 30, 2011 and December 31, 2010, respectively, approximately $216.4 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
$109.9 million and $117.6 million, respectively.
|
Subsequent Events | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Subsequent Events [Abstract] | |
Subsequent Events |
19. Subsequent Events
In October 2011, Nationstar amended its 2010-ADV1 Advance Facility with a financial institution.
This amendment increased Nationstar’s borrowing capacity from $200 million to $300 million, and
extended the maturity date to May 2014. In conjunction with this amendment, Nationstar paid off
the 2009-ADV1 facility and transferred the related collateral to the amended 2010-ADV1 facility.
Also in October 2011, Nationstar extended one of its MRA with a financial institution that was set
to expire in October 2011. Under the terms of this extension,
this agreement is now set to expire in January 2012.
In
conjunction with the Q3 MSR purchase, Nationstar executed the 2011-ADV1 Advance Facility with a financial institution in October 2011.
This facility has the capacity to purchase up to $75 million of advance receivables. The interest
rate is LIBOR plus 2.50% and matures in October 2012. This debt is nonrecourse to Nationstar.
In October, 2011, Nationstar entered into an operating sublease agreement for office space in
Houston, Texas. This sublease begins the fourth quarter 2011, and expires fourth quarter 2014.
Nationstar’s total obligation related to this agreement will be approximately $1.3 million per year
over the life of the sublease.
In November 2011, Nationstar made
the decision to refocus its strategy with respect to its
origination platform. As a part of this activity, Nationstar will eliminate a
substantial portion of its distributed retail branch network in
non-strategic locations in favor of a more centralized retail
origination structure. To effect this change in structure, Nationstar will record a fourth quarter
2011 charge of approximately $2.0 million to $2.5 million for estimated severance costs, lease
termination and other related costs.
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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):
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Recent Accounting Developments | 9 Months Ended |
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Sep. 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 are effective for this quarter, with retrospective application to the
beginning of this year. The adoption of Update No. 2011-02 did not 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 non-owner
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 | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets |
8. Other Assets
Other assets consisted of the following (in thousands):
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 September 30, 2011 are presented
in the following tables (in thousands):
Nationstar recorded a net charge to earnings of $450 thousand and $971 thousand for the three and nine
months ended September 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.
|
Members Equity | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Member's Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Member's Equity |
13. Member’s Equity
Share-based compensation is recognized in accordance with ASC 718, Compensation—Stock
Compensation. This guidance requires all share-based payments to employees, including grants of
employee stock options, to be recognized as expense in the statement of operations based on their
fair values. The amount of compensation is measured at the fair value of the awards when granted
and this cost is expensed over the required service period, which is normally the vesting period of
the award.
The limited liability company interests in FIF HE Holdings LLC are represented by four separate
classes of units, Class A Units, Class B Units, Class C Preferred Units, and Class D Preferred
Units, as defined in the FIF HE Holdings LLC Amended and Restated Limited Liability Company
Agreement dated December 31, 2008 (the Agreement). Class A Units have voting rights and Class B
Units, Class C Preferred Units, and Class D Preferred Units have no voting rights. Distributions
and allocations of profits and losses to members are made in accordance with the Agreement. Class C
Preferred Units and Class D Preferred Units represent preferred priority return units, accruing
distribution preference on any contributions at an annual rate of 15% and 20%, respectively.
A total of 100,887 Class A Units were granted to certain management members on the date of the
acquisition of CHEC. No consideration was paid for the Class A Units, and these units vest in
accordance with the Vesting Schedule per the Agreement, generally in years three through five after
grant date.
Effective September 17, 2010, FIF HE Holdings LLC executed the FIF HE Holdings LLC Fifth Amended
and Restated Limited Liability Company Agreement (the Fifth Agreement). This Fifth Agreement
provided for a total of 457,526 Class A Units to be granted to certain management members. No
consideration was paid for the granted units, and the units vest in accordance with the Vesting
Schedule per the Fifth Agreement.
Simultaneously to the execution of the Fifth Agreement, FIF HE Holdings LLC executed several
Restricted Series I Preferred Stock Unit Award Agreements (PRSU Agreements). These Agreements
provided for a total of 3,304,000 Class C Units and 3,348,000 Class D Units to be granted to
certain management members. No consideration was paid for the granted units, and the units vest in
accordance with the Vesting Schedule per the PRSU Agreements.
These awards were valued using a sum of the parts analysis in computing the fair value of the
company’s equity. The analysis adds the value of the servicing and originations businesses to the
value of the assets and securities that Nationstar owns. The value of the servicing and
originations businesses is derived using both a market approach and an income approach. The market
approach considers market multiples from public company examples in the industry. The income
approach employs a discounted cash flow analysis that utilizes several factors to
capture the ongoing cash flows of the business and then is discounted with an assumed equity cost
of capital. The valuation of the assets applies
a net asset value method utilizing a variety of
assumptions, including assumptions for prepayments, cumulative losses, and other variables. Recent
market transactions, experience with similar assets and securities, current business combinations,
and analysis of the underlying collateral, as available, are considered in the valuation.
The Class A, Class C and Class D Units were scheduled to vest over 1.8 years. The vesting schedule
of these Units is as follows:
The weighted average grant date fair value of the Units was $4.23. Subsequent to September 30,
2011, Nationstar expects to recognize $1.6 million of compensation expense over the final three
months of 2011, and $3.2 million of compensation expense in the first six months of 2012.
Total share-based compensation expense, net of forfeitures, recognized for the nine months ended,
September 30, 2011 and 2010, is provided in the table below (in thousands).
|
Derivative Financial Instruments | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 2009-ADV1 Trust. 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 $322.0 million
as of September 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)
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):
|
Mortgage Servicing Rights (MSRs) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 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 not 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.
In July 2011, Nationstar acquired interest sensitive MSRs
representing loans with unpaid principal
balances of approximately $3.6 billion from a financial
institution for approximately $33 million.
These MSRs were boarded in September 2011. In September 2011, Nationstar acquired credit sensitive
MSRs representing loans with unpaid principal balances of
$10.2 billion for approximately $72 million
from a financial institution. These MSRs will be boarded in the fourth quarter of 2011.
Nationstar used the following weighted average assumptions in estimating the fair value of MSRs for
the dates indicated:
The activity of MSRs carried at fair value is as follows for the nine month period ended September
30, 2011 and for the year ended December 31, 2010 (in thousands):
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 September 30, 2011 and December 31, 2010 (in thousands):
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):
|
Variable Interest Entities and Securitizations | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 was 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 a SPE was determined to
not be a QSPE, Nationstar further evaluated it for classification as a VIE. When a 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 September 30, 2011 and December 31, 2010 is
presented in the following table (in thousands):
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 September 30, 2011 and December 31, 2010 is
presented in the following table (in thousands):
Nationstar has not retained any variable interests in the unconsolidated securitization trusts that
were outstanding as of September 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):
Certain cash flows received from securitization trusts accounted for as sales for the dates
indicated were as follows (in thousands):
|
Consolidated Statement of Cash Flows-Supplemental Disclosure | 9 Months Ended |
---|---|
Sep. 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 nine months ended September 30, 2011 and 2010 was approximately $61.8
million and $60.9 million, respectively.
|
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