INVESTMENTS IN CONSUMER LOANS (Tables)
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12 Months Ended |
Dec. 31, 2019 |
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| Investments, Debt and Equity Securities [Abstract] |
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| Schedule of Investments in Consumer Loan Equity Method Investees |
The following table summarizes the investment in consumer loans, held-for-investment held by New Residential: | | | | | | | | | | | | | | | | | | | | | Unpaid Principal Balance | | Interest in Consumer Loans | | Carrying Value | | Weighted Average Coupon | | Weighted Average Expected Life (Years)(A) | | Weighted Average Delinquency(B) | December 31, 2019 | | | | | | | | | | | | Consumer Loan Companies | | | | | | | | | | | | Performing Loans | $ | 644,676 |
| | 53.5 | % | | $ | 682,310 |
| | 18.8 | % | | 4.0 | | 4.7 | % | Purchased Credit Deteriorated Loans(C) | 170,083 |
| | 53.5 | % | | 136,633 |
| | 15.5 | % | | 3.7 | | 10.1 | % | Other - Performing Loans | 9,158 |
| | 100.0 | % | | 8,602 |
| | 15.1 | % | | 0.7 | | 6.1 | % | Total Consumer Loans, held-for-investment | $ | 823,917 |
| | | | $ | 827,545 |
| | 18.0 | % | | 3.9 | | 5.9 | % | December 31, 2018 | | | | | | | | | | | | Consumer Loan Companies | | | | | | | | | | | | Performing Loans | $ | 815,341 |
| | 53.5 | % | | $ | 856,563 |
| | 18.8 | % | | 3.6 | | 5.4 | % | Purchased Credit Deteriorated Loans(C) | 221,910 |
| | 53.5 | % | | 182,917 |
| | 16.0 | % | | 3.4 | | 11.6 | % | Other - Performing Loans | 35,326 |
| | 100.0 | % | | 32,722 |
| | 14.2 | % | | 0.8 | | 5.6 | % | Total Consumer Loans, held-for-investment | $ | 1,072,577 |
| | | | $ | 1,072,202 |
| | 18.1 | % | | 3.5 | | 6.7 | % |
| | (A) | Represents the weighted average expected timing of the receipt of expected cash flows for this investment. |
| | (B) | Represents the percentage of the total unpaid principal balance that is 30+ days delinquent. Delinquency status is the primary credit quality indicator as it provides early warning of borrowers who may be experiencing financial difficulties. |
| | (C) | Includes loans with evidence of credit deterioration since origination where it is probable that New Residential will not collect all contractually required principal and interest payments, which are accounted for as PCD loans. |
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| Past Due Financing Receivables |
The following table provides past due information regarding New Residential’s Performing Loans, which is an important indicator of credit quality and the establishment of the allowance for loan losses: | | | | | December 31, 2019 | Days Past Due | | Delinquency Status(A) | Current | | 86.5 | % | 30-59 | | 7.0 | % | 60-89 | | 2.7 | % | 90-119(B) | | 0.7 | % | 120+(C) | | 3.1 | % | | | 100.0 | % |
| | (A) | Represents the percentage of the total principal balance that corresponds to loans that are in each delinquency status. |
| | (B) | Includes loans 90-119 days past due and still accruing interest because they are generally placed on nonaccrual status at 120 days or more past due. |
(C) Represents nonaccrual loans. The following table provides past due information regarding New Residential’s performing consumer loans, held-for-investment, which is an important indicator of credit quality and the establishment of the allowance for loan losses: | | | | | December 31, 2019 | Days Past Due | | Delinquency Status(A) | Current | | 95.3 | % | 30-59 | | 1.8 | % | 60-89 | | 1.2 | % | 90-119(B) | | 0.7 | % | 120+(B) (C) | | 1.0 | % | | | 100.0 | % |
| | (A) | Represents the percentage of the total unpaid principal balance that corresponds to loans that are in each delinquency status. |
| | (B) | Includes loans more than 90 days past due and still accruing interest. |
(C) Interest is accrued up to the date of charge-off at 180 days past due.
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| Schedule of Carrying Value of Performing Consumer Loans |
Activities related to the carrying value of performing consumer loans, held-for-investment were as follows: | | | | | | | | Performing Loans | Balance at December 31, 2017 | | $ | 1,137,814 |
| Purchases | | — |
| Additional fundings(A) | | 63,971 |
| Proceeds from repayments | | (257,182 | ) | Accretion of loan discount and premium amortization, net | | 1,940 |
| Gross charge-offs | | (56,870 | ) | Additions to the allowance for loan losses, net | | (388 | ) | Balance at December 31, 2018 | | $ | 889,285 |
| Purchases | | — |
| Additional fundings(A) | | 54,375 |
| Proceeds from repayments | | (213,525 | ) | Accretion of loan discount and premium amortization, net | | 186 |
| Gross charge-offs | | (38,563 | ) | Additions to the allowance for loan losses, net | | (846 | ) | Balance at December 31, 2019 | | $ | 690,912 |
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(A) Represents draws on consumer loans with revolving privileges.
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| Allowance for Credit Losses on Financing Receivables |
Activities related to the valuation and loss provision on reverse mortgage loans and allowance for loan losses on performing loans held-for-investment were as follows: | | | | | | | | Performing Loans | Balance at December 31, 2017 | | $ | 196 |
| Provision for loan losses(A) | | 1,028 |
| Charge-offs(B) | | (1,224 | ) | Balance at December 31, 2018 | | $ | — |
| Provision for loan losses(A) | | 595 |
| Charge-offs(B) | | (595 | ) | Balance at December 31, 2019 | | $ | — |
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| | (A) | Based on an analysis of collective borrower performance, credit ratings of borrowers, loan-to-value ratios, estimated value of the underlying collateral, key terms of the loans and historical and anticipated trends in defaults and loss severities at a pool level. |
| | (B) | Loans, other than PCD loans, are generally charged off or charged down to the net realizable value of the collateral (i.e., fair value less costs to sell), with an offset to the allowance for loan losses, when available information confirms that loans are uncollectible. |
Activities related to the allowance for loan losses on performing consumer loans, held-for-investment were as follows: | | | | | | | | | | | | | | | | Collectively Evaluated(A) | | Individually Impaired(B) | | Total | Balance at December 31, 2017 | | $ | 4,429 |
| | $ | 1,676 |
| | $ | 6,105 |
| Provision (reversal) for loan losses | | 47,839 |
| | 388 |
| | 48,227 |
| Net charge-offs(C) | | (49,664 | ) | | — |
| | (49,664 | ) | Balance at December 31, 2018 | | $ | 2,604 |
| | $ | 2,064 |
| | $ | 4,668 |
| Provision (reversal) for loan losses | | 30,008 |
| | 846 |
| | 30,854 |
| Net charge-offs(C) | | (32,057 | ) | | — |
| | (32,057 | ) | Balance at December 31, 2019 | | $ | 555 |
| | $ | 2,910 |
| | $ | 3,465 |
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| | (A) | Represents smaller-balance homogeneous loans that are not individually considered impaired and are evaluated based on an analysis of collective borrower performance, key terms of the loans and historical and anticipated trends in defaults and loss severities, and consideration of the unamortized acquisition discount. |
| | (B) | Represents consumer loan modifications considered to be troubled debt restructurings (“TDRs”) as they provide concessions to borrowers, primarily in the form of interest rate reductions, who are experiencing financial difficulty. As of December 31, 2019, there are $18.0 million in UPB and $15.9 million in carrying value of consumer loans classified as TDRs. |
| | (C) | Consumer loans, other than PCD loans, are charged off when available information confirms that loans are uncollectible, which is generally when they become 180 days past due. Charge-offs are presented net of $8.6 million and $9.0 million in recoveries of previously charged-off UPB in 2019 and 2018, respectively. |
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| Schedule of Carrying Value of Purchased Credit Deteriorated Loans |
A portion of the consumer loans are considered PCD loans. Activities related to the carrying value of PCD consumer loans, held-for-investment were as follows: | | | | | | Balance at December 31, 2017 | | $ | 236,449 |
| (Allowance) reversal for loan losses(A) | | (31 | ) | Proceeds from repayments | | (90,700 | ) | Accretion of loan discount and other amortization | | 37,199 |
| Balance at December 31, 2018 | | $ | 182,917 |
| (Allowance) reversal for loan losses(A) | | 31 |
| Proceeds from repayments | | (78,519 | ) | Accretion of loan discount and other amortization | | 32,204 |
| Balance at December 31, 2019 | | $ | 136,633 |
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| | (A) | An allowance represents the present value of cash flows expected at acquisition that are no longer expected to be collected. A reversal results from an increase to expected cash flows that reverses a prior allowance. |
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| Impaired Financing Receivables |
The following is the unpaid principal balance and carrying value for consumer loans, for which, as of the acquisition date, it was probable that New Residential would be unable to collect all contractually required payments: | | | | | | | | | | Unpaid Principal Balance | | Carrying Value | December 31, 2019 | $ | 170,083 |
| | $ | 136,633 |
| December 31, 2018 | 221,910 |
| | 182,917 |
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| Schedule of Changes in Accretable Yield |
The following is a summary of the changes in accretable yield for these loans: | | | | | | Balance at December 31, 2017 | | $ | 132,291 |
| Accretion | | (37,199 | ) | Reclassifications from (to) non-accretable difference(A) | | 31,426 |
| Balance at December 31, 2018 | | $ | 126,518 |
| Accretion | | (32,204 | ) | Reclassifications from (to) non-accretable difference(A) | | 10,949 |
| Balance at December 31, 2019 | | $ | 105,263 |
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(A) Represents a probable and significant increase (decrease) in cash flows previously expected to be uncollectible.
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| Summary of the Investment in the Consumer Loan Companies |
The following tables summarize the investment in LoanCo and WarrantCo held by New Residential: | | | | | | | | | | December 31, 2019 | | December 31, 2018(A) | Consumer loans, at fair value | $ | — |
| | $ | 231,560 |
| Warrants, at fair value | — |
| | 103,067 |
| Other assets | — |
| | 25,971 |
| Warehouse financing | — |
| | (182,065 | ) | Other liabilities | — |
| | (1,142 | ) | Equity | $ | — |
| | $ | 177,391 |
| Undistributed retained earnings | $ | — |
| | $ | — |
| New Residential’s investment | $ | — |
| | $ | 42,875 |
| New Residential’s ownership | 24.3 | % | | 24.2 | % |
| | | | | | | | | | Year Ended December 31, | | 2019 | | 2018(A) | Interest income | $ | 19,912 |
| | $ | 42,920 |
| Interest expense | (6,487 | ) | | (12,258 | ) | Change in fair value of consumer loans and warrants | (4,596 | ) | | 17,491 |
| Gain on sale of consumer loans(B) | (10,711 | ) | | 2,697 |
| Other expenses | (3,871 | ) | | (7,257 | ) | Net income | $ | (5,753 | ) | | $ | 43,593 |
| New Residential’s equity in net income | $ | (1,438 | ) | | $ | 10,803 |
| New Residential’s ownership | 25.0 | % | | 24.8 | % |
| | (A) | Data as of, and for the periods ended, November 30, 2018, as a result of the one month reporting lag. |
| | (B) | During the year ended December 31, 2019, LoanCo sold, through securitizations which were treated as sales for accounting purposes, $406.1 million in UPB of consumer loans. LoanCo retained $83.9 million of residual interest in the securitizations and distributed them to the LoanCo co-investors, including New Residential. |
New Residential’s investment in LoanCo and WarrantCo changed as follows: | | | | | Balance at December 31, 2018 | $ | 38,294 |
| Contributions to equity method investees | 64,499 |
| Distributions of earnings from equity method investees | (8,607 | ) | Distributions of capital from equity method investees | (92,748 | ) | Earnings from investments in consumer loans, equity method investees | (1,438 | ) | Balance at December 31, 2019 | $ | — |
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