x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 45-2156869 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
350 Highland Drive Lewisville, TX | 75067 | |
(Address of principal executive offices) | (Zip Code) |
Large Accelerated Filer | ¨ | Accelerated Filer | ¨ |
Non-Accelerated Filer | x (Do not check if a smaller reporting company.) | Smaller reporting company | ¨ |
Page | ||
PART I | FINANCIAL INFORMATION | |
Item 1. | ||
Item 2. | ||
Item 3. | Quantitative and Qualitative Disclosure About Market Risks | |
Item 4. | ||
PART II | OTHER INFORMATION | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
• | the delay in our foreclosure proceedings due to inquiries by certain state Attorneys General, court administrators, and state and federal government agencies; |
• | the impact of the ongoing implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), including proposed Consumer Financial Protection Bureau ("CFPB") rules relating to mortgage servicers and the recent examination of our business begun by the CFPB, on our business activities and practices, costs of operations and overall results of operations; |
• | the impact on our servicing practices of enforcement consent orders against and agreements entered into by certain federal and state agencies with the largest mortgage servicers and ongoing inquiries regarding other non-bank mortgage servicers; |
• | increased legal proceedings and related costs; |
• | the continued uncertainty of the residential mortgage market, increase in monthly payments on adjustable rate mortgage loans, adverse economic conditions, decrease in property values and increase in delinquencies and defaults; |
• | the deterioration of the market for reverse mortgages and increase in foreclosure rates for reverse mortgages; |
• | our ability to efficiently service higher risk loans; |
• | our ability to mitigate the increased risks related to servicing reverse mortgages; |
• | our ability to compete successfully in the mortgage loan servicing and mortgage loan originations industries; |
• | our ability to maintain or grow the size of our servicing portfolio and realize our significant investments in personnel and our technology platform by successfully identifying attractive acquisition opportunities, including mortgage servicing rights ("MSRs"), subservicing contracts, servicing platforms and originations platforms; |
• | our ability to scale-up appropriately and integrate our acquisitions to realize the anticipated benefits of any such potential future acquisitions, including potentially significant acquisitions; |
• | our ability to close on and realize the benefits of the acquisition of certain assets from Residential Capital LLC (ResCap), Residential Funding Company, LLC, GMAC Mortgage, LLC, Executive Trustee Services, LLC, ETS of Washington, Inc., EPRE LLC, GMACM Borrower LLC and RFC Borrower LLC (collectively, the ResCap Sellers) whether due to our failure to be the winning bidder in the auction process, the failure of a closing condition or otherwise; |
• | our ability to obtain sufficient capital to meet our financing requirements; |
• | our ability to grow our loan originations 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 state and federal laws that are adverse to mortgage servicers which increase costs and operational complexity and impose significant penalties for violations; |
• | loss of our licenses; |
• | 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 ("GSEs") or a significant change in such guidelines; |
• | delays in our ability to collect or be reimbursed for servicing advances; |
• | changes to Home Affordable Modification Program ("HAMP"), Home Affordable Refinance Program ("HARP"), Making Home Affordable Plan ("MHA") or other similar government programs; |
• | changes in our business relationships with the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac"), the Government National Mortgage Association ("Ginnie Mae") and others that facilitate the issuance of mortgage-backed securities ("MBS"); |
• | 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; |
• | requirements 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; |
• | failure to attract and retain a highly skilled work force; |
• | changes in public opinion concerning mortgage originators or debt default specialists; and |
• | changes in accounting standards. |
September 30, 2012 | December 31, 2011 | ||||||
(unaudited) | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 430,815 | $ | 62,445 | |||
Restricted cash | 258,858 | 71,499 | |||||
Accounts receivable | 2,852,985 | 562,300 | |||||
Mortgage loans held for sale | 703,214 | 458,626 | |||||
Mortgage loans held for investment, subject to nonrecourse debt - Legacy Assets, net of allowance for loan losses of $7,645 and $5,824, respectively | 238,178 | 243,480 | |||||
Reverse mortgage interests | 452,886 | — | |||||
Receivables from affiliates | 13,301 | 4,609 | |||||
Mortgage servicing rights – fair value | 592,692 | 251,050 | |||||
Mortgage servicing rights – amortized cost | 8,036 | — | |||||
Property and equipment, net of accumulated depreciation of $45,544 and $39,201, respectively | 48,714 | 24,073 | |||||
Real estate owned (REO), net | 3,193 | 3,668 | |||||
Other assets | 338,359 | 106,181 | |||||
Total assets | $ | 5,941,231 | $ | 1,787,931 | |||
Liabilities and equity | |||||||
Notes payable | $ | 2,532,316 | $ | 873,179 | |||
Unsecured senior notes | 1,062,423 | 280,199 | |||||
Payables and accrued liabilities | 762,268 | 183,789 | |||||
Derivative financial instruments | 37,835 | 12,370 | |||||
Mortgage servicing liabilities | 82,313 | — | |||||
Nonrecourse debt - Legacy Assets | 101,898 | 112,490 | |||||
Excess spread financing - fair value | 255,484 | 44,595 | |||||
Participating interest financing | 415,448 | — | |||||
Total liabilities | 5,249,985 | 1,506,622 | |||||
Commitments and contingencies – See Note 18 | |||||||
Members’ units related to Nationstar Mortgage LLC | — | 281,309 | |||||
Preferred stock at $0.01 par value - 300,000 shares authorized, no shares issued and outstanding | — | — | |||||
Common stock at $0.01 par value - 1,000,000 shares authorized, 90,418 shares issued and outstanding | 904 | — | |||||
Additional paid-in-capital | 553,380 | — | |||||
Accumulated other comprehensive loss | — | — | |||||
Retained earnings | 141,528 | — | |||||
Common shares held by subsidiary | (4,566 | ) | — | ||||
Total equity | 691,246 | 281,309 | |||||
Total liabilities and equity | $ | 5,941,231 | $ | 1,787,931 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Servicing fee income | $ | 135,504 | $ | 53,031 | $ | 305,546 | $ | 160,755 | |||||||
Other fee income | 2,396 | 7,660 | 21,259 | 23,999 | |||||||||||
Total fee income | 137,900 | 60,691 | 326,805 | 184,754 | |||||||||||
Gain on mortgage loans held for sale | 139,259 | 30,232 | 312,116 | 73,560 | |||||||||||
Total revenues | 277,159 | 90,923 | 638,921 | 258,314 | |||||||||||
Expenses and impairments: | |||||||||||||||
Salaries, wages and benefits | 98,107 | 50,904 | 238,519 | 146,199 | |||||||||||
General and administrative | 51,585 | 25,397 | 127,107 | 56,707 | |||||||||||
Provision for loan losses | 1,545 | 877 | 3,153 | 2,005 | |||||||||||
Loss/(gain) on foreclosed real estate | (2,050 | ) | 2,558 | 1,705 | 6,904 | ||||||||||
Occupancy | 5,641 | 3,458 | 11,293 | 7,902 | |||||||||||
Total expenses and impairments | 154,828 | 83,194 | 381,777 | 219,717 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 23,542 | 16,201 | 52,633 | 51,246 | |||||||||||
Interest expense | (65,015 | ) | (26,376 | ) | (125,908 | ) | (76,929 | ) | |||||||
Loss on interest rate swaps and caps | (1,077 | ) | — | (1,702 | ) | — | |||||||||
Fair value changes in ABS securitizations | — | (654 | ) | — | (6,919 | ) | |||||||||
Total other expense | (42,550 | ) | (10,829 | ) | (74,977 | ) | (32,602 | ) | |||||||
Income (loss) before taxes | 79,781 | (3,100 | ) | 182,167 | 5,995 | ||||||||||
Income tax expense | 24,714 | — | 40,639 | — | |||||||||||
Net income (loss) | 55,067 | (3,100 | ) | 141,528 | 5,995 | ||||||||||
Other comprehensive loss, net of tax: | |||||||||||||||
Cash flow hedges: | |||||||||||||||
Change in value of designated cash flow hedges | — | — | (423 | ) | (1,071 | ) | |||||||||
Reclassification adjustments for gain (loss) included in earnings | 423 | — | 423 | — | |||||||||||
Comprehensive income (loss) | $ | 55,490 | $ | (3,100 | ) | $ | 141,528 | $ | 4,924 | ||||||
Earnings (loss) per share: | |||||||||||||||
Basic earnings (loss) per share | $ | 0.62 | $ | (0.04 | ) | $ | 1.68 | $ | 0.09 | ||||||
Diluted earnings (loss) per share | $ | 0.61 | $ | (0.04 | ) | $ | 1.68 | $ | 0.09 | ||||||
Weighted average shares: | |||||||||||||||
Basic | 89,168 | 70,000 | 84,038 | 70,000 | |||||||||||
Dilutive effect of stock awards | 597 | — | 360 | — | |||||||||||
Diluted | 89,765 | 70,000 | 84,398 | 70,000 | |||||||||||
Dividends declared per share | $ | — | $ | — | $ | — | $ | — |
Common Shares | Members’ Units | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Common shares held by subsidiary | Total Shareholders’ Units and Equity | |||||||||||||||||||||||
Balance at December 31, 2010 | — | $ | 255,301 | $ | — | $ | — | $ | 1,071 | $ | — | $ | — | $ | 256,372 | |||||||||||||||
Share-based compensation | — | 14,815 | — | — | — | — | — | 14,815 | ||||||||||||||||||||||
Distributions to parent | — | (4,348 | ) | — | — | — | — | — | (4,348 | ) | ||||||||||||||||||||
Tax related share-based settlement of units by members | — | (5,346 | ) | — | — | — | — | — | (5,346 | ) | ||||||||||||||||||||
Net income | — | 20,887 | — | — | — | — | — | 20,887 | ||||||||||||||||||||||
Change in value of cash flow hedge | — | — | — | — | (1,071 | ) | — | — | (1,071 | ) | ||||||||||||||||||||
Balance at December 31, 2011 | — | 281,309 | — | — | — | — | — | 281,309 | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||
Contributions from parent – FIF HE | — | 12,764 | — | — | — | — | — | 12,764 | ||||||||||||||||||||||
Change in value of cash flow hedge | — | — | — | — | (423 | ) | — | — | (423 | ) | ||||||||||||||||||||
Reclassification adjustment for gain (loss) included in earnings | — | — | — | — | 423 | — | — | 423 | ||||||||||||||||||||||
LLC conversion of equity to common shares | 70,000 | (294,073 | ) | 700 | 293,373 | — | — | — | — | |||||||||||||||||||||
Common stock issuance | 19,167 | — | 192 | 246,508 | — | — | — | 246,700 | ||||||||||||||||||||||
Shares issued under incentive plan | 1,251 | — | 12 | (12 | ) | — | — | — | — | |||||||||||||||||||||
Share-based compensation | — | — | — | 10,665 | — | — | — | 10,665 | ||||||||||||||||||||||
Excess tax benefit from share-based compensation | — | — | — | 2,846 | — | — | — | 2,846 | ||||||||||||||||||||||
Withholding tax related to share based settlement of common stock by management | — | — | — | — | — | — | (4,566 | ) | (4,566 | ) | ||||||||||||||||||||
Net income | — | — | — | — | — | 141,528 | — | 141,528 | ||||||||||||||||||||||
Balance at September 30, 2012 | 90,418 | $ | — | $ | 904 | $ | 553,380 | $ | — | $ | 141,528 | $ | (4,566 | ) | $ | 691,246 |
For the nine months ended September 30, | |||||||
2012 | 2011 | ||||||
Operating activities | |||||||
Net income | $ | 141,528 | $ | 5,995 | |||
Adjustments to reconcile net income to net cash (used in) / provided by operating activities: | |||||||
Share-based compensation | 10,665 | 12,201 | |||||
Gain on mortgage loans held for sale | (312,116 | ) | (73,560 | ) | |||
Provision for loan losses | 3,153 | 2,005 | |||||
Loss on foreclosed real estate | 1,705 | 6,904 | |||||
Loss on equity method investments | 1,327 | 971 | |||||
(Gain) / loss on derivatives including ineffectiveness on interest rate swaps and caps | 1,702 | (2,032 | ) | ||||
Fair value changes in ABS securitizations | — | 6,919 | |||||
Fair value changes in excess spread financing | 5,050 | — | |||||
Depreciation and amortization | 6,358 | 2,551 | |||||
Fair value changes in mortgage servicing rights | 42,810 | 30,757 | |||||
Amortization/accretion of mortgage servicing rights at amortized cost | (3,276 | ) | — | ||||
Amortization of debt discount | 18,101 | 10,324 | |||||
Amortization (accretion) of loan discounts | (4,002 | ) | (4,001 | ) | |||
Mortgage loans originated and purchased, net of fees | (4,814,018 | ) | (2,285,558 | ) | |||
Cost of loans sold and principal payments and prepayments, and other changes in mortgage loans originated as held for sale, net of fees | 4,769,317 | 2,334,807 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable, net | (268,394 | ) | (35,055 | ) | |||
Receivables from affiliates | 653 | 2,911 | |||||
Reverse mortgage interests | (317,272 | ) | — | ||||
Other assets | (135,107 | ) | (2,037 | ) | |||
Payables and accrued liabilities | 231,925 | 35,840 | |||||
Net cash (used in)/provided by operating activities | (619,891 | ) | 49,942 |
For the nine months ended September 30, | |||||||
2012 | 2011 | ||||||
Investing activities | |||||||
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt | — | 29,395 | |||||
Property and equipment additions, net of disposals | (20,699 | ) | (15,147 | ) | |||
Acquisition of equity method investee | — | (6,600 | ) | ||||
Cash disbursement from assumption of reverse mortgage servicing obligations, net | (31,169 | ) | — | ||||
Purchase of forward mortgage servicing rights, including advances, net of liabilities incurred | (2,024,019 | ) | (40,305 | ) | |||
Loan repurchases from Ginnie Mae | (6,856 | ) | — | ||||
Proceeds from sales of REO | 8,434 | 22,897 | |||||
Net cash used in investing activities | (2,074,309 | ) | (9,760 | ) | |||
Financing activities | |||||||
Issuance of Senior Unsecured Notes, net | 781,196 | — | |||||
Transfers (to) / from restricted cash, net | (187,359 | ) | 18,312 | ||||
Issuance of common stock, net of IPO issuance costs | 246,700 | — | |||||
Issuance of participating interest financing | 416,303 | — | |||||
Issuance of excess spread financing | 215,570 | — | |||||
Increase in notes payable | 1,659,137 | 29,025 | |||||
Repayment of nonrecourse debt – Legacy assets | (12,306 | ) | (26,119 | ) | |||
Repayment of ABS nonrecourse debt | — | (47,175 | ) | ||||
Repayment of excess servicing spread financing | (12,981 | ) | — | ||||
Distributions to parent – FIF | — | (3,900 | ) | ||||
Debt financing costs | (43,690 | ) | (2,734 | ) | |||
Tax related share-based settlement of units by members | — | (4,809 | ) | ||||
Net cash provided by / (used in) financing activities | 3,062,570 | (37,400 | ) | ||||
Net increase in cash and cash equivalents | 368,370 | 2,782 | |||||
Cash and cash equivalents at beginning of period | 62,445 | 21,223 | |||||
Cash and cash equivalents at end of period | $ | 430,815 | $ | 24,005 | |||
Supplemental disclosures of non-cash activities | |||||||
Transfer of mortgage loans held for sale to REO at fair value | $ | — | $ | 90 | |||
Transfer of mortgage loans held for investment to REO at fair value | 2,808 | 3,675 | |||||
Transfer of mortgage loans held for investment, subject to ABS nonrecourse debt to REO at fair value | — | 9,616 | |||||
Mortgage servicing rights resulting from sale or securitization of mortgage loans | 37,578 | 17,985 | |||||
Excess tax benefit from share based compensation | 2,846 | — | |||||
Tax related share-based settlement of common stock | 4,566 | — | |||||
Liabilities incurred from acquired servicer advances | 294,671 | — |
September 30, 2012 | December 31, 2011 | ||||||
Transfers Accounted for as Secured Borrowings | Transfers Accounted for as Secured Borrowings | ||||||
ASSETS | |||||||
Restricted cash | $ | 126,002 | $ | 22,316 | |||
Accounts receivable | 2,269,229 | 279,414 | |||||
Mortgage loans held for investment, subject to nonrecourse debt | 228,041 | 237,496 | |||||
REO | 1,830 | 3,668 | |||||
Total Assets | $ | 2,625,102 | $ | 542,894 | |||
LIABILITIES | |||||||
Notes payable | $ | 1,707,941 | $ | 244,574 | |||
Payables and accrued liabilities | 2,412 | 977 | |||||
Derivative financial instruments | 7,041 | — | |||||
Nonrecourse debt–Legacy Assets | 101,898 | 112,490 | |||||
Total Liabilities | $ | 1,819,292 | $ | 358,041 |
September 30, 2012 | December 31, 2011 | ||||||
Total collateral balances | $ | 4,239,774 | $ | 4,579,142 | |||
Total certificate balances | 4,230,472 | 4,582,598 | |||||
Total mortgage servicing rights at fair value | 23,367 | 28,635 |
As of or for the nine months ended, | |||||||||||||||
September 30, 2012 | September 30, 2011 | ||||||||||||||
Principal Amount of Loans 60 Days or More Past Due | Credit Losses | Principal Amount of Loans 60 Days or More Past Due | Credit Losses | ||||||||||||
Total securitization trusts | $ | 1,060,797 | $ | 208,628 | $ | 801,216 | $ | 182,991 |
For the three months ended | For the nine months ended | ||||||||||||||||||||||||||||
September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | ||||||||||||||||||||||||||
Servicing Fees Received | Loan Repurchases | Servicing Fees Received | Loan Repurchases | Servicing Fees Received | Loan Repurchases | Servicing Fees Received | Loan Repurchases | ||||||||||||||||||||||
Total securitization trusts | $ | 6,317 | $ | — | $ | 5,870 | $ | — | $ | 22,149 | $ | — | $ | 21,221 | $ | — |
September 30, 2012 | December 31, 2011 | ||||||
Delinquent interest advances | $ | 1,508,429 | $ | 213,737 | |||
Corporate and escrow advances | 1,159,711 | 299,946 | |||||
Accrued servicing fees | 94,214 | 20,865 | |||||
Reverse mortgage | 26,240 | — | |||||
Receivables from trusts | 13,175 | 4,664 | |||||
Accrued interest | 3,942 | 1,512 | |||||
Insurance deposits | 1,750 | 1,750 | |||||
Other | 45,524 | 19,826 | |||||
Total accounts receivable | $ | 2,852,985 | $ | 562,300 |
September 30, 2012 | December 31, 2011 | ||||||
Mortgage loans held for sale – unpaid principal balance | $ | 668,345 | $ | 442,596 | |||
Mark-to-market adjustment | 34,869 | 16,030 | |||||
Total mortgage loans held for sale | $ | 703,214 | $ | 458,626 |
For the nine months ended September 30, | 2012 | 2011 | |||||
Mortgage loans held for sale – beginning balance | $ | 458,626 | $ | 369,617 | |||
Mortgage loans originated and purchased, net of fees | 4,814,018 | 2,285,558 | |||||
Cost of loans sold, net of fees | (4,606,909 | ) | (2,287,430 | ) | |||
Principal payments received on mortgage loans held for sale and other changes | 38,935 | 10,475 | |||||
Transfer of mortgage loans held for sale to held for investment | (1,456 | ) | (288 | ) | |||
Mortgage loans held for sale – ending balance | $ | 703,214 | $ | 377,932 |
September 30, 2012 | December 31, 2011 | |||||||
Mortgage loans held for investment, subject to nonrecourse debt - legacy assets, net – unpaid principal balance | $ | 361,474 | $ | 375,720 | ||||
Transfer discount | ||||||||
Accretable | (20,828 | ) | (22,392 | ) | ||||
Non-accretable | (94,823 | ) | (104,024 | ) | ||||
Allowance for loan losses | (7,645) | (5,824 | ) | |||||
Total mortgage loans held for investment, subject to nonrecourse debt -legacy assets, net | $ | 238,178 | $ | 243,480 |
Nine months ended September 30, 2012 | Year ended December 31, 2011 | ||||||
Accretable Yield | |||||||
Balance at the beginning of the period | $ | 22,392 | $ | 25,219 | |||
Additions | — | — | |||||
Accretion | (2,728 | ) | (4,131 | ) | |||
Reclassifications from (to) nonaccretable discount | 1,164 | 1,304 | |||||
Disposals | — | — | |||||
Balance at the end of the period | $ | 20,828 | $ | 22,392 |
Nine months ended September 30, 2012 | |||||||||||
Performing | Non-Performing | Total | |||||||||
Balance at the beginning of the period | $ | 1,641 | $ | 4,183 | $ | 5,824 | |||||
Provision for loan losses | 2,249 | 904 | 3,153 | ||||||||
Charge-offs | (978 | ) | (354 | ) | (1,332 | ) | |||||
Balance at the end of the period | $ | 2,912 | $ | 4,733 | $ | 7,645 | |||||
Ending balance – collectively evaluated for impairment | $ | 278,367 | $ | 83,107 | $ | 361,474 |
Year ended December 31, 2011 | |||||||||||
Performing | Non-Performing | Total | |||||||||
Balance at the beginning of the period | $ | 829 | $ | 2,469 | $ | 3,298 | |||||
Provision for loan losses | 1,346 | 2,191 | 3,537 | ||||||||
Recoveries on loans previously charged-off | — | — | — | ||||||||
Charge-offs | (534 | ) | (477 | ) | (1,011 | ) | |||||
Balance at the end of the period | $ | 1,641 | $ | 4,183 | $ | 5,824 | |||||
Ending balance – Collectively evaluated for impairment | $ | 283,770 | $ | 91,950 | $ | 375,720 |
September 30, 2012 | December 31, 2011 | ||||||
(in thousands) | |||||||
Credit Quality by Delinquency Status | |||||||
Performing | $ | 278,367 | $ | 283,770 | |||
Non-Performing | 83,107 | 91,950 | |||||
Total | $ | 361,474 | $ | 375,720 | |||
Credit Quality by Loan-to-Value Ratio | |||||||
Less than 60 | $ | 40,060 | $ | 42,438 | |||
Less than 70 and more than 60 | 15,817 | 15,968 | |||||
Less than 80 and more than 70 | 22,627 | 25,190 | |||||
Less than 90 and more than 80 | 28,863 | 32,620 | |||||
Less than 100 and more than 90 | 32,804 | 33,708 | |||||
Greater than 100 | 221,303 | 225,796 | |||||
Total | $ | 361,474 | $ | 375,720 |
Credit Sensitive MSRs | September 30, 2012 | December 31, 2011 | |||
Discount rate | 17.12 | % | 25.71 | % | |
Total prepayment speeds | 20.74 | % | 15.80 | % | |
Expected weighted-average life | 4.49 years | 5.15 years | |||
Credit losses | 21.35 | % | 35.42 | % | |
Interest Rate Sensitive MSRs | September 30, 2012 | December 31, 2011 | |||
Discount rate | 10.62 | % | 10.46 | % | |
Total prepayment speeds | 18.63 | % | 19.02 | % | |
Expected weighted-average life | 4.79 years | 5.04 years | |||
Credit losses | 9.59 | % | 9.73 | % |
Nine months ended September 30, 2012 | Year ended December 31, 2011 | ||||||
Fair value at the beginning of the period | $ | 251,050 | $ | 145,062 | |||
Additions: | |||||||
Servicing resulting from transfers of financial assets | 37,578 | 36,474 | |||||
Recognition of servicing assets from derecognition of variable interest entities | — | 5,714 | |||||
Purchases of servicing assets | 346,874 | 102,800 | |||||
Changes in fair value: | |||||||
Due to changes in valuation inputs or assumptions used in the valuation model | 6,669 | (14,207 | ) | ||||
Other changes in fair value | (49,479 | ) | (24,793 | ) | |||
Fair value at the end of the period | $ | 592,692 | $ | 251,050 | |||
Unpaid principal balance of forward loans serviced for others | |||||||
Credit sensitive loans | $ | 106,076,630 | $ | 32,408,623 | |||
Interest sensitive loans | 14,776,208 | 11,844,831 | |||||
Total owned loans | $ | 120,852,838 | $ | 44,253,454 |
Discount Rate | Total Prepayment Speeds | Credit Losses | ||||||||||||||||||
100 bps Adverse Change | 200 bps Adverse Change | 10% Adverse Change | 20% Adverse Change | 10% Adverse Change | 20% Adverse Change | |||||||||||||||
September 30, 2012 | ||||||||||||||||||||
Mortgage servicing rights | $ | (17,284 | ) | $ | (32,796 | ) | $ | (67,848 | ) | $ | (137,087 | ) | $ | (50,922 | ) | $ | (107,768 | ) | ||
December 31, 2011 | ||||||||||||||||||||
Mortgage servicing rights | $ | (6,640 | ) | $ | (12,929 | ) | $ | (13,281 | ) | $ | (25,215 | ) | $ | (5,081 | ) | $ | (10,944 | ) |
Nine months Ended | |||||||
September 30, 2012 | |||||||
Assets | Liabilities | ||||||
Activity of MSRs at amortized cost | |||||||
Balance at the beginning of the period | $ | — | $ | — | |||
Additions: | |||||||
Purchase /Assumptions of servicing rights/obligations | 9,000 | 86,553 | |||||
Deductions: | |||||||
Amortization/Accretion | (964 | ) | (4,240 | ) | |||
Balance at end of the period | $ | 8,036 | $ | 82,313 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||
Servicing fees | $ | 95,281 | $ | 48,141 | $ | 223,255 | $ | 133,338 | |||||
Ancillary fees | 35,355 | 25,772 | 84,893 | 62,848 | |||||||||
Total servicing and ancillary fees | $ | 130,636 | $ | 73,913 | $ | 308,148 | $ | 196,186 |
September 30, 2012 | December 31, 2011 | ||||||
Interest rate locks (see Note 10) | $ | 112,628 | $ | 11,302 | |||
Deposit in escrow for ResCap acquisition | 72,000 | — | |||||
Loans subject to repurchase right from Ginnie Mae | 58,534 | 35,735 | |||||
Deferred financing costs | 43,501 | 12,059 | |||||
Margin call deposits | 29,784 | 4,518 | |||||
Equity method investment | 8,994 | 6,493 | |||||
Prepaid expenses | 6,445 | 4,286 | |||||
Unsecured loans | 1,803 | 1,827 | |||||
Deposits pending on mortgage servicing rights acquisitions | 1,798 | 28,904 | |||||
Other | 2,872 | 1,057 | |||||
Total other assets | $ | 338,359 | $ | 106,181 |
September 30, 2012 | December 31, 2011 | ||||||||||||||
ASSETS | |||||||||||||||
Cash | $ | 3,259 | $ | 2,486 | |||||||||||
Accounts receivable | 3,837 | 5,296 | |||||||||||||
Receivables from affiliates | 388 | 92 | |||||||||||||
Equity method investments | 1,482 | 2,788 | |||||||||||||
Property and equipment, net | 2,092 | 1,995 | |||||||||||||
Goodwill and other intangible assets | 33,548 | 33,876 | |||||||||||||
Other assets | 820 | 590 | |||||||||||||
Total assets | $ | 45,426 | $ | 47,123 | |||||||||||
LIABILITIES | |||||||||||||||
Notes payable | $ | 4,724 | $ | 4,724 | |||||||||||
Payables and accrued liabilities | 16,049 | 13,236 | |||||||||||||
Total liabilities | $ | 20,773 | $ | 17,960 | |||||||||||
Three months ended September 30, | Nine months ended September 30, | From Acquisition through September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
REVENUES | |||||||||||||||
Sales | $ | 12,917 | $ | 13,181 | $ | 41,296 | $ | 25,382 | |||||||
Cost of sales | (10,447 | ) | (10,871 | ) | (31,878 | ) | (21,593 | ) | |||||||
Net sales revenues | 2,470 | 2,310 | 9,418 | 3,789 | |||||||||||
OTHER (EXPENSE)/INCOME | |||||||||||||||
Operating costs | (4,841 | ) | (5,054 | ) | (13,903 | ) | (9,004 | ) | |||||||
Income from equity method investments | 675 | 771 | 1,930 | 1,176 | |||||||||||
Depreciation and amortization | (377 | ) | (180 | ) | (1,138 | ) | (359 | ) | |||||||
Other (expense)/income | (42 | ) | 136 | (111 | ) | 39 | |||||||||
Gain/(loss) from discontinued operations | 21 | (27 | ) | (14 | ) | (54 | ) | ||||||||
Total expense | (4,564 | ) | (4,354 | ) | (13,236 | ) | (8,202 | ) | |||||||
Net loss | $ | (2,094 | ) | $ | (2,044 | ) | $ | (3,818 | ) | $ | (4,413 | ) |
September 30, 2012 | December 31, 2011 | ||||||
MSR purchases payable including advances | $ | 310,609 | $ | 8,204 | |||
Mortgage insurance premiums and reserves | 70,344 | 19,162 | |||||
Loans subject to repurchase from Ginnie Mae | 58,534 | 35,735 | |||||
Payables to securitization trusts | 37,607 | 10,665 | |||||
Reverse mortgage payables | 46,000 | — | |||||
Accrued bonus and payroll | 43,511 | 21,236 | |||||
Accrued interest | 39,902 | 10,225 | |||||
Government sponsored entities | 26,797 | 18,728 | |||||
Deposit from MSR co-investor for ResCap | 25,200 | — | |||||
Taxes | 14,544 | 154 | |||||
Repurchase reserves | 15,055 | 10,026 | |||||
Legal and professional fees | 12,076 | 5,931 | |||||
Cancelled lease reserves | 7,319 | 9,160 | |||||
Servicing Payables | 6,628 | — | |||||
Other | 48,142 | 34,563 | |||||
Total payables and accrued liabilities | $ | 762,268 | $ | 183,789 |
Derivatives in ASC 815 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) | Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) | |||||||||||
For the three months ended September 30, 2012 | ||||||||||||||||
Interest Rate Swap | $ | — | Interest Expense | $ | — | Interest Expense | $ | 423 | ||||||||
For the three months ended September 30, 2011 | ||||||||||||||||
Interest Rate Swap | $ | — | Interest Expense | $ | — | Interest Expense | $ | 617 | ||||||||
For the nine months ended September 30, 2012 | ||||||||||||||||
Interest Rate Swap | $ | — | Interest Expense | $ | — | Interest Expense | $ | — | ||||||||
For the nine months ended September 30, 2011 | ||||||||||||||||
Interest Rate Swap | $ | (1,071 | ) | Interest Expense | $ | 582 | Interest Expense | $ | 2,032 |
Expiration Dates | Outstanding Notional | Fair Value | Recorded Gains / (Losses) | ||||||||||
For the nine months ended September 30, 2012 | |||||||||||||
MORTGAGE LOANS HELD FOR SALE | |||||||||||||
Loan sale commitments | 2012 | $ | 4,175 | $ | 212 | $ | (422 | ) | |||||
OTHER ASSETS | |||||||||||||
IRLCs | 2012 | 4,353,327 | 112,628 | 101,326 | |||||||||
LIABILITIES | |||||||||||||
Interest rate swaps and caps | 2012-2015 | 648,940 | 7,041 | (501 | ) | ||||||||
Interest rate swaps on ABS debt (1) | 2012-2017 | 894,363 | 1,632 | (1,201 | ) | ||||||||
Forward MBS trades | 2012 | 2,838,185 | 29,162 | (23,332 | ) | ||||||||
For the year ending December 31, 2011 | |||||||||||||
MORTGAGE LOANS HELD FOR SALE | |||||||||||||
Loan sale commitments | 2012 | $ | 28,047 | $ | 634 | $ | 592 | ||||||
OTHER ASSETS | |||||||||||||
IRLCs | 2012 | 736,377 | 11,302 | 6,598 | |||||||||
LIABILITIES | |||||||||||||
Interest rate swaps and caps | 2012-2015 | 193,500 | 6,540 | 1,261 | |||||||||
Forward MBS trades | 2012 | 691,725 | 5,830 | (9,792 | ) | ||||||||
Interest rate swap, subject to ABS nonrecourse debt (2) | — | — | — | (8,058 | ) |
(1) | In March 2012, Nationstar received interest rate swaps from FIF as a part of the reorganization. |
(2) | In December 2011, Nationstar sold its remaining variable interest in a securitization trust that had been a consolidated VIE since January 1, 2010 and deconsolidated the VIE. Upon deconsolidation of this VIE, Nationstar derecognized the related ABS nonrecourse debt and therefore the underlying interest rate swap, subject to ABS nonrecourse debt. |
September 30, 2012 | December 31, 2011 | ||||||||||||||
Outstanding | Collateral Pledged | Outstanding | Collateral Pledged | ||||||||||||
Servicing Segment Notes Payable | |||||||||||||||
MBS advance financing facility | $ | 178,455 | $ | 197,934 | $ | 179,904 | $ | 182,096 | |||||||
Securities repurchase facility (2011) | 11,774 | 55,603 | 11,774 | 55,603 | |||||||||||
2010-ABS advance financing facility | 189,038 | 228,898 | 219,563 | 249,499 | |||||||||||
2011-1 Agency advance financing facility | 159,945 | 181,803 | 25,011 | 28,811 | |||||||||||
MSR note | 6,015 | 13,296 | 10,180 | 16,230 | |||||||||||
2012-AW Agency advance financing facility | 100,000 | 124,551 | — | — | |||||||||||
2012-C ABS advance financing facility | 562,366 | 692,635 | — | — | |||||||||||
2012-R ABS advance financing facility | 328,793 | 392,360 | — | — | |||||||||||
2012-W ABS advance financing facility | 367,797 | 454,402 | — | — | |||||||||||
Reverse participations financing facility | 18,801 | 21,298 | — | — | |||||||||||
Originations Segment Notes Payable | |||||||||||||||
$375 million warehouse facility | 195,703 | 211,820 | 46,810 | 51,040 | |||||||||||
$150 million warehouse facility | 155,323 | 162,705 | 251,722 | 265,083 | |||||||||||
$250 million warehouse facility (2011) | 141,204 | 147,941 | 7,310 | 7,672 | |||||||||||
$100 million warehouse facility (2009) | 87,659 | 91,311 | 16,047 | 16,715 | |||||||||||
ASAP+ facility | 29,443 | 28,800 | 104,858 | 104,006 | |||||||||||
Total notes payable | $ | 2,532,316 | $ | 3,005,357 | $ | 873,179 | $ | 976,755 |
September 30, 2012 | December 31, 2011 | ||||||
$285 million face value, 10.875% interest rate payable semi-annually, due April 2015 | $ | 281,307 | $ | 280,199 | |||
$375 million face value, 9.625% interest rate payable semi-annually, due May 2019 | 380,366 | — | |||||
$400 million face value, 7.875% interest rate payable semi-annually, due October 2020 | $ | 400,750 | $ | — | |||
Total | $ | 1,062,423 | $ | 280,199 |
Year | Amount | ||
2013 | $ | — | |
2014 | — | ||
2015 | 285,000 | ||
2016 | — | ||
2017 | — | ||
Thereafter | 775,000 | ||
Total | $ | 1,060,000 |
For the three months ended | For the nine months ended | ||||||||||||
September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | ||||||||||
Servicing | $ | 13,893 | $ | 7,106 | $ | 50,530 | $ | 16,101 | |||||
Legal and professional fees | 18,251 | 8,508 | 32,818 | 13,145 | |||||||||
Depreciation and amortization | 2,973 | 991 | 6,358 | 2,551 | |||||||||
Equipment | 2,450 | 1,251 | 5,569 | 3,245 | |||||||||
Postage | 2,395 | 1,522 | 5,056 | 3,937 | |||||||||
Travel | 2,043 | 871 | 4,730 | 2,383 | |||||||||
Other | 9,580 | 5,148 | 22,046 | 15,345 | |||||||||
Total general and administrative expenses | $ | 51,585 | $ | 25,397 | $ | 127,107 | $ | 56,707 |
September 30, 2012 | |||||||||||||||
Recurring Fair Value Measurements | |||||||||||||||
Total Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
ASSETS | |||||||||||||||
Mortgage loans held for sale(1) | $ | 703,214 | $ | — | $ | 703,214 | $ | — | |||||||
Mortgage servicing rights – fair value(1) | 592,692 | — | — | 592,692 | |||||||||||
Other assets: | |||||||||||||||
IRLCs | 112,628 | — | 112,628 | — | |||||||||||
Total assets | $ | 1,408,534 | $ | — | $ | 815,842 | $ | 592,692 | |||||||
LIABILITIES | |||||||||||||||
Derivative financial instruments | |||||||||||||||
Interest rate swaps and caps | $ | 7,041 | $ | — | $ | 7,041 | $ | — | |||||||
Interest rate swaps on ABS debt | 1,632 | — | 1,632 | — | |||||||||||
Forward MBS trades | 29,162 | — | 29,162 | — | |||||||||||
Excess spread financing (at fair value) | 255,484 | — | — | 255,484 | |||||||||||
Total liabilities | $ | 293,319 | $ | — | $ | 37,835 | $ | 255,484 | |||||||
December 31, 2011 | |||||||||||||||
Recurring Fair Value Measurements | |||||||||||||||
Total Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
ASSETS | |||||||||||||||
Mortgage loans held for sale(1) | $ | 458,626 | $ | — | $ | 458,626 | $ | — | |||||||
Mortgage servicing rights – fair value(1) | 251,050 | — | — | 251,050 | |||||||||||
Other assets: | |||||||||||||||
IRLCs | 11,302 | — | 11,302 | — | |||||||||||
Total assets | $ | 720,978 | $ | — | $ | 469,928 | $ | 251,050 | |||||||
LIABILITIES | |||||||||||||||
Derivative financial instruments | |||||||||||||||
Interest rate swaps and caps | $ | 6,540 | $ | — | $ | 6,540 | $ | — | |||||||
Forward MBS trades | 5,830 | — | 5,830 | — | |||||||||||
Excess spread financing (at fair value) | 44,595 | — | — | 44,595 | |||||||||||
Total liabilities | $ | 56,965 | $ | — | $ | 12,370 | $ | 44,595 |
(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. |
ASSETS | LIABILITIES | |||||||
For the three months ended September 30, 2012 | Mortgage servicing rights | Excess spread financing | ||||||
Beginning balance | $ | 596,462 | $ | 266,693 | ||||
Transfers into Level 3 | — | — | ||||||
Transfers out of Level 3 | — | — | ||||||
Total gains or losses | ||||||||
Included in earnings | (22,430 | ) | (2,213 | ) | ||||
Included in other comprehensive income | — | — | ||||||
Purchases, issuances, sales and settlements | ||||||||
Purchases | 5,210 | — | ||||||
Issuances | 13,450 | (1,522 | ) | |||||
Sales | — | — | ||||||
Settlements | — | (7,474 | ) | |||||
Ending balance | $ | 592,692 | $ | 255,484 |
ASSETS | LIABILITIES | |||||||
For the nine months ended September 30, 2012 | Mortgage servicing rights | Excess spread financing | ||||||
Beginning balance | $ | 251,050 | $ | 44,595 | ||||
Transfers into Level 3 | — | — | ||||||
Transfers out of Level 3 | — | — | ||||||
Total gains or losses | ||||||||
Included in earnings | (42,810 | ) | 5,050 | |||||
Included in other comprehensive income | — | — | ||||||
Purchases, issuances, sales and settlements | ||||||||
Purchases | 346,874 | — | ||||||
Issuances | 37,578 | 218,820 | ||||||
Sales | — | — | ||||||
Settlements | — | (12,981 | ) | |||||
Ending balance | $ | 592,692 | $ | 255,484 |
ASSETS | LIABILITIES | |||||||
For the year ending December 31, 2011 | Mortgage servicing rights | Excess spread financing | ||||||
Beginning balance | $ | 145,062 | $ | — | ||||
Transfers into Level 3 | — | — | ||||||
Transfers out of Level 3 | — | — | ||||||
Total gains or losses | ||||||||
Included in earnings | (39,000 | ) | 3,060 | |||||
Included in other comprehensive income | — | — | ||||||
Purchases, issuances, sales and settlements | ||||||||
Purchases | 102,800 | — | ||||||
Issuances | 36,474 | 43,742 | ||||||
Sales | — | — | ||||||
Settlements | 5,714 | (2,207 | ) | |||||
Ending balance | $ | 251,050 | $ | 44,595 |
Nonrecurring Fair Value Measurements | Total Estimated Fair Value | Total Gain (Loss) Included in Earnings | |||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||
Three months ended September 30, 2012 | |||||||||||||||||||
Assets | |||||||||||||||||||
REO(1) | $ | — | $ | — | $ | 3,193 | $ | 3,193 | $ | 2,050 | |||||||||
Total assets | $ | — | $ | — | $ | 3,193 | $ | 3,193 | $ | 2,050 | |||||||||
Nine months ended September 30, 2012 | |||||||||||||||||||
Assets | |||||||||||||||||||
REO(1) | $ | — | $ | — | $ | 3,193 | $ | 3,193 | $ | (1,705 | ) | ||||||||
Total assets | $ | — | $ | — | $ | 3,193 | $ | 3,193 | $ | (1,705 | ) | ||||||||
Year ended December 31, 2011 | |||||||||||||||||||
Assets | |||||||||||||||||||
REO(1) | $ | — | $ | — | $ | 3,668 | $ | 3,668 | $ | (6,833 | ) | ||||||||
Total assets | $ | — | $ | — | $ | 3,668 | $ | 3,668 | $ | (6,833 | ) |
(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. |
September 30, 2012 | |||||||||||||||
Carrying Amount | Fair Value | ||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 430,815 | $ | 430,815 | $ | — | $ | — | |||||||
Restricted cash | 258,858 | 258,858 | — | — | |||||||||||
Mortgage loans held for sale | 703,214 | — | 703,214 | — | |||||||||||
Mortgage loans held for investment, subject to nonrecourse debt – Legacy assets | 238,178 | — | — | 221,852 | |||||||||||
Reverse mortgage interests | 452,886 | — | 492,765 | — | |||||||||||
Derivative instruments | 112,628 | — | 112,628 | — | |||||||||||
Financial liabilities: | |||||||||||||||
Notes payable | 2,532,216 | — | — | 2,532,216 | |||||||||||
Unsecured senior notes | 1,062,423 | 1,129,060 | — | — | |||||||||||
Derivative financial instruments | 37,835 | — | 37,835 | — | |||||||||||
Nonrecourse debt - Legacy assets | 101,898 | — | — | 103,727 | |||||||||||
Excess spread financing | 255,484 | — | — | 255,484 | |||||||||||
Participating interest financing | 415,448 | — | 417,650 | — | |||||||||||
December 31, 2011 | |||||||||||||||
Carrying Amount | Fair Value | ||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 62,445 | $ | 62,445 | $ | — | $ | — | |||||||
Restricted cash | 71,499 | 71,499 | — | — | |||||||||||
Mortgage loans held for sale | 458,626 | — | 458,626 | — | |||||||||||
Mortgage loans held for investment, subject to nonrecourse debt – Legacy assets | 243,480 | — | — | 226,890 | |||||||||||
Derivative instruments | 11,302 | — | 11,302 | — | |||||||||||
Financial liabilities: | |||||||||||||||
Notes payable | 873,179 | — | — | 873,179 | |||||||||||
Unsecured senior notes | 280,199 | 282,150 | — | — | |||||||||||
Derivative financial instruments | 12,370 | — | 12,370 | — | |||||||||||
Nonrecourse debt - Legacy assets | 112,490 | — | — | 114,037 | |||||||||||
Excess spread financing | 44,595 | — | — | 44,595 |
Shares | Grant Date Fair Value | Remaining Contractual Term | |||
Restricted Stock outstanding at March 31, 2012 | 1,277 | $14.00 | 2.4 | ||
Granted | 6 | $28.17 | 1.0 | ||
Forfeited | (32) | ||||
Restricted Stock outstanding at September 30, 2012 | 1,251 | ||||
Restricted Stock unvested and expected to vest | 1,223 | ||||
Restricted Stock vested and payable at September 30, 2012 | — |
Three months ended September 30, 2012 | |||||||||||||||||||||||
Servicing | Originations | Operating Segments | Legacy Portfolio and Other | Eliminations | Consolidated | ||||||||||||||||||
REVENUES: | |||||||||||||||||||||||
Servicing fee income | $ | 135,398 | $ | — | $ | 135,398 | $ | 548 | $ | (442 | ) | $ | 135,504 | ||||||||||
Other fee income | 6,457 | (4,055 | ) | 2,402 | (6 | ) | 2,396 | ||||||||||||||||
Total fee income | 141,855 | (4,055 | ) | 137,800 | 542 | (442 | ) | 137,900 | |||||||||||||||
Gain/(loss) on mortgage loans held for sale | — | 139,259 | 139,259 | — | — | 139,259 | |||||||||||||||||
Total revenues | 141,855 | 135,204 | 277,059 | 542 | (442 | ) | 277,159 | ||||||||||||||||
Total expenses and impairments | 95,296 | 56,481 | 151,777 | 3,051 | — | 154,828 | |||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest income | 12,544 | 6,161 | 18,705 | 4,395 | 442 | 23,542 | |||||||||||||||||
Interest expense | (53,830 | ) | (7,738 | ) | (61,568 | ) | (3,447 | ) | — | (65,015 | ) | ||||||||||||
Gain (loss) on interest rate swaps and caps | 236 | — | 236 | (1,313 | ) | — | (1,077 | ) | |||||||||||||||
Total other income (expense) | (41,050 | ) | (1,577 | ) | (42,627 | ) | (365 | ) | 442 | (42,550 | ) | ||||||||||||
Income (loss) before taxes | $ | 5,509 | $ | 77,146 | $ | 82,655 | $ | (2,874 | ) | $ | — | $ | 79,781 | ||||||||||
Depreciation and amortization | $ | 2,006 | $ | 766 | $ | 2,772 | $ | 201 | $ | — | $ | 2,973 | |||||||||||
Total assets | 4,470,896 | 1,079,521 | 5,550,417 | 390,814 | — | 5,941,231 |
Three months ended September 30, 2011 | |||||||||||||||||||||||
Servicing | Originations | Operating Segments | Legacy Portfolio and Other | Eliminations | Consolidated | ||||||||||||||||||
REVENUES: | |||||||||||||||||||||||
Servicing fee income | $ | 54,220 | $ | — | $ | 54,220 | $ | 519 | $ | (1,708 | ) | $ | 53,031 | ||||||||||
Other fee income | 3,772 | 3,114 | 6,886 | 774 | — | 7,660 | |||||||||||||||||
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 ABS securitizations | — | — | — | (654 | ) | — | (654 | ) | |||||||||||||||
Total other income (expense) | (13,254 | ) | 67 | (13,187 | ) | 650 | 1,708 | (10,829 | ) | ||||||||||||||
Income before taxes | $ | (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, 2012 | |||||||||||||||||||||||
Servicing | Originations | Operating Segments | Legacy Portfolio and Other | Eliminations | Consolidated | ||||||||||||||||||
REVENUES: | |||||||||||||||||||||||
Servicing fee income | $ | 305,124 | $ | — | $ | 305,124 | $ | 1,785 | $ | (1,363 | ) | $ | 305,546 | ||||||||||
Other fee income | 19,728 | 1,665 | 21,393 | (134 | ) | 21,259 | |||||||||||||||||
Total fee income | 324,852 | 1,665 | 326,517 | 1,651 | (1,363 | ) | 326,805 | ||||||||||||||||
Gain (loss) on mortgage loans held for sale | — | 312,094 | 312,094 | — | 22 | 312,116 | |||||||||||||||||
Total revenues | 324,852 | 313,759 | 638,611 | 1,651 | (1,341 | ) | 638,921 | ||||||||||||||||
Total expenses and impairments | 228,182 | 132,935 | 361,117 | 20,660 | — | 381,777 | |||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest income | 22,406 | 14,719 | 37,125 | 14,145 | 1,363 | 52,633 | |||||||||||||||||
Interest expense | (99,053 | ) | (15,529 | ) | (114,582 | ) | (11,304 | ) | (22 | ) | (125,908 | ) | |||||||||||
Gain (loss) on interest rate swaps and caps | 424 | — | 424 | (2,126 | ) | — | (1,702 | ) | |||||||||||||||
Total other income (expense) | (76,223 | ) | (810 | ) | (77,033 | ) | 715 | 1,341 | (74,977 | ) | |||||||||||||
Income before taxes | $ | 20,447 | $ | 180,014 | $ | 200,461 | $ | (18,294 | ) | $ | — | $ | 182,167 | ||||||||||
Depreciation and amortization | $ | 4,104 | $ | 1,669 | $ | 5,773 | $ | 585 | $ | — | $ | 6,358 | |||||||||||
Total assets | 4,470,896 | 1,079,521 | 5,550,417 | 390,814 | — | 5,941,231 |
Nine months ended September 30, 2011 | |||||||||||||||||||||||
Servicing | Originations | Operating Segments | Legacy Portfolio and Other | Eliminations | Consolidated | ||||||||||||||||||
REVENUES: | |||||||||||||||||||||||
Servicing fee income | $ | 164,804 | $ | — | $ | 164,804 | $ | 1,257 | $ | (5,306 | ) | $ | 160,755 | ||||||||||
Other fee income | 10,437 | 10,983 | 21,420 | 2,579 | — | 23,999 | |||||||||||||||||
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 - ABS securitizations | — | — | — | (6,919 | ) | — | (6,919 | ) | |||||||||||||||
Total other income (expense) | (38,580 | ) | 1,080 | (37,500 | ) | (408 | ) | 5,306 | (32,602 | ) | |||||||||||||
Income before taxes | $ | 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 |
NATIONSTAR MORTGAGE HOLDINGS INC. CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2012 (IN THOUSANDS) | |||||||||||||||||||||||
Assets | Nationstar Inc. | Issuer | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | |||||||||||||||||
Cash and cash equivalents | $ | — | $ | 430,497 | $ | 318 | $ | — | $ | — | $ | 430,815 | |||||||||||
Restricted cash | — | 132,854 | 3 | 126,001 | — | 258,858 | |||||||||||||||||
Accounts receivable, net | — | 2,851,007 | — | 1,978 | — | 2,852,985 | |||||||||||||||||
Mortgage loans held for sale | — | 703,214 | — | — | — | 703,214 | |||||||||||||||||
Mortgage loans held for investment, subject to nonrecourse debt–Legacy Asset, net | — | 10,137 | — | 228,041 | — | 238,178 | |||||||||||||||||
Participating interest in reverse mortgages | — | 452,886 | — | — | — | 452,886 | |||||||||||||||||
Receivables from affiliates | — | (1,605,564 | ) | 82,229 | 1,536,636 | — | 13,301 | ||||||||||||||||
Mortgage servicing rights – fair value | — | 592,692 | — | — | — | 592,692 | |||||||||||||||||
Investment in subsidiaries | 661,463 | 157,812 | — | — | (819,275 | ) | — | ||||||||||||||||
Mortgage servicing rights – amortized cost | — | 8,036 | — | — | — | 8,036 | |||||||||||||||||
Property and equipment, net | — | 47,879 | 835 | — | — | 48,714 | |||||||||||||||||
REO, net | — | 1,363 | — | 1,830 | — | 3,193 | |||||||||||||||||
Other assets | 29,783 | 338,359 | — | — | (29,783 | ) | 338,359 | ||||||||||||||||
Total assets | $ | 691,246 | $ | 4,121,172 | $ | 83,385 | $ | 1,894,486 | $ | (849,058 | ) | $ | 5,941,231 | ||||||||||
Liabilities and shareholders’ equity | |||||||||||||||||||||||
Notes payable | $ | — | $ | 823,608 | $ | — | $ | 1,708,708 | $ | — | $ | 2,532,316 | |||||||||||
Unsecured senior notes | — | 1,062,423 | — | — | — | 1,062,423 | |||||||||||||||||
Payables and accrued liabilities | — | 789,639 | — | 2,412 | (29,783 | ) | 762,268 | ||||||||||||||||
Payables to affiliates | — | — | — | — | — | — | |||||||||||||||||
Derivative financial instruments | — | 30,794 | — | 7,041 | — | 37,835 | |||||||||||||||||
Mortgage Servicing Liability | — | 82,313 | — | — | — | 82,313 | |||||||||||||||||
Nonrecourse debt–Legacy Assets | — | — | — | 101,898 | — | 101,898 | |||||||||||||||||
Excess spread financing - at fair value | — | 255,484 | — | — | — | 255,484 | |||||||||||||||||
Participating interest financing | — | 415,448 | — | — | — | 415,448 | |||||||||||||||||
Total liabilities | — | 3,459,709 | — | 1,820,059 | (29,783 | ) | 5,249,985 | ||||||||||||||||
Total shareholders’ equity | 691,246 | 661,463 | 83,385 | 74,427 | (819,275 | ) | 691,246 | ||||||||||||||||
Total liabilities and shareholders’ equity | $ | 691,246 | $ | 4,121,172 | $ | 83,385 | $ | 1,894,486 | $ | (849,058 | ) | $ | 5,941,231 |
NATIONSTAR MORTGAGE INC CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012 (IN THOUSANDS) | |||||||||||||||||||||||
Nationstar Inc. | Issuer | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Servicing fee income | $ | — | $ | 135,339 | $ | — | $ | 607 | $ | (442 | ) | $ | 135,504 | ||||||||||
Other fee income | — | (4,672 | ) | 6,947 | 121 | — | 2,396 | ||||||||||||||||
Total fee income | — | 130,667 | 6,947 | 728 | (442 | ) | 137,900 | ||||||||||||||||
Gain on mortgage loans held for sale | — | 139,259 | — | — | — | 139,259 | |||||||||||||||||
Total Revenues | — | 269,926 | 6,947 | 728 | (442 | ) | 277,159 | ||||||||||||||||
Expenses and impairments: | |||||||||||||||||||||||
Salaries, wages and benefits | — | 96,121 | 1,986 | — | — | 98,107 | |||||||||||||||||
General and administrative | — | 50,573 | 401 | 611 | — | 51,585 | |||||||||||||||||
Provision for loan losses | — | — | — | 1,545 | — | 1,545 | |||||||||||||||||
Loss on foreclosed real estate and other | — | 884 | — | (2,934 | ) | — | (2,050 | ) | |||||||||||||||
Occupancy | — | 5,641 | — | — | — | 5,641 | |||||||||||||||||
Total expenses and impairments | — | 153,219 | 2,387 | (778 | ) | — | 154,828 | ||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest income | — | 18,460 | — | 4,640 | 442 | 23,542 | |||||||||||||||||
Interest expense | — | (43,000 | ) | — | (22,015 | ) | — | (65,015 | ) | ||||||||||||||
Gain/(Loss) on interest rate swaps and caps | — | (389 | ) | — | (688 | ) | — | (1,077 | ) | ||||||||||||||
Gain/(loss) from subsidiaries | 49,931 | (11,997 | ) | — | — | (37,934 | ) | — | |||||||||||||||
Total other income (expense) | 49,931 | (36,926 | ) | — | (18,063 | ) | (37,492 | ) | (42,550 | ) | |||||||||||||
Income before taxes | 49,931 | 79,781 | 4,560 | (16,557 | ) | (37,934 | ) | 79,781 | |||||||||||||||
Income tax expense/(benefit) | (5,136 | ) | 29,850 | — | — | — | 24,714 | ||||||||||||||||
Net income/(loss) | 55,067 | 49,931 | 4,560 | (16,557 | ) | (37,934 | ) | 55,067 | |||||||||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||||||
Change in value of cash flow hedges | — | — | — | — | — | — | |||||||||||||||||
Reclassification adjustments for gain (loss) included in earnings | $ | — | $ | — | $ | — | $ | 423 | $ | — | $ | 423 | |||||||||||
Comprehensive income / (loss) | $ | 55,067 | $ | 49,931 | $ | 4,560 | $ | (16,134 | ) | $ | (37,934 | ) | $ | 55,490 |
NATIONSTAR MORTGAGE HOLDINGS INC. CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 (IN THOUSANDS) | |||||||||||||||||||||||
Nationstar Inc. | Issuer | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Servicing fee income | $ | — | $ | 301,363 | $ | — | $ | 5,546 | $ | (1,363 | ) | $ | 305,546 | ||||||||||
Other fee income | — | 310 | 20,596 | 353 | — | 21,259 | |||||||||||||||||
Total fee income | — | 301,673 | 20,596 | 5,899 | (1,363 | ) | 326,805 | ||||||||||||||||
Gain on mortgage loans held for sale | — | 312,116 | — | — | — | 312,116 | |||||||||||||||||
Total Revenues | — | 613,789 | 20,596 | 5,899 | (1,363 | ) | 638,921 | ||||||||||||||||
Expenses and impairments: | |||||||||||||||||||||||
Salaries, wages and benefits | — | 231,709 | 6,810 | — | — | 238,519 | |||||||||||||||||
General and administrative | — | 119,772 | 1,778 | 5,557 | — | 127,107 | |||||||||||||||||
Provision for loan losses | — | — | — | 3,153 | — | 3,153 | |||||||||||||||||
Loss on foreclosed real estate and other | — | 1,008 | — | 697 | — | 1,705 | |||||||||||||||||
Occupancy | — | 11,293 | — | — | — | 11,293 | |||||||||||||||||
Total expenses and impairments | — | 363,782 | 8,588 | 9,407 | — | 381,777 | |||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest income | — | 36,489 | — | 14,781 | 1,363 | 52,633 | |||||||||||||||||
Interest expense | — | (89,832 | ) | — | (36,076 | ) | — | (125,908 | ) | ||||||||||||||
Gain/(Loss) on interest rate swaps and caps | — | (1,201 | ) | — | (501 | ) | — | (1,702 | ) | ||||||||||||||
Gain/(loss) from subsidiaries | 114,591 | (13,331 | ) | — | — | (101,260 | ) | — | |||||||||||||||
Total other income (expense) | 114,591 | (67,875 | ) | — | (21,796 | ) | (99,897 | ) | (74,977 | ) | |||||||||||||
Income before taxes | 114,591 | 182,132 | 12,008 | (25,304 | ) | (101,260 | ) | 182,167 | |||||||||||||||
Income tax expense/(benefit) | (26,937 | ) | 67,541 | 5 | 30 | — | 40,639 | ||||||||||||||||
Net income/(loss) | 141,528 | 114,591 | 12,003 | (25,334 | ) | (101,260 | ) | 141,528 | |||||||||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||||||
Change in value of cash flow hedges | — | — | — | (423 | ) | — | (423 | ) | |||||||||||||||
Reclassification adjustments for gain (loss) included in earnings | — | — | — | 423 | — | 423 | |||||||||||||||||
Comprehensive income / (loss) | $ | 141,528 | $ | 114,591 | $ | 12,003 | $ | (25,334 | ) | $ | (101,260 | ) | $ | 141,528 |
NATIONSTAR MORTGAGE HOLDINGS INC. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 (IN THOUSANDS) | |||||||||||||||||||||||
Nationstar Inc. | Issuer | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||||
Operating activities: | |||||||||||||||||||||||
Net income/(loss) | $ | 141,528 | $ | 114,591 | $ | 12,003 | $ | (25,334 | ) | $ | (101,260 | ) | $ | 141,528 | |||||||||
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities: | |||||||||||||||||||||||
(Gain)/loss from subsidiaries | (114,591 | ) | 13,331 | — | — | 101,260 | — | ||||||||||||||||
Share-based compensation | — | 10,665 | — | — | — | 10,665 | |||||||||||||||||
Gain on mortgage loans held for sale | — | (312,116 | ) | — | — | — | (312,116 | ) | |||||||||||||||
Provision for loan losses | — | — | — | 3,153 | — | 3,153 | |||||||||||||||||
Loss on foreclosed real estate and other | — | 1,008 | — | 697 | — | 1,705 | |||||||||||||||||
Loss on equity method investments | — | 1,327 | — | — | — | 1,327 | |||||||||||||||||
(Gain)/loss on ineffectiveness on interest rate swaps and cap | — | 1,201 | — | 501 | — | 1,702 | |||||||||||||||||
Fair value changes in excess spread financing | — | 5,050 | — | — | — | 5,050 | |||||||||||||||||
Depreciation and amortization | — | 6,315 | 43 | — | — | 6,358 | |||||||||||||||||
Change in fair value of mortgage servicing rights | — | 42,810 | — | — | — | 42,810 | |||||||||||||||||
Accretion of mortgage servicing liability | — | (3,276 | ) | — | — | — | (3,276 | ) | |||||||||||||||
Amortization of debt discount | — | 16,387 | — | 1,714 | — | 18,101 | |||||||||||||||||
Amortization of premiums/(discounts) | — | (125 | ) | — | (3,877 | ) | — | (4,002 | ) | ||||||||||||||
Mortgage loans originated and purchased, net of fees | — | (4,814,018 | ) | — | — | — | (4,814,018 | ) | |||||||||||||||
Cost of loans sold and principal payments and prepayments, and other changes in mortgage loans originated as held for sale, net of fees | — | 4,761,946 | — | 7,371 | — | 4,769,317 | |||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||||||
Accounts receivable | — | (546,934 | ) | 7 | 278,533 | — | (268,394 | ) | |||||||||||||||
Receivables from/(payables to) affiliates | — | 1,626,650 | (11,979 | ) | (1,614,018 | ) | — | 653 | |||||||||||||||
Reverse funded advances due to securitization | — | (317,272 | ) | — | — | — | (317,272 | ) | |||||||||||||||
Other assets | (29,783 | ) | (135,107 | ) | — | — | 29,783 | (135,107 | ) | ||||||||||||||
Accounts payable and accrued liabilities | 2,846 | 259,694 | — | (832 | ) | (29,783 | ) | 231,925 | |||||||||||||||
Net cash provided by/(used in) operating activities | — | 732,127 | 74 | (1,352,092 | ) | — | (619,891 | ) |
Nationstar Inc. | Issuer | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||||
Investing activities: | |||||||||||||||||||||||
Property and equipment additions, net of disposals | — | (20,699 | ) | — | — | — | (20,699 | ) | |||||||||||||||
Cash Proceeds from assumption of reverse mortgage servicing obligations, net | — | (31,169 | ) | — | — | — | (31,169 | ) | |||||||||||||||
Deposit on / purchase of mortgage servicing rights, net of liabilities incurred | — | (2,024,019 | ) | — | — | — | (2,024,019 | ) | |||||||||||||||
Repurchases of REO from Ginnie Mae | — | (6,856 | ) | — | — | — | (6,856 | ) | |||||||||||||||
Proceeds from sales of REO | — | 4,485 | — | 3,949 | — | 8,434 | |||||||||||||||||
Net cash provided by/(used in) investing activities | — | (2,078,258 | ) | — | 3,949 | — | (2,074,309 | ) | |||||||||||||||
Financing activities: | |||||||||||||||||||||||
Issuance of Senior Unsecured Notes | — | 781,196 | — | — | — | 781,196 | |||||||||||||||||
Transfers to/from restricted cash | — | (83,674 | ) | — | (103,685 | ) | — | (187,359 | ) | ||||||||||||||
Issuance of common stock, net of IPO issuance costs | 246,700 | — | — | — | — | 246,700 | |||||||||||||||||
Issuance of participating interest financing | — | 416,303 | — | — | — | 416,303 | |||||||||||||||||
Issuance of excess spread financing | — | 215,570 | — | — | — | 215,570 | |||||||||||||||||
Increase (decrease) in notes payable, net | — | 195,003 | — | 1,464,134 | — | 1,659,137 | |||||||||||||||||
Repayment of nonrecourse debt–Legacy assets | — | — | — | (12,306 | ) | — | (12,306 | ) | |||||||||||||||
Repayment of excess servicing spread financing | — | (12,981 | ) | — | — | — | (12,981 | ) | |||||||||||||||
Distribution to subsidiaries | (246,700 | ) | — | — | — | 246,700 | — | ||||||||||||||||
Contributions of parent | — | 246,700 | — | — | (246,700 | ) | — | ||||||||||||||||
Debt financing costs | — | (43,690 | ) | — | — | — | (43,690 | ) | |||||||||||||||
Net cash provided by/(used in) financing activities | — | 1,714,427 | — | 1,348,143 | — | 3,062,570 | |||||||||||||||||
Net increase/(decrease) in cash | — | 368,296 | 74 | — | — | 368,370 | |||||||||||||||||
Cash and cash equivalents at beginning of period | — | 62,201 | 244 | — | — | 62,445 | |||||||||||||||||
Cash and cash equivalents at end of period | $ | — | $ | 430,497 | $ | 318 | $ | — | $ | — | $ | 430,815 |
NATIONSTAR MORTGAGE LLC CONSOLIDATING BALANCE SHEET DECEMBER 31, 2011 (IN THOUSANDS) | |||||||||||||||||||
Issuer (Parent) | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 62,201 | $ | 244 | $ | — | $ | — | $ | 62,445 | |||||||||
Restricted cash | 49,180 | 3 | 22,316 | — | 71,499 | ||||||||||||||
Accounts receivable, net | 281,782 | 7 | 280,511 | — | 562,300 | ||||||||||||||
Mortgage loans held for sale | 458,626 | — | — | — | 458,626 | ||||||||||||||
Mortgage loans held for investment, subject to nonrecourse debt–Legacy Asset, net | 5,984 | — | 237,496 | — | 243,480 | ||||||||||||||
Receivables from affiliates | 41,961 | 70,541 | — | (107,893 | ) | 4,609 | |||||||||||||
Mortgage servicing rights – fair value | 251,050 | — | — | — | 251,050 | ||||||||||||||
Investment in subsidiaries | 140,880 | — | — | (140,880 | ) | — | |||||||||||||
Property and equipment, net | 23,238 | 835 | — | — | 24,073 | ||||||||||||||
REO, net | — | — | 3,668 | — | 3,668 | ||||||||||||||
Other assets | 106,181 | — | — | — | 106,181 | ||||||||||||||
Total assets | $ | 1,421,083 | $ | 71,630 | $ | 543,991 | $ | (248,773 | ) | $ | 1,787,931 | ||||||||
Liabilities and members’ equity | |||||||||||||||||||
Notes payable | $ | 628,605 | $ | — | $ | 244,574 | $ | — | $ | 873,179 | |||||||||
Unsecured senior notes | 280,199 | — | — | — | 280,199 | ||||||||||||||
Payables and accrued liabilities | 180,545 | — | 3,244 | — | 183,789 | ||||||||||||||
Payables to affiliates | — | — | 107,893 | (107,893 | ) | — | |||||||||||||
Derivative financial instruments | 5,830 | — | 6,540 | — | 12,370 | ||||||||||||||
Derivative financial instruments, subject to ABS nonrecourse debt | — | — | — | — | — | ||||||||||||||
Nonrecourse debt–Legacy Assets | — | — | 112,490 | — | 112,490 | ||||||||||||||
Excess spread financing – fair value | 44,595 | — | — | — | 44,595 | ||||||||||||||
ABS nonrecourse – fair value | — | — | — | — | — | ||||||||||||||
Total liabilities | 1,139,774 | — | 474,741 | (107,893 | ) | 1,506,622 | |||||||||||||
Total members’ equity | 281,309 | 71,630 | 69,250 | (140,880 | ) | 281,309 | |||||||||||||
Total liabilities and members’ equity | $ | 1,421,083 | $ | 71,630 | $ | 543,991 | $ | (248,773 | ) | $ | 1,787,931 |
NATIONSTAR MORTGAGE LLC CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 (IN THOUSANDS) | |||||||||||||||||||
Issuer | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | |||||||||||||||
Revenues: | |||||||||||||||||||
Servicing fee income | $ | 50,983 | $ | (106 | ) | $ | 3,862 | $ | (1,708 | ) | $ | 53,031 | |||||||
Other fee income | 3,517 | 3,882 | 261 | — | 7,660 | ||||||||||||||
Total fee income | 54,500 | 3,776 | 4,123 | (1,708 | ) | 60,691 | |||||||||||||
Gain on mortgage loans held for sale | 30,232 | — | — | — | 30,232 | ||||||||||||||
Total Revenues | 84,732 | 3,776 | 4,123 | (1,708 | ) | 90,923 | |||||||||||||
Expenses and impairments: | |||||||||||||||||||
Salaries, wages and benefits | 49,989 | 915 | — | — | 50,904 | ||||||||||||||
General and administrative | 20,585 | 871 | 3,941 | — | 25,397 | ||||||||||||||
Provision for loan losses | 1,281 | — | (404 | ) | — | 877 | |||||||||||||
Loss on foreclosed real estate | 1,234 | — | 1,324 | — | 2,558 | ||||||||||||||
Occupancy | 3,419 | 39 | — | — | 3,458 | ||||||||||||||
Total expenses and impairments | 76,508 | 1,825 | 4,861 | — | 83,194 | ||||||||||||||
Other income / (expense): | |||||||||||||||||||
Interest income | 2,871 | 5 | 11,617 | 1,708 | 16,201 | ||||||||||||||
Interest expense | (14,686 | ) | — | (11,690 | ) | — | (26,376 | ) | |||||||||||
Fair value changes in ABS securitizations | — | — | (553 | ) | (101 | ) | (654 | ) | |||||||||||
Gain / (loss) from subsidiaries | 592 | — | — | (592 | ) | — | |||||||||||||
Total other income / (expense) | (11,223 | ) | 5 | (626 | ) | 1,015 | (10,829 | ) | |||||||||||
Net income / (loss) | (2,999 | ) | 1,956 | (1,364 | ) | (693 | ) | (3,100 | ) | ||||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||
Change in value of cash flow hedges | — | — | — | — | — | ||||||||||||||
Comprehensive income / (loss) | $ | (2,999 | ) | $ | 1,956 | $ | (1,364 | ) | $ | (693 | ) | $ | (3,100 | ) |
NATIONSTAR MORTGAGE LLC CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (IN THOUSANDS) | |||||||||||||||||||
Issuer (Parent) | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | |||||||||||||||
Revenues: | |||||||||||||||||||
Servicing fee income | $ | 162,741 | $ | (542 | ) | $ | 3,862 | $ | (5,306 | ) | $ | 160,755 | |||||||
Other fee income | 11,647 | 11,411 | 941 | — | 23,999 | ||||||||||||||
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 | ||||||||||||||
Provision for loan losses | 2,005 | — | — | — | 2,005 | ||||||||||||||
Loss on foreclosed real estate | 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 | ||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||
Change in value of cash flow hedges | — | — | (1,071 | ) | — | (1,071 | ) | ||||||||||||
Comprehensive income / (loss) | $ | 5,979 | $ | 5,474 | $ | (13,267 | ) | $ | 6,738 | $ | 4,924 |
NATIONSTAR MORTGAGE LLC CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (IN THOUSANDS) | |||||||||||||||||||
Issuer (Parent) | Guarantor (Subsidiaries) | Non-Guarantor (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 on equity method investments | 971 | 971 | |||||||||||||||||
Share-based compensation | 12,201 | — | — | — | 12,201 | ||||||||||||||
Gain on mortgage loans held for sale | (73,560 | ) | — | — | — | (73,560 | ) | ||||||||||||
Provision for loan losses | 2,005 | — | — | — | 2,005 | ||||||||||||||
Loss on foreclosed real estate and other | 1,436 | — | 5,468 | — | 6,904 | ||||||||||||||
(Gain)/loss on ineffectiveness on interest rate swaps and cap | — | — | (2,032 | ) | — | (2,032 | ) | ||||||||||||
Fair value changes in ABS securitizations | — | — | 6,935 | (16 | ) | 6,919 | |||||||||||||
Loss from subsidiaries | 6,722 | — | — | (6,722 | ) | — | |||||||||||||
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 | 37,620 | — | 9,757 | — | 47,377 | ||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||
Accounts receivable | (35,366 | ) | (5 | ) | 316 | — | (35,055 | ) | |||||||||||
Receivables from/(payables to) affiliates | (24,356 | ) | (5,031 | ) | 32,298 | — | 2,911 | ||||||||||||
Other assets | (2,037 | ) | — | — | — | (2,037 | ) | ||||||||||||
Accounts payable and accrued liabilities | 36,053 | — | (213 | ) | — | 35,840 | |||||||||||||
Net cash provided by/(used) in operating activities | 9,515 | 438 | 39,989 | — | 49,942 |
Issuer (Parent) | Guarantor (Subsidiaries) | Non-Guarantor (Subsidiaries) | Eliminations | Consolidated | |||||||||||||||
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 REO | — | — | 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 nonrecourse debt–Legacy assets | — | — | (26,119 | ) | — | (26,119 | ) | ||||||||||||
Repayment of ABS nonrecourse debt | — | — | (47,175 | ) | — | (47,175 | ) | ||||||||||||
Debt financing costs | (2,734 | ) | — | — | — | (2,734 | ) | ||||||||||||
Distribution to parent | (3,900 | ) | — | — | — | (3,900 | ) | ||||||||||||
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 | 3,229 | 435 | (882 | ) | — | 2,782 | |||||||||||||
Cash and cash equivalents at beginning of period | 20,904 | 319 | — | — | 21,223 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 24,133 | $ | 754 | $ | (882 | ) | $ | — | $ | 24,005 |
September 30, 2012 | December 31, 2011 | |||||
Consolidated Balance Sheets Data: | ||||||
Cash and cash equivalents | $ | 430,815 | $ | 62,445 | ||
Accounts receivable | 2,852,985 | 562,300 | ||||
Mortgage servicing rights (at fair value) | 592,692 | 251,050 | ||||
Total assets | 5,941,231 | 1,787,931 | ||||
Notes payable | 2,532,316 | 873,179 | ||||
Unsecured senior notes | 1,062,423 | 280,199 | ||||
Nonrecourse debt-legacy assets | 101,898 | 112,490 | ||||
Excess spread financing (at fair value) | 255,484 | 44,595 | ||||
Total liabilities | 5,249,985 | 1,506,622 | ||||
Total equity | 691,246 | 281,309 |
Consolidated Statements of Operations and Comprehensive Income Data: | For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Total revenues | $ | 277,159 | $ | 90,923 | $ | 638,921 | $ | 258,314 | |||||||
Total expenses and impairments | 154,828 | 83,194 | 381,777 | 219,717 | |||||||||||
Total other expense | (42,550 | ) | (10,829 | ) | (74,977 | ) | (32,602 | ) | |||||||
Income (loss) before taxes | 79,781 | (3,100 | ) | 182,167 | 5,995 | ||||||||||
Total income tax expense | 24,714 | — | 40,639 | — | |||||||||||
Net income (loss) | 55,067 | (3,100 | ) | 141,528 | 5,995 | ||||||||||
Reclassification adjustment for gain (loss) included in earnings | 423 | — | 423 | — | |||||||||||
Change in value of designated cash flow hedges | — | — | (423 | ) | (1,071 | ) | |||||||||
Comprehensive income (loss) | $ | 55,490 | $ | (3,100 | ) | $ | 141,528 | $ | 4,924 | ||||||
Other Financial Data: | |||||||||||||||
Net cash provided by / (used in): | |||||||||||||||
Operating activities | $ | (263,266 | ) | $ | (66,155 | ) | $ | (619,891 | ) | $ | 49,942 | ||||
Investing activities | (105,656 | ) | (28,382 | ) | (2,074,309 | ) | (9,760 | ) | |||||||
Financing activities | 783,845 | 116,010 | 3,062,570 | (37,400 | ) | ||||||||||
Adjusted EBITDA(1) (non-GAAP measure) | 123,035 | 32,996 | 301,479 | 88,661 | |||||||||||
Operating Segments: | |||||||||||||||
Interest expense from unsecured senior notes | 17,656 | 7,543 | 39,714 | 22,622 | |||||||||||
Change in fair value of mortgage servicing rights | 22,430 | 19,035 | 42,810 | 30,757 | |||||||||||
Depreciation and amortization | 2,772 | 852 | 5,773 | 2,187 | |||||||||||
Share-based compensation | 2,623 | 1,676 | 11,371 | 12,152 |
(1) | Adjusted EBITDA is a key performance measure used by management in evaluating the performance of our segments. Adjusted EBITDA represents our Operating Segments' income, 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, 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 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 our 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 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 MSRs 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. |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
Net Income/(Loss) from Operating Segments to Adjusted EBITDA Reconciliation (dollars in thousands): | 2012 | 2011 | 2012 | 2011 | |||||||||||
Net income (loss) | $ | 55,067 | $ | (3,100 | ) | $ | 141,528 | $ | 5,995 | ||||||
Plus: | |||||||||||||||
Net loss from Legacy Portfolio and Other | 2,874 | 7,607 | 18,294 | 16,980 | |||||||||||
Income tax expense | 24,714 | — | 40,639 | — | |||||||||||
Income from Operating Segments | 82,655 | 4,507 | 200,461 | 22,975 | |||||||||||
Adjust for: | |||||||||||||||
Interest expense from unsecured senior notes | 17,656 | 7,543 | 39,714 | 22,622 | |||||||||||
Depreciation and amortization | 2,772 | 852 | 5,773 | 2,187 | |||||||||||
Change in fair value of mortgage servicing rights | 22,430 | 19,035 | 42,810 | 30,757 | |||||||||||
Amortization of mortgage servicing rights/obligations - at amortized cost | (2,652 | ) | — | (3,276 | ) | — | |||||||||
Share-based compensation | 2,623 | 1,676 | 11,371 | 12,152 | |||||||||||
Fair value changes on excess spread financing | (2,213 | ) | — | 5,050 | — | ||||||||||
Fair value changes in derivatives | (236 | ) | — | (424 | ) | — | |||||||||
Ineffective portion of cash flow hedge | — | (617 | ) | — | (2,032 | ) | |||||||||
Adjusted EBITDA | $ | 123,035 | $ | 32,996 | $ | 301,479 | $ | 88,661 |
September 30, 2012 | September 30, 2011 | ||||||
Servicing Portfolio (in millions) | |||||||
Unpaid principal balance (by investor): | |||||||
Special servicing | $ | 10,751 | $ | 10,621 | |||
Government-sponsored enterprises | 92,695 | 62,085 | |||||
Non-Agency securitizations | 55,453 | 19,821 | |||||
Total boarded forward servicing portfolio | 158,899 | 92,527 | |||||
Acquired Servicing Rights owned - serviced by others | 5,226 | — | |||||
Acquired Servicing Rights owned - serviced by predecessor | 6,134 | 10,189 | |||||
Total forward servicing portfolio | 170,259 | 102,716 | |||||
Reverse mortgage servicing | 27,313 | — | |||||
Total servicing portfolio unpaid principal balance | $ | 197,572 | $ | 102,716 |
Nine months ended September 30, | 2012 (1) | 2011 | |||||
($ in millions, except for average loan amount) | |||||||
Loan count-servicing | 879,058 | 550,283 | |||||
Ending unpaid principal balance | $ | 158,899 | $ | 92,527 | |||
Average unpaid principal balance | $ | 117,405 | $ | 78,351 | |||
Average loan amount | $ | 180,761 | $ | 168,144 | |||
Average coupon | 5.36 | % | 5.46 | % | |||
Average FICO | 669 | 667 | |||||
60+ delinquent (% of loans) (2) | 13.7 | % | 14.7 | % | |||
Total prepayment speed (12 month constant pre-payment rate) | 15.6 | % | 12.5 | % |
(1) | 2012 characteristics and key performance metrics of our servicing portfolio exclude approximately $6.1 billion and approximately 33,000 units of forward residential mortgage loans acquired. These loans were boarded in October 2012 and have been excluded from our key performance metrics above. Additionally, these characteristics and key performance metrics exclude forward residential mortgage servicing rights serviced by others. |
(2) | Loan delinquency is based on the current contractual due date of the loan. In the case of a completed loan modification, delinquency is based on the modified due date of the loan. |
Nine months ended September 30, | 2012 | ||
($ in millions, except for average loan amount) | |||
Loan count | 166,015 | ||
Ending unpaid principal balance | $ | 27,313 | |
Average loan amount | $ | 164,004 | |
Average coupon | 3.02 | % | |
Average borrower age | 76 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Servicing fee income | $ | 113,154 | $ | 51,837 | $ | 255,847 | $ | 145,237 | |||||||
Loss mitigation and performance-based incentive fees | 5,787 | 4,713 | 20,741 | 8,896 | |||||||||||
Modification fees | 17,186 | 10,485 | 31,718 | 23,485 | |||||||||||
Late fees and other ancillary charges | 8,048 | 5,860 | 22,342 | 17,981 | |||||||||||
Reverse mortgage fees | 8,303 | — | 18,446 | — | |||||||||||
Other servicing fee related revenues | 485 | 360 | 614 | (37 | ) | ||||||||||
Total servicing fee income before MSR fair value adjustments | 152,963 | 73,255 | 349,708 | 195,562 | |||||||||||
Fair value adjustments on excess spread financing | 2,213 | — | (5,050 | ) | — | ||||||||||
Reverse mortgage servicing amortization/accretion | 2,652 | — | 3,276 | — | |||||||||||
MSR fair value adjustments | (22,430 | ) | (19,035 | ) | (42,810 | ) | (30,757 | ) | |||||||
Total servicing fee income | $ | 135,398 | $ | 54,220 | $ | 305,124 | $ | 164,805 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Primary servicing | $ | 113,204 | $ | 39,154 | $ | 234,554 | $ | 112,235 | |||||||
Subservicing | 31,456 | 34,101 | 96,708 | 83,327 | |||||||||||
Reverse servicing | 8,303 | — | 18,446 | — | |||||||||||
Total servicing fee income before MSR fair value adjustments | $ | 152,963 | $ | 73,255 | $ | 349,708 | $ | 195,562 |
September 30, 2012 | September 30, 2011 | ||||||
UPB (in millions) | |||||||
Primary servicing | $ | 123,132 | $ | 36,527 | |||
Subservicing | 47,127 | 56,000 | |||||
Reverse servicing | 27,313 | — | |||||
Total unpaid principal balance | $ | 197,572 | $ | 92,527 |
• | Increase of $61.4 million due to higher average UPB on our forward servicing portfolio, which increased to $160.3 billion in the 2012 period compared to $83.7 billion in the comparable 2011 period. The increase in our servicing portfolio was primarily driven by an increase in average UPB for loans serviced for GSEs and other subservicing contracts for third-party investors to $82.8 billion in the 2012 period compared to $56.4 billion in the comparable 2011 period. In addition, we also experienced an increase in average UPB for our private asset-backed securitizations portfolio, which increased to $36.4 billion in the three months ended September 30, 2012 compared to $13.3 billion in the comparable 2011 period. |
• | Increase of $1.1 million due to increased loss mitigation and performance-based incentive fees earned from a GSE. |
• | Increase of $6.7 million due to higher modification fees earned from HAMP and non-HAMP modifications. |
• | Increase of $2.1 million from increased collections from late fees and other ancillary charges. |
• | Increase of $8.3 million from fees earned from our reverse mortgage portfolio for which we began servicing in January 2012. |
• | Decrease of $3.4 million from change in fair value on MSRs which was recognized in servicing fee income. The fair value of our 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 previously 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. |
• | Increase of $2.2 million from change in fair value of our excess spread financing arrangements. In conjunction with various MSR acquisitions, we have entered into sale and assignment agreements, which we treated as financings, whereby we sold the right to receive 65% of the excess cash flow generated from certain underlying MSR portfolios after receipt of a fixed basic servicing fee per loan. We measure these financing arrangements at fair value. |
For the three months ended September 30, | |||||||
2012 | 2011 | ||||||
Primary servicing | $ | 430 | $ | 1,002 | |||
Subservicing | 16 | 726 | |||||
Adjacent businesses | 6,011 | 2,044 | |||||
Total other fee income | $ | 6,457 | $ | 3,772 |
For the three months ended September 30, | |||||||
2012 | 2011 | ||||||
Primary servicing | $ | 43,206 | $ | 18,507 | |||
Subservicing | 31,124 | 24,616 | |||||
Reverse servicing | 8,902 | — | |||||
Adjacent businesses | 8,489 | 2,717 | |||||
Other Servicing Segment expenses | 3,575 | 2,034 | |||||
Total expenses and impairments | $ | 95,296 | $ | 47,874 |
• | Interest income was $12.5 million for the three months ended September 30, 2012 compared to $1.0 million for the three months ended September 30, 2011, an increase of $11.5 million primarily attributable to interest earned on our outstanding participating interests in reverse mortgages of $13.4 million, with no respective interest amounts earned in the comparable 2011 period. |
• | Interest expense was $53.8 million for the three months ended September 30, 2012 compared to $14.2 million for the three ended September 30, 2011, an increase of $39.6 million, or 278.9%, primarily due to higher average outstanding debt of $2,658.3 million for the three months ended September 30, 2012 compared to $620.5 million in the comparable 2011 period. The impact of the higher debt balances is partially offset by lower interest rates due to declines in the base LIBOR and decreases in the overall index margin on outstanding servicer advance facilities. Interest expense from the senior unsecured notes was $15.7 million and $7.5 million, for the three months ended September 30, 2012 and 2011, respectively. Interest expense for the three months ended September 30, 2011 also includes gains for the ineffective portion of a cash flow hedge of $0.6 million, with no respective amounts for the 2012 period. |
• | Increase of $110.6 million due to higher average UPB on our forward servicing portfolio, which increased to $117.4 billion in the 2012 period compared to $71.9 billion in the comparable 2011 period. The increase in our servicing portfolio was primarily driven by an increase in average UPB for loans serviced for GSEs and other subservicing contracts for third-party investors of $81.2 billion in the 2012 period compared to $57.1 billion in the comparable 2011 period. In addition, we also experienced an increase in average UPB for our private asset-backed securitizations portfolio, which increased to $37.2 billion in the nine months ended September 30, 2012 compared to $13.5 billion in the comparable 2011 period. |
• | Increase of $11.8 million due to increased loss mitigation and performance-based incentive fees earned from a GSE. |
• | Increase of $8.2 million due to higher modification fees earned from HAMP and non-HAMP modifications. |
• | Increase of $4.3 million from higher collections from late fees and other ancillary charges. |
• | Increase of $18.4 million from fees earned from our reverse mortgage portfolio for which we began servicing in January 2012. |
• | Decrease of $12.0 million from change in fair value on MSRs which was recognized in servicing fee income. The fair value of our 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 previously 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. |
• | Decrease of $5.1 million from change in fair value of our excess spread financing arrangement. In conjunction with various MSR acquisitions, we have entered into sale and assignment agreements, which we treated as financings, whereby we sold the right to receive 65% of the excess cash flow generated from certain underlying MSR portfolios after receipt of a fixed basic servicing fee per loan. We measure these financing arrangements at fair value. |
For the nine months ended September 30, | |||||||
2012 | 2011 | ||||||
Primary servicing | $ | 3,711 | $ | 3,154 | |||
Subservicing | 2,339 | 1,895 | |||||
Adjacent businesses | 13,678 | 5,387 | |||||
Total other fee income | $ | 19,728 | $ | 10,436 |
For the nine months ended September 30, | |||||||
2012 | 2011 | ||||||
Primary servicing | $ | 97,444 | $ | 51,167 | |||
Subservicing | 87,445 | 58,593 | |||||
Reverse servicing | 17,965 | — | |||||
Adjacent businesses | 13,354 | 6,224 | |||||
Other Servicing Segment expenses | 11,974 | 12,193 | |||||
Total expenses and impairments | $ | 228,182 | $ | 128,177 |
• | Interest income was $22.4 million for the nine months ended September 30, 2012 compared to $2.5 million for the nine months ended September 30, 2011, an increase of $19.9 million primarily attributable to interest earned on our outstanding participating interests in reverse mortgages of $23.3 million, with no respective interest amounts earned in the comparable 2011 period. |
• | Interest expense was $90.1 million for the nine months ended September 30, 2012 compared to $41.1 million for the nine ended September 30, 2011, an increase of $49.0 million, or 119.2%, primarily due to higher average outstanding debt of $1,515.1 million for the nine months ended September 30, 2012 compared to $618.2 million in the comparable 2011 period. The impact of the higher debt balances is partially offset by lower interest rates due to declines in the base LIBOR and decreases in the overall index margin on outstanding servicer advance facilities. Interest expense from the senior unsecured notes was $37.8 million and $22.5 million, respectively, for the nine months ended September 30, 2012 and 2011. Interest expense for September 30, 2011 also includes gains for the ineffective portion of a cash flow hedge of $2.0 million, with no respective amounts for the 2012 period. |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
Originations Volume (in millions) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Retail | $ | 977.0 | $ | 590.3 | $ | 2,861.7 | $ | 1,505.9 | |||||||
Wholesale | 840.7 | 317.2 | 1,952.3 | 779.7 | |||||||||||
Total Originations | $ | 1,817.7 | $ | 907.5 | $ | 4,814.0 | $ | 2,285.6 |
• | Other fee income was ($4.1) million for the three months ended September 30, 2012 compared to $3.1 million for the three months ended September 30, 2011, a decrease of $7.2 million, or 232.3%, primarily due to an increase in net points and fees collected of $3.7 million offset by an increase in broker fees paid of $10.4 million. |
For the three months ended September 30, | |||||||
2012 | 2011 | ||||||
Gain on sale | $ | 94,437 | $ | 16,270 | |||
Provision for repurchases | (3,352 | ) | (778 | ) | |||
Capitalized servicing rights | 13,450 | 7,762 | |||||
Fair value mark-to-market adjustments | (6,455 | ) | 6,161 | ||||
Mark-to-market on derivatives/hedges | 41,179 | 937 | |||||
Total gain on mortgage loans held for sale | $ | 139,259 | $ | 30,352 |
• | Increase of $78.1 million from larger volume of originations, which increased to $1.8 billion in 2012 from $0.9 billion in 2011, and higher margins earned on the sale of residential mortgage loans during the period. |
• | Increase of $5.7 million from capitalized MSRs due to the larger volume of originations and subsequent retention of MSRs. |
• | Increase of $40.3 million from change in unrealized gains/losses on derivative financial instruments. These include IRLCs and forward sales of MBS. |
• | Decrease of $12.7 million resulting from the change in fair value on newly-originated loans. |
• | Decrease of $2.6 million from a larger provision for repurchases as a result of the increase in our loan sale volume. |
• | Increase of $22.6 million in salaries, wages and benefits expense from increase in average headcount of 1,181 in 2012 from 799 in 2011 and increases in performance-based compensation due to increases in originations volume. |
• | Increase of $8.0 million in general and administrative and occupancy expense primarily due to an increase in our overhead expenses from the higher originations volume in the 2012 period. |
• | Interest income was $6.2 million for the three months ended September 30, 2012 compared to $3.1 million for the three months ended September 30, 2011, an increase of $3.1 million, or 100.0%, representing interest earned from originated loans prior to sale or securitization. The increase is primarily due to the increase in the volume of originations. Loans are typically sold within 30 days of origination. |
• | Interest expense was $7.7 million for the three months ended September 30, 2012 compared to $3.0 million for the three months ended September 30, 2011, an increase of $4.7 million, or 156.7%, primarily due to an increase in originations volume in 2012 and associated financing required to originate these loans, combined with a slight increase in outstanding average days in warehouse on newly originated loans. Additionally, we recognized $0.6 million in additional amortization on our outstanding debt facilities due to recent amendments and modifications on our outstanding warehouse facilities. |
For the nine months ended September 30, | |||||||
2012 | 2011 | ||||||
Gain on sale | $ | 186,933 | $ | 42,260 | |||
Provision for repurchases | (9,134 | ) | (2,978 | ) | |||
Capitalized servicing rights | 37,578 | 25,748 | |||||
Fair value mark-to-market adjustments | 18,838 | 9,292 | |||||
Mark-to-market on derivatives/hedges | 77,879 | (490 | ) | ||||
Total gain on mortgage loans held for sale | $ | 312,094 | $ | 73,832 |
• | Increase of $144.6 million from larger volume of originations, which increased to $4.8 billion 2012 from $2.3 billion in 2011, and higher margins earned on the sale of residential mortgage loans during the period. |
• | Increase of $11.9 million from capitalized MSRs due to the larger volume of originations and subsequent retention of MSRs. |
• | Increase of $9.5 million resulting from the change in fair value on newly-originated loans. |
• | Increase of $78.4 million from change in unrealized gains/losses on derivative financial instruments. These include IRLCs and forward sales of MBS. |
• | Decrease of $6.1 million from an increase in our provision for repurchases as a result of the increase in our loan sale volume. |
• | Increase of $45.5 million in salaries, wages and benefits expense from increase in average headcount of 997 in 2012 from 752 in 2011 and increases in performance-based compensation due to increases in originations volume. |
• | Increase of $16.0 million in general and administrative and occupancy expense primarily due to an increase in our overhead expenses from the higher originations volume in the 2012 period. |
• | Interest income was $14.7 million for the nine months ended September 30, 2012 compared to $8.6 million for the nine months ended September 30, 2011, an increase of $6.1 million, or 70.9%, representing interest earned from originated loans prior to sale or securitization. The increase is primarily due to the increase in the volume of originations. Loans are typically sold within 30 days of origination. |
• | Interest expense was $15.5 million for the nine months ended September 30, 2012 compared to $7.5 million for the nine months ended September 30, 2011, an increase of $8.0 million, or 106.7%, primarily due to an increase in originations volume in 2012 and associated financing required to originate these loans, combined with a slight increase in outstanding average days in warehouse on newly originated loans. Additionally, we recognized an additional $1.7 million in amortization on our outstanding debt facilities due to recent amendments and modifications on our outstanding warehouse facilities. |
September 30, | |||||||
2012 | 2011 (1) | ||||||
Performing – UPB | $ | 278,367 | $ | 982,510 | |||
Nonperforming (90+ Delinquency) - UPB | 83,107 | 295,082 | |||||
REO - Estimated Fair Value | 3,193 | 15,411 | |||||
Total Legacy Portfolio and Other – UPB | $ | 364,667 | $ | 1,293,003 |
(1) | Amounts include one previously off-balance sheet securitization which was consolidated upon adoption of ASC 810, Consolidation, related to consolidation of certain VIEs. |
Nine Months Ended September 30, 2012 | Year Ended December 31, 2011 | ||||||
Repurchase reserves, beginning of period | $ | 10,026 | $ | 7,321 | |||
Additions | 9,226 | 5,534 | |||||
Charge-offs | (4,197 | ) | (2,829 | ) | |||
Repurchase reserves, end of period | $ | 15,055 | $ | 10,026 |
Nine Months Ended September 30, 2012 | Year Ended December 31, 2011 | ||||||||||||
UPB | Count | UPB | Count | ||||||||||
Beginning balance | $ | 12.9 | 62 | $ | 4.3 | 21 | |||||||
Repurchases & indemnifications | (5.5 | ) | (26 | ) | (6.9 | ) | (37 | ) | |||||
Claims initiated | 17.7 | 103 | 32.4 | 155 | |||||||||
Rescinded | (13.6 | ) | (64 | ) | (16.9 | ) | (77 | ) | |||||
$ | 11.5 | 75 | $ | 12.9 | 62 |
Nine Months Ended September 30, 2012 | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | Total | |||||||||||||||||||||||||||||||||||
$ | Count | $ | Count | $ | Count | $ | Count | $ | Count | $ | Count | |||||||||||||||||||||||||||||
Loan Sales | $ | 4.6 | 21,172 | $ | 3.3 | 16,629 | $ | 2.6 | 13,090 | $ | 1.0 | 5,344 | $ | 0.5 | 3,412 | $ | 12.0 | 59,647 |
• | Decrease of $2,528.4 million due to higher originations volume. We originated $4,814.0 million in residential mortgage loans during the nine month period ended September 30, 2012, compared to $2,285.6 in mortgage originations for the comparable 2011 period. This decrease was partially offset by an increase of $2,434.5 million in our cash inflows from proceeds received from the sale of our residential mortgage loans and payments received on mortgage loans. We received $4,769.3 million in cash proceeds from loan sales and principal collections for the nine month ended September 30, 2012, compared to $2,334.8 million for the comparable 2011 period. |
• | Increase of $489.9 million in cash outflows used by working capital which used $488.2 million for the nine months ended September 30, 2012 compared to $1.7 million in cash inflow for the comparable 2011 period. |
Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | Filed or Furnished Herewith |
4.1 | Fourth Supplemental Indenture, dated as of August 9, 2012 among Nationstar Mortgage Holdings Inc., Nationstar Sub1 LLC, Nationstar Sub2 LLC and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.1 | 8/9/2012 | |
4.2 | Second Supplemental Indenture, dated as of August 9, 2012 among Nationstar Mortgage Holdings Inc., Nationstar Sub1 LLC, Nationstar Sub2 LLC and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.2 | 8/9/2012 | |
4.3 | First Supplemental Indenture, dated as of July 24, 2012 by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.2 | 7/24/2012 | |
4.4 | Fifth Supplemental Indenture, dated as of August 30, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.1 | 9/4/2012 | |
4.5 | Indenture, dated as of September 24, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.1 | 9/24/2012 | |
4.6 | First Supplemental Indenture, dated as of September 28, 2012 by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.2 | 9/28/2012 | |
10.1 | Registration Rights Agreement, dated as of July 24, 2012, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers | 8-K | 001-35449 | 10.1 | 7/24/2012 | |
10.2 | Registration Rights Agreement, dated as of September 24, 2012, among the Issuers, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers | 8-K | 001-35449 | 10.1 | 9/24/2012 | |
10.3 | Registration Rights Agreement, dated as of September 28, 2012, among the Issuers, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers | 8-K | 001-35449 | 10.1 | 9/28/2012 | |
Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | Filed or Furnished Herewith |
31.1 | Certification by Chief Executive Officer pursuant to Rules 13a 14(a) and 15d 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
31.2 | Certification by Chief Financial Officer pursuant to Rules 13a 14(a) and 15d 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
32.1 | Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
32.2 | Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
101.INS | XBRL Instance Document | X | ||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||
NATIONSTAR MORTGAGE HOLDINGS INC. | ||
November 6, 2012 | /s/ Jay Bray | |
Date | Jay Bray Chief Executive Officer | |
November 6, 2012 | /s/ David C. Hisey | |
Date | David C.Hisey Chief Financial Officer |
Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | Filed or Furnished Herewith |
4.1 | Fourth Supplemental Indenture, dated as of August 9, 2012 among Nationstar Mortgage Holdings Inc., Nationstar Sub1 LLC, Nationstar Sub2 LLC and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.1 | 8/9/2012 | |
4.2 | Second Supplemental Indenture, dated as of August 9, 2012 among Nationstar Mortgage Holdings Inc., Nationstar Sub1 LLC, Nationstar Sub2 LLC and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.2 | 8/9/2012 | |
4.3 | First Supplemental Indenture, dated as of July 24, 2012 by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.2 | 7/24/2012 | X |
4.4 | Fifth Supplemental Indenture, dated as of August 30, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.1 | 9/4/2012 | X |
4.5 | Indenture, dated as of September 24, 2012, by and among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors thereto and Wells Fargo Bank, National Association, as trustee | 8-K | 001-35449 | 4.1 | 9/24/2012 | |
10.1 | Registration Rights Agreement, dated as of July 24, 2012, among Nationstar Mortgage LLC, Nationstar Capital Corporation, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers | 8-K | 001-35449 | 10.1 | 7/24/2012 | |
10.2 | Registration Rights Agreement, dated as of September 24, 2012, among the Issuers, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers | 8-K | 001-35449 | 10.1 | 9/24/2012 | |
10.3 | Registration Rights Agreement, dated as of September 28, 2012, among the Issuers, the guarantors party thereto, and Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., RBS Securities Inc. and Wells Fargo Securities, LLC, as representatives of the several initial purchasers | 8-K | 001-35449 | 10.1 | 9/28/2012 | |
31.1 | Certification by Chief Executive Officer pursuant to Rules 13a 14(a) and 15d 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | Filed or Furnished Herewith |
31.2 | Certification by Chief Financial Officer pursuant to Rules 13a 14(a) and 15d 14(a) under the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
32.1 | Certification by Chief Executive Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
32.2 | Certification by Chief Financial Officer pursuant to 18 USC. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
101.INS | XBRL Instance Document | X | ||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2012 of Nationstar Mortgage Inc.; |
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 registrant's 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 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s 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 registrant's 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 registrant’s internal control over financial reporting. |
Date: | November 6, 2012 | By: | /s/ Jay Bray | |
Jay Bray | ||||
Title: | Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2012 of Nationstar Mortgage Inc.; |
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 registrant's 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 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s 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 registrant's 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 registrant’s internal control over financial reporting. |
Date: | November 6, 2012 | By: | /s/ David C. Hisey | |
David C. Hisey | ||||
Title | 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. |
Date: | November 6, 2012 | ||
By: | /s/ Jay Bray | ||
Jay Bray | |||
Title: | Chief Executive 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. |
Date: | November 6, 2012 | ||
By: | /s/ David C. Hisey | ||
David C. Hisey | |||
Title: | Chief Financial Officer |
General and Administrative Expenses (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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General and Administrative Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General and Administrative Expenses | General and administrative expenses consist of the following for the dates indicated (in thousands):
|
Mortgage Loans Held for Sale and Investment - Mortgage Loans Held for Investment (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Total mortgage loans held for investment, subject to nonrecourse debt - legacy assets, net | $ 238,178 | $ 243,480 | |
Mortgage Loans Held for Investment
|
|||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Mortgage loans held for investment, subject to nonrecourse debt - legacy assets, net - unpaid principal balance | 361,474 | 375,720 | |
Transfer discount - accretable | (20,828) | (22,392) | (25,219) |
Transfer discount - non-accretable | (94,823) | (104,024) | |
Allowance for loan losses | (7,645) | (5,824) | (3,298) |
Total mortgage loans held for investment, subject to nonrecourse debt - legacy assets, net | $ 238,178 | $ 243,480 |
Variable Interest Entities and Securitizations - Securitization Trusts (Details) (USD $)
In Thousands, unless otherwise specified |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
|
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Total mortgage servicing rights at fair value | $ 592,692 | $ 251,050 | |
Variable Interest Entity, Not Primary Beneficiary
|
|||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Total collateral balances | 4,239,774 | 4,579,142 | |
Total certificate balances | 4,230,472 | 4,582,598 | |
Total mortgage servicing rights at fair value | 23,367 | 28,635 | |
Principal Amount of Loans 60 Days or More Past Due | 1,060,797 | 801,216 | |
Credit Losses | $ 208,628 | $ 182,991 |
Indebtedness - Servicing Segment Notes Payable (Details) (USD $)
|
9 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
Sep. 30, 2012
Servicing Segment
Notes Payable, Other
MBS Advance Financing Facility
|
Dec. 31, 2011
Servicing Segment
Notes Payable, Other
MBS Advance Financing Facility
|
Sep. 30, 2012
Servicing Segment
Notes Payable, Other
Securities Repurchase Facility (2011)
|
Dec. 31, 2011
Servicing Segment
Notes Payable, Other
Securities Repurchase Facility (2011)
|
Oct. 31, 2009
Servicing Segment
Notes Payable, Other
MSR Note
|
Sep. 30, 2012
Servicing Segment
Notes Payable, Other
MSR Note
|
Dec. 31, 2011
Servicing Segment
Notes Payable, Other
MSR Note
|
Sep. 30, 2012
Servicing Segment
Notes Payable to Banks
ABS Advance Financing Facility (2010)
|
Dec. 31, 2011
Servicing Segment
Notes Payable to Banks
ABS Advance Financing Facility (2010)
|
Sep. 30, 2012
Servicing Segment
Notes Payable to Banks
Agency Advance Financing Facility (2011-1)
|
Oct. 31, 2012
Servicing Segment
Notes Payable to Banks
Agency Advance Financing Facility (2011-1)
|
Dec. 31, 2011
Servicing Segment
Notes Payable to Banks
Agency Advance Financing Facility (2011-1)
|
Sep. 30, 2012
Servicing Segment
Notes Payable to Banks
AW Agency Advance Financing Facility (2012)
|
Dec. 31, 2011
Servicing Segment
Notes Payable to Banks
AW Agency Advance Financing Facility (2012)
|
Sep. 30, 2012
Servicing Segment
Notes Payable to Banks
C ABS Advance Financing Facility (2012)
|
Dec. 31, 2011
Servicing Segment
Notes Payable to Banks
C ABS Advance Financing Facility (2012)
|
Sep. 30, 2012
Servicing Segment
Notes Payable to Banks
R ABS Advance Financing Facility (2012)
|
Dec. 31, 2011
Servicing Segment
Notes Payable to Banks
R ABS Advance Financing Facility (2012)
|
Sep. 30, 2012
Servicing Segment
Notes Payable to Banks
W ABS Advance Financing Facility (2012)
|
Dec. 31, 2011
Servicing Segment
Notes Payable to Banks
W ABS Advance Financing Facility (2012)
|
Sep. 30, 2012
Servicing Segment
Notes Payable to Banks
Reverse Participations Financing Facility
|
Dec. 31, 2011
Servicing Segment
Notes Payable to Banks
Reverse Participations Financing Facility
|
Sep. 30, 2012
Minimum
Servicing Segment
Notes Payable to Banks
Agency Advance Financing Facility (2011-1)
|
Sep. 30, 2012
Minimum
Servicing Segment
Notes Payable to Banks
C ABS Advance Financing Facility (2012)
|
Sep. 30, 2012
Minimum
Servicing Segment
Notes Payable to Banks
R ABS Advance Financing Facility (2012)
|
Sep. 30, 2012
Maximum
Servicing Segment
Notes Payable to Banks
Agency Advance Financing Facility (2011-1)
|
Sep. 30, 2012
Maximum
Servicing Segment
Notes Payable to Banks
C ABS Advance Financing Facility (2012)
|
Sep. 30, 2012
Maximum
Servicing Segment
Notes Payable to Banks
R ABS Advance Financing Facility (2012)
|
|
Debt Instrument | ||||||||||||||||||||||||||||||
Term of agreement | 1 year | 4 years | ||||||||||||||||||||||||||||
Maximum borrowing capacity | $ 325,000,000 | $ 300,000,000 | $ 300,000,000 | $ 600,000,000 | $ 100,000,000 | $ 600,000,000 | $ 350,000,000 | $ 450,000,000 | $ 150,000,000 | |||||||||||||||||||||
Extension period | 90 days | |||||||||||||||||||||||||||||
Variable interest rate basis | LIBOR | LIBOR | LIBOR | LIBOR | LIBOR | LIBOR | LIBOR | LIBOR | LIBOR | LIBOR | ||||||||||||||||||||
Interest Rate, LIBOR Plus a spread of | 2.50% | 3.50% | 2.50% | 3.00% | 2.50% | 3.75% | 4.00% | 2.50% | 3.50% | 3.37% | 6.00% | 4.00% | 8.00% | |||||||||||||||||
Collateral Pledged | $ 3,005,357,000 | $ 976,755,000 | $ 197,934,000 | $ 182,096,000 | $ 55,603,000 | $ 55,603,000 | $ 13,296,000 | $ 16,230,000 | $ 228,898,000 | $ 249,499,000 | $ 181,803,000 | $ 28,811,000 | $ 124,551,000 | $ 0 | $ 692,635,000 | $ 0 | $ 392,360,000 | $ 0 | $ 454,402,000 | $ 0 | $ 21,298,000 | $ 0 |
Mortgage Loans Held for Sale and Investment - Accretable Yield (Details) (Mortgage Loans Held for Investment, USD $)
In Thousands, unless otherwise specified |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
|
Mortgage Loans Held for Investment
|
||
Accretable Yield Movement Schedule [Roll Forward] | ||
Balance at the beginning of the period | $ 22,392 | $ 25,219 |
Additions | 0 | 0 |
Accretion | (2,728) | (4,131) |
Reclassifications from (to) nonaccretable discount | 1,164 | 1,304 |
Disposals | 0 | 0 |
Balance at the end of the period | $ 20,828 | $ 22,392 |
Income Taxes (Details) (USD $)
|
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Mar. 07, 2012
|
|
Income Tax Disclosure [Abstract] | |||||
Deferred tax asset | $ 70,800,000 | ||||
Deferred tax liability | 16,500,000 | ||||
Valuation allowance on deferred tax asset | 54,300,000 | ||||
Income tax provision | 24,714,000 | 0 | 40,639,000 | 0 | |
Pretax income | $ 79,781,000 | $ (3,100,000) | $ 182,167,000 | $ 5,995,000 |
Nature of Business, Basis of Presentation and Material Transaction - Material Transaction (Details) (USD $)
|
1 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
|
Mortgaging Servicing Rights | ||||
Payments to Acquire Mortgage Servicing Rights (MSR) | $ 2,024,019,000 | $ 40,305,000 | ||
Mortgage servicing rights - fair value | 592,692,000 | 251,050,000 | ||
Accounts Receivable, Net | 2,852,985,000 | 562,300,000 | ||
Issuance of notes payable | 1,300,000,000 | |||
Issuance of excess spread financing | 176,500,000 | 215,570,000 | 0 | |
Aurora
|
||||
Mortgaging Servicing Rights | ||||
Payments to Acquire Mortgage Servicing Rights (MSR) | 2,000,000,000 | |||
Mortgage servicing rights - fair value | 271,500,000 | |||
Accounts Receivable, Net | 1,700,000,000 | |||
Residential Mortgage | Aurora
|
||||
Mortgaging Servicing Rights | ||||
Number of loans covered by mortgage servicing agreement | 300,000 | |||
Principal amount outstanding on loans managed and securitized | $ 63,000,000,000 |
Mortgage Loans Held for Sale and Investment (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Mortgage Loans Held for Sale and Investment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Mortgage Loans Held-for-Sale | Mortgage loans held for sale consist of the following (in thousands):
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Reconciliation of Mortgage Loans Held-for-Sale to Cash Flow | 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):
|
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Schedule of Loans Held for Investment | Mortgage loans held for investment, subject to nonrecourse debt—legacy assets, net as of the dates indicated include (in thousands):
|
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Changes in Accretable Yield on Mortgage Loans Held for Investment | 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):
|
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Allowance for Loan Losses | 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:
|
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Mortgage Loans by Credit Quality Indicator | The following tables provide the outstanding unpaid principal balance of Nationstar’s mortgage loans held for investment by credit quality indicators as of dates indicated.
|
Fair Value Measurements - Fair Value Assumptions (Details) (Excess Spread Financing)
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
Excess Spread Financing
|
|
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement | |
Mortgage prepayment speeds | 12.80% |
Average life | 3 years 7 months 6 days |
Discount rate | 14.40% |
Indebtedness - Unsecured Notes Maturity Schedule (Details) (Unsecured Senior Notes, USD $)
|
Sep. 30, 2012
|
---|---|
Unsecured Senior Notes
|
|
Expected maturities of long-term debt | |
2013 | $ 0 |
2014 | 0 |
2015 | 285,000,000 |
2016 | 0 |
2017 | 0 |
Thereafter | 775,000,000 |
Total | $ 1,060,000,000 |
Commitments and Contingencies - Other Contingencies (Details) (Loan Subservicing Agreement, USD $)
In Millions, unless otherwise specified |
Jun. 30, 2011
|
---|---|
Maximum
|
|
Mortgage Servicing Rights [Line Items] | |
Incentive fees | $ 2.5 |
Loss Sharing Agreement [Member]
|
|
Mortgage Servicing Rights [Line Items] | |
Company share under loss sharing agreement | $ 10.0 |
Mortgage Loans Held for Sale and Investment - Credit Quality (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Minimum | Loan-to-Value Ratio Between 60 Percent and 70 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 60.00% | |
Minimum | Loan-to-Value Ratio Between 70 Percent and 80 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 70.00% | |
Minimum | Loan-to-Value Ratio Between 80 Percent and 90 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 80.00% | |
Minimum | Loan-to-Value Ratio Between 90 Percent and 100 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 90.00% | |
Minimum | Loan-to-Value Ratio Greater Than 100 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 100.00% | |
Maximum | Loan-to-Value Ratio Less Than 60 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 60.00% | |
Maximum | Loan-to-Value Ratio Between 60 Percent and 70 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 70.00% | |
Maximum | Loan-to-Value Ratio Between 70 Percent and 80 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 80.00% | |
Maximum | Loan-to-Value Ratio Between 80 Percent and 90 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 90.00% | |
Maximum | Loan-to-Value Ratio Between 90 Percent and 100 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan-to-value ratio | 100.00% | |
Mortgage Loans Held for Investment
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | $ 361,474 | $ 375,720 |
Mortgage Loans Held for Investment | Performing
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | 278,367 | 283,770 |
Mortgage Loans Held for Investment | Nonperforming
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | 83,107 | 91,950 |
Mortgage Loans Held for Investment | Loan-to-Value Ratio Less Than 60 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | 40,060 | 42,438 |
Mortgage Loans Held for Investment | Loan-to-Value Ratio Between 60 Percent and 70 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | 15,817 | 15,968 |
Mortgage Loans Held for Investment | Loan-to-Value Ratio Between 70 Percent and 80 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | 22,627 | 25,190 |
Mortgage Loans Held for Investment | Loan-to-Value Ratio Between 80 Percent and 90 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | 28,863 | 32,620 |
Mortgage Loans Held for Investment | Loan-to-Value Ratio Between 90 Percent and 100 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | 32,804 | 33,708 |
Mortgage Loans Held for Investment | Loan-to-Value Ratio Greater Than 100 Percent
|
||
Financing Receivable, Recorded Investment [Line Items] | ||
Unpaid principal balance | $ 221,303 | $ 225,796 |
Indebtedness - Participating Interest Financing (Details) (USD $)
In Thousands, unless otherwise specified |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
Sep. 30, 2012
Participating Interest Financing
|
|
Debt Instrument | |||
Interest rate, minimum | 0.53% | ||
Interest rate, maximum | 7.17% | ||
Participating Interest Financing | $ 415,448 | ||
Participating interest financing | $ 415,448 | $ 0 |
Capital Requirements (Details) (USD $)
In Millions, unless otherwise specified |
Sep. 30, 2012
|
---|---|
Mortgage Banking [Abstract] | |
Minimum Net Worth Required for Compliance | $ 356.5 |
Minimum Tangible Net Worth Required for Compliance | $ 175.0 |
Commitments and Contingencies - Litigation and Regulatory Matters (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Legal Fees | $ 3.5 | $ 6.3 | $ 9.7 | $ 7.8 |
General and Administrative Expenses (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
General and Administrative Expense [Abstract] | ||||
Servicing | $ 13,893 | $ 7,106 | $ 50,530 | $ 16,101 |
Professional Fees | 18,251 | 8,508 | 32,818 | 13,145 |
Depreciation and amortization | 2,973 | 991 | 6,358 | 2,551 |
Equipment | 2,450 | 1,251 | 5,569 | 3,245 |
Postage | 2,395 | 1,522 | 5,056 | 3,937 |
Travel | 2,043 | 871 | 4,730 | 2,383 |
Insurance, taxes, and other | 9,580 | 5,148 | 22,046 | 15,345 |
Total general and administrative expense | $ 51,585 | $ 25,397 | $ 127,107 | $ 56,707 |
Indebtedness - Originations Segment Notes Payable (Details) (Originations Segment, USD $)
|
9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
Notes Payable to Banks
Warehouse Facility $375 Million
|
May 31, 2012
Notes Payable to Banks
Warehouse Facility $375 Million
|
Sep. 30, 2012
Notes Payable to Banks
Warehouse Facility $250 Million (2011)
|
Sep. 30, 2012
Notes Payable to Banks
Warehouse Facility $100 Million (2009)
|
Sep. 30, 2012
Notes Payable, Other
Warehouse Facility $150 Million
|
Feb. 29, 2012
Notes Payable, Other
Warehouse Facility $150 Million
|
Jan. 31, 2012
Notes Payable, Other
Warehouse Facility $150 Million
|
Sep. 30, 2012
Notes Payable, Other
ASAP Plus Facility
|
Sep. 30, 2012
Minimum
Notes Payable to Banks
Warehouse Facility $375 Million
|
Sep. 30, 2012
Minimum
Notes Payable to Banks
Warehouse Facility $250 Million (2011)
|
Sep. 30, 2012
Maximum
Notes Payable to Banks
Warehouse Facility $375 Million
|
Sep. 30, 2012
Maximum
Notes Payable to Banks
Warehouse Facility $250 Million (2011)
|
Sep. 30, 2012
Maximum
Notes Payable, Other
ASAP Plus Facility
|
|
Debt Instrument | |||||||||||||
Maximum borrowing capacity | $ 375,000,000 | $ 175,000,000 | $ 250,000,000 | $ 100,000,000 | $ 150,000,000 | $ 300,000,000 | |||||||
Variable interest rate basis | LIBOR | LIBOR | LIBOR | LIBOR | LIBOR | ||||||||
Interest Rate, LIBOR Plus a spread of | 3.25% | 3.25% | 1.50% | 1.75% | 2.25% | 2.50% | 3.00% | ||||||
Maturity length | 45 days |
Business Segment Reporting
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Reporting | Business Segment Reporting Nationstar currently conducts business in two separate operating segments: Servicing and Originations. The Servicing segment provides loan servicing on Nationstar’s total servicing portfolio, including the collection of principal and interest payments and the assessment of ancillary fees related to the servicing of mortgage loans. The Originations segment involves the origination, packaging, and sale of agency mortgage loans into the secondary markets via whole loan sales or securitizations. Nationstar reports the activity not related to either operating segment in the Legacy Portfolio and Other column. The Legacy Portfolio and Other column includes primarily all subprime mortgage loans originated in the latter portion of 2006 and during 2007 or acquired from Nationstar’s predecessor and consolidated VIEs which were consolidated pursuant to consolidation guidance related to VIEs adopted on January 1, 2010. Nationstar’s segments are based upon Nationstar’s organizational structure which focuses primarily on the services offered. The accounting policies of each reportable segment are the same as those of Nationstar except for 1) expenses for consolidated back-office operations and general overhead-type expenses such as executive administration and accounting and 2) revenues generated on inter-segment services performed. Expenses are allocated to individual segments based on the estimated value of services performed, including total revenue contributions, personnel headcount, and the equity invested in each segment. Revenues generated or inter-segment services performed are valued based on similar services provided to external parties. To reconcile to Nationstar’s consolidated results, certain inter-segment revenues and expenses are eliminated in the “Elimination” column in the following tables. The following tables are a presentation of financial information by segment for the periods indicated (in thousands):
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Consolidated Statement of Cash Flows-Supplemental Disclosure (Details) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | |
---|---|---|
Sep. 30, 2012
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Sep. 30, 2011
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Supplemental Cash Flow Elements [Abstract] | ||
Interest paid | $ 78.2 | $ 61.8 |
Income taxes paid | $ 18.2 | $ 0 |
Commitments and Contingencies (Tables)
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9 Months Ended |
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Sep. 30, 2012
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Commitments and Contingencies Disclosure [Abstract] | |
Minimum Annual Rental Commitments |
Indebtedness - Excess Spread Financing Debt (Details) (USD $)
In Thousands, unless otherwise specified |
1 Months Ended | ||
---|---|---|---|
Sep. 30, 2012
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Dec. 31, 2011
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Dec. 31, 2011
Newcastle
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Debt Instrument | |||
Percentage interest sold in excess cash flow | 65.00% | ||
Percentage interest retained of excess cash flow | 35.00% | ||
Excess spread financing at fair value | $ 255,484 | $ 44,595 |
Definitive Agreement to Acquire Certain Mortgage Servicing Assets of Residential Capital, LLC (Details) (USD $)
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1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2012
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Sep. 30, 2012
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Sep. 30, 2011
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Mar. 31, 2013
Scenario, Forecast
Residential Capital, LLC
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Mar. 31, 2013
Termination Fee [Member]
Scenario, Forecast
Residential Capital, LLC
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Mortgage Servicing Rights [Line Items] | |||||
Purchase price of mortgage servicing rights | $ 2,900,000,000 | ||||
Issuance of excess spread financing | 176,500,000 | 215,570,000 | 0 | ||
Termination fee, amount | $ 24,000,000 |
Derivative Financial Instruments (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of Derivative Instruments on the Statement of Operations |
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Schedule of Derivative Instruments | 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):
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Mortgage Loans Held for Sale and Investment - Mortgage Loans Held for Sale (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
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Dec. 31, 2011
|
Sep. 30, 2011
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Dec. 31, 2010
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---|---|---|---|---|
Mortgage Loans Held for Sale and Investment [Abstract] | ||||
Mortgage loans held for sale - unpaid principal balance | $ 668,345 | $ 442,596 | ||
Mark-to-market adjustment | 34,869 | 16,030 | ||
Total mortgage loans held for sale | $ 703,214 | $ 458,626 | $ 377,932 | $ 369,617 |
Payables and Accrued Liabilities (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Payables and Accruals [Abstract] | ||
MSR purchases payable | $ 310,609 | $ 8,204 |
Mortgage insurance premiums and reserves | 70,344 | 19,162 |
Payables to securitization trusts | 37,607 | 10,665 |
Loans subject to repurchase from Ginnie Mae | 58,534 | 35,735 |
Cancelled lease reserves | 7,319 | 9,160 |
Servicing Liability | 6,628 | 0 |
Legal and professional fees | 12,076 | 5,931 |
Accrued bonus and payroll | 43,511 | 21,236 |
Accrued interest | 39,902 | 10,225 |
Government sponsored entities | 26,797 | 18,728 |
Repurchase reserves | 15,055 | 10,026 |
Deposit from MSR co-investor for ResCap | 25,200 | 0 |
Reverse mortgage payables | 46,000 | 0 |
Taxes | 14,544 | 154 |
Other | 48,142 | 34,563 |
Total payables and accrued liabilities | $ 762,268 | $ 183,789 |
Variable Interest Entities and Securitizations
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Variable Interest Entities and Securitizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities and Securitizations | 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 and any mortgage servicing rights subsequently retained in the securitization. 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. A Variable Interest Entity (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 VIE's 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. Current accounting guidance requires that all existing SPEs be evaluated for consolidation. 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. 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 Accounting Standards Codification (ASC) 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. The Company consolidates the assets and liabilities of the VIEs onto its consolidated financial statements. In December 2011, Nationstar sold its remaining variable interest in a securitization trust that had been a consolidated VIE since January 1, 2010 and deconsolidated the VIE. In accordance with ASC 810 Nationstar has evaluated this securitization trust and determined that Nationstar no longer 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, and this securitization trust was derecognized as of December 31, 2011. Upon deconsolidation of this VIE, Nationstar derecognized the securitized mortgage loans held for investment, subject to ABS nonrecourse debt, the related ABS nonrecourse debt, as well as certain other assets and liabilities of the securitization trust, and recognized any MSRs on the consolidated balance sheet. The impact of this derecognition on the Company’s consolidated statement of operations was recognized in the fourth quarter of 2011 in the fair value changes in ABS securitizations line item. A summary of the assets and liabilities of Nationstar’s transactions with VIEs included in the Company’s consolidated financial statements as of September 30, 2012 and December 31, 2011 is presented in the following tables (in thousands):
A summary of the outstanding collateral and certificate balances for securitization trusts, including any retained beneficial interests and MSRs, that were not consolidated by Nationstar for the periods indicated are as follows (in thousands):
Nationstar has not retained any variable interests in the unconsolidated securitization trusts that were outstanding as of September 30, 2012 or December 31, 2011, 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):
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Mortgage Servicing Rights - MSR's at Amortized Cost (Details) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Servicing Asset at Amortized Value, Balance [Roll Forward] | ||
Balance at the beginning of the period | $ 8,036 | $ 0 |
Balance at the end of the period | 8,036 | 0 |
Servicing Liability at Amortized Value [Roll Forward] | ||
Balance at the beginning of the period | 82,313 | 0 |
Balance at the end of the period | 82,313 | 0 |
Mortgage Servicing Rights
|
||
Servicing Assets at Amortized Value | ||
Principal amount outstanding on loans managed and securitized | 120,852,838 | 44,253,454 |
Servicing Liability at Amortized Value [Roll Forward] | ||
Balance at the beginning of the period | 82,313 | |
Balance at the end of the period | 82,313 | |
Reverse Mortgages
|
||
Servicing Assets at Amortized Value | ||
Principal amount outstanding on loans managed and securitized | $ 27,300,000 |