Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 06, 2020 | Jun. 28, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Registrant Name | IMPAC MORTGAGE HOLDINGS INC | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 33.8 | ||
Entity Common Stock, Shares Outstanding | 21,264,926 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001000298 | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
ASSETS | ||
Cash and cash equivalents | $ 24,666 | $ 23,200 |
Restricted cash | 12,466 | 6,989 |
Mortgage loans held-for-sale | 782,143 | 353,601 |
Mortgage servicing rights | 41,470 | 64,728 |
Securitized mortgage trust assets | 2,634,746 | 3,165,590 |
Other assets | 50,788 | 33,835 |
Total assets | 3,546,279 | 3,647,943 |
LIABILITIES | ||
Warehouse borrowings | 701,563 | 284,137 |
Convertible notes, net | 24,996 | 24,985 |
Long-term debt | 45,434 | 44,856 |
Securitized mortgage trust liabilities | 2,619,210 | 3,148,215 |
Other liabilities | 50,839 | 35,575 |
Total liabilities | 3,442,042 | 3,537,768 |
Commitments and contingencies (See Note 14) | ||
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.01 par value; 200,000,000 shares authorized; 21,255,426 and 21,117,006 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively | 212 | 211 |
Additional paid-in capital | 1,236,237 | 1,235,108 |
Accumulated other comprehensive earnings | 24,786 | 23,877 |
Net accumulated deficit: | ||
Cumulative dividends declared | (822,520) | (822,520) |
Retained deficit | (334,499) | (326,522) |
Net accumulated deficit | (1,157,019) | (1,149,042) |
Total stockholders’ equity | 104,237 | 110,175 |
Total liabilities and stockholders’ equity | 3,546,279 | 3,647,943 |
Series A-1 junior participating preferred stock | ||
STOCKHOLDERS’ EQUITY | ||
Preferred stock | ||
Series B 9.375% redeemable preferred stock | ||
STOCKHOLDERS’ EQUITY | ||
Preferred stock | 7 | 7 |
Series C 9.125% redeemable preferred stock | ||
STOCKHOLDERS’ EQUITY | ||
Preferred stock | $ 14 | $ 14 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 21,255,426 | 21,117,006 |
Common stock, shares outstanding | 21,255,426 | 21,117,006 |
Series A-1 junior participating preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B 9.375% redeemable preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, dividend rate (as a percent) | 9.375% | 9.375% |
Preferred stock, liquidation value (in dollars) | $ 32,630 | $ 32,630 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 665,592 | 665,592 |
Preferred stock, shares outstanding | 665,592 | 665,592 |
Series C 9.125% redeemable preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, dividend rate (as a percent) | 9.125% | 9.125% |
Preferred stock, liquidation value (in dollars) | $ 35,127 | $ 35,127 |
Preferred stock, shares authorized | 5,500,000 | 5,500,000 |
Preferred stock, shares issued | 1,405,086 | 1,405,086 |
Preferred stock, shares outstanding | 1,405,086 | 1,405,086 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | ||
Gain on sale of loans, net | $ 98,830 | $ 66,750 |
Servicing fees, net | 12,943 | 37,257 |
Loss on mortgage servicing rights, net | (24,911) | (3,625) |
Real estate services fees, net | 3,287 | 4,327 |
Other | 479 | 291 |
Total revenues | 90,628 | 105,000 |
Expenses: | ||
Personnel expense | 65,191 | 64,143 |
Business promotion | 9,319 | 26,936 |
General, administrative and other | 22,410 | 35,339 |
Intangible asset impairment | 18,347 | |
Goodwill impairment | 104,587 | |
Total expenses | 96,920 | 249,352 |
Operating loss | (6,292) | (144,352) |
Other income (expense): | ||
Interest income | 165,198 | 186,848 |
Interest expense | (155,868) | (184,331) |
Change in fair value of long-term debt | (1,429) | 3,978 |
Change in fair value of net trust assets, including trust REO losses | (9,831) | (2,549) |
Total other (expense) income, net | (1,930) | 3,946 |
Loss before income taxes | (8,222) | (140,406) |
Income tax (benefit) expense | (245) | 5,004 |
Net loss | (7,977) | (145,410) |
Other comprehensive earnings (loss): | ||
Change in fair value of instrument specific credit risk of long-term debt | 909 | (3,141) |
Total comprehensive loss | $ (7,068) | $ (148,551) |
Net loss per common share: | ||
Basic (in dollars per share) | $ (0.38) | $ (6.92) |
Diluted (in dollars per share) | $ (0.38) | $ (6.92) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY - USD ($) $ in Thousands | Preferred Stock | Common Stock | Additional Paid-In Capital | Cumulative Dividends Declared | Retained Deficit | Accumulated Other Comprehensive Earnings (Loss) | Total |
Balance at Dec. 31, 2017 | $ 21 | $ 209 | $ 1,233,704 | $ (822,520) | $ (146,267) | $ 265,147 | |
Balance (in shares) at Dec. 31, 2017 | 2,070,678 | 20,949,679 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Proceeds from exercise of stock options | $ 1 | 457 | 458 | ||||
Proceeds from exercise of stock options (in shares) | 104,410 | ||||||
Issuance of deferred stock | $ 1 | 1 | |||||
Issuance of deferred stock (in shares) | 62,917 | ||||||
Stock based compensation | 947 | 947 | |||||
Other comprehensive earnings (loss) | $ (3,141) | (3,141) | |||||
Net loss | (145,410) | (145,410) | |||||
Balance at Dec. 31, 2018 | $ 21 | $ 211 | 1,235,108 | (822,520) | (326,522) | 23,877 | 110,175 |
Balance (in shares) at Dec. 31, 2018 | 2,070,678 | 21,117,006 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Reclassification and adjustment related to adoption of new standard | ASU 2016-01 | (27,018) | 27,018 | |||||
Reclassification and adjustment related to adoption of new standard | ASU 2016-16 | (7,827) | (7,827) | |||||
Proceeds from exercise of stock options | $ 1 | 344 | 345 | ||||
Proceeds from exercise of stock options (in shares) | 103,351 | ||||||
Issuance of restricted stock | 125 | 125 | |||||
Issuance of restricted stock (in shares) | 35,069 | ||||||
Stock based compensation | 660 | 660 | |||||
Other comprehensive earnings (loss) | 909 | 909 | |||||
Net loss | (7,977) | (7,977) | |||||
Balance at Dec. 31, 2019 | $ 21 | $ 212 | $ 1,236,237 | $ (822,520) | $ (334,499) | $ 24,786 | $ 104,237 |
Balance (in shares) at Dec. 31, 2019 | 2,070,678 | 21,255,426 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (7,977) | $ (145,410) |
(Gain) loss on sale of mortgage servicing rights | (860) | 5,937 |
Change in fair value of mortgage servicing rights | 25,771 | (3,757) |
Gain on sale of mortgage-backed securities | (136) | |
Gain on sale of mortgage loans | (84,035) | (88,611) |
Change in fair value of mortgage loans held-for-sale | (15,810) | 14,762 |
Change in fair value of derivatives lending, net | (4,472) | 2,110 |
Provision for repurchases | 5,487 | 5,074 |
Origination of mortgage loans held-for-sale | (4,548,750) | (3,839,640) |
Sale and principal reduction on mortgage loans held-for-sale | 4,217,562 | 4,103,790 |
Losses from trust REO | 6,434 | 950 |
Change in fair value of net trust assets, excluding trust REO | 3,397 | 1,599 |
Change in fair value of long-term debt | 1,429 | (3,978) |
Accretion of interest income and expense | 27,272 | 33,435 |
Amortization of intangible and other assets | 572 | 3,807 |
Amortization of debt issuance costs and discount on note payable | 17 | 83 |
Stock-based compensation | 660 | 947 |
Impairment of goodwill | 104,587 | |
Impairment of intangible assets | 18,347 | |
Excess tax benefit from share based compensation | (151) | |
Change in deferred tax assets, net | 4,315 | |
Net change in other assets | 8,400 | (12,195) |
Net change in other liabilities | (12,444) | (5,032) |
Net cash (used in) provided by operating activities | (377,483) | 200,969 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Net change in securitized mortgage collateral | 565,600 | 553,953 |
Proceeds from the sale of mortgage servicing rights | 112,376 | |
Finance receivable advances to customers | (401,357) | |
Repayments of finance receivables | 443,134 | |
Purchase of premises and equipment | (862) | (867) |
Purchase of mortgage-backed securities | (10,346) | (1,000) |
Proceeds from the sale of mortgage-backed securities | 11,502 | |
Proceeds from the sale of trust REO | 23,804 | 21,493 |
Net cash provided by investing activities | 589,698 | 727,732 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of MSR financing | (8,000) | (137,133) |
Borrowings under MSR financing | 8,000 | 102,000 |
Repayment of warehouse borrowings | (3,746,311) | (3,877,663) |
Borrowings under warehouse agreements | 4,163,737 | 3,586,437 |
Payment of acquisition related contingent consideration | (554) | |
Repayment of securitized mortgage borrowings | (623,028) | (610,810) |
Principal payments on capital lease | (81) | |
Principal payments on capital lease | (202) | |
Tax payments on stock based compensation awards | (59) | (145) |
Proceeds from exercise of stock options | 345 | 458 |
Net cash used in financing activities | (205,272) | (937,611) |
Net change in cash, cash equivalents and restricted cash | 6,943 | (8,910) |
Cash, cash equivalents and restricted cash at beginning of year | 30,189 | 39,099 |
Cash, cash equivalents and restricted cash at end of year | 37,132 | 30,189 |
SUPPLEMENTARY INFORMATION: | ||
Interest paid | 116,807 | 123,734 |
Taxes (paid) refunded, net | (345) | 591 |
NON-CASH TRANSACTIONS: | ||
Transfer of securitized mortgage collateral to trust REO | 27,186 | 22,421 |
Mortgage servicing rights retained from issuance of mortgage backed securities and loan sales | 2,491 | 24,879 |
Recognition of operating lease right of use assets (net of $3.8 million of deferred rent) | 20,538 | |
Recognition of operating lease liabilities | 24,291 | |
Common stock issued upon issuance of deferred stock units | 606 | |
Restricted stock units | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Issuance of restricted stock and deferred stock units | $ 125 | |
Deferred stock units | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Issuance of restricted stock and deferred stock units | $ 1 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Millions | Dec. 31, 2019USD ($) |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Deferred rent liability | $ 3.8 |
Summary of Business and Financi
Summary of Business and Financial Statement Presentation including Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Business and Financial Statement Presentation including Significant Accounting Policies | |
Summary of Business and Financial Statement Presentation including Significant Accounting Policies | IMPAC MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share data or as otherwise indicated) Note 1.—Summary of Business and Financial Statement Presentation including Significant Accounting Policies Business Summary Impac Mortgage Holdings, Inc. (the Company or IMH) is a Maryland corporation incorporated in August 1995 and has the following direct and indirect wholly-owned subsidiaries: Integrated Real Estate Service Corporation (IRES), Impac Mortgage Corp. (IMC), IMH Assets Corp. (IMH Assets) and Impac Funding Corporation (IFC). The Company’s operations include the mortgage lending operations and real estate services conducted by IRES and IMC and the long-term mortgage portfolio (residual interests in securitizations reflected as net trust assets and liabilities in the consolidated balance sheets) conducted by IMH. IMC’s mortgage lending operations include the activities of its division, CashCall Mortgage (CCM). Financial Statement Presentation Basis of Presentation The accompanying consolidated financial statements of IMH and its subsidiaries (as defined above) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). All significant inter‑company balances and transactions have been eliminated in consolidation. In addition, certain amounts in the prior periods’ consolidated financial statements have been reclassified to conform to the current year presentation. Management has made a number of material estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period to prepare these consolidated financial statements in conformity with GAAP. Material estimates and assumptions subject to change include the valuation of trust assets and trust liabilities, contingencies, the estimated obligation of repurchase liabilities related to sold loans, the valuation of long-term debt, mortgage servicing rights, mortgage loans held-for-sale and derivative instruments, including interest rate lock commitments (IRLC). Actual results could differ from those estimates and assumptions . Principles of Consolidation The accompanying consolidated financial statements include accounts of IMH and its wholly-owned subsidiaries. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity. However, a controlling financial interest may also exist in entities, such as variable interest entities (VIEs), through arrangements that do not involve voting interests. The VIE framework requires a variable interest holder (counterparty to a VIE) to consolidate the VIE if that party has the power to direct activities of the VIE that most significantly impact the entity’s economic performance, will absorb a majority of the expected losses of the VIE, will receive a majority of the residual returns of the VIE, or both, and directs the significant activities of the entity. This party is considered the primary beneficiary of the entity. The determination of whether the Company meets the criteria to be considered the primary beneficiary of a VIE requires an evaluation of all transactions (such as investments, liquidity commitments, derivatives and fee arrangements) with the entity. The assessment of whether or not the Company is the primary beneficiary of the VIE is performed on an ongoing basis. Significant Accounting Policies Fair Value Option The Company has elected the fair value option for mortgage servicing rights, mortgage loans held-for-sale, long-term debt and its consolidated non-recourse securitizations (securitized mortgage collateral and securitized mortgage borrowings). Elections were made to mitigate income statement volatility caused by differences in the measurement basis of elected instruments. Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash and highly liquid investments with maturities of three months or less at the date of acquisition. The carrying amount of cash and cash equivalents approximates fair value. Cash balances that have restrictions as to the Company’s ability to withdraw funds are considered restricted cash. At December 31, 2019 and 2018, restricted cash totaled $12.5 million and $7.0 million, respectively. The restricted cash is the result of the terms of the Company’s warehouse borrowing agreements. In accordance with the terms of the Master Repurchase Agreements related to the warehouse borrowings, the Company is required to maintain cash balances with the lender as additional collateral for the borrowings (See Note 6.—Debt). Mortgage Loans Held‑for‑Sale Mortgage loans held-for-sale (LHFS) are accounted for using the fair value option, with changes in fair value recorded in gain on sale of loans, net in the accompanying consolidated statements of operations and comprehensive loss. In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 825, Financial Instruments , loan origination fees and expenses are recognized in earnings as incurred and not deferred. Revenue derived from the Company’s mortgage lending activities includes loan fees collected at the time of origination and gain or loss from the sale of LHFS. Loan fees consist of fee income earned on all loan originations, including loans closed and held-for-sale. Loan fees are recognized as earned and consist of amounts collected for application and underwriting fees, fees on cancelled loans and discount points. The related direct loan origination costs are recognized when incurred and consists of broker fees and commissions. Gain or loss from the sale and mark‑to‑market adjustments of LHFS includes both realized and unrealized gains and losses and are included in gain on sale of loans, net in the accompanying consolidated statements of operations and comprehensive loss. The valuation of LHFS approximates a whole‑loan price, which includes the value of the related mortgage servicing rights. The Company primarily sells its LHFS to government sponsored entities and investors. The Company evaluates its loan sales for sales treatment. To the extent the transfer of loans qualifies as a sale, the Company derecognizes the loans and records a realized gain or loss on the sale date. In the event the Company determines that the transfer of loans does not qualify as a sale, the transfer would be treated as a secured borrowing. Interest on loans is recorded as income when earned and deemed collectible. LHFS are placed on nonaccrual status when any portion of the principal or interest is 90 days past due or earlier if factors indicate that the ultimate collectability of the principal or interest is not probable. Interest received from loans on nonaccrual status is recorded as income when collected. Loans return to accrual status when the principal and interest become current and it is probable that the amounts are fully collectible. Mortgage Servicing Rights The Company accounts for mortgage loan sales in accordance with FASB ASC 860, Transfers and Servicing . Upon sale of mortgage loans on a service-retained basis, the LHFS are removed from the consolidated balance sheets and mortgage servicing rights (MSRs) are recorded as an asset for servicing rights retained. The Company elects to measure MSRs at fair value as prescribed by FASB ASC 860-50-35, and as such, servicing assets or liabilities are valued using discounted cash flow modeling techniques using assumptions regarding future net servicing cash flow, including prepayment rates, discount rates, servicing cost and other factors. Changes in estimated fair value are reported in the accompanying consolidated statements of operations and comprehensive loss within loss on mortgage servicing rights, net. When the Company sells mortgage servicing rights, the Company records a gain or loss on such sale based on the selling price of the mortgage servicing rights less the carrying value and transaction costs. Gains and losses are reported in the accompanying consolidated statements of operations and comprehensive loss within loss on mortgage servicing rights, net. Consolidated Non-recourse Securitizations Securitized Mortgage Collateral The Company’s long‑term mortgage portfolio primarily includes adjustable rate and, to a lesser extent, fixed rate non‑conforming mortgages and commercial mortgages that were acquired and originated by our mortgage and commercial operations prior to 2008. Non‑conforming mortgages may not have certain documentation or verifications that are required by government sponsored entities and, therefore, in making our credit decisions, we were more reliant upon the borrower’s credit score and the adequacy of the underlying collateral. Historically, the Company securitized mortgages in the form of collateralized mortgage obligations (CMO) or real estate mortgage investment conduits (REMICs). These securitizations are evaluated for consolidation based on the provisions of FASB ASC 810‑10‑25. Amounts consolidated are included in trust assets and liabilities as securitized mortgage collateral, real estate owned, derivative assets, securitized mortgage borrowings and derivative liabilities in the accompanying consolidated balance sheets. The Company accounts for securitized mortgage collateral at fair value, with changes in fair value during the period reflected in earnings. Fair value measurements are based on the Company’s estimated cash flow models, which incorporate assumptions, inputs of other market participants and quoted prices for the underlying bonds. The Company’s assumptions include its expectations of inputs that other market participants would use. These assumptions include judgments about the underlying collateral, prepayment speeds, credit losses, investor yield requirements, forward interest rates and certain other factors. Interest income on securitized mortgage collateral is recorded using the effective yield for the period based on the previous quarter‑end’s estimated fair value. Securitized mortgage collateral is generally not placed on nonaccrual status as the servicer advances the interest payments to the trust regardless of the delinquency status of the underlying mortgage loan, until it becomes apparent to the servicer that the advance is not collectible. Real Estate Owned Real estate owned (REO) on the consolidated balance sheets are primarily assets within the securitized trusts but are recorded as a separate asset for accounting and reporting purposes and are within the long‑term mortgage portfolio. REO, which consists of residential real estate acquired in satisfaction of loans, is carried at net realizable value, which includes the estimated fair value of the residential real estate less estimated selling and holding costs. Adjustments to the loan carrying value required at the time of foreclosure affect the carrying amount of REO. Subsequent write‑downs in the net realizable value of REO are included in change in fair value of net trust assets, including trust REO (losses) gains in the consolidated statements of operations and comprehensive loss. Securitized Mortgage Borrowings The Company records securitized mortgage borrowings in the accompanying consolidated balance sheets for the consolidated CMO and REMIC securitized trusts within the long-term mortgage portfolio. The debt from each issuance of a securitized mortgage borrowing is payable from the principal and interest payments on the underlying mortgages collateralizing such debt, as well as the proceeds from liquidations of REO. If the principal and interest payments are insufficient to repay the debt, the shortfall is allocated first to the residual interest holders (generally owned by the Company) then, if necessary, to the certificate holders (e.g. third party investors in the securitized mortgage borrowings) in accordance with the specific terms of the various respective indentures. Securitized mortgage borrowings typically are structured as one-month LIBOR “floaters” and fixed rate securities with interest payable to certificate holders monthly. The maturity of each class of securitized mortgage borrowing is directly affected by the amount of net interest spread, overcollateralization and the rate of principal prepayments and defaults on the related securitized mortgage collateral. The actual maturity of any class of a securitized mortgage borrowing can occur later than the stated maturities of the underlying mortgages. When the Company issued securitized mortgage borrowings, the Company generally sought an investment grade rating for the Company’s securitized mortgages by nationally recognized rating agencies. To secure such ratings, it was often necessary to incorporate certain structural features that provide for credit enhancement. This generally included the pledge of collateral in excess of the principal amount of the securities to be issued, a bond guaranty insurance policy for some or all of the issued securities, or additional forms of mortgage insurance. These securitization transactions are non-recourse to the Company and the total loss exposure is limited to the Company’s initial net economic investment in each trust, which is referred to as a residual interest. The Company accounts for securitized mortgage borrowings at fair value, with changes in fair value during the period reflected in earnings. Fair value measurements are based on the Company’s estimated cash flow models, which incorporate assumptions, inputs of other market participants and quoted prices for the underlying bonds. The Company’s assumptions include its expectations of inputs that other market participants would use. These assumptions include judgments about the underlying collateral, prepayment speeds, credit losses, investor yield requirements, forward interest rates and certain other factors. Interest expense on securitized mortgage borrowings are recorded quarterly using the effective yield for the period based on the previous quarter‑end’s estimated fair value. Leases On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, “ Leases (Topic 842) ”, using the modified retrospective transition approach and elected the practical expedients transition option to recognize the adjustment in the period of adoption rather than in the earliest period presented. On January 1, 2019, the Company recognized right of use (ROU) assets of $19.7 million (net of the reversal of $3.8 million deferred rent liability) and lease liabilities of $23.4 million which are included in other assets and other liabilities, respectively, in the accompanying consolidated balance sheets. (See Note 14.— Commitments and Contingencies). The Company has four operating leases for office space expiring at various dates through 2024. The Company determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its ROU assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. When the Company cannot readily determine the rate implicit in the lease, the Company determines its incremental borrowing rate by using the rate of interest that it would have to pay to borrow on a collateralized basis over a similar term. As a practical expedient permitted under Topic 842, the Company has elected to account for the lease and non-lease components as a single lease component for all leases of which it is the lessee. Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets and lease expense for these leases is recognized on a straight-line basis over the lease term. For operating leases existing prior to January 1, 2019, the rate used for the remaining lease term was determined as of the date of adoption. Goodwill and Intangible Assets Goodwill arises from the acquisition method of accounting for business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. Other intangible assets with definite lives include trademarks, customer relationships, and non-compete agreements. Goodwill, trademarks and other intangible assets are tested annually for impairment or more frequently if events and circumstances indicate that the asset might be impaired. The carrying value of these intangible assets could be impaired if a significant adverse change in the use, life, or brand strategy of the asset is determined, or if a significant adverse change in the legal and regulatory environment, business or competitive climate occurs that would adversely impact the asset. Goodwill and other intangible assets deemed to have indefinite lives generated from purchase business combinations are not subject to amortization but are instead tested for impairment no less than annually. Impairment exists when the carrying value exceeds its implied fair value. An impairment loss, if any, is measured as the excess of carrying value over the implied fair value and would be recorded in the consolidated statements of operations and comprehensive loss. Intangible assets with definite lives are amortized over their estimated lives using an amortization method that reflects the pattern in which the economic benefits of the asset are consumed. As discussed in Note 4.—Goodwill and Intangible Assets, the Company recorded impairment charges for goodwill and intangible assets for the year ended December 31, 2018. Business Combinations Business combinations are accounted for under the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations . Under the acquisition method, the acquiring entity in a business combination recognizes 100 percent of the acquired assets and assumed liabilities, regardless of the percentage owned, at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including other identifiable assets, exceeds the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed which involve contingencies must also be recognized at their estimated fair value, provided such fair value can be determined during the measurement period. Acquisition-related costs, including severance, conversion and other restructuring charges, such as abandoned space accruals, are expensed as incurred. Results of operations of an acquired business are included in the consolidated statements of operations and comprehensive loss from the date of acquisition. Derivative Instruments In accordance with FASB ASC 815‑10 Derivatives and Hedging—Overview , the Company records all derivative instruments at fair value. The Company has accounted for all its derivatives as non‑designated hedge instruments or free‑standing derivatives. The mortgage lending operation enters into IRLCs with consumers to originate mortgage loans at a specified interest rate. These IRLCs are accounted for as derivative instruments. The fair values of IRLCs utilize current secondary market prices for underlying loans and estimated servicing value with similar coupons, maturities and credit quality, subject to the anticipated loan funding probability (pull‑through rate). The fair value of IRLCs is subject to change primarily due to changes in interest rates and the estimated pull‑through rate. The Company reports IRLCs within other assets and other liabilities at fair value with changes in fair value being recorded in the accompanying consolidated statements of operations and comprehensive loss within gain on sale of loans, net. The Company hedges the changes in fair value associated with changes in interest rates related to IRLCs and uncommitted LHFS by using forward delivery commitments on mortgage-backed securities, including Fannie Mae and Ginnie Mae mortgage‑backed securities known as to‑be‑announced mortgage‑backed securities (TBA MBS or Hedging Instruments) as well as forward delivery commitments on whole loans. The Hedging Instruments and forward delivery loan commitments are used to fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market and are accounted for as derivative instruments. The fair value of Hedging Instruments and forward delivery loan commitments are subject to change primarily due to changes in interest rates. The Company reports Hedging Instruments and forward delivery loan commitments within other assets and other liabilities at fair value with changes in fair value being recorded in the accompanying consolidated statements of operations and comprehensive loss within gain on sale of loans, net. The Company hedges the changes in fair value associated with changes in interest rates related to MSRs by using TBA MBS or Hedging Instruments. The Hedging Instruments are typically entered into at the time the MSR is created and are accounted for as derivative instruments. The fair value of Hedging Instruments is subject to change primarily due to changes in interest rates. The Company reports Hedging Instruments within other assets and other liabilities at fair value with changes in fair value being recorded in the accompanying consolidated statements of operations and comprehensive loss within loss on sale of mortgage servicing rights, net. The fair value of IRLCs and Hedging Instruments are represented as derivative assets, lending, net and derivative liabilities, lending, net in Note 10.—Fair Value of Financial Instruments . Long‑term Debt Long‑term debt (junior subordinated notes) is reported at fair value. These securities are measured based upon an analysis prepared by management, which considers the Company’s own credit risk and discounted cash flow analysis. Unrealized gains and losses are recognized in earnings in the accompanying consolidated statements of operations and comprehensive loss within change in fair value of long‑term debt. Repurchase Reserve The Company sells mortgage loans in the secondary market, including U.S. government sponsored entities, and issues mortgage‑backed securities through Ginnie Mae and Fannie Mae. When the Company sells or issues securities, it makes customary representations and warranties to the purchasers about various characteristics of each loan such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws. In the event of a breach of its representations and warranties, the Company may be required to either repurchase the mortgage loans with the identified defects or indemnify the investor or insurer for any loss. In addition, the Company may be required to repurchase loans as a result of borrower fraud or if a payment default occurs on a mortgage loan shortly after its sale. Also, the Company’s loss may be reduced by proceeds from the sale or liquidation of the repurchased loan. The Company’s loss may be reduced by any recourse it has to correspondent lenders that, in turn, had sold such mortgage loans to the Company and breached similar or other representations and warranties. In such event, the Company has the right to seek a recovery of related repurchase losses from that correspondent lender. The Company records a provision for losses relating to such representations and warranties as part of its loan sale transactions. The method used to estimate the liability for representations and warranties is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults including any loss on sale or liquidation of the repurchased loan and the probability of reimbursement by the correspondent loan seller. The Company establishes a liability at the time loans are sold and continually updates its estimated repurchase liability. The level of the repurchase liability for representations and warranties is difficult to estimate and requires considerable management judgment. The level of mortgage loan repurchase losses is dependent on economic factors, investor demands for loan repurchases and other external conditions that may change over the lives of the underlying loans. Revenue Recognition for Fees from Services The Company follows FASB ASC 606, Revenue Recognition, which provides guidance on the application of GAAP to selected revenue recognition issues related to our real estate services fees. Under ASC 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. The Company’s primary sources of revenue are derived from financial instruments that are not within the scope of ASC 606. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Operations and Comprehensive Loss, was not necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, the Company has made no significant judgments in applying the revenue guidance prescribed in ASC 606 that affect the determination of the amount and timing of revenue from contracts with customers. The revenues from these services are recognized in income in the period when services are rendered and collectability is reasonably certain. Advertising Costs Advertising costs are expensed as incurred and are included in business promotion expense. For the years ended December 31, 2019 and 2018, business promotion expense was $9.3 million and $26.9 million, respectively. Stock‑Based Compensation The Company accounts for stock‑based compensation in accordance with FASB ASC 718 Compensation—Stock Compensation . Accordingly, the Company measures the cost of stock‑based awards using the grant‑date fair value of the award and recognizes that cost over the requisite service period. The fair value of each stock option granted under the Company’s stock-based compensation plan is estimated on the date of grant using an option-pricing model and assumptions noted in Note 15.—Share Based Payments and Employee Benefit Plans. The risk-free interest rate is based on the U.S. Treasury rate with a term equal to the expected term of the option grants on the date of grant. FASB ASC 718 requires forfeitures to be estimated at the time of grant and prospectively revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Stock‑based compensation expense is recorded net of estimated forfeitures for the years ended December 31, 2019 and 2018, such that the expense was recorded only for those stock‑based awards that were expected to vest during such periods. Refer to Note 15.—Share Based Payments and Employee Benefit Plans. Income Taxes In accordance with FASB ASC 740, Income Taxes , the Company records income tax expense as well as deferred tax assets and liabilities. Current income tax expense approximates taxes to be paid or refunded for the current period and includes income tax expense related to uncertain tax positions. The Company determines deferred income taxes using the balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and recognizes enacted changes in tax rates and laws in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized subject to management’s judgment that realization is “more likely than not.” Uncertain tax positions that meet the more likely than not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit that management believes has a greater than 50% likelihood of realization upon settlement. The Company is subject to federal income taxes as a regular (Subchapter C) corporation and files a consolidated U.S. federal income tax return on qualifying subsidiaries. The Company files federal and various states income tax returns in the U.S. In prior periods when the Company was taxed as a real estate investment trust (REIT), it recorded a deferred charge to eliminate the expense recognition of income taxes paid on inter-company profits that result from the sale of mortgage loans from the taxable REIT subsidiaries to IMH. The deferred charge was included in other assets in the consolidated balance sheets and was amortized and or impaired as a component of income tax expense in the consolidated statements of operations and comprehensive loss over the estimated life of the mortgages retained in the securitized mortgage collateral. With the adoption of ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” on January 1, 2018, the deferred charge was eliminated with a $7.8 million cumulative effect adjustment to opening retained earnings and is no longer a component of income tax expense. Loss per Common Share Basic loss per common share is computed on the basis of the weighted average number of shares outstanding for the year divided into net loss for the year. Diluted loss per common share is computed on the basis of the weighted average number of shares and dilutive common equivalent shares outstanding for the year divided by net loss for the year, unless anti‑dilutive. Refer to Note 11.—Reconciliation of Loss Per Share. Accounting Pronouncements Adopted In January 2016, the FASB issued ASU 2016-01, " Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. " The amendments in ASU 2016-01, among other things, requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables); requires separate presentation in other comprehensive income for the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The update is effective for interim and annual reporting periods beginning after December 15, 2017 on a modified retrospective basis, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year adopted. The Company adopted this guidance on January 1, 2018, which resulted in a $27.0 million reclass, net of tax, between opening retained earnings and other comprehensive earnings (loss) within stockholders’ equity. In January 2017, the FASB issued ASU 2017-04, " Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill I |
Mortgage Loans Held-for-Sale
Mortgage Loans Held-for-Sale | 12 Months Ended |
Dec. 31, 2019 | |
Mortgage Loans Held-for-Sale | |
Mortgage Loans Held-for-Sale | Note 2.—Mortgage Loans Held-for-Sale A summary of the unpaid principal balance (UPB) of mortgage loans held-for-sale by type is presented below: December 31, December 31, 2019 2018 Government (1) $ 51,019 $ 39,522 Conventional (2) 436,040 53,148 Non-qualified mortgages (NonQM) 274,834 256,491 Fair value adjustment (3) 20,250 4,440 Total mortgage loans held-for-sale $ 782,143 $ 353,601 (1) Includes all government-insured loans including Federal Housing Administration (FHA), Veterans Affairs (VA) and United States Department of Agriculture (USDA). (2) Includes loans eligible for sale to Federal National Mortgage Association (Fannie Mae or FNMA) and Federal home Loan Mortgage Corporation (Freddie Mac or FHLMC). (3) Changes in fair value are included in gain on sale of loans, net on the accompanying consolidated statements of operations and comprehensive loss. As of December 31, 2019, the Company had $4.5 million in UPB of mortgage loans held-for-sale that were in nonaccrual status as the loans were 90 days or more delinquent. The carrying value of these nonaccrual loans as of December 31, 2019 were $4.2 million. As of December 31, 2018, there were $2.3 million in UPB of mortgage loans held -for-sale that were in nonaccrual status as the loans were 90 days or more delinquent. The carrying value of these nonaccrual loans as of December 31, 2018 were $1.8 million. Gain on sale of loans, net in the consolidated statements of operations and comprehensive loss is comprised of the following for the years ended December 31, 2019 and 2018: For the Year Ended December 31, 2019 2018 Gain on sale of mortgage loans $ 111,787 $ 102,899 Premium from servicing retained loan sales 2,491 24,879 Unrealized gains (losses) from derivative financial instruments 4,472 (2,025) Realized (losses) gains from derivative financial instruments (5,627) 11,878 Mark to market gain (loss) on LHFS 15,810 (14,762) Direct origination expenses, net (24,616) (51,045) Provision for repurchases (5,487) (5,074) Total gain on sale of loans, net $ 98,830 $ 66,750 |
Mortgage Servicing Rights
Mortgage Servicing Rights | 12 Months Ended |
Dec. 31, 2019 | |
Mortgage Servicing Rights | |
Mortgage Servicing Rights | Note 3.—Mortgage Servicing Rights The Company retains MSRs from its sales and securitization of certain mortgage loans or as a result of purchase transactions. MSRs are reported at fair value based on the expected income derived from the net projected cash flows associated with the servicing contracts. The Company receives servicing fees, less subservicing costs, on the UPB of the underlying mortgage loans. The servicing fees are collected from the monthly payments made by the mortgagors, or if delinquent, when the underlying real estate is foreclosed upon and liquidated. The Company may receive other remuneration from rights to various mortgagor-contracted fees, such as late charges, collateral reconveyance charges and nonsufficient fund fees, and the Company is generally entitled to retain the interest earned on funds held pending remittance (or float) related to its collection of mortgagor principal, interest, tax and insurance payments. The following table summarizes the activity of MSRs for the years ended December 31, 2019 and 2018: December 31, December 31, 2019 2018 Balance at beginning of year $ 64,728 $ 154,405 Additions from servicing retained loan sales 2,491 24,879 Reductions from bulk sales — (118,313) Other 22 — Changes in fair value (1) (25,771) 3,757 Fair value of MSRs at end of year $ 41,470 $ 64,728 (1) Changes in fair value are included within loss on mortgage servicing rights, net in the accompanying consolidated statements of operations and comprehensive loss. At December 31, 2019 and 2018, the UPB of the mortgage servicing portfolio was comprised of the following: December 31, December 31, 2019 2018 Government insured $ 105,442 $ 51,157 Conventional 4,826,407 6,165,129 NonQM — 1,848 Total loans serviced (1) $ 4,931,849 $ 6,218,134 (1) No collateral was pledged as part of the MSR Financing at December 31, 2019 and December 31, 2018. The table below illustrates hypothetical changes in the fair value of MSRs, caused by assumed immediate changes to key assumptions that are used to determine fair value. See Note 10.—Fair Value of Financial Instruments for a description of the key assumptions used to determine the fair value of MSRs. December 31, December 31, Mortgage Servicing Rights Sensitivity Analysis 2019 2018 Fair value of MSRs $ 41,470 $ 64,728 Prepayment Speed: Decrease in fair value from 10% adverse change (1,850) (1,419) Decrease in fair value from 20% adverse change (3,631) (2,918) Decrease in fair value from 30% adverse change (5,325) (4,475) Discount Rate: Decrease in fair value from 10% adverse change (1,330) (2,345) Decrease in fair value from 20% adverse change (2,579) (4,532) Decrease in fair value from 30% adverse change (3,753) (6,575) Sensitivities are hypothetical changes in fair value and cannot be extrapolated because the relationship of changes in assumptions to changes in fair value may not be linear. Also, the effect of a variation in a particular assumption is calculated without changing any other assumption, whereas a change in one factor may result in changes to another. Accordingly, no assurance can be given that actual results would be consistent with the results of these estimates. As a result, actual future changes in MSR values may differ significantly from those displayed above. Loss on mortgage servicing rights, net is comprised of the following for the years ended December 31, 2019 and 2018: For the Year Ended December 31, 2019 2018 Change in fair value of mortgage servicing rights $ (25,771) $ 3,757 Gain (loss) on sale of mortgage servicing rights 860 (5,937) Realized and unrealized losses from hedging instruments — (1,445) Loss on mortgage servicing rights, net $ (24,911) $ (3,625) Servicing fees, net is comprised of the following for the years ended December 31, 2019 and 2018: For the Year Ended December 31, 2019 2018 Contractual servicing fees $ 15,147 $ 43,065 Late and ancillary fees 180 603 Subservicing and other costs (2,384) (6,411) Servicing fees, net $ 12,943 $ 37,257 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets. | |
Goodwill and Intangible Assets | Note 4.—Goodwill and Intangible assets In the first quarter of 2015, the Company acquired CCM and recorded $104.6 million of goodwill and intangible assets of $33.1 million. The Company reviewed its goodwill and intangible assets for impairment at least annually as of December 31 or more frequently if facts and circumstances indicated that it is more likely than not that the fair value of a reporting unit that has goodwill was less than its carrying value. In the second and third quarters of 2018, the Company performed impairment tests and determined that the goodwill and intangible assets were impaired. As a result, an impairment charge of $74.7 million related to goodwill and $13.5 million related to intangible assets was recorded during the quarter ended June 30, 2018, and an additional $29.9 million and $4.9 million, respectively, was recorded during the quarter ended September 30, 2018. At December 31, 2019 and 2018, the Company had no goodwill or intangible assets remaining related to the CCM acquisition. The following table presents the changes in the carrying amount of goodwill for the period indicated: Balance at December 31, 2017 $ 104,587 Impairment charges (104,587) Balance at December 31, 2018 $ — The following table presents the net carrying amount of the intangible assets acquired as part of the CCM acquisition as of December 31, 2018: Gross Accumulated Aggregate Net As of December 31, 2018: Carrying Amount Amortization Impairment Charges Carrying Amount Intangible assets: Trademark $ 17,251 $ (3,801) $ (13,450) $ — Customer relationships 10,170 (5,273) (4,897) — Non-compete agreement 5,701 (5,701) — — Total intangible assets acquired $ 33,122 $ (14,775) $ (18,347) $ — |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets | |
Other Assets | Note 5.—Other Assets Other assets consisted of the following: December 31, December 31, 2019 2018 Right of use asset (See Note 14) $ 17,169 $ — Accounts receivable, net 14,265 16,840 Derivative assets – lending (See Note 8) 7,791 3,351 Prepaid expenses 3,125 3,252 Accrued interest receivable 2,131 1,505 Servicing advances 2,109 3,468 Loans eligible for repurchase from Ginnie Mae 1,686 204 Premises and equipment, net 1,250 1,109 Other 1,110 2,168 Real estate owned – outside trusts 152 1,366 Developed software, net — 572 Total other assets $ 50,788 $ 33,835 Accounts Receivable, net Accounts receivable are primarily holdbacks from MSR sales, which are generally collected within six months of the sale date, cash due to the Company related to hedging instruments and fees earned for real estate services rendered, generally collected one month in arrears. Accounts receivable are stated at their carrying value, net of $280 thousand and $434 thousand reserve for doubtful accounts as of December 31, 2019 and 2018, respectively. Servicing Advances The Company is required to advance certain amounts to meet its contractual loan servicing requirements. The Company advances principal, interest, property taxes and insurance for borrowers that have insufficient escrow accounts, plus any other costs to preserve the properties. Also, the Company will advance funds to maintain, repair and market foreclosed real estate properties. The Company is entitled to recover advances from the borrowers for reinstated and performing loans or from proceeds of liquidated properties. Servicer advances totaled $2.1 million and $3.5 million at December 31, 2019 and 2018, respectively, and are all considered fully collectible. Loans Eligible for Repurchase from Ginnie Mae The Company routinely sells loans in Ginnie Mae guaranteed MBS by pooling eligible loans through a pool custodian and assigning rights to the loans to Ginnie Mae. When these Ginnie Mae loans are initially pooled and securitized, the Company meets the criteria for sale treatment and de-recognizes the loans. The terms of the Ginnie Mae MBS program allow, but do not require, the Company to repurchase mortgage loans when the borrower has made no payments for three consecutive months. When the Company has the unconditional right, as servicer, to repurchase Ginnie Mae pool loans it has previously sold and are more than 90 days past due, the Company then re-recognizes the loans on its consolidated balance sheets in other assets, at their UPB and records a corresponding liability in other liabilities in the consolidated balance sheets. At December 31, 2019 and 2018, loans eligible for repurchase from GNMA totaled $1.7 million and $204 thousand, respectively. As part of the Company’s repurchase reserve, the Company records a repurchase provision to provide for estimated losses from the sale or securitization of all mortgage loans, including these loans. The loans eligible for repurchase from GNMA are in the Company’s servicing portfolio. The Company monitors the delinquency of the servicing portfolio and directs the subservicer to mitigate losses on delinquent loans. In the fourth quarter of 2018, the Company sold approximately $3.9 billion in UPB of GNMA MSRs substantially reducing the loans eligible for repurchase from GNMA. Premises and Equipment, net December 31, 2019 2018 Premises and equipment (1) $ 5,829 $ 17,793 Less: Accumulated depreciation (1) (4,579) (16,684) Total premises and equipment, net $ 1,250 $ 1,109 (1) During the year ended December 31, 2019, the Company wrote off $12.8 million of fixed assets that had been fully depreciated. The Company recognized $721 thousand and $620 thousand of depreciation expense within general, administrative and other expense in the accompanying consolidated statements of operations and comprehensive loss, for the years ended December 31, 2019 and 2018, respectively. Developed Software, net As part of the acquisition of CCM, the purchase price of other assets acquired are listed below as of December 31, 2019 and 2018: Gross Accumulated Net Remaining As of December 31, 2019: Carrying Amount Amortization Carrying Amount Life Other assets: Developed software $ 2,719 $ (2,719) $ — — Gross Accumulated Net As of December 31, 2018: Carrying Amount Amortization Carrying Amount Other assets: Developed software $ 2,719 $ (2,147) $ 572 The Company recognized $572 thousand of amortization expense associated with developed software within general, administrative and other expense in the accompanying consolidated statements of operations for both years ended December 31, 2019 and 2018. As of December 31, 2019, the Company had no capitalized developed software remaining. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt | |
Debt | Note 6.—Debt The following table shows contractual future debt maturities as of December 31, 2019: Payments Due by Period Less Than One to Three to More Than Total One Year Three Years Five Years Five Years Warehouse borrowings $ 701,563 $ 701,563 $ — $ — $ — 2015 Convertible notes 25,000 25,000 — — — Long-term debt 62,000 — — — 62,000 Total debt obligations $ 788,563 $ 726,563 $ — $ — $ 62,000 Warehouse Borrowings The Company, through its subsidiaries, enters into Master Repurchase Agreements with lenders providing warehouse facilities. The warehouse facilities are used to fund, and are secured by, residential mortgage loans that are held for sale. In accordance with the terms of the Master Repurchase Agreements, the Company is required to maintain cash balances with the lender as additional collateral for the borrowings which are included in restricted cash in the accompanying consolidated balance sheets. At December 31, 2019, the Company was in compliance with all financial covenants from its lenders. The following table presents certain information on warehouse borrowings for the periods indicated: Maximum Balance Outstanding at Allowable Borrowing December 31, December 31, Advance Rate Capacity 2019 2018 Rates (%) Range Maturity Date Short-term borrowings: Repurchase agreement 1 (1) $ 75,000 $ 25,953 $ 84,897 80 - 98 1ML + 2.00 - 4.00% April 1, 2020 Repurchase agreement 2 100,000 72,971 47,108 90 - 98 1ML + 2.00 - 3.25% May 28, 2020 Repurchase agreement 3 (1) 425,000 250,722 35,920 90 - 97 1ML + 2.25% March 17, 2020 Repurchase agreement 4 200,000 119,838 80,141 100 1ML + 1.75% July 30, 2020 Repurchase agreement 5 (1) 300,000 72,666 23,370 100 Note Rate - 0.50% March 31, 2020 Repurchase agreement 6 600,000 159,413 12,701 95 - 98 1ML + 1.75% June 25, 2020 Total warehouse borrowings $ 1,700,000 $ 701,563 $ 284,137 (1) These lines are in the process of being renewed. The following table presents certain information on warehouse borrowings for the periods indicated: For the year ended December 31, 2019 2018 Maximum outstanding balance during the year $ 971,595 $ 650,342 Average balance outstanding for the year 547,421 440,273 UPB of underlying collateral (mortgage loans) 763,309 343,724 Weighted average interest rate for period % % MSR Financings In February 2018, IMC (Borrower), amended the Line of Credit Promissory Note (FHLMC and GNMA Financing) originally entered into in August 2017, increasing the maximum borrowing capacity of the revolving line of credit to $50.0 million and extending the term to January 31, 2019 . In May 2018, the agreement was amended increasing the maximum borrowing capacity of the revolving line of credit to $60.0 million, increasing the borrowing capacity up to 60% of the fair market value of the pledged mortgage servicing rights and reducing the interest rate per annum to one-month LIBOR plus 3.0%. As part of the May 2018 amendment, the obligations under the line of credit are secured by FHLMC and GNMA pledged mortgage servicing rights (subject to an acknowledge agreement) and is guaranteed by IRES. In April 2019, the maturity of the line was extended to January 31, 2020. At December 31, 2019, there were no outstanding borrowings under the FHLMC and GNMA Financing and approximately $24.4 million was available for borrowing. In January 2020, the maturity of the line was extended to March 31, 2020. The following table presents certain information on MSR Financings for the periods indicated: For the year ended December 31, 2019 2018 Maximum outstanding balance during the year $ 5,000 $ 67,000 Average balance outstanding for the year 200 45,532 Weighted average rate for period (1) % % (1) As part of the agreement, the Company paid an origination fee to the lender which was deferred and amortized on a straight-line basis as an adjustment to the yield over the term of the agreement. Convertible Notes In May 2015, the Company issued $25.0 million Convertible Promissory Notes (2015 Convertible Notes). The 2015 Convertible Notes mature on or before May 9, 2020 and accrues interest at a rate of 7.5% per annum, to be paid quarterly. The Company had approximately $50 thousand in transaction costs which were deferred and amortized over the life of the 2015 Convertible Notes. Noteholders may convert all or a portion of the outstanding principal amount of the 2015 Convertible Notes into shares of the Company’s common stock (Conversion Shares) at a rate of $21.50 per share, subject to adjustment for stock splits and dividends (the Conversion Price). The Company has the right to convert the entire outstanding principal of the 2015 Convertible Notes into Conversion Shares at the Conversion Price if the market price per share of the common stock, as measured by the average volume-weighted closing stock price per share of the common stock on the NYSE AMERICAN (or any other U.S. national securities exchange then serving as the principal such exchange on which the shares of Common Stock are listed), reaches the level of $30.10, for any twenty (20) trading days in any period of thirty (30) consecutive trading days after the Closing Date. Upon conversion of the 2015 Convertible Notes by the Company, the entire amount of accrued and unpaid interest (and all other amounts owing) under the 2015 Convertible Notes are immediately due and payable. To the extent the Company pays any cash dividends on its shares of common stock prior to conversion of the 2015 Convertible Notes, upon conversion of the 2015 Convertible Notes, the noteholders will also receive such dividends on an as-converted basis less the amount of interest paid by the Company prior to such dividend. Long‑term Debt The Company carries its Long-term Debt (Junior Subordinated Notes) at estimated fair value as more fully described in Note 10.—Fair Value of Financial Instruments. The following table shows the remaining principal balance and fair value of junior subordinated notes issued as of December 31, 2019 and 2018: December 31, 2019 2018 Junior Subordinated Notes (1) $ 62,000 $ 62,000 Fair value adjustment (16,566) (17,144) Total Junior Subordinated Notes $ 45,434 $ 44,856 (1) Stated maturity of March 2034; requires quarterly interest payments at a variable rate of 3-month LIBOR plus 3.75% per annum. At December 31, 2019, the interest rate was 5.71%. |
Securitized Mortgage Trusts
Securitized Mortgage Trusts | 12 Months Ended |
Dec. 31, 2019 | |
Securitized Mortgage Trusts | |
Securitized Mortgage Trusts | Note 7.—Securitized Mortgage Trusts Securitized Mortgage Trust Assets Securitized mortgage trust assets are comprised of the following at December 31, 2019 and 2018: December 31, December 31, 2019 2018 Securitized mortgage collateral, at fair value $ 2,628,064 $ 3,157,071 REO, at net realizable value (NRV) 6,682 8,519 Total securitized mortgage trust assets $ 2,634,746 $ 3,165,590 Securitized Mortgage Collateral Securitized mortgage collateral consisted of the following: December 31, December 31, 2019 2018 Mortgages secured by residential real estate $ 2,649,997 $ 3,245,606 Mortgages secured by commercial real estate 210,536 294,599 Fair value adjustment (232,469) (383,134) Total securitized mortgage collateral, at fair value $ 2,628,064 $ 3,157,071 As of December 31, 2019, the Company was also a master servicer of mortgages for others of approximately $268.1 million in UPB that were primarily collateralizing REMIC securitizations, compared to $328.7 million at December 31, 2018. Related fiduciary funds are held in trust for investors in non‑interest bearing accounts and are not included in the Company’s consolidated balance sheets. The Company may also be required to advance funds or cause loan servicers to advance funds to cover principal and interest payments not received from borrowers depending on the status of their mortgages. Real Estate Owned The Company’s REO consisted of the following: December 31, 2019 2018 REO $ 21,195 $ 17,813 Impairment (1) (14,361) (7,928) Ending balance $ 6,834 $ 9,885 REO inside trusts $ 6,682 $ 8,519 REO outside trusts 152 1,366 Total $ 6,834 $ 9,885 (1) Impairment represents the cumulative write‑downs of net realizable value subsequent to foreclosure. Securitized Mortgage Trust Liabilities Securitized mortgage trust liabilities, which are recorded at estimated fair market value as more fully described in Note 10., are comprised of the following at December 31, 2019 and 2018: December 31, December 31, 2019 2018 Securitized mortgage borrowings $ 2,619,210 $ 3,148,215 Securitized Mortgage Borrowings – Non-recourse Selected information on securitized mortgage borrowings for the periods indicated consisted of the following (dollars in millions): Securitized mortgage borrowings outstanding as of December 31, Range of Interest Rates (%) Interest Interest Rate Rate Original Fixed Margins over Margins after Issuance Interest One-Month Contractual Year of Issuance Amount 2019 2018 Rates LIBOR (1) Call Date (2) 2002 $ 3,876.1 $ 3.9 $ 4.8 5.25 - 12.00 0.27 - 2.75 0.54 - 3.68 2003 5,966.1 26.8 35.9 4.34 - 12.75 0.27 - 3.00 0.54 - 4.50 2004 17,710.7 354.3 557.0 3.58 - 5.56 0.25 - 2.50 0.50 - 3.75 2005 13,387.7 1,581.7 1,752.9 — 0.24 - 2.90 0.48 - 4.35 2006 5,971.4 2,018.0 2,113.2 6.25 0.10 - 2.75 0.20 - 4.13 2007 3,860.5 1,121.1 1,265.1 — 0.06 - 2.00 0.12 - 3.00 Subtotal contractual principal balance (3) 5,105.8 5,728.9 Fair value adjustment (2,486.6) (2,580.7) Total securitized mortgage borrowings $ 2,619.2 $ 3,148.2 (1) One-month LIBOR was 1.76% as of December 31, 2019. (2) Interest rate margins are generally adjusted when the unpaid principal balance is reduced to less than 10‑20% of the original issuance amount, or if certain other triggers are met. (3) Represents the outstanding balance in accordance with trustee reporting. As of December 31, 2019, expected principal reductions of the securitized mortgage borrowings, which is based on contractual principal payments and expected prepayment and loss assumptions for securitized mortgage collateral, was as follows (dollars in millions): Payments Due by Period Less Than One to Three to More Than Total One Year Three Years Five Years Five Years Securitized mortgage borrowings (1) $ 5,105.8 $ 490.3 $ 728.1 $ 479.8 $ 3,407.6 (1) Represents the outstanding balance in accordance with trustee reporting. Change in fair value of net trust assets, including trust REO losses Changes in fair value of net trust assets, including trust REO losses are comprised of the following for the years ended December 31, 2019 and 2018: For the Year Ended December 31, 2019 2018 Change in fair value of net trust assets, excluding REO $ (3,397) $ (1,599) Losses from REO (6,434) (950) Change in fair value of net trust assets, including trust REO losses $ (9,831) $ (2,549) |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments | |
Derivative Instruments | Note 8.—Derivative Instruments Derivative Assets and Liabilities, Lending The mortgage lending operation enters into IRLCs with prospective borrowers to originate mortgage loans at a specified interest rate and Hedging Instruments and forward delivery loan commitments to hedge the fair value changes associated with changes in interest rates relating to its mortgage loan origination operations. The fair value of IRLCs, Hedging Instruments and forward delivery loan commitments related to mortgage loan origination are included in other assets or liabilities in the consolidated balance sheets. As of December 31, 2019, the estimated fair value of IRLCs was an asset of $7.8 million while Hedging Instruments were a liability of $651 thousand. Forward delivery commitments had no fair value as they were marked within LHFS to the price of the trades. As of December 31, 2018, the estimated fair value of IRLCs was an asset of $3.4 million while Hedging Instruments and forward delivery loan commitments were liabilities of $440 thousand and $243 thousand, respectively. The following table includes information for the derivative assets and liabilities, lending for the periods presented: Total Gains (Losses) Notional Amount For the Year Ended December 31, December 31, December 31, 2019 2018 2019 2018 Derivative – IRLC's (1) $ 419,035 $ 183,595 $ 4,440 $ (1,006) Derivative – TBA MBS (2) 485,459 88,018 (5,595) 9,658 Derivative – Forward delivery loan commitment (3) 232,530 150,000 — (243) (1) Amounts included in gain on sale of loans, net within the accompanying consolidated statements of operations and comprehensive loss. (2) Amounts included in gain on sale of loans, net and loss on mortgage servicing rights, net within the accompanying consolidated statements of operations and comprehensive loss. (3) As of December 31, 2019 and 2018, $232.5 million and $50.0 million, respectively, in mortgage loans have been allocated to forward delivery loan commitments and are recorded at fair value within LHFS in the accompanying consolidated balance sheets. As of December 31, 2018, $100.0 million of forward loan commitments remained unallocated and are recorded at fair value within other liabilities in the accompanying consolidated balance sheets. |
Redeemable Preferred Stock
Redeemable Preferred Stock | 12 Months Ended |
Dec. 31, 2019 | |
Redeemable Preferred Stock | |
Redeemable Preferred Stock | Note 9.—Redeemable Preferred Stock At December 31, 2019, the Company has outstanding $67.8 million liquidation preference of Series B and Series C Preferred Stock. The holders of each series of Preferred Stock, which are non‑voting and redeemable at the option of the Company, retain the right to a $25.00 per share liquidation preference in the event of a liquidation of the Company and the right to receive dividends on the Preferred Stock if any such dividends are declared. As disclosed within Note 14.—Commitments and Contingencies, on July 16, 2018, the court entered its Judgement Order and Memorandum Opinion on the matter entitled Timm, v. Impac Mortgage Holdings, Inc., a purported class action purportedly on behalf of holders of the Company’s 9.375% Series B Cumulative Redeemable Preferred Stock (Preferred B) and 9.125% Series C Cumulative Redeemable Preferred Stock (Preferred C). The court entered judgement in favor of the Company on all claims related to the Preferred C holders. The judgment also declared (among other items disclosed in Note 14) that two-thirds of the Preferred B holders were required to approve the 2009 amendments to the Preferred B Articles Supplementary, which was not obtained, rendering the 2009 amendments to the Preferred B Articles Supplementary invalid and leaving the 2004 Preferred B Articles Supplementary in effect. As a result of the Judgement Order, all rights of the Preferred B holders under the 2004 Articles are deemed reinstated. Subject to an appeal, the Company has cumulative undeclared dividends in arrears of approximately $16.0 million, or approximately $24.02 per outstanding share of Preferred B, increasing the liquidation value to approximately $49.02 per share. Additionally, every quarter the cumulative undeclared dividends in arrears will increase by $0.5859 per share, or approximately $390 thousand. As the Company prevailed on all claims related to the Preferred C holders, based on the court’s ruling there are no Preferred C dividends owed. The liquidation preference, inclusive of the cumulative undeclared dividends in arrears, is only payable upon voluntary or involuntary liquidation, dissolution or winding up of the Company’s affairs. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 10.—Fair Value of Financial Instruments The use of fair value to measure the Company’s financial instruments is fundamental to its consolidated financial statements and is a critical accounting estimate because a substantial portion of its assets and liabilities are recorded at estimated fair value. FASB ASC 825 requires disclosure of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate such fair values. The Company uses exit price notion when measuring the fair values of financial instruments for disclosure purposes. The following table presents the estimated fair value of financial instruments included in the consolidated financial statements as of the dates indicated: December 31, 2019 December 31, 2018 Carrying Estimated Fair Value Carrying Estimated Fair Value Amount Level 1 Level 2 Level 3 Amount Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 24,666 $ 24,666 $ — $ — $ 23,200 $ 23,200 $ — $ — Restricted cash 12,466 12,466 — — 6,989 6,989 — — Mortgage loans held-for-sale 782,143 — 782,143 — 353,601 — 353,601 — Mortgage servicing rights 41,470 — — 41,470 64,728 — — 64,728 Derivative assets, lending, net (1) 7,791 — — 7,791 3,351 — — 3,351 Mortgage-backed securities — — — — 1,000 — 1,000 — Securitized mortgage collateral 2,628,064 — — 2,628,064 3,157,071 — — 3,157,071 Liabilities Warehouse borrowings $ 701,563 $ — $ 701,563 $ — $ 284,137 $ — $ 284,137 $ — Convertible notes 24,996 — — 24,996 24,985 — — 24,985 Long-term debt 45,434 — — 45,434 44,856 — — 44,856 Securitized mortgage borrowings 2,619,210 — — 2,619,210 3,148,215 — — 3,148,215 Derivative liabilities, lending, net (2) 651 — 651 — 683 — 683 — (1) Represents IRLCs and are included in other assets in the accompanying consolidated balance sheets. (2) Represents Hedging Instruments and are included in other liabilities in the accompanying consolidated balance sheets. The fair value amounts above have been estimated by management using available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop the estimates of fair value in both inactive and orderly markets. Accordingly, the estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For the consolidated non-recourse securitizations, the fair value of the financial liabilities of the consolidated non-recourse securitizations (securitized mortgage borrowings) is more observable than the fair value of the financial assets of the consolidated non-recourse securitizations (securitized mortgage collateral). As a result, the financial liabilities of the consolidated non-recourse securitizations are being measured at fair value and the financial assets are being measured in consolidation as: (1) the sum of the fair value of the securitized mortgage borrowings and the fair value of the beneficial interests retained by the Company less (2) the carrying value of any REO. The resulting amount is allocated to securitized mortgage collateral. For securitized mortgage collateral and securitized mortgage borrowings, the underlying Alt‑A (non-conforming) residential and commercial loans and mortgage‑backed securities market have experienced significant declines in market activity, along with a lack of orderly transactions. The Company’s methodology to estimate fair value of these assets and liabilities include the use of internal pricing techniques such as the net present value of future expected cash flows (with observable market participant assumptions, where available) discounted at a rate of return based on the Company’s estimates of market participant requirements. The significant assumptions utilized in these internal pricing techniques, which are based on the characteristics of the underlying collateral, include estimated credit losses, estimated prepayment speeds and appropriate discount rates. Refer to Recurring Fair Value Measurements below for a description of the valuation methods used to determine the fair value of securitized mortgage collateral and borrowings, derivative assets and liabilities, long‑term debt, mortgage servicing rights, loans held‑for‑sale. The carrying amounts of cash and cash equivalents and restricted cash approximates fair value. Warehouse borrowings carrying amounts approximate fair value due to the short‑term nature of the liabilities and do not present unanticipated interest rate or credit concerns. Convertible notes are recorded at amortized cost, which approximates fair value due to the short duration to maturity. MSR financings carrying amount approximates fair value as the underlying facility bears interest at a rate that is periodically adjusted based on a market index. Fair Value Hierarchy The application of fair value measurements may be on a recurring or nonrecurring basis depending on the accounting principles applicable to the specific asset or liability or whether management has elected to carry the item at its estimated fair value. FASB ASC 820‑10‑35 specifies a hierarchy of valuation techniques based on whether the inputs to those techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy: · Level 1—Quoted prices (unadjusted) in active markets for identical instruments or liabilities that an entity has the ability to assess at measurement date. · Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices that are observable for an asset or liability, including interest rates and yield curves observable at commonly quoted intervals, prepayment speeds, loss severities, credit risks and default rates; and market‑corroborated inputs. · Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when estimating fair value. As a result of the lack of observable market data resulting from inactive markets, the Company has classified its securitized mortgage collateral and borrowings, derivative assets (IRLCs), convertible notes and long‑term debt as Level 3 fair value measurements. Level 3 assets and liabilities measured at fair value on a recurring basis were approximately 77% and 99% and 90% and 99%, respectively, of total assets and total liabilities measured at estimated fair value at December 31, 2019 and 2018. Recurring Fair Value Measurements The Company assesses its financial instruments on a quarterly basis to determine the appropriate classification within the fair value hierarchy, as defined by FASB ASC Topic 810. Transfers between fair value classifications occur when there are changes in pricing observability levels. Transfers of financial instruments among the levels occur at the beginning of the reporting period. There were no material transfers between Level 1, Level 2 or Level 3 classified instruments during the year ended December 31, 2019. The following tables present the Company’s assets and liabilities that are measured at estimated fair value on a recurring basis, including financial instruments for which the Company has elected the fair value option at December 31, 2019 and 2018, based on the fair value hierarchy: Recurring Fair Value Measurements December 31, 2019 December 31, 2018 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Mortgage loans held-for-sale $ — $ 782,143 $ — $ — $ 353,601 $ — Mortgage-backed securities — — — — 1,000 — Derivative assets, lending, net (1) — — 7,791 — — 3,351 Mortgage servicing rights — — 41,470 — — 64,728 Securitized mortgage collateral — — 2,628,064 — — 3,157,071 Total assets at fair value $ — $ 782,143 $ 2,677,325 $ — $ 354,601 $ 3,225,150 Liabilities Securitized mortgage borrowings $ — $ — $ 2,619,210 $ — $ — $ 3,148,215 Long-term debt — — 45,434 — — 44,856 Derivative liabilities, lending, net (2) — 651 — — 683 — Total liabilities at fair value $ — $ 651 $ 2,664,644 $ — $ 683 $ 3,193,071 (1) At December 31, 2019, derivative assets, lending, net included $7.8 million in IRLCs and is included in other assets in the accompanying consolidated balance sheets. At December 31, 2018, derivative assets, lending, net included $3.4 million in IRLCs and is included in other assets in accompanying consolidated balance sheets. (2) At December 31, 2019 and 2018, derivative liabilities, lending, net are included in other liabilities in the accompanying consolidated balance sheets. The following tables present reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended the years ended December 31, 2019 and 2018: Level 3 Recurring Fair Value Measurements For the Year Ended December 31, 2019 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term collateral borrowings rights net debt Fair value, December 31, 2018 $ 3,157,071 $ (3,148,215) $ 64,728 $ 3,351 $ (44,856) Total gains (losses) included in earnings: Interest income (1) 11,279 — — — — Interest expense (1) — (38,127) — — (425) Change in fair value 52,499 (55,896) (25,771) 4,440 (1,429) Change in instrument specific credit risk — — — — 1,276 (2) Total gains (losses) included in earnings 63,778 (94,023) (25,771) 4,440 (578) Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 2,491 — — Settlements (592,785) 623,028 22 — — Fair value, December 31, 2019 $ 2,628,064 $ (2,619,210) $ 41,470 $ 7,791 $ (45,434) Unrealized (losses) gains still held (3) $ (232,469) $ 2,486,615 $ 41,470 $ 7,791 $ 16,566 (1) Amounts primarily represent accretion to recognize interest income and interest expense using effective yields based on estimated fair values for trust assets and trust liabilities. Net interest income, including cash received and paid, was $9.4 million for the year ended December 31, 2019. The difference between accretion of interest income and expense and the amounts of interest income and expense recognized in the consolidated statements of operations and comprehensive loss is primarily from contractual interest on the securitized mortgage collateral and borrowings. (2) Amount represents the change in instrument specific credit risk in other comprehensive earnings in the consolidated statements of operations and comprehensive loss as required by the adoption of ASU 2016-01. (3) Represents the amount of unrealized gains (losses) relating to assets and liabilities classified as Level 3 that are still held and reflected in the fair values at December 31, 2019. Level 3 Recurring Fair Value Measurements For the Year Ended December 31, 2018 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term Contingent collateral borrowings rights net debt consideration Fair value, December 31, 2017 $ 3,662,008 $ (3,653,265) $ 154,405 $ 4,357 $ (44,982) $ (554) Total gains (losses) included in earnings: Interest income (1) 28,165 — — — — — Interest expense (1) — (60,889) — — (711) — Change in fair value 43,272 (44,871) 3,757 (1,006) 3,978 — Change in instrument specific credit risk — — — — (3,141) (2) — Total gains (losses) included in earnings 71,437 (105,760) 3,757 (1,006) 126 — Transfers in and/or out of Level 3 — — — — — — Purchases, issuances and settlements: Purchases — — — — — — Issuances — — 24,879 — — — Settlements (576,374) 610,810 (118,313) — — 554 Fair value, December 31, 2018 $ 3,157,071 $ (3,148,215) $ 64,728 $ 3,351 $ (44,856) $ — Unrealized (losses) gains still held (3) $ (383,134) $ 2,580,638 $ 64,728 $ 3,351 $ 17,144 $ — (1) Amounts primarily represent accretion to recognize interest income and interest expense using effective yields based on estimated fair values for trust assets and trust liabilities. Net interest income, including cash received and paid, was $7.7 million for the year ended December 31, 2018. The difference between accretion of interest income and expense and the amounts of interest income and expense recognized in the consolidated statements of operations and comprehensive loss is primarily from contractual interest on the securitized mortgage collateral and borrowings. (2) Amount represents the change in instrument specific credit risk in other comprehensive earnings in the consolidated statements of operations and comprehensive loss as required by the adoption of ASU 2016-01. (3) Represents the amount of unrealized gains (losses) relating to assets and liabilities classified as Level 3 that were still held and reflected in the fair values at December 31, 2018. The following table presents quantitative information about the valuation techniques and unobservable inputs applied to Level 3 fair value measurements for financial instruments measured at fair value on a recurring and non‑recurring basis at December 31, 2019. Estimated Valuation Unobservable Range of Weighted Financial Instrument Fair Value Technique Input Inputs Average Assets and liabilities backed by real estate Securitized mortgage collateral, and $ 2,628,064 DCF Prepayment rates 2.5 - 34.6 % 9.1 % Securitized mortgage borrowings (2,619,210) Default rates 0.02 - 3.9 % 1.6 % Loss severities 6.3 - 91.7 % 55.4 % Discount rates 2.9 - 25.0 % 3.8 % Other assets and liabilities Mortgage servicing rights $ 41,470 DCF Discount rate 9.0 - 13.0 % 9.2 % Prepayment rates 8.0 - 88.8 % 15.2 % Derivative assets - IRLCs, net 7,791 Market pricing Pull-through rate 21.1 - 99.9 % 76.3 % Long-term debt (45,434) DCF Discount rate 9.0 % 9.0 % DCF = Discounted Cash Flow For assets and liabilities backed by real estate, a significant increase in discount rates, default rates or loss severities would result in a significantly lower estimated fair value. The effect of changes in prepayment speeds would have differing effects depending on the seniority or other characteristics of the instrument. For other assets and liabilities, a significant increase in discount rates would result in a significantly lower estimated fair value. A significant increase or decrease in pull‑through rate assumptions would result in a significant increase or decrease in the fair value of IRLCs. The Company believes that the imprecision of an estimate could be significant. The following tables present the changes in recurring fair value measurements included in net losses for the years ended December 31, 2019 and 2018: Recurring Fair Value Measurements Changes in Fair Value Included in Net Loss For the Year Ended December 31, 2019 Change in Fair Value of Interest Interest Net Trust Long-term Other Income Gain on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 11,279 $ — $ 52,499 $ — $ — $ — $ 63,778 Securitized mortgage borrowings — (38,127) (55,896) — — — (94,023) Long-term debt — (425) — (1,429) — — (1,854) Mortgage servicing rights (2) — — — — (25,771) — (25,771) Mortgage loans held-for-sale — — — — — 15,810 15,810 Derivative assets — IRLCs — — — — — 4,440 4,440 Derivative liabilities — Hedging Instruments — — — — — 32 32 Total $ 11,279 $ (38,552) $ (3,397) (3) $ (1,429) $ (25,771) $ 20,282 $ (37,588) (1) Amounts primarily represent accretion to recognize interest income and interest expense using effective yields based on estimated fair values for trust assets and trust liabilities. (2) Included in loss on mortgage servicing rights, net in the consolidated statements of operations and comprehensive loss. (3) For the year ended December 31, 2019, change in the fair value of trust assets, excluding REO was $3.4 million. Recurring Fair Value Measurements Changes in Fair Value Included in Net Loss For the Year Ended December 31, 2018 Change in Fair Value of Interest Interest Net Trust Long-term Other Income Gain on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 28,165 $ — $ 43,272 $ — $ — $ — $ 71,437 Securitized mortgage borrowings — (60,889) (44,871) — — — (105,760) Long-term debt — (711) — 3,978 — — 3,267 Mortgage servicing rights (2) — — — — 3,757 — 3,757 Mortgage loans held-for-sale — — — — — (14,762) (14,762) Derivative assets — IRLCs — — — — — (1,006) (1,006) Derivative liabilities — Hedging Instruments — — — — (85) (1,019) (1,104) Total $ 28,165 $ (61,600) $ (1,599) (3) $ 3,978 $ 3,672 $ (16,787) $ (44,171) (1) Amounts primarily represent accretion to recognize interest income and interest expense using effective yields based on estimated fair values for trust assets and trust liabilities. (2) Included in loss on mortgage servicing rights, net in the consolidated statements of operations and comprehensive loss. (3) For the year ended December 31, 2018, change in the fair value of trust assets, excluding REO was $1.6 million. The following is a description of the measurement techniques for items recorded at estimated fair value on a recurring basis. Mortgage servicing rights —The Company elected to carry its mortgage servicing rights arising from its mortgage loan origination operation at fair value. The fair value of mortgage servicing rights is based upon a discounted cash flow model. The valuation model incorporates assumptions that market participants would use in estimating the fair value of servicing. These assumptions include estimates of prepayment speeds, discount rate, cost to service, escrow account earnings, contractual servicing fee income, prepayment and late fees, among other considerations. Mortgage servicing rights are considered a Level 3 measurement at December 31, 2019 and 2018. Mortgage loans held‑for‑sale —The Company elected to carry its mortgage LHFS originated or acquired from its mortgage lending operation at fair value. Fair value is based on quoted market prices, where available, prices for other traded mortgage loans with similar characteristics, and purchase commitments and bid information received from market participants. Given the meaningful level of secondary market activity for mortgage loans, active pricing is available for similar assets and accordingly, the Company classifies its mortgage LHFS as a Level 2 measurement at December 31, 2019 and 2018. Mortgage-backed securities —The Company invested in mortgage-backed securities collateralized by NonQM loans originated by the Company and sold to third party investors. Fair value is based on prices for other traded mortgage-backed securities with similar characteristics and bid information received from market participants. Given the market pricing for other traded mortgage-backed securities, active pricing is available for similar assets and accordingly, the Company classifies mortgage-backed securities as a Level 2 measurement at December 31, 2018. Securitized mortgage collateral —The Company elected to carry its securitized mortgage collateral at fair value. These assets consist primarily of non‑conforming mortgage loans securitized between 2002 and 2007. Fair value measurements are based on the Company’s internal models used to compute the net present value of future expected cash flows, with observable market participant assumptions, where available. The Company’s assumptions include its expectations of inputs that other market participants would use in pricing these assets. These assumptions include judgments about the underlying collateral, prepayment speeds, estimated future credit losses, forward interest rates, investor yield requirements and certain other factors. As of December 31, 2019, securitized mortgage collateral had an unpaid principal balance of $2.9 billion, compared to an estimated fair value on the Company’s consolidated balance sheets of $2.6 billion. The aggregate unpaid principal balance exceeds the fair value by $0.3 billion at December 31, 2019. As of December 31, 2019, the unpaid principal balance of loans 90 days or more past due was $0.4 billion compared to an estimated fair value of $0.2 billion. The aggregate unpaid principal balances of loans 90 days or more past due exceed the fair value by $0.2 billion at December 31, 2019. Securitized mortgage collateral is considered a Level 3 measurement at December 31, 2019 and 2018. Securitized mortgage borrowings —The Company elected to carry all of its securitized mortgage borrowings at fair value. These borrowings consist of individual tranches of bonds issued by securitization trusts and are primarily backed by non‑conforming mortgage loans. Fair value measurements include the Company’s judgments about the underlying collateral and assumptions such as prepayment speeds, estimated future credit losses, forward interest rates, investor yield requirements and certain other factors. As of December 31, 2019, securitized mortgage borrowings had an outstanding principal balance of $2.9 billion, net of $2.2 billion in bond losses, compared to an estimated fair value of $2.6 billion. The aggregate outstanding principal balance exceeds the fair value by $0.3 billion at December 31, 2019. Securitized mortgage borrowings are considered a Level 3 measurement at December 31, 2019 and 2018. Contingent consideration —Contingent consideration was applicable to the acquisition of CCM and was estimated and recorded at fair value at the acquisition date as part of purchase price consideration. In the fourth quarter of 2017, the earn-out period ended and the remaining $554 thousand in contingent consideration payments were paid during the three months ended March 31, 2018. The Company has no further obligations related to contingent consideration as of December 31, 2018. Long‑term debt —The Company elected to carry its remaining long‑term debt (consisting of junior subordinated notes) at fair value. These securities are measured based upon an analysis prepared by management, which considered the Company’s own credit risk, including settlements with trust preferred debt holders and discounted cash flow analysis. As of December 31, 2019, long‑term debt had an unpaid principal balance of $62.0 million compared to an estimated fair value of $45.4 million. The aggregate unpaid principal balance exceeds the fair value by $16.6 million at December 31, 2019. The long‑term debt is considered a Level 3 measurement at December 31, 2019 and 2018. Derivative assets and liabilities, Lending —The Company’s derivative assets and liabilities are carried at fair value as required by GAAP and are accounted for as free standing derivatives. The derivatives include IRLCs with prospective residential mortgage borrowers whereby the interest rate on the loan is determined prior to funding and the borrowers have locked in that interest rate. These commitments are determined to be derivative instruments in accordance with GAAP. The derivatives also include hedging instruments (typically TBA MBS) used to hedge the fair value changes associated with changes in interest rates relating to its mortgage lending originations as well as mortgage servicing rights. The Company hedges the period from the interest rate lock (assuming a fall‑out factor) to the date of the loan sale. The estimated fair value of IRLCs are based on underlying loan types with similar characteristics using the TBA MBS market, which is actively quoted and validated through external sources. The data inputs used in this valuation include, but are not limited to, loan type, underlying loan amount, note rate, loan program, expected sale date of the loan, and current market interest rates. These valuations are adjusted at the loan level to consider the servicing release premium and loan pricing adjustments specific to each loan. For all IRLCs, the base value is then adjusted for the anticipated Pull‑through Rate. The anticipated Pull‑through Rate is an unobservable input based on historical experience, which results in classification of IRLCs as a Level 3 measurement at December 31, 2019 and 2018. The fair value of the Hedging Instruments is based on the actively quoted TBA MBS market using observable inputs related to characteristics of the underlying MBS stratified by product, coupon and settlement date. Therefore, the Hedging Instruments are classified as a Level 2 measurement at December 31, 2019 and 2018. Nonrecurring Fair Value Measurements The Company is required to measure certain assets and liabilities at estimated fair value from time to time. These fair value measurements typically result from the application of specific accounting pronouncements under GAAP. The fair value measurements are considered nonrecurring fair value measurements under FASB ASC 820‑10. The following table presents financial and non‑financial assets and liabilities measured using nonrecurring fair value measurements at December 31, 2019 and 2018, respectively: Nonrecurring Fair Value Measurements December 31, 2019 December 31, 2018 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 REO (1) $ — $ 6,834 $ — $ — $ 9,885 $ — (1) Balance represents REO at December 31, 2019 and December 31, 2018 which has been impaired subsequent to foreclosure. The following table presents total losses on financial and non‑financial assets and liabilities measured using nonrecurring fair value measurements for the years ended December 31, 2019 and 2018, respectively: Total Losses (1) For the Year Ended December 31, 2019 2018 REO (2) $ (6,434) $ (950) Intangible assets — (18,347) Goodwill — (104,587) (1) Total losses reflect losses from all nonrecurring measurements during the period. (2) For the years ended December 31, 2019 and 2018, the Company recorded $6.4 million and $950 thousand, respectively, of losses related to changes in the NRV of REO. Losses represent impairment of the NRV attributable to an increase in state specific loss severities on REO held during the period which resulted in a decrease to NRV. Real estate owned —REO consists of residential real estate acquired in satisfaction of loans. Upon foreclosure, REO is adjusted to the estimated fair value of the residential real estate less estimated selling and holding costs, offset by expected contractual mortgage insurance proceeds to be received, if any. Subsequently, REO is recorded at the lower of carrying value or estimated fair value less costs to sell. REO balance representing REOs which have been impaired subsequent to foreclosure are subject to nonrecurring fair value measurement and included in the nonrecurring fair value measurements tables. Fair values of REO are generally based on observable market inputs, and considered Level 2 measurements at December 31, 2019 and 2018. Intangible assets— The methodology used to determine the fair value as well as measure potential impairment of trademarks includes assumptions with inherent uncertainty, including projected sales volumes and related projected revenues, long-term growth rates, royalty rates that a market participant might assume and judgments regarding the factors to develop an applied discount rate. The carrying value of intangible assets is at risk of impairment if future projected usage, revenues or long-term growth rates are lower than those currently projected, or if factors used in the development of a discount rate result in the application of a higher discount rate. As the results of the Company’s testing indicated that the carrying value of certain intangible assets would not be recoverable, and as a result the Company recorded intangible asset impairment of approximately $18.3 million during the year ended December 31, 2018. Intangible assets were considered Level 3 nonrecurring fair value measurements for the year ended December 31, 2018, and as of December 31, 2019 and 2018, the Company had no intangible assets remaining. Goodwill— For goodwill, the determination of fair value of a reporting unit involves, among other things, application of various approaches, which include developing forecasts of future cash flows with a number of assumptions including but not limited to, origination and margin projections, growth and terminal value projections, and judgements regarding the factors to develop discount rates and cost of capital. The Company reviewed its goodwill for impairment at least annually as of December 31 or more frequently if facts and circumstances indicate that it is more likely than not that the fair value of a reporting unit that has goodwill is less than its carrying value. The Company compared the fair value of its net assets using three methodologies (two income approaches and one market approach), to the carrying value and determined that its goodwill was impaired. As a result, the Company recorded an impairment charge of $104.6 million related to goodwill during the year ended December 31, 2018. Goodwill was considered a Level 3 nonrecurring fair value measurement for the year ended December 31, 2018, and as of December 31, 2019 and December 31, 2018, the Company had no goodwill remaining. |
Reconciliation of Loss Per Shar
Reconciliation of Loss Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Reconciliation of Loss Per Share | |
Reconciliation of Loss Per Share | Note 11.—Reconciliation of Loss Per Share The following table presents the computation of basic and diluted loss per common share, including the dilutive effect of stock options, restricted stock, restricted stock units, deferred stock units, convertible notes and cumulative redeemable preferred stock outstanding for the periods indicated, when dilutive: For the Year Ended December 31, 2019 2018 Numerator for basic loss per share: Net loss $ (7,977) $ (145,410) Numerator for diluted loss per share: Net loss $ (7,977) $ (145,410) Interest expense attributable to convertible notes (1) — — Net loss plus interest expense attributable to convertible notes $ (7,977) $ (145,410) Denominator for basic loss per share (2): Basic weighted average common shares outstanding during the period 21,189 21,026 Denominator for diluted loss per share (2): Basic weighted average common shares outstanding during the period 21,189 21,026 Net effect of dilutive convertible notes (1) — — Net effect of dilutive stock options and DSU’s — — Diluted weighted average common shares 21,189 21,026 Net loss per common share: Basic $ (0.38) $ (6.92) Diluted $ (0.38) $ (6.92) (1) Adjustments to diluted loss per share for the convertible notes for the years ended December 31, 2019 and 2018, were excluded from the calculation, as they were anti-dilutive. (2) Share amounts presented in thousands. The anti‑dilutive stock options, restricted stock awards (RSA), restricted stock units (RSU) and deferred stock units (DSU) outstanding for the years ending December 31, 2019 and 2018 were 1.1 million and 1.0 million shares in the aggregate, respectively. Additionally, for the years ended December 2019 and 2018, there were 1.2 million shares attributable to the 2015 convertible notes that were anti-dilutive. In addition to the potential dilutive effects of stock options, restricted stock, restricted stock units, deferred stock units and convertible notes listed above, see Note 9.—Redeemable Preferred Stock, for a description of cumulative undeclared dividends in arrears which would also become dilutive in the event the Company is not successful in its appeal of the original court ruling. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | Note 12.—Income Taxes The Company is subject to federal income taxes as a regular (Subchapter C) corporation and files a consolidated U.S. federal income tax return. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act made broad and complex changes to the U.S. tax code by, among other things, reducing the federal corporate income tax rate and business deductions and eliminates federal alternative minimum tax (AMT). The Tax Act reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. Under FASB ASC 740, the effects of changes in tax rates and laws were recognized in the period in which the new legislation was enacted. Income taxes for the years ended December 31, 2019 and 2018 were as follows: For the year ended December 31, 2019 2018 Current income taxes: Federal $ (362) $ — State 117 689 Total current income tax (benefit) expense (245) 689 Deferred income taxes: Federal — 3,757 State — 558 Total deferred income tax expense — 4,315 Total income tax (benefit) expense $ (245) $ 5,004 The Company recorded income tax (benefit) expense of $(245) thousand and $5.0 million for the years ended December 31, 2019 and 2018, respectively. The income tax benefit of $245 thousand for the year ended December 31, 2019 is primarily the result of a benefit resulting from the intraperiod allocation rules that are applied when there is a pre-tax loss from continuing operations and pre-tax income from other comprehensive income partially offset by state taxes from states where the Company does not have net operating loss carryforwards or state minimum taxes. The income tax expense of $5.0 million for the year ended December 31, 2018 was primarily the result of recording a full valuation allowance on deferred tax assets due to a reduction in future utilization and state income taxes from states where the Company does not have net operating loss carryforwards and state minimum taxes, including AMT. Deferred tax assets are recognized subject to management's judgment that realization is "more likely than not". A valuation allowance is recognized for a deferred tax asset if, based on the weight of the available evidence, it is more likely than not that some portion of the deferred tax asset will not be realized. In making such judgments, significant weight is given to evidence that can be objectively verified. As of each reporting date, the Company considers new evidence, both positive and negative, that could impact management's view with regard to future realization of deferred tax assets. Significant judgment is required in assessing future earnings trends, the availability of tax planning strategies, recent pretax losses and the timing of reversals of temporary differences. The Company's evaluation is based on current tax laws as well as management's expectation of future performance. The Company's deferred tax assets are primarily the result of net operating losses and basis differences on mortgage securities and goodwill. The Company has recorded a full valuation allowance against its deferred tax assets at December 31, 2019 as it is more likely than not that the deferred tax assets will not be realized. The valuation allowance is based on the management's assessment that it is more likely than not that certain deferred tax assets, primarily net operating loss carryforwards, may not be realized in the foreseeable future due to objective negative evidence. Deferred tax assets are comprised of the following temporary differences between the financial statement carrying value and the tax basis of assets: For the year ended December 31, 2019 2018 Deferred tax assets: Federal and state net operating losses $ 163,676 $ 164,435 Mortgage securities 49,927 51,356 Depreciation and amortization 29,127 31,501 Capital loss carryover 169 168 Compensation and other accruals 3,535 4,571 Repurchase reserve 2,765 2,350 Total gross deferred tax assets 249,199 254,381 Deferred tax liabilities: Fair value adjustments on long-term debt (4,391) (4,620) Mortgage servicing rights (11,549) (18,443) Total gross deferred tax liabilities (15,940) (23,063) Valuation allowance (233,259) (231,318) Total net deferred tax assets $ — $ — The following is a reconciliation of income taxes to the expected statutory federal corporate income tax rates for the years ended December 31, 2019 and 2018: For the year ended December 31, 2019 2018 Expected income tax expense $ (1,727) $ (29,485) State tax expense, net of federal benefit 106 301 State rate change (269) 35 Change in valuation allowance 1,425 33,718 Other 220 435 Total income tax (benefit) expense $ (245) $ 5,004 At December 31, 2019, the Company had accumulated other comprehensive earnings of $24.8 million, which was net of tax of $11.3 million. As of December 31, 2019, the Company had estimated federal net operating loss (NOL) carryforwards of approximately $566.6 million. Federal net operating loss carryforwards begin to expire in 2027. As of December 31, 2019, the Company had estimated California NOL carryforwards of approximately $385.2 million, which begin to expire in 2028. The Company may not be able to realize the maximum benefit due to the nature and tax entities that holds the NOL. On October 23, 2019, the Company adopted a Tax Benefits Preservation Rights Agreement (Rights Plan) to help preserve the value of certain deferred tax benefits, including those generated by net operating losses (collectively, Tax Benefits). In general, the Company may “carry forward” net operating losses in certain circumstances to offset current and future taxable income, which will reduce federal and state income tax liability, subject to certain requirements and restrictions. The Company’s ability to use these Tax Benefits would be substantially limited and impaired if it were to experience an “ownership change” for purposes of Section 382 of the Internal Revenue Code of 1986, as amended (the Code) and the Treasury Regulations promulgated thereunder. Generally, the Company will experience an “ownership change” if the percentage of the shares of Common Stock owned by one or more “five-percent shareholders” increases by more than 50 percentage points over the lowest percentage of shares of Common Stock owned by such stockholder at any time during the prior three year on a rolling basis. As such, the Rights Plan has a 4.99% “trigger” threshold that is intended to act as a deterrent to any person or entity seeking to acquire 4.99% or more of the outstanding Common Stock without the prior approval of the Board. The Rights Plan also has certain ancillary anti-takeover effects. The rights accompany each share of common stock of the Company and are evidenced by ownership of common stock. The rights are not exercisable except upon the occurrence of certain change of control events. Once triggered, the rights would entitle the stockholders, other than a person qualifying as an “Acquiring Person” pursuant to the rights plan, to certain “flip in”, “flip over” and exchange rights. The rights issued under the Rights Plan may be redeemed by the board of directors at a nominal redemption price of $0.001 per right, and the board of directors may amend the rights in any respect until the rights are triggered. The Rights Plan will expire at the Company’s 2020 annual meeting of stockholders if the stockholders do not approve the Rights Plan. Otherwise, the Rights Plan will generally expire on the three-year anniversary of its adoption. The Company files numerous tax returns in various jurisdictions. While the Company is subject to examination by various taxing authorities, the Company believes there are no unresolved issues or claims likely to be material to its financial position. The Company classifies interest and penalties on taxes as provision for income taxes. As of December 31, 2019 and 2018, the Company has no material uncertain tax positions. The Company has state AMT credits in the amount of $404 thousand as of December 31, 2019. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting | |
Segment Reporting | Note 13.—Segment Reporting The Company has three primary reporting segments which include mortgage lending, real estate services and long‑term mortgage portfolio. Unallocated corporate and other administrative costs, including the costs associated with being a public company, are presented in Corporate and other. The following table presents selected balance sheet data by reporting segment as of the dates indicated: Balance Sheet Items as of Mortgage Real Estate Long-term Corporate December 31, 2019: Lending Services Portfolio and other Consolidated Cash and cash equivalents $ 23,647 $ 4 $ — $ 1,015 $ 24,666 Restricted cash 12,466 — — — 12,466 Mortgage loans held-for-sale 782,143 — — — 782,143 Mortgage servicing rights 41,470 — — — 41,470 Trust assets — — 2,634,746 — 2,634,746 Other assets (1) 29,121 2 66 21,599 50,788 Total assets 888,847 6 2,634,812 22,614 3,546,279 Total liabilities 723,965 — 2,664,946 53,131 3,442,042 Balance Sheet Items as of Mortgage Real Estate Long-term Corporate December 31, 2018: Lending Services Portfolio and other Consolidated Cash and cash equivalents $ 21,679 $ 124 $ — $ 1,397 $ 23,200 Restricted cash 6,989 — — — 6,989 Mortgage loans held-for-sale 353,601 — — — 353,601 Mortgage servicing rights 64,728 — — — 64,728 Trust assets — — 3,165,590 — 3,165,590 Other assets (1) 28,737 2 79 5,017 33,835 Total assets 475,734 126 3,165,669 6,414 3,647,943 Total liabilities 304,013 1,103 3,193,395 39,257 3,537,768 (1) All segment asset balances exclude intercompany balances. The following table presents selected statement of operations information by reporting segment for the years ended December 31, 2019 and 2018: Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Year Ended December 31, 2019: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 98,830 $ — $ — $ — $ 98,830 Servicing fees, net 12,943 — — — 12,943 Loss on mortgage servicing rights, net (24,911) — — — (24,911) Real estate services fees, net — 3,287 — — 3,287 Other revenue 157 — 260 62 479 Other operating expense (79,536) (1,391) (531) (15,462) (96,920) Other income (expense) 6,067 — (6,189) (1,808) (1,930) Net earnings (loss) before income tax expense $ 13,550 $ 1,896 $ (6,460) $ (17,208) (8,222) Income tax benefit (245) Net loss $ (7,977) Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Year Ended December 31, 2018: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 66,750 $ — $ — $ — $ 66,750 Servicing fees, net 37,257 — — — 37,257 Loss on mortgage servicing rights, net (3,625) — — — (3,625) Real estate services fees, net — 4,327 — — 4,327 Other revenue — — 291 — 291 Intangible asset impairment (18,347) — — — (18,347) Goodwill impairment (104,587) — — — (104,587) Other operating expense (101,672) (2,088) (1,438) (21,220) (126,418) Other income (expense) 1,100 — 4,633 (1,787) 3,946 Net (loss) earnings before income tax expense $ (123,124) $ 2,239 $ 3,486 $ (23,007) $ (140,406) Income tax expense 5,004 Net loss $ (145,410) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 14.—Commitments and Contingencies Legal Proceedings The Company is a defendant in or a party to a number of legal actions or proceedings that arise in the ordinary course of business. In some of these actions and proceedings, claims for monetary damages are asserted against the Company. In view of the inherent difficulty of predicting the outcome of such legal actions and proceedings, the Company generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss related to each pending matter may be, if any. In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation when those matters present loss contingencies that are both probable and estimable. In any case, there may be exposure to losses in excess of any such amounts whether accrued or not. Any estimated loss is subject to significant judgment and is based upon currently available information, a variety of assumptions, and known and unknown uncertainties. The matters underlying the estimated loss will change from time to time, and actual results may vary significantly from the current estimate. Therefore, an estimate of possible loss represents what the Company believes to be an estimate of possible loss only for certain matters meeting these criteria. It does not represent the Company’s maximum loss exposure. Based on the Company’s current understanding of pending legal actions and proceedings, management does not believe that judgments or settlements arising from pending or threatened legal matters, individually or in the aggregate, will have a material adverse effect on the consolidated financial position, operating results or cash flows of the Company. However, in light of the inherent uncertainties involved in these matters, some of which are beyond the Company’s control, and the very large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period. The legal matters summarized below are ongoing and may have an effect on the Company’s business and future financial condition and results of operations: On December 7, 2011, a purported class action was filed in the Circuit Court of Baltimore City entitled Timm, v. Impac Mortgage Holdings, Inc, et al. alleging on behalf of holders of the Company’s 9.375% Series B Cumulative Redeemable Preferred Stock (Preferred B) and 9.125% Series C Cumulative Redeemable Preferred Stock (Preferred C) who did not tender their stock in connection with the Company’s 2009 completion of its Offer to Purchase and Consent Solicitation that the Company failed to achieve the required consent of the Preferred B and C holders, the consents to amend the Preferred stock were not effective because they were given on unissued stock (after redemption), the Company tied the tender offer with a consent requirement that constituted an improper “vote buying” scheme, and that the tender offer was a breach of a fiduciary duty. The action seeks the payment of two quarterly dividends for the Preferred B and C holders, the unwinding of the consents and reinstatement of the cumulative dividend on the Preferred B and C stock, and the election of two directors by the Preferred B and C holders. The action also seeks punitive damages and legal expenses. On July 16, 2018, the Court entered a Judgement Order whereby it (1) declared and entered judgment in favor of all defendants on all claims related to the Preferred C holders and all claims against all individual defendants thereby affirming the validity of the 2009 amendments to the Series B Articles Supplementary; (2) declared its interpretation of the voting provision language in the Preferred B Articles Supplementary to mean that consent of two-thirds of the Preferred B stockholders was required to approve the 2009 amendments to the Preferred B Articles Supplementary, which consent was not obtained, thus rendering the amendments invalid and leaving the 2004 Preferred B Articles Supplementary in effect; (3) ordered the Company to hold a special election within sixty days for the Preferred B stockholders to elect two directors to the Board of Directors pursuant to the 2004 Preferred B Articles Supplementary (which Directors will remain on the Company’s Board of Directors until such time as all accumulated dividends on the Preferred B have been paid or set aside for payment); and, (4) declared that the Company is required to pay three quarters of dividends on the Preferred B stock under the 2004 Articles Supplementary (approximately, $1.2 million, but did not order the Company to make any payment at this time). The Court declined to certify any class pending the outcome of appeals and certified its Judgment Order for immediate appeal. On October 2, 2019, the appellate court held oral argument for all appeals in the matter. On February 5, 2020, the Special Court of Appeals requested that the parties provide a supplemental memorandum explaining the appealability of the original circuit court opinion which the Company responded to on February 21, 2020. To date, the Court has yet to opine on the appealability issue or the oral arguments and related briefs. On April 30, 2012, a purported class action was filed entitled Marentes v. Impac Mortgage Holdings, Inc., alleging that certain loan modification activities of the Company constitute an unfair business practice, false advertising and marketing, and that the fees charged are improper. The complaint seeks unspecified damages, restitution, injunctive relief, attorney’s fees and prejudgment interest. On August 22, 2012, the plaintiffs filed an amended complaint adding Impac Funding Corporation as a defendant and on October 2, 2012, the plaintiffs dismissed Impac Mortgage Holdings, Inc., without prejudice. On January 11, 2019, the trial court determined that the plaintiffs were unable to prove their case and ordered that judgment be entered in favor of the defendant. On April 19, 2019, the plaintiffs filed their Notice of Appeal and the plaintiffs filed their opening brief on October 31, 2019. The Company filed its response on February 19, 2020. In October 2011 and November 2012, the Company received letters from Countrywide Securities Corporation (Countrywide), Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch), and UBS Securities LLC (UBS) claiming indemnification relating to mortgage‑backed securities bonds issued, originated or sold by Impac Secured Assets Corporation (ISAC), IFC, IMH Assets Corp. and the Company. The claims seek indemnification from claims asserted against Countrywide, Merrill Lynch, and UBS in specified legal actions entitled American International Group Inc. v. Bank of America Corp., et al., in the United States District Court for the Southern District of New York and Federal Home Loan Bank of Boston v. Ally Financial, Inc., et al., in the United States District Court for the District of Massachusetts. The notices each seek indemnification for all losses, liabilities, damages and legal fees and costs incurred in those actions. In October 2012, January 2013, and December 2014, Deutsche Bank issued indemnification demands for claims asserted against them in the Superior Court of New York in cases entitled Royal Park Investments SA/NV v. Merrill Lynch, et al. and Dealink Funding Ltd. v. Deutsche Bank and in the Circuit Court for the City of Richmond, Virginia, in a case entitled Commonwealth of VA, et al. v. Barclays Capital Inc, et al. In July 2018, the Company received an additional indemnification notice from Deutsche Bank as a result of a case filed against Deutsche Bank in Orange County Superior Court in 2016, entitled BlackRock Balanced Capital Portfolio (FI) et al. v. Deutsche Bank. In February of 2013, the Company also received a notice of intent to seek indemnification on behalf of Deutsche Bank AG, Deutsche Bank Securities, Inc., DB Structured Products, Inc., ACE Securities Corp and Deutsche Alt‑A Securities, Inc. The claims relate to actions filed against those entities in the Superior Court of New York. On April 20, 2017, a purported class action was filed in the United States District Court, Central District of California, entitled Nguyen v. Impac Mortgage Corp. dba CashCall Mortgage et al. The plaintiffs contend the defendants did not pay purported class members overtime compensation or provide meal and rest breaks, as required by law. The action seeks to invalidate any waiver signed by a purported class member of their right to bring a class action and seeks damages, restitution, penalties, attorney’s fees, interest, and an injunction against unfair, deceptive, and unlawful activities. On August 23, 2018, the court (1) granted the defendants motion to compel arbitration as to all claims, except for the plaintiffs’ claims under California’s Private Attorneys General Act (PAGA); (2) ordered the plaintiffs to submit their claims (other than PAGA claims) to arbitration on an individual, non-class, non-collective, and non-representative basis; (3) dismissed all class and collective claims with prejudice to the plaintiffs and without prejudice to putative class members; and (4) stayed all claims that were compelled to arbitration, as well as the PAGA claims. On September 18, 2018, a purported class action was filed in the Superior Court of California, Orange County, entitled McNair v. Impac Mortgage Corp. dba CashCall Mortgage. The plaintiff contends the defendant did not pay the plaintiff and purported class members overtime compensation, provide required meal and rest breaks, or provide accurate wage statements. The action seeks damages, restitution, penalties, interest, attorney’s fees, and all other appropriate injunctive, declaratory, and equitable relief. On March 8, 2019, a First Amended Complaint was filed, which added a claim alleging PAGA violations. On March 12, 2019, the parties filed a stipulation with the court stating (1) the plaintiff’s individual claims should be arbitrated pursuant to the parties’ arbitration agreement, (2) the class claims should be struck from the First Amended Complaint, and (3) the plaintiff will proceed solely with regard to her PAGA claims. This case was consolidated with Batres v. Impac Mortgage Corp. dba CashCall Mortgage discussed below with a scheduled trial date of September 8, 2020. On December 27, 2018, a purported class action was filed in the Superior Court of California, Orange County, entitled Batres v. Impac Mortgage Corp. dba CashCall Mortgage. The plaintiff contends the defendant did not pay the plaintiff and purported class members overtime compensation, provide required meal and rest breaks, or provide accurate wage statements. The action seeks damages, restitution, penalties, interest, attorney’s fees, and all other appropriate injunctive, declaratory, and equitable relief. On March 14, 2019, the plaintiff filed an amended complaint alleging only a violation of the California Labor Code Private Attorneys General Act seeking penalties, attorneys’ fees, and such other appropriate relief. This case was consolidated with the McNair v. Impac Mortgage Corp. dba CashCall Mortgage discussed above with a scheduled trial date of September 8, 2020. On July 3, 2019, a representative action was filed in the Superior Court of California, Orange County, entitled Law v. Impac Mortgage Corp. dba CashCall Mortgage under the California Labor Code Private Attorneys General Act. The plaintiff contends the defendant did not pay its employees overtime compensation, provide required meal and rest breaks, or provide accurate wage statements as required by law. The action seeks penalties, attorneys’ fees, and such other appropriate relief. The Company is a party to other litigation and claims which are normal in the course of its operations. While the results of such other litigation and claims cannot be predicted with certainty, the Company believes the final outcome of such matters will not have a material adverse effect on our financial condition or results of operations. The Company believes that it has meritorious defenses to the above claims and intends to defend these claims vigorously and as such the Company believes the final outcome of such matters will not have a material adverse effect on its financial condition or results of operations. Nevertheless, litigation is uncertain and the Company may not prevail in the lawsuits. An adverse judgment in any of these matters could have a material adverse effect on the Company’s financial position and results of operations. Lease Commitments The following table presents the operating lease balances within the consolidated balance sheets, weighted average remaining lease term, and weighted average discount rates related to the Company’s operating leases as of December 31, 2019: December 31, Lease Assets and Liabilities Classification 2019 Assets Operating lease ROU assets Other assets $ 17,169 Liabilities Operating lease liabilities Other liabilities $ 20,582 Weighted average remaining lease term Weighted average discount rate % The Company leases office space and certain office equipment under long‑term leases expiring at various dates through 2024. Future minimum commitments under non‑cancelable leases are as follows: Year 2020 $ 5,138 Year 2021 4,593 Year 2022 4,721 Year 2023 4,867 Year 2024 3,729 Total lease commitments 23,048 Less: imputed interest (2,466) Total operating lease liability $ 20,582 During the year ended December 31, 2019, cash paid for operating leases was $4.7 million. Total operating lease expense for the years ended December 31, 2019 and 2018 was $4.2 million and $6.0 million, respectively. Operating lease expense includes short-term leases and sublease income, both of which are immaterial. Interest expense on capital equipment leases was $1 thousand and $9 thousand for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, the Company had no additional operating or financing leases that had not yet commenced. Repurchase Reserve The provision for repurchases represents an estimate of losses to be incurred on the repurchase of loans or indemnification of purchaser's losses related to loan sales. Certain sale contracts and U.S. government‑sponsored enterprise (GSE) standards require the Company to repurchase a loan or indemnify the purchaser or insurer for losses if a borrower fails to make initial loan payments or if the accompanying mortgage loan fails to meet certain customary representations and warranties. In the event of a breach of the representations and warranties, the Company may be required to either repurchase the loan or indemnify the purchaser for losses it sustains on the loan. In addition, an investor may request that the Company refund a portion of the premium paid on the sale of mortgage loans if a loan is prepaid within a certain amount of time from the date of sale. The Company records a reserve for estimated losses associated with loan repurchases, purchaser indemnification and premium refunds. The provision for repurchase losses is charged against gain on sale of loans, net in the consolidated statements of operations and comprehensive loss. A release of repurchase reserves is recorded when the Company's assessment reveals that previously recorded reserves are no longer needed. Loans sold to Ginnie Mae are insured by the FHA or are guaranteed by the VA. As servicer, the Company may elect to repurchase delinquent loans in accordance with Ginnie Mae guidelines; however, the loans continue to be insured. The Company may also indemnify the FHA and VA for losses related to loans not originated in accordance with their guidelines. A selling representation and warranty framework was introduced by the GSEs in 2013 and enhanced in 2014 that helps address concerns of loan sellers with respect to loan repurchase risk. Under the framework, a GSE will not exercise its remedies, including the issuance of repurchase requests, for breaches of certain selling representations and warranties if a mortgage meets certain eligibility requirements. For loans sold to GSEs on or after January 1, 2013, repurchase risk for Home Affordable Refinance Program (HARP) loans is lowered if the borrower stays current on the loan for 12 months and representation and warranty risks are limited for non-HARP loans that stay current for 36 months. The Company regularly evaluates the adequacy of repurchase reserves based on trends in repurchase and indemnification requests, actual loss experience, settlement negotiation, estimated future loss exposure and other relevant factors including economic conditions. The Company sold $4.1 billion of loans for both the years ended December 31, 2019 and 2018, which are subject to repurchase representations and warranties. The Company believes its reserve balances as of December 31, 2019 are sufficient to cover future loss exposure associated with repurchase contingencies. The following table summarizes the repurchase reserve activity (included in other liabilities in the accompanying consolidated balance sheets) related to previously sold loans for the years ended December 31, 2019 and 2018 is as follows: December 31, December 31, 2019 2018 Beginning balance $ 7,657 $ 6,020 Provision for repurchases 5,487 5,074 Settlements (4,175) (3,437) Total repurchase reserve $ 8,969 $ 7,657 Concentration of Risk The aggregate unpaid principal balance of loans in the Company’s long‑term mortgage portfolio secured by properties in California and Florida was $1.4 billion and $321.9 million, or 49% and 11%, respectively, at December 31, 2019. The Company does not have a significant concentration of risk to any individual client except for the U.S. government and its agencies relating to its concentration of loan sales. The Company also has geographic concentration risk because 81% of the Company’s mortgage loan originations were from California. |
Share Based Payments and Employ
Share Based Payments and Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Share Based Payments and Employee Benefit Plans | |
Share Based Payments and Employee Benefit Plans | Note 15.—Share Based Payments and Employee Benefit Plans The Company maintains a stock‑based incentive compensation plan, the terms of which are governed by the 2010 Omnibus Incentive Plan (the 2010 Incentive Plan). The 2010 Incentive Plan provides for the grant of stock appreciation rights, restricted stock units, performance shares and other stock and cash‑based incentive awards. Employees, directors, consultants or other persons providing services to the Company or its affiliates are eligible to receive awards pursuant to the 2010 Incentive Plan. In connection with the adoption of the 2010 Incentive Plan, the Company’s 2001 Stock Plan, which was scheduled to expire in March 2011, was frozen. Further, all outstanding awards under the 2001 Stock Plan, as well as the Company’s previous 1995 Stock Option, Deferred Stock and Restricted Stock Plan (together with the 2001 Stock Plan, the “Prior Plans”), were assumed by the 2010 Incentive Plan. In 2019, the shareholders voted on and approved an amendment to the 2010 Omnibus Incentive Plan to increase the shares subject to the plan by 500,000 shares. As of December 31, 2019, the aggregate number of shares reserved under the 2010 Incentive Plan is 3,200,000 shares (including all outstanding awards assumed from Prior Plans), and there were 1,230,953 shares available for grant as stock options, restricted stock and deferred stock awards. The Company issues new shares of common stock to satisfy stock option exercises. The fair value of options granted, which is amortized to expense over the option service period, is estimated on the date of grant with the following weighted average assumptions: For the year ended December 31, 2019 2018 Risk-free interest rate 2.23 - 2.51% 2.69 - 2.76% Expected lives (in years) 4.74 - 5.06 5.21 - 5.50 Expected volatility 56.14 - 56.57% 45.65 - 46.34% Expected dividend yield 0.00% 0.00% Fair value per share $ 1.61 - 1.85 $ 4.04 - 4.35 The following table summarizes activity, pricing and other information for the Company’s stock options for the years presented below: For the year ended December 31, 2019 2018 Weighted- Weighted- Average Average Number of Exercise Number of Exercise Shares Price Shares Price Options outstanding at the beginning of the year 1,001,469 $ 13.16 1,582,754 $ 13.61 Options granted 592,500 3.66 90,000 9.52 Options exercised (103,351) 3.34 (104,410) 4.39 Options forfeited/cancelled (576,148) 13.20 (566,875) 15.46 Options outstanding at the end of the year 914,470 8.10 1,001,469 13.16 Options exercisable at the end of the year 328,933 $ 14.36 765,302 $ 13.41 The aggregate intrinsic value in the following table represents the total pre‑tax intrinsic value, based on the Company’s closing stock price of $5.26 and $3.78 per common share as of December 31, 2019 and 2018, respectively. Aggregate intrinsic value represents the amount of proceeds the option holders would have received had all option holders exercised their options and sold the stock as of that date. As of December 31, 2019 2018 Weighted- Weighted- Average Aggregate Average Aggregate Remaining Intrinsic Remaining Intrinsic Life Value Life Value (Years) (in thousands) (Years) (in thousands) Options outstanding at end of year $ 838 $ 102 Options exercisable at end of year $ 25 $ 102 As of December 31, 2019, there was approximately $889 thousand of total unrecognized compensation cost related to stock option compensation arrangements granted under the plan, net of estimated forfeitures. That cost is expected to be recognized over the remaining weighted average period of 1.9 years. For the years ended December 31, 2019 and 2018, the aggregate grant‑date fair value of stock options granted was approximately $1.1 million and $436 thousand, respectively. For the years ended December 31, 2019 and 2018, total stock‑based compensation expense was $660 thousand and $947 thousand, respectively. Additional information regarding stock options outstanding as of December 31, 2019 is as follows: Stock Options Outstanding Options Exercisable Weighted- Average Weighted- Weighted- Exercise Remaining Average Average Price Number Contractual Exercise Number Exercise Range Outstanding Life in Years Price Exercisable Price $ 2.73 - 3.21 39,863 7.25 $ 3.10 9,863 $ 2.76 3.22 - 3.74 170,000 9.10 3.59 — — 3.75 - 5.38 310,000 9.16 3.75 — — 5.39 - 9.85 105,832 7.21 8.48 52,500 7.47 9.86 - 17.39 132,958 6.03 12.48 110,753 12.24 17.40 - 20.49 78,917 6.22 17.40 78,917 17.40 20.50 76,900 5.02 20.50 76,900 20.50 $ 2.73 - 20.50 914,470 7.78 $ 8.10 328,933 $ 14.36 In addition to the options granted, the Company has granted deferred stock units (DSU), which vest between one and three year periods. The fair value of each DSU was measured on the date of grant using the grant date price of the Company’s stock. In 2019, the Company granted thirty thousand deferred stock units. For the year ended December 31, 2019, the aggregate grant‑date fair value of DSU’s granted was approximately $113 thousand. The following table summarizes activity, pricing and other information for the Company’s DSU’s for the years presented below: For the year ended December 31, 2019 2018 Weighted- Weighted- Average Average Number of Grant Date Number of Grant Date Shares Fair Value Shares Fair Value DSU’s outstanding at the beginning of the year 24,500 $ 10.11 100,750 $ 10.41 DSU’s granted 30,000 3.75 — — DSU’s issued — — (62,917) 9.63 DSU’s forfeited/cancelled — — (13,333) 14.64 DSU’s outstanding at the end of the year 54,500 $ 6.61 24,500 $ 10.11 As of December 31, 2019, there was approximately $96 thousand of total unrecognized compensation cost related to the DSU compensation arrangements granted under the plan. This cost is expected to be recognized over a weighted average period of 1.9 years. The following table summarizes activity, pricing and other information for the Company’s restricted stock units (RSU) for the years presented below: Weighted- Average Number of Grant Date Shares Fair Value RSU’s outstanding at beginning of the year — $ — RSU’s granted 75,000 3.75 RSU’s issued — — RSU’s forfeited/cancelled — — RSU’s outstanding at end of the year 75,000 $ 3.75 For the year ended December 31, 2019, the aggregate grant‑date fair value of RSU’s granted was approximately $281 thousand. As of December 31, 2019, there was approximately $202 thousand of total unrecognized compensation cost related to the RSU compensation arrangements granted under the plan. This cost is expected to be recognized over a weighted average period of 2.2 years. The following table summarizes activity, pricing and other information for the Company’s restricted stock awards (RSA) for the years presented below: Weighted- Average Number of Grant Date Shares Fair Value RSA’s outstanding at beginning of the year — $ — RSA’s granted 35,069 3.57 RSA’s issued — — RSA’s forfeited/cancelled — — RSA’s outstanding at end of the year 35,069 $ 3.57 For the year ended December 31, 2019, total RSA expense was $125 thousand. At December 31, 2019, there was no unrecognized compensation cost related to the RSA compensation arrangements granted under the plan as the amounts were accrued as part of an executive stay bonus in accordance with the executive’s employment agreement. 401(k) Plan After meeting certain employment requirements, employees can participate in the Company’s 401(k) plan. Under the 401(k) plan, employees may contribute up to 25% of their salaries, pursuant to certain restrictions. The Company matches 50% of the first 4% of employee contributions. Additional contributions may be made at the discretion of the board of directors. During the year ended December 31, 2019 and 2018, the Company recorded compensation expense of approximately $751 thousand and $459 thousand for basic matching contributions, respectively. There were no discretionary matching contributions recorded during the years ended December 31, 2019 or 2018. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Related Party Transactions | Note 16.—Related Party Transactions In May 2015, the Company issued the 2015 Convertible Notes to purchasers, some of which are related parties. See Note 6.—Debt — Convertible Notes. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Subsequent Events | Note 17.—Subsequent Events In February 2020, the Company granted approximately 245,000 RSUs, 30,000 stock options and 15,000 DSUs. In late February through the date of this filing, the U.S. financial markets have experienced significant volatility and negative pressures which have caused, among other things, unprecedented declines in interest rates to record low levels. The ultimate impact and duration on global and financial markets and the effects on the Company are difficult to evaluate at this time as they present material uncertainty due to the potential effects on personnel and business continuity or disruption, valuation of financial assets and liabilities and potential severe disruption to financial markets or deteriorations in credit and financing conditions. Subsequent events have been evaluated through the date of this filing. |
Summary of Business and Finan_2
Summary of Business and Financial Statement Presentation including Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Business and Financial Statement Presentation including Significant Accounting Policies | |
Financial Statement Presentation | Basis of Presentation The accompanying consolidated financial statements of IMH and its subsidiaries (as defined above) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). All significant inter‑company balances and transactions have been eliminated in consolidation. In addition, certain amounts in the prior periods’ consolidated financial statements have been reclassified to conform to the current year presentation. Management has made a number of material estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period to prepare these consolidated financial statements in conformity with GAAP. Material estimates and assumptions subject to change include the valuation of trust assets and trust liabilities, contingencies, the estimated obligation of repurchase liabilities related to sold loans, the valuation of long-term debt, mortgage servicing rights, mortgage loans held-for-sale and derivative instruments, including interest rate lock commitments (IRLC). Actual results could differ from those estimates and assumptions . |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include accounts of IMH and its wholly-owned subsidiaries. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity. However, a controlling financial interest may also exist in entities, such as variable interest entities (VIEs), through arrangements that do not involve voting interests. The VIE framework requires a variable interest holder (counterparty to a VIE) to consolidate the VIE if that party has the power to direct activities of the VIE that most significantly impact the entity’s economic performance, will absorb a majority of the expected losses of the VIE, will receive a majority of the residual returns of the VIE, or both, and directs the significant activities of the entity. This party is considered the primary beneficiary of the entity. The determination of whether the Company meets the criteria to be considered the primary beneficiary of a VIE requires an evaluation of all transactions (such as investments, liquidity commitments, derivatives and fee arrangements) with the entity. The assessment of whether or not the Company is the primary beneficiary of the VIE is performed on an ongoing basis. |
Fair Value Option | Fair Value Option The Company has elected the fair value option for mortgage servicing rights, mortgage loans held-for-sale, long-term debt and its consolidated non-recourse securitizations (securitized mortgage collateral and securitized mortgage borrowings). Elections were made to mitigate income statement volatility caused by differences in the measurement basis of elected instruments. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash and highly liquid investments with maturities of three months or less at the date of acquisition. The carrying amount of cash and cash equivalents approximates fair value. Cash balances that have restrictions as to the Company’s ability to withdraw funds are considered restricted cash. At December 31, 2019 and 2018, restricted cash totaled $12.5 million and $7.0 million, respectively. The restricted cash is the result of the terms of the Company’s warehouse borrowing agreements. In accordance with the terms of the Master Repurchase Agreements related to the warehouse borrowings, the Company is required to maintain cash balances with the lender as additional collateral for the borrowings (See Note 6.—Debt). |
Mortgage Loans Held-for-Sale | Mortgage Loans Held‑for‑Sale Mortgage loans held-for-sale (LHFS) are accounted for using the fair value option, with changes in fair value recorded in gain on sale of loans, net in the accompanying consolidated statements of operations and comprehensive loss. In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 825, Financial Instruments , loan origination fees and expenses are recognized in earnings as incurred and not deferred. Revenue derived from the Company’s mortgage lending activities includes loan fees collected at the time of origination and gain or loss from the sale of LHFS. Loan fees consist of fee income earned on all loan originations, including loans closed and held-for-sale. Loan fees are recognized as earned and consist of amounts collected for application and underwriting fees, fees on cancelled loans and discount points. The related direct loan origination costs are recognized when incurred and consists of broker fees and commissions. Gain or loss from the sale and mark‑to‑market adjustments of LHFS includes both realized and unrealized gains and losses and are included in gain on sale of loans, net in the accompanying consolidated statements of operations and comprehensive loss. The valuation of LHFS approximates a whole‑loan price, which includes the value of the related mortgage servicing rights. The Company primarily sells its LHFS to government sponsored entities and investors. The Company evaluates its loan sales for sales treatment. To the extent the transfer of loans qualifies as a sale, the Company derecognizes the loans and records a realized gain or loss on the sale date. In the event the Company determines that the transfer of loans does not qualify as a sale, the transfer would be treated as a secured borrowing. Interest on loans is recorded as income when earned and deemed collectible. LHFS are placed on nonaccrual status when any portion of the principal or interest is 90 days past due or earlier if factors indicate that the ultimate collectability of the principal or interest is not probable. Interest received from loans on nonaccrual status is recorded as income when collected. Loans return to accrual status when the principal and interest become current and it is probable that the amounts are fully collectible. |
Mortgage Servicing Rights | Mortgage Servicing Rights The Company accounts for mortgage loan sales in accordance with FASB ASC 860, Transfers and Servicing . Upon sale of mortgage loans on a service-retained basis, the LHFS are removed from the consolidated balance sheets and mortgage servicing rights (MSRs) are recorded as an asset for servicing rights retained. The Company elects to measure MSRs at fair value as prescribed by FASB ASC 860-50-35, and as such, servicing assets or liabilities are valued using discounted cash flow modeling techniques using assumptions regarding future net servicing cash flow, including prepayment rates, discount rates, servicing cost and other factors. Changes in estimated fair value are reported in the accompanying consolidated statements of operations and comprehensive loss within loss on mortgage servicing rights, net. When the Company sells mortgage servicing rights, the Company records a gain or loss on such sale based on the selling price of the mortgage servicing rights less the carrying value and transaction costs. Gains and losses are reported in the accompanying consolidated statements of operations and comprehensive loss within loss on mortgage servicing rights, net. |
Securitized Mortgage Collateral | Securitized Mortgage Collateral The Company’s long‑term mortgage portfolio primarily includes adjustable rate and, to a lesser extent, fixed rate non‑conforming mortgages and commercial mortgages that were acquired and originated by our mortgage and commercial operations prior to 2008. Non‑conforming mortgages may not have certain documentation or verifications that are required by government sponsored entities and, therefore, in making our credit decisions, we were more reliant upon the borrower’s credit score and the adequacy of the underlying collateral. Historically, the Company securitized mortgages in the form of collateralized mortgage obligations (CMO) or real estate mortgage investment conduits (REMICs). These securitizations are evaluated for consolidation based on the provisions of FASB ASC 810‑10‑25. Amounts consolidated are included in trust assets and liabilities as securitized mortgage collateral, real estate owned, derivative assets, securitized mortgage borrowings and derivative liabilities in the accompanying consolidated balance sheets. The Company accounts for securitized mortgage collateral at fair value, with changes in fair value during the period reflected in earnings. Fair value measurements are based on the Company’s estimated cash flow models, which incorporate assumptions, inputs of other market participants and quoted prices for the underlying bonds. The Company’s assumptions include its expectations of inputs that other market participants would use. These assumptions include judgments about the underlying collateral, prepayment speeds, credit losses, investor yield requirements, forward interest rates and certain other factors. Interest income on securitized mortgage collateral is recorded using the effective yield for the period based on the previous quarter‑end’s estimated fair value. Securitized mortgage collateral is generally not placed on nonaccrual status as the servicer advances the interest payments to the trust regardless of the delinquency status of the underlying mortgage loan, until it becomes apparent to the servicer that the advance is not collectible. |
Real Estate Owned | Real Estate Owned Real estate owned (REO) on the consolidated balance sheets are primarily assets within the securitized trusts but are recorded as a separate asset for accounting and reporting purposes and are within the long‑term mortgage portfolio. REO, which consists of residential real estate acquired in satisfaction of loans, is carried at net realizable value, which includes the estimated fair value of the residential real estate less estimated selling and holding costs. Adjustments to the loan carrying value required at the time of foreclosure affect the carrying amount of REO. Subsequent write‑downs in the net realizable value of REO are included in change in fair value of net trust assets, including trust REO (losses) gains in the consolidated statements of operations and comprehensive loss. |
Securitized Mortgage Borrowings | Securitized Mortgage Borrowings The Company records securitized mortgage borrowings in the accompanying consolidated balance sheets for the consolidated CMO and REMIC securitized trusts within the long-term mortgage portfolio. The debt from each issuance of a securitized mortgage borrowing is payable from the principal and interest payments on the underlying mortgages collateralizing such debt, as well as the proceeds from liquidations of REO. If the principal and interest payments are insufficient to repay the debt, the shortfall is allocated first to the residual interest holders (generally owned by the Company) then, if necessary, to the certificate holders (e.g. third party investors in the securitized mortgage borrowings) in accordance with the specific terms of the various respective indentures. Securitized mortgage borrowings typically are structured as one-month LIBOR “floaters” and fixed rate securities with interest payable to certificate holders monthly. The maturity of each class of securitized mortgage borrowing is directly affected by the amount of net interest spread, overcollateralization and the rate of principal prepayments and defaults on the related securitized mortgage collateral. The actual maturity of any class of a securitized mortgage borrowing can occur later than the stated maturities of the underlying mortgages. When the Company issued securitized mortgage borrowings, the Company generally sought an investment grade rating for the Company’s securitized mortgages by nationally recognized rating agencies. To secure such ratings, it was often necessary to incorporate certain structural features that provide for credit enhancement. This generally included the pledge of collateral in excess of the principal amount of the securities to be issued, a bond guaranty insurance policy for some or all of the issued securities, or additional forms of mortgage insurance. These securitization transactions are non-recourse to the Company and the total loss exposure is limited to the Company’s initial net economic investment in each trust, which is referred to as a residual interest. The Company accounts for securitized mortgage borrowings at fair value, with changes in fair value during the period reflected in earnings. Fair value measurements are based on the Company’s estimated cash flow models, which incorporate assumptions, inputs of other market participants and quoted prices for the underlying bonds. The Company’s assumptions include its expectations of inputs that other market participants would use. These assumptions include judgments about the underlying collateral, prepayment speeds, credit losses, investor yield requirements, forward interest rates and certain other factors. Interest expense on securitized mortgage borrowings are recorded quarterly using the effective yield for the period based on the previous quarter‑end’s estimated fair value. |
Leases | Leases On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, “ Leases (Topic 842) ”, using the modified retrospective transition approach and elected the practical expedients transition option to recognize the adjustment in the period of adoption rather than in the earliest period presented. On January 1, 2019, the Company recognized right of use (ROU) assets of $19.7 million (net of the reversal of $3.8 million deferred rent liability) and lease liabilities of $23.4 million which are included in other assets and other liabilities, respectively, in the accompanying consolidated balance sheets. (See Note 14.— Commitments and Contingencies). The Company has four operating leases for office space expiring at various dates through 2024. The Company determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its ROU assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. When the Company cannot readily determine the rate implicit in the lease, the Company determines its incremental borrowing rate by using the rate of interest that it would have to pay to borrow on a collateralized basis over a similar term. As a practical expedient permitted under Topic 842, the Company has elected to account for the lease and non-lease components as a single lease component for all leases of which it is the lessee. Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets and lease expense for these leases is recognized on a straight-line basis over the lease term. For operating leases existing prior to January 1, 2019, the rate used for the remaining lease term was determined as of the date of adoption. |
Goodwill and Intangible assets | Goodwill and Intangible Assets Goodwill arises from the acquisition method of accounting for business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. Other intangible assets with definite lives include trademarks, customer relationships, and non-compete agreements. Goodwill, trademarks and other intangible assets are tested annually for impairment or more frequently if events and circumstances indicate that the asset might be impaired. The carrying value of these intangible assets could be impaired if a significant adverse change in the use, life, or brand strategy of the asset is determined, or if a significant adverse change in the legal and regulatory environment, business or competitive climate occurs that would adversely impact the asset. Goodwill and other intangible assets deemed to have indefinite lives generated from purchase business combinations are not subject to amortization but are instead tested for impairment no less than annually. Impairment exists when the carrying value exceeds its implied fair value. An impairment loss, if any, is measured as the excess of carrying value over the implied fair value and would be recorded in the consolidated statements of operations and comprehensive loss. Intangible assets with definite lives are amortized over their estimated lives using an amortization method that reflects the pattern in which the economic benefits of the asset are consumed. As discussed in Note 4.—Goodwill and Intangible Assets, the Company recorded impairment charges for goodwill and intangible assets for the year ended December 31, 2018. |
Business Combinations | Business Combinations Business combinations are accounted for under the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations . Under the acquisition method, the acquiring entity in a business combination recognizes 100 percent of the acquired assets and assumed liabilities, regardless of the percentage owned, at their estimated fair values as of the date of acquisition. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. To the extent the fair value of net assets acquired, including other identifiable assets, exceeds the purchase price, a bargain purchase gain is recognized. Assets acquired and liabilities assumed which involve contingencies must also be recognized at their estimated fair value, provided such fair value can be determined during the measurement period. Acquisition-related costs, including severance, conversion and other restructuring charges, such as abandoned space accruals, are expensed as incurred. Results of operations of an acquired business are included in the consolidated statements of operations and comprehensive loss from the date of acquisition. |
Derivative Instruments | Derivative Instruments In accordance with FASB ASC 815‑10 Derivatives and Hedging—Overview , the Company records all derivative instruments at fair value. The Company has accounted for all its derivatives as non‑designated hedge instruments or free‑standing derivatives. The mortgage lending operation enters into IRLCs with consumers to originate mortgage loans at a specified interest rate. These IRLCs are accounted for as derivative instruments. The fair values of IRLCs utilize current secondary market prices for underlying loans and estimated servicing value with similar coupons, maturities and credit quality, subject to the anticipated loan funding probability (pull‑through rate). The fair value of IRLCs is subject to change primarily due to changes in interest rates and the estimated pull‑through rate. The Company reports IRLCs within other assets and other liabilities at fair value with changes in fair value being recorded in the accompanying consolidated statements of operations and comprehensive loss within gain on sale of loans, net. The Company hedges the changes in fair value associated with changes in interest rates related to IRLCs and uncommitted LHFS by using forward delivery commitments on mortgage-backed securities, including Fannie Mae and Ginnie Mae mortgage‑backed securities known as to‑be‑announced mortgage‑backed securities (TBA MBS or Hedging Instruments) as well as forward delivery commitments on whole loans. The Hedging Instruments and forward delivery loan commitments are used to fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market and are accounted for as derivative instruments. The fair value of Hedging Instruments and forward delivery loan commitments are subject to change primarily due to changes in interest rates. The Company reports Hedging Instruments and forward delivery loan commitments within other assets and other liabilities at fair value with changes in fair value being recorded in the accompanying consolidated statements of operations and comprehensive loss within gain on sale of loans, net. The Company hedges the changes in fair value associated with changes in interest rates related to MSRs by using TBA MBS or Hedging Instruments. The Hedging Instruments are typically entered into at the time the MSR is created and are accounted for as derivative instruments. The fair value of Hedging Instruments is subject to change primarily due to changes in interest rates. The Company reports Hedging Instruments within other assets and other liabilities at fair value with changes in fair value being recorded in the accompanying consolidated statements of operations and comprehensive loss within loss on sale of mortgage servicing rights, net. The fair value of IRLCs and Hedging Instruments are represented as derivative assets, lending, net and derivative liabilities, lending, net in Note 10.—Fair Value of Financial Instruments . |
Long-term Debt | Long‑term Debt Long‑term debt (junior subordinated notes) is reported at fair value. These securities are measured based upon an analysis prepared by management, which considers the Company’s own credit risk and discounted cash flow analysis. Unrealized gains and losses are recognized in earnings in the accompanying consolidated statements of operations and comprehensive loss within change in fair value of long‑term debt. |
Repurchase Reserve | Repurchase Reserve The Company sells mortgage loans in the secondary market, including U.S. government sponsored entities, and issues mortgage‑backed securities through Ginnie Mae and Fannie Mae. When the Company sells or issues securities, it makes customary representations and warranties to the purchasers about various characteristics of each loan such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws. In the event of a breach of its representations and warranties, the Company may be required to either repurchase the mortgage loans with the identified defects or indemnify the investor or insurer for any loss. In addition, the Company may be required to repurchase loans as a result of borrower fraud or if a payment default occurs on a mortgage loan shortly after its sale. Also, the Company’s loss may be reduced by proceeds from the sale or liquidation of the repurchased loan. The Company’s loss may be reduced by any recourse it has to correspondent lenders that, in turn, had sold such mortgage loans to the Company and breached similar or other representations and warranties. In such event, the Company has the right to seek a recovery of related repurchase losses from that correspondent lender. The Company records a provision for losses relating to such representations and warranties as part of its loan sale transactions. The method used to estimate the liability for representations and warranties is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults including any loss on sale or liquidation of the repurchased loan and the probability of reimbursement by the correspondent loan seller. The Company establishes a liability at the time loans are sold and continually updates its estimated repurchase liability. The level of the repurchase liability for representations and warranties is difficult to estimate and requires considerable management judgment. The level of mortgage loan repurchase losses is dependent on economic factors, investor demands for loan repurchases and other external conditions that may change over the lives of the underlying loans. |
Revenue Recognition for Fees from Services | Revenue Recognition for Fees from Services The Company follows FASB ASC 606, Revenue Recognition, which provides guidance on the application of GAAP to selected revenue recognition issues related to our real estate services fees. Under ASC 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when (or as) the Company satisfies a performance obligation. The Company’s primary sources of revenue are derived from financial instruments that are not within the scope of ASC 606. The Company has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Operations and Comprehensive Loss, was not necessary. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, the Company has made no significant judgments in applying the revenue guidance prescribed in ASC 606 that affect the determination of the amount and timing of revenue from contracts with customers. The revenues from these services are recognized in income in the period when services are rendered and collectability is reasonably certain. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and are included in business promotion expense. For the years ended December 31, 2019 and 2018, business promotion expense was $9.3 million and $26.9 million, respectively. |
Stock-Based Compensation | Stock‑Based Compensation The Company accounts for stock‑based compensation in accordance with FASB ASC 718 Compensation—Stock Compensation . Accordingly, the Company measures the cost of stock‑based awards using the grant‑date fair value of the award and recognizes that cost over the requisite service period. The fair value of each stock option granted under the Company’s stock-based compensation plan is estimated on the date of grant using an option-pricing model and assumptions noted in Note 15.—Share Based Payments and Employee Benefit Plans. The risk-free interest rate is based on the U.S. Treasury rate with a term equal to the expected term of the option grants on the date of grant. FASB ASC 718 requires forfeitures to be estimated at the time of grant and prospectively revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Stock‑based compensation expense is recorded net of estimated forfeitures for the years ended December 31, 2019 and 2018, such that the expense was recorded only for those stock‑based awards that were expected to vest during such periods. Refer to Note 15.—Share Based Payments and Employee Benefit Plans. |
Income Taxes | Income Taxes In accordance with FASB ASC 740, Income Taxes , the Company records income tax expense as well as deferred tax assets and liabilities. Current income tax expense approximates taxes to be paid or refunded for the current period and includes income tax expense related to uncertain tax positions. The Company determines deferred income taxes using the balance sheet method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and recognizes enacted changes in tax rates and laws in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized subject to management’s judgment that realization is “more likely than not.” Uncertain tax positions that meet the more likely than not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at the largest amount of benefit that management believes has a greater than 50% likelihood of realization upon settlement. The Company is subject to federal income taxes as a regular (Subchapter C) corporation and files a consolidated U.S. federal income tax return on qualifying subsidiaries. The Company files federal and various states income tax returns in the U.S. In prior periods when the Company was taxed as a real estate investment trust (REIT), it recorded a deferred charge to eliminate the expense recognition of income taxes paid on inter-company profits that result from the sale of mortgage loans from the taxable REIT subsidiaries to IMH. The deferred charge was included in other assets in the consolidated balance sheets and was amortized and or impaired as a component of income tax expense in the consolidated statements of operations and comprehensive loss over the estimated life of the mortgages retained in the securitized mortgage collateral. With the adoption of ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” on January 1, 2018, the deferred charge was eliminated with a $7.8 million cumulative effect adjustment to opening retained earnings and is no longer a component of income tax expense. |
Loss per Common Share | Loss per Common Share Basic loss per common share is computed on the basis of the weighted average number of shares outstanding for the year divided into net loss for the year. Diluted loss per common share is computed on the basis of the weighted average number of shares and dilutive common equivalent shares outstanding for the year divided by net loss for the year, unless anti‑dilutive. Refer to Note 11.—Reconciliation of Loss Per Share. |
Recent Accounting Pronouncements | Accounting Pronouncements Adopted In January 2016, the FASB issued ASU 2016-01, " Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. " The amendments in ASU 2016-01, among other things, requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables); requires separate presentation in other comprehensive income for the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The update is effective for interim and annual reporting periods beginning after December 15, 2017 on a modified retrospective basis, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year adopted. The Company adopted this guidance on January 1, 2018, which resulted in a $27.0 million reclass, net of tax, between opening retained earnings and other comprehensive earnings (loss) within stockholders’ equity. In January 2017, the FASB issued ASU 2017-04, " Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. " ASU 2017-04 amends Topic 350 to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This update requires the performance of an annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those periods, with early adoption permitted. The Company early adopted this guidance prospectively on June 30, 2018. See Note 4.-Goodwill and Intangible Assets for further discussion on goodwill impairment testing. In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) ”, and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding ROU assets. The Company adopted ASU 2016-02 on January 1, 2019 and applied the practical expedients included therein, as well as utilized the transition method included in ASU 2018-11. By applying ASU 2016-02 at the adoption date, as opposed to at the beginning of the earliest period presented, the presentation of financial information for periods prior to January 1, 2019 remained unchanged in accordance with Leases (Topic 840). On January 1, 2019, the Company recognized ROU assets of $19.7 million (net of the reversal of $3.8 million deferred rent liability) and lease liabilities of $23.4 million in the consolidated balance sheets. There was no impact to retained earnings upon adoption of Topic 842. For additional information related to the impact of the new guidance, see Note 14.—Commitments and Contingencies. In August 2017, the FASB issued ASU 2017-12, “ Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This ASU improves certain aspects of the hedge accounting model including making more risk management strategies eligible for hedge accounting and simplifying the assessment of hedge effectiveness. ASU 2017-12 is effective for all annual periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted and requires a prospective adoption with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption for existing hedging relationships. The Company adopted this guidance on January 1, 2019, and the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, “ Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This ASU allows a reclassification from accumulated other comprehensive earnings (AOCE) to retained earnings for the stranded tax effects caused by the revaluation of deferred taxes resulting from the newly enacted corporate tax rate in the Tax Cuts and Jobs Act (the Tax Act) which was signed into law in the fourth quarter of 2017 . The ASU is effective in years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted this guidance on January 1, 2019, and the adoption of this ASU had no impact on the Company’s consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” , which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees. This ASU specifies that Topic 718 apply to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. for public business entities for fiscal years beginning after December 15, 2018 , with early adoption permitted. The Company adopted this guidance on January 1, 2019, and the adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Pronouncements Not Yet Effective In August 2018, the FASB issued ASU 2018-13, “ Fair Value Measurement (Topic 820) .” The ASU eliminates disclosures such as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The ASU adds new disclosure requirements for Level 3 measurements. This ASU is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “ Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40).” This ASU addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This ASU is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In December 2019, FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes . The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes . The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for public business entities for fiscal years and interim periods beginning after December 15, 2020. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. |
Mortgage Loans Held-for-Sale (T
Mortgage Loans Held-for-Sale (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Mortgage Loans Held-for-Sale | |
Summary of the unpaid principal balance (UPB ) of mortgage loans held-for-sale by type | December 31, December 31, 2019 2018 Government (1) $ 51,019 $ 39,522 Conventional (2) 436,040 53,148 Non-qualified mortgages (NonQM) 274,834 256,491 Fair value adjustment (3) 20,250 4,440 Total mortgage loans held-for-sale $ 782,143 $ 353,601 (1) Includes all government-insured loans including Federal Housing Administration (FHA), Veterans Affairs (VA) and United States Department of Agriculture (USDA). (2) Includes loans eligible for sale to Federal National Mortgage Association (Fannie Mae or FNMA) and Federal home Loan Mortgage Corporation (Freddie Mac or FHLMC). (3) Changes in fair value are included in gain on sale of loans, net on the accompanying consolidated statements of operations and comprehensive loss. |
Schedule of gain on loans held-for-sale (LHFS) | For the Year Ended December 31, 2019 2018 Gain on sale of mortgage loans $ 111,787 $ 102,899 Premium from servicing retained loan sales 2,491 24,879 Unrealized gains (losses) from derivative financial instruments 4,472 (2,025) Realized (losses) gains from derivative financial instruments (5,627) 11,878 Mark to market gain (loss) on LHFS 15,810 (14,762) Direct origination expenses, net (24,616) (51,045) Provision for repurchases (5,487) (5,074) Total gain on sale of loans, net $ 98,830 $ 66,750 |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Mortgage Servicing Rights | |
Schedule of changes in the fair value of MSRs | December 31, December 31, 2019 2018 Balance at beginning of year $ 64,728 $ 154,405 Additions from servicing retained loan sales 2,491 24,879 Reductions from bulk sales — (118,313) Other 22 — Changes in fair value (1) (25,771) 3,757 Fair value of MSRs at end of year $ 41,470 $ 64,728 (1) Changes in fair value are included within loss on mortgage servicing rights, net in the accompanying consolidated statements of operations and comprehensive loss. |
Schedule of the outstanding loans serviced by entity | December 31, December 31, 2019 2018 Government insured $ 105,442 $ 51,157 Conventional 4,826,407 6,165,129 NonQM — 1,848 Total loans serviced (1) $ 4,931,849 $ 6,218,134 (1) No collateral was pledged as part of the MSR Financing at December 31, 2019 and December 31, 2018. |
Schedule of hypothetical changes in the fair values of MSRs | December 31, December 31, Mortgage Servicing Rights Sensitivity Analysis 2019 2018 Fair value of MSRs $ 41,470 $ 64,728 Prepayment Speed: Decrease in fair value from 10% adverse change (1,850) (1,419) Decrease in fair value from 20% adverse change (3,631) (2,918) Decrease in fair value from 30% adverse change (5,325) (4,475) Discount Rate: Decrease in fair value from 10% adverse change (1,330) (2,345) Decrease in fair value from 20% adverse change (2,579) (4,532) Decrease in fair value from 30% adverse change (3,753) (6,575) |
Schedule of Gain (loss) on mortgage servicing rights | For the Year Ended December 31, 2019 2018 Change in fair value of mortgage servicing rights $ (25,771) $ 3,757 Gain (loss) on sale of mortgage servicing rights 860 (5,937) Realized and unrealized losses from hedging instruments — (1,445) Loss on mortgage servicing rights, net $ (24,911) $ (3,625) |
Schedule of components of servicing income | For the Year Ended December 31, 2019 2018 Contractual servicing fees $ 15,147 $ 43,065 Late and ancillary fees 180 603 Subservicing and other costs (2,384) (6,411) Servicing fees, net $ 12,943 $ 37,257 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets. | |
Summary of changes in carrying amount of goodwill | Balance at December 31, 2017 $ 104,587 Impairment charges (104,587) Balance at December 31, 2018 $ — |
Summary of intangible assets acquired | Gross Accumulated Aggregate Net As of December 31, 2018: Carrying Amount Amortization Impairment Charges Carrying Amount Intangible assets: Trademark $ 17,251 $ (3,801) $ (13,450) $ — Customer relationships 10,170 (5,273) (4,897) — Non-compete agreement 5,701 (5,701) — — Total intangible assets acquired $ 33,122 $ (14,775) $ (18,347) $ — |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of other assets | December 31, December 31, 2019 2018 Right of use asset (See Note 14) $ 17,169 $ — Accounts receivable, net 14,265 16,840 Derivative assets – lending (See Note 8) 7,791 3,351 Prepaid expenses 3,125 3,252 Accrued interest receivable 2,131 1,505 Servicing advances 2,109 3,468 Loans eligible for repurchase from Ginnie Mae 1,686 204 Premises and equipment, net 1,250 1,109 Other 1,110 2,168 Real estate owned – outside trusts 152 1,366 Developed software, net — 572 Total other assets $ 50,788 $ 33,835 |
Schedule of premises and equipment and accumulated depreciation | December 31, 2019 2018 Premises and equipment (1) $ 5,829 $ 17,793 Less: Accumulated depreciation (1) (4,579) (16,684) Total premises and equipment, net $ 1,250 $ 1,109 |
Summary of intangible assets acquired | Gross Accumulated Aggregate Net As of December 31, 2018: Carrying Amount Amortization Impairment Charges Carrying Amount Intangible assets: Trademark $ 17,251 $ (3,801) $ (13,450) $ — Customer relationships 10,170 (5,273) (4,897) — Non-compete agreement 5,701 (5,701) — — Total intangible assets acquired $ 33,122 $ (14,775) $ (18,347) $ — |
Developed software | |
Summary of intangible assets acquired | Gross Accumulated Net Remaining As of December 31, 2019: Carrying Amount Amortization Carrying Amount Life Other assets: Developed software $ 2,719 $ (2,719) $ — — Gross Accumulated Net As of December 31, 2018: Carrying Amount Amortization Carrying Amount Other assets: Developed software $ 2,719 $ (2,147) $ 572 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long-term Debt | |
Schedule of contractual reductions of debt | Payments Due by Period Less Than One to Three to More Than Total One Year Three Years Five Years Five Years Warehouse borrowings $ 701,563 $ 701,563 $ — $ — $ — 2015 Convertible notes 25,000 25,000 — — — Long-term debt 62,000 — — — 62,000 Total debt obligations $ 788,563 $ 726,563 $ — $ — $ 62,000 |
Schedule of information on warehouse borrowings | The following table presents certain information on warehouse borrowings for the periods indicated: Maximum Balance Outstanding at Allowable Borrowing December 31, December 31, Advance Rate Capacity 2019 2018 Rates (%) Range Maturity Date Short-term borrowings: Repurchase agreement 1 (1) $ 75,000 $ 25,953 $ 84,897 80 - 98 1ML + 2.00 - 4.00% April 1, 2020 Repurchase agreement 2 100,000 72,971 47,108 90 - 98 1ML + 2.00 - 3.25% May 28, 2020 Repurchase agreement 3 (1) 425,000 250,722 35,920 90 - 97 1ML + 2.25% March 17, 2020 Repurchase agreement 4 200,000 119,838 80,141 100 1ML + 1.75% July 30, 2020 Repurchase agreement 5 (1) 300,000 72,666 23,370 100 Note Rate - 0.50% March 31, 2020 Repurchase agreement 6 600,000 159,413 12,701 95 - 98 1ML + 1.75% June 25, 2020 Total warehouse borrowings $ 1,700,000 $ 701,563 $ 284,137 (1) These lines are in the process of being renewed. The following table presents certain information on warehouse borrowings for the periods indicated: For the year ended December 31, 2019 2018 Maximum outstanding balance during the year $ 971,595 $ 650,342 Average balance outstanding for the year 547,421 440,273 UPB of underlying collateral (mortgage loans) 763,309 343,724 Weighted average interest rate for period % % |
Schedule of certain information on MSR financings | For the year ended December 31, 2019 2018 Maximum outstanding balance during the year $ 5,000 $ 67,000 Average balance outstanding for the year 200 45,532 Weighted average rate for period (1) % % (1) As part of the agreement, the Company paid an origination fee to the lender which was deferred and amortized on a straight-line basis as an adjustment to the yield over the term of the agreement. |
Junior Subordinated Notes | |
Long-term Debt | |
Schedule of remaining principal balance and fair value | December 31, 2019 2018 Junior Subordinated Notes (1) $ 62,000 $ 62,000 Fair value adjustment (16,566) (17,144) Total Junior Subordinated Notes $ 45,434 $ 44,856 (1) Stated maturity of March 2034; requires quarterly interest payments at a variable rate of 3-month LIBOR plus 3.75% per annum. At December 31, 2019, the interest rate was 5.71%. |
Securitized Mortgage Trusts (Ta
Securitized Mortgage Trusts (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Securitized Mortgage Collateral | |
Schedule of securitized mortgage trust assets | December 31, December 31, 2019 2018 Securitized mortgage collateral, at fair value $ 2,628,064 $ 3,157,071 REO, at net realizable value (NRV) 6,682 8,519 Total securitized mortgage trust assets $ 2,634,746 $ 3,165,590 |
Summary of securitized mortgage collateral | December 31, December 31, 2019 2018 Mortgages secured by residential real estate $ 2,649,997 $ 3,245,606 Mortgages secured by commercial real estate 210,536 294,599 Fair value adjustment (232,469) (383,134) Total securitized mortgage collateral, at fair value $ 2,628,064 $ 3,157,071 |
Schedule of real estate owned | December 31, 2019 2018 REO $ 21,195 $ 17,813 Impairment (1) (14,361) (7,928) Ending balance $ 6,834 $ 9,885 REO inside trusts $ 6,682 $ 8,519 REO outside trusts 152 1,366 Total $ 6,834 $ 9,885 (1) Impairment represents the cumulative write‑downs of net realizable value subsequent to foreclosure. |
Schedule of securitized mortgage trust liabilities | December 31, December 31, 2019 2018 Securitized mortgage borrowings $ 2,619,210 $ 3,148,215 |
Schedule of securitized mortgage borrowings | Securitized mortgage borrowings outstanding as of December 31, Range of Interest Rates (%) Interest Interest Rate Rate Original Fixed Margins over Margins after Issuance Interest One-Month Contractual Year of Issuance Amount 2019 2018 Rates LIBOR (1) Call Date (2) 2002 $ 3,876.1 $ 3.9 $ 4.8 5.25 - 12.00 0.27 - 2.75 0.54 - 3.68 2003 5,966.1 26.8 35.9 4.34 - 12.75 0.27 - 3.00 0.54 - 4.50 2004 17,710.7 354.3 557.0 3.58 - 5.56 0.25 - 2.50 0.50 - 3.75 2005 13,387.7 1,581.7 1,752.9 — 0.24 - 2.90 0.48 - 4.35 2006 5,971.4 2,018.0 2,113.2 6.25 0.10 - 2.75 0.20 - 4.13 2007 3,860.5 1,121.1 1,265.1 — 0.06 - 2.00 0.12 - 3.00 Subtotal contractual principal balance (3) 5,105.8 5,728.9 Fair value adjustment (2,486.6) (2,580.7) Total securitized mortgage borrowings $ 2,619.2 $ 3,148.2 (1) One-month LIBOR was 1.76% as of December 31, 2019. (2) Interest rate margins are generally adjusted when the unpaid principal balance is reduced to less than 10‑20% of the original issuance amount, or if certain other triggers are met. (3) Represents the outstanding balance in accordance with trustee reporting. |
Schedule of expected principal reductions of securitized mortgage borrowings | Payments Due by Period Less Than One to Three to More Than Total One Year Three Years Five Years Five Years Warehouse borrowings $ 701,563 $ 701,563 $ — $ — $ — 2015 Convertible notes 25,000 25,000 — — — Long-term debt 62,000 — — — 62,000 Total debt obligations $ 788,563 $ 726,563 $ — $ — $ 62,000 |
Schedule of changes in fair value of net trust assets, including trust REO losses | For the Year Ended December 31, 2019 2018 Change in fair value of net trust assets, excluding REO $ (3,397) $ (1,599) Losses from REO (6,434) (950) Change in fair value of net trust assets, including trust REO losses $ (9,831) $ (2,549) |
Securitized mortgage borrowings | |
Securitized Mortgage Collateral | |
Schedule of expected principal reductions of securitized mortgage borrowings | As of December 31, 2019, expected principal reductions of the securitized mortgage borrowings, which is based on contractual principal payments and expected prepayment and loss assumptions for securitized mortgage collateral, was as follows (dollars in millions): Payments Due by Period Less Than One to Three to More Than Total One Year Three Years Five Years Five Years Securitized mortgage borrowings (1) $ 5,105.8 $ 490.3 $ 728.1 $ 479.8 $ 3,407.6 (1) Represents the outstanding balance in accordance with trustee reporting. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments | |
Schedule of information for derivative assets and liabilities - lending | Total Gains (Losses) Notional Amount For the Year Ended December 31, December 31, December 31, 2019 2018 2019 2018 Derivative – IRLC's (1) $ 419,035 $ 183,595 $ 4,440 $ (1,006) Derivative – TBA MBS (2) 485,459 88,018 (5,595) 9,658 Derivative – Forward delivery loan commitment (3) 232,530 150,000 — (243) (1) Amounts included in gain on sale of loans, net within the accompanying consolidated statements of operations and comprehensive loss. (2) Amounts included in gain on sale of loans, net and loss on mortgage servicing rights, net within the accompanying consolidated statements of operations and comprehensive loss. (3) As of December 31, 2019 and 2018, $232.5 million and $50.0 million, respectively, in mortgage loans have been allocated to forward delivery loan commitments and are recorded at fair value within LHFS in the accompanying consolidated balance sheets. As of December 31, 2018, $100.0 million of forward loan commitments remained unallocated and are recorded at fair value within other liabilities in the accompanying consolidated balance sheets. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value of Financial Instruments | |
Schedule of estimated fair value of financial instruments included in consolidated financial statements | December 31, 2019 December 31, 2018 Carrying Estimated Fair Value Carrying Estimated Fair Value Amount Level 1 Level 2 Level 3 Amount Level 1 Level 2 Level 3 Assets Cash and cash equivalents $ 24,666 $ 24,666 $ — $ — $ 23,200 $ 23,200 $ — $ — Restricted cash 12,466 12,466 — — 6,989 6,989 — — Mortgage loans held-for-sale 782,143 — 782,143 — 353,601 — 353,601 — Mortgage servicing rights 41,470 — — 41,470 64,728 — — 64,728 Derivative assets, lending, net (1) 7,791 — — 7,791 3,351 — — 3,351 Mortgage-backed securities — — — — 1,000 — 1,000 — Securitized mortgage collateral 2,628,064 — — 2,628,064 3,157,071 — — 3,157,071 Liabilities Warehouse borrowings $ 701,563 $ — $ 701,563 $ — $ 284,137 $ — $ 284,137 $ — Convertible notes 24,996 — — 24,996 24,985 — — 24,985 Long-term debt 45,434 — — 45,434 44,856 — — 44,856 Securitized mortgage borrowings 2,619,210 — — 2,619,210 3,148,215 — — 3,148,215 Derivative liabilities, lending, net (2) 651 — 651 — 683 — 683 — (1) Represents IRLCs and are included in other assets in the accompanying consolidated balance sheets. (2) Represents Hedging Instruments and are included in other liabilities in the accompanying consolidated balance sheets. |
Schedule of assets and liabilities that are measured at estimated fair value on recurring basis | Recurring Fair Value Measurements December 31, 2019 December 31, 2018 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Mortgage loans held-for-sale $ — $ 782,143 $ — $ — $ 353,601 $ — Mortgage-backed securities — — — — 1,000 — Derivative assets, lending, net (1) — — 7,791 — — 3,351 Mortgage servicing rights — — 41,470 — — 64,728 Securitized mortgage collateral — — 2,628,064 — — 3,157,071 Total assets at fair value $ — $ 782,143 $ 2,677,325 $ — $ 354,601 $ 3,225,150 Liabilities Securitized mortgage borrowings $ — $ — $ 2,619,210 $ — $ — $ 3,148,215 Long-term debt — — 45,434 — — 44,856 Derivative liabilities, lending, net (2) — 651 — — 683 — Total liabilities at fair value $ — $ 651 $ 2,664,644 $ — $ 683 $ 3,193,071 (1) At December 31, 2019, derivative assets, lending, net included $7.8 million in IRLCs and is included in other assets in the accompanying consolidated balance sheets. At December 31, 2018, derivative assets, lending, net included $3.4 million in IRLCs and is included in other assets in accompanying consolidated balance sheets. (2) At December 31, 2019 and 2018, derivative liabilities, lending, net are included in other liabilities in the accompanying consolidated balance sheets. |
Schedule of reconciliation for all assets and liabilities measured at estimated fair value on recurring basis using significant unobservable inputs (Level 3) | Level 3 Recurring Fair Value Measurements For the Year Ended December 31, 2019 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term collateral borrowings rights net debt Fair value, December 31, 2018 $ 3,157,071 $ (3,148,215) $ 64,728 $ 3,351 $ (44,856) Total gains (losses) included in earnings: Interest income (1) 11,279 — — — — Interest expense (1) — (38,127) — — (425) Change in fair value 52,499 (55,896) (25,771) 4,440 (1,429) Change in instrument specific credit risk — — — — 1,276 (2) Total gains (losses) included in earnings 63,778 (94,023) (25,771) 4,440 (578) Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 2,491 — — Settlements (592,785) 623,028 22 — — Fair value, December 31, 2019 $ 2,628,064 $ (2,619,210) $ 41,470 $ 7,791 $ (45,434) Unrealized (losses) gains still held (3) $ (232,469) $ 2,486,615 $ 41,470 $ 7,791 $ 16,566 (1) Amounts primarily represent accretion to recognize interest income and interest expense using effective yields based on estimated fair values for trust assets and trust liabilities. Net interest income, including cash received and paid, was $9.4 million for the year ended December 31, 2019. The difference between accretion of interest income and expense and the amounts of interest income and expense recognized in the consolidated statements of operations and comprehensive loss is primarily from contractual interest on the securitized mortgage collateral and borrowings. (2) Amount represents the change in instrument specific credit risk in other comprehensive earnings in the consolidated statements of operations and comprehensive loss as required by the adoption of ASU 2016-01. (3) Represents the amount of unrealized gains (losses) relating to assets and liabilities classified as Level 3 that are still held and reflected in the fair values at December 31, 2019. Level 3 Recurring Fair Value Measurements For the Year Ended December 31, 2018 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term Contingent collateral borrowings rights net debt consideration Fair value, December 31, 2017 $ 3,662,008 $ (3,653,265) $ 154,405 $ 4,357 $ (44,982) $ (554) Total gains (losses) included in earnings: Interest income (1) 28,165 — — — — — Interest expense (1) — (60,889) — — (711) — Change in fair value 43,272 (44,871) 3,757 (1,006) 3,978 — Change in instrument specific credit risk — — — — (3,141) (2) — Total gains (losses) included in earnings 71,437 (105,760) 3,757 (1,006) 126 — Transfers in and/or out of Level 3 — — — — — — Purchases, issuances and settlements: Purchases — — — — — — Issuances — — 24,879 — — — Settlements (576,374) 610,810 (118,313) — — 554 Fair value, December 31, 2018 $ 3,157,071 $ (3,148,215) $ 64,728 $ 3,351 $ (44,856) $ — Unrealized (losses) gains still held (3) $ (383,134) $ 2,580,638 $ 64,728 $ 3,351 $ 17,144 $ — (1) Amounts primarily represent accretion to recognize interest income and interest expense using effective yields based on estimated fair values for trust assets and trust liabilities. Net interest income, including cash received and paid, was $7.7 million for the year ended December 31, 2018. The difference between accretion of interest income and expense and the amounts of interest income and expense recognized in the consolidated statements of operations and comprehensive loss is primarily from contractual interest on the securitized mortgage collateral and borrowings. (2) Amount represents the change in instrument specific credit risk in other comprehensive earnings in the consolidated statements of operations and comprehensive loss as required by the adoption of ASU 2016-01. (3) Represents the amount of unrealized gains (losses) relating to assets and liabilities classified as Level 3 that were still held and reflected in the fair values at December 31, 2018. |
Schedule of quantitative information about the valuation techniques and unobservable inputs applied to Level 3 fair value measurements for financial instruments measured at fair value on a recurring and non-recurring basis | The following table presents quantitative information about the valuation techniques and unobservable inputs applied to Level 3 fair value measurements for financial instruments measured at fair value on a recurring and non‑recurring basis at December 31, 2019. Estimated Valuation Unobservable Range of Weighted Financial Instrument Fair Value Technique Input Inputs Average Assets and liabilities backed by real estate Securitized mortgage collateral, and $ 2,628,064 DCF Prepayment rates 2.5 - 34.6 % 9.1 % Securitized mortgage borrowings (2,619,210) Default rates 0.02 - 3.9 % 1.6 % Loss severities 6.3 - 91.7 % 55.4 % Discount rates 2.9 - 25.0 % 3.8 % Other assets and liabilities Mortgage servicing rights $ 41,470 DCF Discount rate 9.0 - 13.0 % 9.2 % Prepayment rates 8.0 - 88.8 % 15.2 % Derivative assets - IRLCs, net 7,791 Market pricing Pull-through rate 21.1 - 99.9 % 76.3 % Long-term debt (45,434) DCF Discount rate 9.0 % 9.0 % DCF = Discounted Cash Flow |
Schedule of changes in recurring fair value measurements included in net earnings | Recurring Fair Value Measurements Changes in Fair Value Included in Net Loss For the Year Ended December 31, 2019 Change in Fair Value of Interest Interest Net Trust Long-term Other Income Gain on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 11,279 $ — $ 52,499 $ — $ — $ — $ 63,778 Securitized mortgage borrowings — (38,127) (55,896) — — — (94,023) Long-term debt — (425) — (1,429) — — (1,854) Mortgage servicing rights (2) — — — — (25,771) — (25,771) Mortgage loans held-for-sale — — — — — 15,810 15,810 Derivative assets — IRLCs — — — — — 4,440 4,440 Derivative liabilities — Hedging Instruments — — — — — 32 32 Total $ 11,279 $ (38,552) $ (3,397) (3) $ (1,429) $ (25,771) $ 20,282 $ (37,588) (1) Amounts primarily represent accretion to recognize interest income and interest expense using effective yields based on estimated fair values for trust assets and trust liabilities. (2) Included in loss on mortgage servicing rights, net in the consolidated statements of operations and comprehensive loss. (3) For the year ended December 31, 2019, change in the fair value of trust assets, excluding REO was $3.4 million. Recurring Fair Value Measurements Changes in Fair Value Included in Net Loss For the Year Ended December 31, 2018 Change in Fair Value of Interest Interest Net Trust Long-term Other Income Gain on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 28,165 $ — $ 43,272 $ — $ — $ — $ 71,437 Securitized mortgage borrowings — (60,889) (44,871) — — — (105,760) Long-term debt — (711) — 3,978 — — 3,267 Mortgage servicing rights (2) — — — — 3,757 — 3,757 Mortgage loans held-for-sale — — — — — (14,762) (14,762) Derivative assets — IRLCs — — — — — (1,006) (1,006) Derivative liabilities — Hedging Instruments — — — — (85) (1,019) (1,104) Total $ 28,165 $ (61,600) $ (1,599) (3) $ 3,978 $ 3,672 $ (16,787) $ (44,171) (1) Amounts primarily represent accretion to recognize interest income and interest expense using effective yields based on estimated fair values for trust assets and trust liabilities. (2) Included in loss on mortgage servicing rights, net in the consolidated statements of operations and comprehensive loss. (3) For the year ended December 31, 2018, change in the fair value of trust assets, excluding REO was $1.6 million. |
Schedule of financial and non-financial assets and liabilities measured using nonrecurring fair value measurements | The following table presents financial and non‑financial assets and liabilities measured using nonrecurring fair value measurements at December 31, 2019 and 2018, respectively: Nonrecurring Fair Value Measurements December 31, 2019 December 31, 2018 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 REO (1) $ — $ 6,834 $ — $ — $ 9,885 $ — (1) Balance represents REO at December 31, 2019 and December 31, 2018 which has been impaired subsequent to foreclosure. The following table presents total losses on financial and non‑financial assets and liabilities measured using nonrecurring fair value measurements for the years ended December 31, 2019 and 2018, respectively: Total Losses (1) For the Year Ended December 31, 2019 2018 REO (2) $ (6,434) $ (950) Intangible assets — (18,347) Goodwill — (104,587) (1) Total losses reflect losses from all nonrecurring measurements during the period. (2) For the years ended December 31, 2019 and 2018, the Company recorded $6.4 million and $950 thousand, respectively, of losses related to changes in the NRV of REO. Losses represent impairment of the NRV attributable to an increase in state specific loss severities on REO held during the period which resulted in a decrease to NRV. |
Reconciliation of Loss Per Sh_2
Reconciliation of Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Reconciliation of Loss Per Share | |
Schedule of computation of basic and diluted earnings per common share | For the Year Ended December 31, 2019 2018 Numerator for basic loss per share: Net loss $ (7,977) $ (145,410) Numerator for diluted loss per share: Net loss $ (7,977) $ (145,410) Interest expense attributable to convertible notes (1) — — Net loss plus interest expense attributable to convertible notes $ (7,977) $ (145,410) Denominator for basic loss per share (2): Basic weighted average common shares outstanding during the period 21,189 21,026 Denominator for diluted loss per share (2): Basic weighted average common shares outstanding during the period 21,189 21,026 Net effect of dilutive convertible notes (1) — — Net effect of dilutive stock options and DSU’s — — Diluted weighted average common shares 21,189 21,026 Net loss per common share: Basic $ (0.38) $ (6.92) Diluted $ (0.38) $ (6.92) (1) Adjustments to diluted loss per share for the convertible notes for the years ended December 31, 2019 and 2018, were excluded from the calculation, as they were anti-dilutive. (2) Share amounts presented in thousands. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of income taxes | For the year ended December 31, 2019 2018 Current income taxes: Federal $ (362) $ — State 117 689 Total current income tax (benefit) expense (245) 689 Deferred income taxes: Federal — 3,757 State — 558 Total deferred income tax expense — 4,315 Total income tax (benefit) expense $ (245) $ 5,004 |
Schedule of deferred tax assets and liabilities temporary differences between the financial statement carrying value and the tax basis of assets | For the year ended December 31, 2019 2018 Deferred tax assets: Federal and state net operating losses $ 163,676 $ 164,435 Mortgage securities 49,927 51,356 Depreciation and amortization 29,127 31,501 Capital loss carryover 169 168 Compensation and other accruals 3,535 4,571 Repurchase reserve 2,765 2,350 Total gross deferred tax assets 249,199 254,381 Deferred tax liabilities: Fair value adjustments on long-term debt (4,391) (4,620) Mortgage servicing rights (11,549) (18,443) Total gross deferred tax liabilities (15,940) (23,063) Valuation allowance (233,259) (231,318) Total net deferred tax assets $ — $ — |
Schedule of a reconciliation of income taxes to the statutory federal corporate income tax rates | For the year ended December 31, 2019 2018 Expected income tax expense $ (1,727) $ (29,485) State tax expense, net of federal benefit 106 301 State rate change (269) 35 Change in valuation allowance 1,425 33,718 Other 220 435 Total income tax (benefit) expense $ (245) $ 5,004 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting | |
Reconciliation of assets from segment to consolidated | Balance Sheet Items as of Mortgage Real Estate Long-term Corporate December 31, 2019: Lending Services Portfolio and other Consolidated Cash and cash equivalents $ 23,647 $ 4 $ — $ 1,015 $ 24,666 Restricted cash 12,466 — — — 12,466 Mortgage loans held-for-sale 782,143 — — — 782,143 Mortgage servicing rights 41,470 — — — 41,470 Trust assets — — 2,634,746 — 2,634,746 Other assets (1) 29,121 2 66 21,599 50,788 Total assets 888,847 6 2,634,812 22,614 3,546,279 Total liabilities 723,965 — 2,664,946 53,131 3,442,042 Balance Sheet Items as of Mortgage Real Estate Long-term Corporate December 31, 2018: Lending Services Portfolio and other Consolidated Cash and cash equivalents $ 21,679 $ 124 $ — $ 1,397 $ 23,200 Restricted cash 6,989 — — — 6,989 Mortgage loans held-for-sale 353,601 — — — 353,601 Mortgage servicing rights 64,728 — — — 64,728 Trust assets — — 3,165,590 — 3,165,590 Other assets (1) 28,737 2 79 5,017 33,835 Total assets 475,734 126 3,165,669 6,414 3,647,943 Total liabilities 304,013 1,103 3,193,395 39,257 3,537,768 (1) All segment asset balances exclude intercompany balances. |
Reconciliation of earnings from segment to consolidated | Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Year Ended December 31, 2019: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 98,830 $ — $ — $ — $ 98,830 Servicing fees, net 12,943 — — — 12,943 Loss on mortgage servicing rights, net (24,911) — — — (24,911) Real estate services fees, net — 3,287 — — 3,287 Other revenue 157 — 260 62 479 Other operating expense (79,536) (1,391) (531) (15,462) (96,920) Other income (expense) 6,067 — (6,189) (1,808) (1,930) Net earnings (loss) before income tax expense $ 13,550 $ 1,896 $ (6,460) $ (17,208) (8,222) Income tax benefit (245) Net loss $ (7,977) Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Year Ended December 31, 2018: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 66,750 $ — $ — $ — $ 66,750 Servicing fees, net 37,257 — — — 37,257 Loss on mortgage servicing rights, net (3,625) — — — (3,625) Real estate services fees, net — 4,327 — — 4,327 Other revenue — — 291 — 291 Intangible asset impairment (18,347) — — — (18,347) Goodwill impairment (104,587) — — — (104,587) Other operating expense (101,672) (2,088) (1,438) (21,220) (126,418) Other income (expense) 1,100 — 4,633 (1,787) 3,946 Net (loss) earnings before income tax expense $ (123,124) $ 2,239 $ 3,486 $ (23,007) $ (140,406) Income tax expense 5,004 Net loss $ (145,410) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of future minimum commitments under non-cancelable leases | Year 2020 $ 5,138 Year 2021 4,593 Year 2022 4,721 Year 2023 4,867 Year 2024 3,729 Total lease commitments 23,048 Less: imputed interest (2,466) Total operating lease liability $ 20,582 |
Schedule of the activity related to the repurchase reserve for previously sold loans | December 31, December 31, 2019 2018 Beginning balance $ 7,657 $ 6,020 Provision for repurchases 5,487 5,074 Settlements (4,175) (3,437) Total repurchase reserve $ 8,969 $ 7,657 |
ASU 2016-02 | |
Schedule of balance sheets, weighted average remaining lease term and weighted average discount rates | December 31, Lease Assets and Liabilities Classification 2019 Assets Operating lease ROU assets Other assets $ 17,169 Liabilities Operating lease liabilities Other liabilities $ 20,582 Weighted average remaining lease term Weighted average discount rate % |
Share Based Payments and Empl_2
Share Based Payments and Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of weighted average assumptions used in estimation of the fair value of options granted | For the year ended December 31, 2019 2018 Risk-free interest rate 2.23 - 2.51% 2.69 - 2.76% Expected lives (in years) 4.74 - 5.06 5.21 - 5.50 Expected volatility 56.14 - 56.57% 45.65 - 46.34% Expected dividend yield 0.00% 0.00% Fair value per share $ 1.61 - 1.85 $ 4.04 - 4.35 |
Summary of activity, pricing and other information for the Company's stock options | For the year ended December 31, 2019 2018 Weighted- Weighted- Average Average Number of Exercise Number of Exercise Shares Price Shares Price Options outstanding at the beginning of the year 1,001,469 $ 13.16 1,582,754 $ 13.61 Options granted 592,500 3.66 90,000 9.52 Options exercised (103,351) 3.34 (104,410) 4.39 Options forfeited/cancelled (576,148) 13.20 (566,875) 15.46 Options outstanding at the end of the year 914,470 8.10 1,001,469 13.16 Options exercisable at the end of the year 328,933 $ 14.36 765,302 $ 13.41 |
Schedule of aggregate intrinsic value | As of December 31, 2019 2018 Weighted- Weighted- Average Aggregate Average Aggregate Remaining Intrinsic Remaining Intrinsic Life Value Life Value (Years) (in thousands) (Years) (in thousands) Options outstanding at end of year $ 838 $ 102 Options exercisable at end of year $ 25 $ 102 |
Schedule of additional information regarding stock options outstanding | Stock Options Outstanding Options Exercisable Weighted- Average Weighted- Weighted- Exercise Remaining Average Average Price Number Contractual Exercise Number Exercise Range Outstanding Life in Years Price Exercisable Price $ 2.73 - 3.21 39,863 7.25 $ 3.10 9,863 $ 2.76 3.22 - 3.74 170,000 9.10 3.59 — — 3.75 - 5.38 310,000 9.16 3.75 — — 5.39 - 9.85 105,832 7.21 8.48 52,500 7.47 9.86 - 17.39 132,958 6.03 12.48 110,753 12.24 17.40 - 20.49 78,917 6.22 17.40 78,917 17.40 20.50 76,900 5.02 20.50 76,900 20.50 $ 2.73 - 20.50 914,470 7.78 $ 8.10 328,933 $ 14.36 |
Restricted stock units | |
Summary of activity, pricing and other information for the Company's | Weighted- Average Number of Grant Date Shares Fair Value RSU’s outstanding at beginning of the year — $ — RSU’s granted 75,000 3.75 RSU’s issued — — RSU’s forfeited/cancelled — — RSU’s outstanding at end of the year 75,000 $ 3.75 |
Deferred stock units | |
Summary of activity, pricing and other information for the Company's | For the year ended December 31, 2019 2018 Weighted- Weighted- Average Average Number of Grant Date Number of Grant Date Shares Fair Value Shares Fair Value DSU’s outstanding at the beginning of the year 24,500 $ 10.11 100,750 $ 10.41 DSU’s granted 30,000 3.75 — — DSU’s issued — — (62,917) 9.63 DSU’s forfeited/cancelled — — (13,333) 14.64 DSU’s outstanding at the end of the year 54,500 $ 6.61 24,500 $ 10.11 |
Restricted stock awards | |
Summary of activity, pricing and other information for the Company's | Weighted- Average Number of Grant Date Shares Fair Value RSA’s outstanding at beginning of the year — $ — RSA’s granted 35,069 3.57 RSA’s issued — — RSA’s forfeited/cancelled — — RSA’s outstanding at end of the year 35,069 $ 3.57 |
Summary of Business and Finan_3
Summary of Business and Financial Statement Presentation including Significant Accounting Policies (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)lease | Dec. 31, 2018USD ($) | Jan. 01, 2019USD ($) | Jan. 01, 2018USD ($) | |
Mortgage Loans Held-for-Sale | ||||
Maximum past due period of principal or interest based on LHFS are placed on nonaccrual status | 90 days | |||
Recent Accounting Pronouncements | ||||
Restricted cash | $ 12,466 | $ 6,989 | ||
Business promotion | 9,319 | 26,936 | ||
Operating lease ROU assets | 17,169 | |||
Deferred rent liability | 3,800 | |||
Operating lease liabilities | $ 20,582 | |||
Number of Operating Leases | lease | 4 | |||
Accumulated other comprehensive earnings | $ 24,786 | 23,877 | ||
ASU 2016-01 | Retained Deficit | ||||
Recent Accounting Pronouncements | ||||
Reclassification and adjustment related to adoption of new standard | (27,018) | $ (27,000) | ||
ASU 2016-01 | Accumulated Other Comprehensive Earnings (Loss) | ||||
Recent Accounting Pronouncements | ||||
Reclassification and adjustment related to adoption of new standard | 27,018 | 27,000 | ||
ASU 2016-16 | ||||
Recent Accounting Pronouncements | ||||
Reclassification and adjustment related to adoption of new standard | (7,827) | |||
ASU 2016-16 | Retained Deficit | ||||
Recent Accounting Pronouncements | ||||
Reclassification and adjustment related to adoption of new standard | $ (7,827) | $ (7,800) | ||
ASU 2016-02 | Restatement adjustment | ||||
Recent Accounting Pronouncements | ||||
Operating lease ROU assets | $ 19,700 | |||
Deferred rent liability | 3,800 | |||
Operating lease liabilities | $ 23,400 |
Mortgage Loans Held-for-Sale (D
Mortgage Loans Held-for-Sale (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Mortgage loans held-for-Sale | ||
Total mortgage loans held-for-sale | $ 782,143 | $ 353,601 |
Gain on LHFS | ||
Provision for repurchases | (5,487) | (5,074) |
Total gain on sale of loans, net | 84,035 | 88,611 |
Government | ||
Mortgage loans held-for-Sale | ||
Total mortgage loans held-for-sale | 51,019 | 39,522 |
Conventional | ||
Mortgage loans held-for-Sale | ||
Total mortgage loans held-for-sale | 436,040 | 53,148 |
Non-qualified mortgages (NonQM) | ||
Mortgage loans held-for-Sale | ||
Total mortgage loans held-for-sale | 274,834 | 256,491 |
LHFS | ||
Mortgage loans held-for-Sale | ||
Fair value adjustment | 20,250 | 4,440 |
Carrying value | 4,200 | 1,800 |
Gain on LHFS | ||
Gain on sale of mortgage loans | 111,787 | 102,899 |
Premium from servicing retained loan sales | 2,491 | 24,879 |
Unrealized gains (losses) from derivative financial instruments | 4,472 | (2,025) |
Realized (losses) gains from derivative financial instruments | (5,627) | 11,878 |
Mark to market gain (loss) on LHFS | 15,810 | (14,762) |
Direct origination expenses, net | (24,616) | (51,045) |
Provision for repurchases | (5,487) | (5,074) |
Total gain on sale of loans, net | 98,830 | 66,750 |
LHFS | 90 days or more past due | ||
Mortgage loans held-for-Sale | ||
Unpaid principal balance of mortgage loans held for sale | $ 4,500 | $ 2,300 |
Mortgage Servicing Rights (Deta
Mortgage Servicing Rights (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Changes in the fair value of MSRs | ||
Balance at beginning of year | $ 64,728 | |
Fair value of MSRs at end of period | 41,470 | $ 64,728 |
Total loans serviced | 4,931,849 | 6,218,134 |
Amount pledged as collateral as part of the MSR Financing | 0 | 0 |
Mortgage Servicing Rights Sensitivity Analysis | ||
Fair value of MSRs | 41,470 | 64,728 |
Change in fair value of mortgage servicing rights | (25,771) | 3,757 |
Gain (loss) on sale of mortgage servicing rights | 860 | (5,937) |
Loss on mortgage servicing rights, net | (24,911) | (3,625) |
Servicing income, net | ||
Contractual servicing fees | 15,147 | 43,065 |
Late and ancillary fees | 180 | 603 |
Subservicing and other costs | (2,384) | (6,411) |
Servicing fees, net | 12,943 | 37,257 |
Government | ||
Changes in the fair value of MSRs | ||
Total loans serviced | 105,442 | 51,157 |
Conventional | ||
Changes in the fair value of MSRs | ||
Total loans serviced | 4,826,407 | 6,165,129 |
NonQM | ||
Changes in the fair value of MSRs | ||
Total loans serviced | 1,848 | |
Mortgage servicing rights | ||
Changes in the fair value of MSRs | ||
Balance at beginning of year | 64,728 | 154,405 |
Additions from servicing retained loan sales | 2,491 | 24,879 |
Reductions from bulk sales | (118,313) | |
Other | 22 | |
Changes in fair value | (25,771) | 3,757 |
Fair value of MSRs at end of period | 41,470 | 64,728 |
Mortgage Servicing Rights Sensitivity Analysis | ||
Prepayment Speed, Decrease in fair value from 10% adverse change | (1,850) | (1,419) |
Prepayment Speed, Decrease in fair value from 20% adverse change | (3,631) | (2,918) |
Prepayment Speed, Decrease in fair value from 30% adverse change | (5,325) | (4,475) |
Discount Rate, Decrease in fair value from 10% adverse change | (1,330) | (2,345) |
Discount Rate, Decrease in fair value from 20% adverse change | (2,579) | (4,532) |
Discount Rate, Decrease in fair value from 30% adverse change | (3,753) | (6,575) |
Change in fair value of mortgage servicing rights | (25,771) | 3,757 |
Gain (loss) on sale of mortgage servicing rights | 860 | (5,937) |
Realized and unrealized gains (losses) from hedging instruments | (1,445) | |
Loss on mortgage servicing rights, net | $ (24,911) | $ (3,625) |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2015 | Dec. 31, 2018 | Dec. 31, 2019 | |
Goodwill | |||||
Goodwill | $ 104,600 | $ 0 | $ 0 | ||
Intangible assets acquired | 33,100 | ||||
Changes in carrying amount of goodwill | |||||
Goodwill, Beginning Balance | 104,587 | ||||
Goodwill impairment | $ (29,900) | $ (74,700) | (104,587) | ||
Goodwill, Ending Balance | $ 104,600 | 0 | |||
Aggregate Impairment Charges | $ (4,900) | $ (13,500) | (18,347) | ||
Trademark | |||||
Changes in carrying amount of goodwill | |||||
Aggregate Impairment Charges | (13,450) | ||||
Customer relationships | |||||
Changes in carrying amount of goodwill | |||||
Aggregate Impairment Charges | $ (4,897) |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangibles Other Than Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2018 | |
Intangible assets and other assets: | |||
Gross Carrying Amount | $ 33,122 | ||
Accumulated Amortization | (14,775) | ||
Aggregate Impairment Charges | $ (4,900) | $ (13,500) | (18,347) |
Trademark | |||
Intangible assets and other assets: | |||
Gross Carrying Amount | 17,251 | ||
Accumulated Amortization | (3,801) | ||
Aggregate Impairment Charges | (13,450) | ||
Customer relationships | |||
Intangible assets and other assets: | |||
Gross Carrying Amount | 10,170 | ||
Accumulated Amortization | (5,273) | ||
Aggregate Impairment Charges | (4,897) | ||
Non-compete agreement | |||
Intangible assets and other assets: | |||
Gross Carrying Amount | 5,701 | ||
Accumulated Amortization | $ (5,701) |
Other Assets - Summary of Other
Other Assets - Summary of Other Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other Assets | ||
Right of use asset (See Note 14) | $ 17,169 | |
Accounts receivable, net | 14,265 | $ 16,840 |
Derivative assets – lending (See Note 8) | 7,791 | 3,351 |
Prepaid expenses | 3,125 | 3,252 |
Accrued interest receivable | 2,131 | 1,505 |
Servicing advances | 2,109 | 3,468 |
Loans eligible for repurchase from Ginnie Mae | 1,686 | 204 |
Premises and equipment, net | 1,250 | 1,109 |
Other | 1,110 | 2,168 |
Real estate owned - outside trust | 152 | 1,366 |
Developed software, net | 572 | |
Total other assets | $ 50,788 | 33,835 |
Accounts Receivable, net | ||
Average collection period after sale date for holdbacks from MSR sales | 6 months | |
Average number of months in arrears for collection of receivables related to hedging instruments and real estate service fees | 1 month | |
Reserve for doubtful accounts | $ 280 | $ 434 |
Other Assets - Loans Eligible f
Other Assets - Loans Eligible for Repurchase from Ginnie Mae (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Loans eligible for repurchase from Ginnie Mae | $ 1,686 | $ 204 |
Value of MSRs sold | $ 41,470 | 64,728 |
Government National Mortgage Association Certificates and Obligations (GNMA) | ||
Value of MSRs sold | $ 3,900,000 |
Other Assets - Premises and Equ
Other Assets - Premises and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other Assets | ||
Premises and equipment | $ 5,829 | $ 17,793 |
Less: Accumulated depreciation | (4,579) | (16,684) |
Total premises and equipment, net | 1,250 | 1,109 |
Fixed assets written down | 12,800 | |
Depreciation | $ 721 | $ 620 |
Other Assets - Developed Softwa
Other Assets - Developed Software, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Acquired intangible assets | ||
Gross Carrying Amount | $ 33,122 | |
Accumulated Amortization | (14,775) | |
Developed software | ||
Acquired intangible assets | ||
Gross Carrying Amount | $ 2,719 | 2,719 |
Accumulated Amortization | (2,719) | (2,147) |
Net Carrying Amount | 0 | 572 |
Amortization expense | $ 572 | $ 572 |
Debt - Contractual Reductions o
Debt - Contractual Reductions of Debt (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Contractual reductions of debt | |
Total | $ 788,563 |
Less Than One Year | 726,563 |
More Than Five Years | 62,000 |
2015 Convertible Notes | |
Contractual reductions of debt | |
Total | 25,000 |
Less Than One Year | 25,000 |
Long-term debt | |
Contractual reductions of debt | |
Total | 62,000 |
More Than Five Years | 62,000 |
Warehouse Borrowings | |
Contractual reductions of debt | |
Total | 701,563 |
Less Than One Year | $ 701,563 |
Debt - Warehouse Borrowings (De
Debt - Warehouse Borrowings (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Warehouse Borrowings | ||
Balance Outstanding | $ 701,563 | $ 284,137 |
One Month LIBOR | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 1.76% | |
Warehouse Borrowings | ||
Warehouse Borrowings | ||
Maximum Borrowing Capacity | $ 1,700,000 | |
Balance Outstanding | 701,563 | 284,137 |
Information on warehouse borrowings | ||
Amount outstanding | 971,595 | 650,342 |
Average balance outstanding for the year | 547,421 | 440,273 |
UPB of underlying collateral (mortgage loans) | $ 763,309 | $ 343,724 |
Weighted average rate for period (as a percent) | 4.30% | 4.67% |
Repurchase agreement 1 | ||
Warehouse Borrowings | ||
Maximum Borrowing Capacity | $ 75,000 | |
Balance Outstanding | $ 25,953 | $ 84,897 |
Repurchase agreement 1 | Minimum | ||
Warehouse Borrowings | ||
Allowable Advance Rates (as a percent) | 80.00% | |
Repurchase agreement 1 | Minimum | One Month LIBOR | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 2.00% | |
Repurchase agreement 1 | Maximum | ||
Warehouse Borrowings | ||
Allowable Advance Rates (as a percent) | 98.00% | |
Repurchase agreement 1 | Maximum | One Month LIBOR | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 4.00% | |
Repurchase agreement 2 | ||
Warehouse Borrowings | ||
Maximum Borrowing Capacity | $ 100,000 | |
Balance Outstanding | $ 72,971 | 47,108 |
Repurchase agreement 2 | Minimum | ||
Warehouse Borrowings | ||
Allowable Advance Rates (as a percent) | 90.00% | |
Repurchase agreement 2 | Minimum | One Month LIBOR | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 2.00% | |
Repurchase agreement 2 | Maximum | ||
Warehouse Borrowings | ||
Allowable Advance Rates (as a percent) | 98.00% | |
Repurchase agreement 2 | Maximum | One Month LIBOR | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 3.25% | |
Repurchase agreement 3 | ||
Warehouse Borrowings | ||
Maximum Borrowing Capacity | $ 425,000 | |
Balance Outstanding | $ 250,722 | 35,920 |
Repurchase agreement 3 | One Month LIBOR | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 2.25% | |
Repurchase agreement 3 | Minimum | ||
Warehouse Borrowings | ||
Allowable Advance Rates (as a percent) | 90.00% | |
Repurchase agreement 3 | Maximum | ||
Warehouse Borrowings | ||
Allowable Advance Rates (as a percent) | 97.00% | |
Repurchase agreement 4 | ||
Warehouse Borrowings | ||
Maximum Borrowing Capacity | $ 200,000 | |
Balance Outstanding | $ 119,838 | 80,141 |
Allowable Advance Rates (as a percent) | 100.00% | |
Repurchase agreement 4 | One Month LIBOR | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 1.75% | |
Repurchase agreement 5 | ||
Warehouse Borrowings | ||
Maximum Borrowing Capacity | $ 300,000 | |
Balance Outstanding | $ 72,666 | 23,370 |
Allowable Advance Rates (as a percent) | 100.00% | |
Repurchase agreement 5 | Note Rate | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 0.50% | |
Repurchase agreement 6 | ||
Warehouse Borrowings | ||
Maximum Borrowing Capacity | $ 600,000 | |
Balance Outstanding | $ 159,413 | $ 12,701 |
Repurchase agreement 6 | One Month LIBOR | ||
Warehouse Borrowings | ||
Rate Range (as a percent) | 1.75% | |
Repurchase agreement 6 | Minimum | ||
Warehouse Borrowings | ||
Allowable Advance Rates (as a percent) | 95.00% | |
Repurchase agreement 6 | Maximum | ||
Warehouse Borrowings | ||
Allowable Advance Rates (as a percent) | 98.00% |
Debt - MSR Financings (Details)
Debt - MSR Financings (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
May 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 28, 2018 | |
One Month LIBOR | ||||
Long-term Debt | ||||
Interest margin over base rate (as a percent) | 1.76% | |||
MSR Financings | ||||
Long-term Debt | ||||
Amount outstanding | $ 5,000 | $ 67,000 | ||
Average balance outstanding for the year | $ 200 | $ 45,532 | ||
Weighted average rate for period (as a percent) | 8.00% | 5.82% | ||
Line of credit | FHLMC and GNMA Financing | IMC | ||||
Long-term Debt | ||||
Maximum Borrowing Capacity | $ 60,000 | $ 50,000 | ||
Maximum borrowing capacity (in percentage) | 60.00% | |||
Amount outstanding | $ 0 | |||
Available for borrowing | $ 24,400 | |||
Line of credit | FHLMC and GNMA Financing | One Month LIBOR | IMC | ||||
Long-term Debt | ||||
Interest margin over base rate (as a percent) | 3.00% |
Debt - Convertible Notes (Detai
Debt - Convertible Notes (Details) - 2015 Convertible Notes $ / shares in Units, $ in Thousands | 1 Months Ended |
May 31, 2015USD ($)D$ / shares | |
Convertible Notes | |
Amount of debt issued | $ | $ 25,000 |
Interest rate of debt (as a percent) | 7.50% |
Transaction costs | $ | $ 50 |
Conversion price (in dollars per share) | $ / shares | $ 21.50 |
Conditional conversion price (in dollars per share) | $ / shares | $ 30.10 |
Number of trading days for which stock price must exceed specified price | D | 20 |
Number of consecutive trading days during which stock price must exceed specified price | D | 30 |
Debt - Long-term Debt (Details)
Debt - Long-term Debt (Details) - Junior Subordinated Notes - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Long-term Debt | ||
Interest rate at the end of the period (as a percent) | 5.71% | |
Junior Subordinated Notes, Fair Value | ||
Long-term debt | $ 62,000 | $ 62,000 |
Fair value adjustment | (16,566) | (17,144) |
Total | $ 45,434 | $ 44,856 |
LIBOR | ||
Long-term Debt | ||
Applicable margin (as a percent) | 3.75% |
Securitized Mortgage Trusts - S
Securitized Mortgage Trusts - Securitized Mortgage Trust Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Trust Assets | ||
Securitized mortgage collateral, at fair value | $ 2,628,064 | $ 3,157,071 |
REO, at net realizable value (NRV) | 6,682 | 8,519 |
Total securitized mortgage trust assets | 2,634,746 | 3,165,590 |
Mortgages secured by residential real estate | ||
Trust Assets | ||
Securitized mortgage collateral, at fair value | 2,649,997 | 3,245,606 |
Mortgages secured by commercial real estate | ||
Trust Assets | ||
Securitized mortgage collateral, at fair value | 210,536 | 294,599 |
Securitized mortgage collateral | ||
Trust Assets | ||
Securitized mortgage collateral, at fair value | 2,628,064 | 3,157,071 |
Fair value adjustment | (232,469) | (383,134) |
Mortgages serviced for others | ||
Trust Assets | ||
Other mortgages primarily collateralized by REMIC | 268,100 | 328,700 |
REO inside trusts | ||
Trust Assets | ||
REO, at net realizable value (NRV) | $ 6,682 | $ 8,519 |
Securitized Mortgage Trusts -_2
Securitized Mortgage Trusts - Securitized Mortgage Trust Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Securitized Mortgage Trusts | ||
REO | $ 21,195 | $ 17,813 |
Impairment (1) | (14,361) | (7,928) |
Ending balance | 6,834 | 9,885 |
REO inside trust | 6,682 | 8,519 |
REO outside trust | 152 | 1,366 |
Securitized Mortgage Trust Liabilities | ||
Securitized mortgage borrowings | $ 2,619,210 | $ 3,148,215 |
Securitized Mortgage Trusts -_3
Securitized Mortgage Trusts - Securitized Mortgage Borrowings (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Securitized Mortgage Borrowings | ||
Securitized mortgage borrowings | $ 2,619,210 | $ 3,148,215 |
Minimum | ||
Range of interest rates | ||
Interest rate margin adjustment trigger, percentage of unpaid principal balance to original issuance amount | 10.00% | |
Maximum | ||
Range of interest rates | ||
Interest rate margin adjustment trigger, percentage of unpaid principal balance to original issuance amount | 20.00% | |
One Month LIBOR | ||
Range of interest rates | ||
Applicable margin (as a percent) | 1.76% | |
Securitized mortgage borrowings | ||
Securitized Mortgage Borrowings | ||
Subtotal contractual principal balance (3) | $ 5,105,800 | 5,728,900 |
Fair value adjustment | (2,486,600) | (2,580,700) |
Securitized mortgage borrowings | 2,619,200 | 3,148,200 |
2002 | ||
Securitized Mortgage Borrowings | ||
Original Issuance Amount | 3,876,100 | |
Securitized mortgage borrowings | $ 3,900 | 4,800 |
2002 | Minimum | ||
Range of interest rates | ||
Fixed interest rate (as a percent) | 5.25% | |
Interest Rate Margins after Contractual Call Date (as a percent) | 0.54% | |
2002 | Maximum | ||
Range of interest rates | ||
Fixed interest rate (as a percent) | 12.00% | |
Interest Rate Margins after Contractual Call Date (as a percent) | 3.68% | |
2002 | One Month LIBOR | Minimum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 0.27% | |
2002 | One Month LIBOR | Maximum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 2.75% | |
2003 | ||
Securitized Mortgage Borrowings | ||
Original Issuance Amount | $ 5,966,100 | |
Securitized mortgage borrowings | $ 26,800 | 35,900 |
2003 | Minimum | ||
Range of interest rates | ||
Fixed interest rate (as a percent) | 4.34% | |
Interest Rate Margins after Contractual Call Date (as a percent) | 0.54% | |
2003 | Maximum | ||
Range of interest rates | ||
Fixed interest rate (as a percent) | 12.75% | |
Interest Rate Margins after Contractual Call Date (as a percent) | 4.50% | |
2003 | One Month LIBOR | Minimum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 0.27% | |
2003 | One Month LIBOR | Maximum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 3.00% | |
2004 | ||
Securitized Mortgage Borrowings | ||
Original Issuance Amount | $ 17,710,700 | |
Securitized mortgage borrowings | $ 354,300 | 557,000 |
2004 | Minimum | ||
Range of interest rates | ||
Fixed interest rate (as a percent) | 3.58% | |
Interest Rate Margins after Contractual Call Date (as a percent) | 0.50% | |
2004 | Maximum | ||
Range of interest rates | ||
Fixed interest rate (as a percent) | 5.56% | |
Interest Rate Margins after Contractual Call Date (as a percent) | 3.75% | |
2004 | One Month LIBOR | Minimum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 0.25% | |
2004 | One Month LIBOR | Maximum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 2.50% | |
2005 | ||
Securitized Mortgage Borrowings | ||
Original Issuance Amount | $ 13,387,700 | |
Securitized mortgage borrowings | $ 1,581,700 | 1,752,900 |
2005 | Minimum | ||
Range of interest rates | ||
Interest Rate Margins after Contractual Call Date (as a percent) | 0.48% | |
2005 | Maximum | ||
Range of interest rates | ||
Interest Rate Margins after Contractual Call Date (as a percent) | 4.35% | |
2005 | One Month LIBOR | Minimum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 0.24% | |
2005 | One Month LIBOR | Maximum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 2.90% | |
2006 | ||
Securitized Mortgage Borrowings | ||
Original Issuance Amount | $ 5,971,400 | |
Securitized mortgage borrowings | $ 2,018,000 | 2,113,200 |
Range of interest rates | ||
Fixed interest rate (as a percent) | 6.25% | |
2006 | Minimum | ||
Range of interest rates | ||
Interest Rate Margins after Contractual Call Date (as a percent) | 0.20% | |
2006 | Maximum | ||
Range of interest rates | ||
Interest Rate Margins after Contractual Call Date (as a percent) | 4.13% | |
2006 | One Month LIBOR | Minimum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 0.10% | |
2006 | One Month LIBOR | Maximum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 2.75% | |
2007 | ||
Securitized Mortgage Borrowings | ||
Original Issuance Amount | $ 3,860,500 | |
Securitized mortgage borrowings | $ 1,121,100 | $ 1,265,100 |
2007 | Minimum | ||
Range of interest rates | ||
Interest Rate Margins after Contractual Call Date (as a percent) | 0.12% | |
2007 | Maximum | ||
Range of interest rates | ||
Interest Rate Margins after Contractual Call Date (as a percent) | 3.00% | |
2007 | One Month LIBOR | Minimum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 0.06% | |
2007 | One Month LIBOR | Maximum | ||
Range of interest rates | ||
Applicable margin (as a percent) | 2.00% |
Securitized Mortgage Trusts - E
Securitized Mortgage Trusts - Expected Principal Reductions of the Securitized Mortgage Borrowings (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Securitized Mortgage Borrowings | ||
Less Than One Year | $ 726,563 | |
More Than Five Years | 62,000 | |
Securitized mortgage borrowings | ||
Securitized Mortgage Borrowings | ||
Total | 5,105,800 | $ 5,728,900 |
Less Than One Year | 490,300 | |
One to Three Years | 728,100 | |
Three to Five Years | 479,800 | |
More Than Five Years | $ 3,407,600 |
Securitized Mortgage Trusts - C
Securitized Mortgage Trusts - Change in Fair Value of Net Trust Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Change in fair value of net trust assets, including trust REO losses | ||
Change in fair value of net trust assets, excluding REO | $ (3,397) | $ (1,599) |
Losses from REO | (6,434) | (950) |
Change in fair value of net trust assets, including trust REO losses | $ (9,831) | $ (2,549) |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Interest rate lock commitments. net (IRLCs) | ||
Derivative assets and liabilities - lending | ||
Derivative Asset, Notional Amount | $ 419,035 | $ 183,595 |
Total Gains (Losses) | 4,440 | (1,006) |
Hedging Instruments | ||
Derivative assets and liabilities - lending | ||
Derivative Liabilities, Notional Amount | 485,459 | 88,018 |
Total Gains (Losses) | (5,595) | 9,658 |
Forward delivery loan commitment | ||
Derivative assets and liabilities - lending | ||
Derivative, Notional Amount | 150,000 | |
Derivative Asset, Notional Amount | 232,530 | |
Total Gains (Losses) | (243) | |
Forward delivery loan commitment | LHFS | ||
Derivative assets and liabilities - lending | ||
Derivative Asset, Notional Amount | 232,500 | 50,000 |
Forward delivery loan commitment | Other liabilities | ||
Derivative assets and liabilities - lending | ||
Derivative Liabilities, Notional Amount | 100,000 | |
Mortgage lending operations | Interest rate lock commitments. net (IRLCs) | ||
Derivative assets and liabilities - lending | ||
Assets fair value | 7,800 | 3,400 |
Mortgage lending operations | Hedging Instruments | ||
Derivative assets and liabilities - lending | ||
Liabilities fair value | 651 | 440 |
Mortgage lending operations | Forward delivery loan commitment | ||
Derivative assets and liabilities - lending | ||
Assets fair value | $ 0 | |
Liabilities fair value | $ 243 |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 16, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Series B and C Preferred Stock | |||
Outstanding liquidation preference | $ 67,800 | ||
Liquidation preference amount per share (in dollars per share) | $ 25 | ||
Series B 9.375% redeemable preferred stock | |||
Outstanding liquidation preference | $ 32,630 | $ 32,630 | |
Preferred stock, dividend rate (as a percent) | 9.375% | 9.375% | 9.375% |
Series C 9.125% redeemable preferred stock | |||
Outstanding liquidation preference | $ 35,127 | $ 35,127 | |
Preferred stock, dividend rate (as a percent) | 9.125% | 9.125% | 9.125% |
Cumulative undeclared dividends in arrears | $ 0 | ||
Timm | |||
Preferred B stock approval percentage | 67.00% | ||
Timm | Series B 9.375% redeemable preferred stock | |||
Liquidation preference amount per share (in dollars per share) | $ 49.02 | ||
Cumulative undeclared dividends in arrears | $ 16,000 | ||
Cumulative undeclared dividends in arrears (per share) | $ 24.02 | ||
Cumulative undeclared dividends in arrears, increase in every quarter (per share) | $ 0.5859 | ||
Amount of increase in cumulative undeclared dividends in arrears in each quarter | $ 390 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Fair value of Financial Instruments Included in the Consolidated Financial Statements (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Mortgage servicing rights | $ 41,470 | $ 64,728 |
Carrying Amount | ||
Assets | ||
Cash and cash equivalents. | 24,666 | 23,200 |
Restricted cash | 12,466 | 6,989 |
Mortgage loans held for-for-sale | 782,143 | 353,601 |
Mortgage servicing rights | 41,470 | 64,728 |
Derivatives assets, lending, net | 7,791 | 3,351 |
Mortgage-backed securities | 1,000 | |
Securitized mortgage collateral | 2,628,064 | 3,157,071 |
Liabilities | ||
Warehouse borrowings | 701,563 | 284,137 |
Convertible notes | 24,996 | 24,985 |
Long-term debt | 45,434 | 44,856 |
Securitized mortgage borrowings | 2,619,210 | 3,148,215 |
Derivative liabilities, lending, net | 651 | 683 |
Estimated Fair Value | Level 1 | ||
Assets | ||
Cash and cash equivalents. | 24,666 | 23,200 |
Restricted cash | 12,466 | 6,989 |
Estimated Fair Value | Level 2 | ||
Assets | ||
Mortgage loans held for-for-sale | 782,143 | 353,601 |
Mortgage-backed securities | 1,000 | |
Liabilities | ||
Warehouse borrowings | 701,563 | 284,137 |
Derivative liabilities, lending, net | 651 | 683 |
Estimated Fair Value | Level 3 | ||
Assets | ||
Mortgage servicing rights | 41,470 | 64,728 |
Derivatives assets, lending, net | 7,791 | 3,351 |
Securitized mortgage collateral | 2,628,064 | 3,157,071 |
Liabilities | ||
Convertible notes | 24,996 | 24,985 |
Long-term debt | 45,434 | 44,856 |
Securitized mortgage borrowings | $ 2,619,210 | $ 3,148,215 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Mortgage servicing rights | $ 41,470 | $ 64,728 |
Level 3 | ||
Fair Value Measurements | ||
Percentage of level three assets to total assets measured at fair value | 77.00% | 90.00% |
Percentage of level three liabilities to total liabilities measured at fair value | 99.00% | 99.00% |
Recurring basis | Level 2 | ||
Assets | ||
Mortgage loans held for-for-sale | $ 782,143 | $ 353,601 |
Mortgage-backed securities | 1,000 | |
Total assets at fair value | 782,143 | 354,601 |
Liabilities | ||
Derivative liabilities, lending, net | 651 | 683 |
Total liabilities at fair value | 651 | 683 |
Recurring basis | Level 3 | ||
Assets | ||
Derivatives assets, lending, net | 7,791 | 3,351 |
Mortgage servicing rights | 41,470 | 64,728 |
Securitized mortgage collateral | 2,628,064 | 3,157,071 |
Total assets at fair value | 2,677,325 | 3,225,150 |
Liabilities | ||
Securitized mortgage borrowings | 2,619,210 | 3,148,215 |
Long-term debt | 45,434 | 44,856 |
Total liabilities at fair value | 2,664,644 | 3,193,071 |
Recurring basis | Derivative assets, lending, net | Interest rate lock commitments. net (IRLCs) | Level 3 | ||
Assets | ||
Total assets at fair value | $ 7,800 | $ 3,400 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Reconciliation of All Assets and Liabilities Measured Using Level 3 Input (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Level 3 | ||
Purchases, issuances and settlements | ||
Net interest income including cash received and paid | $ 9,400 | $ 7,700 |
Securitized mortgage borrowings | ||
Changes in fair value of liabilities during the period | ||
Fair value in the beginning of the period | (3,148,215) | (3,653,265) |
Total gains (losses) included in earnings: | ||
Total (losses) gains included in earnings | (94,023) | (105,760) |
Purchases, issuances and settlements | ||
Settlements | 623,028 | 610,810 |
Fair value at the end of the period | (2,619,210) | (3,148,215) |
Unrealized gains (losses) still held | 2,486,615 | 2,580,638 |
Securitized mortgage borrowings | Interest expense | ||
Total gains (losses) included in earnings: | ||
Total (losses) gains included in earnings | (38,127) | (60,889) |
Securitized mortgage borrowings | Change in fair value | ||
Total gains (losses) included in earnings: | ||
Total (losses) gains included in earnings | (55,896) | (44,871) |
Long-term debt | ||
Changes in fair value of liabilities during the period | ||
Fair value in the beginning of the period | (44,856) | (44,982) |
Total gains (losses) included in earnings: | ||
Total (losses) gains included in earnings | (578) | 126 |
Purchases, issuances and settlements | ||
Fair value at the end of the period | (45,434) | (44,856) |
Unrealized gains (losses) still held | 16,566 | 17,144 |
Long-term debt | Interest expense | ||
Total gains (losses) included in earnings: | ||
Total (losses) gains included in earnings | (425) | (711) |
Long-term debt | Change in fair value | ||
Total gains (losses) included in earnings: | ||
Total (losses) gains included in earnings | (1,429) | 3,978 |
Long-term debt | Change in instrument specific credit risk | ||
Total gains (losses) included in earnings: | ||
Total (losses) gains included in earnings | 1,276 | (3,141) |
Contingent consideration | ||
Changes in fair value of liabilities during the period | ||
Fair value in the beginning of the period | (554) | |
Purchases, issuances and settlements | ||
Settlements | 554 | |
Securitized mortgage collateral | ||
Changes in fair value of assets during the period | ||
Fair value at the beginning of the period | 3,157,071 | 3,662,008 |
Total gains (losses) included in earnings: | ||
Total gains (losses) included in earnings | 63,778 | 71,437 |
Purchases, issuances and settlements | ||
Settlements | (592,785) | (576,374) |
Fair value at the end of the period | 2,628,064 | 3,157,071 |
Unrealized gains (losses) still held | (232,469) | (383,134) |
Securitized mortgage collateral | Interest income | ||
Total gains (losses) included in earnings: | ||
Total gains (losses) included in earnings | 11,279 | 28,165 |
Securitized mortgage collateral | Change in fair value | ||
Total gains (losses) included in earnings: | ||
Total gains (losses) included in earnings | 52,499 | 43,272 |
Mortgage servicing rights | ||
Changes in fair value of assets during the period | ||
Fair value at the beginning of the period | 64,728 | 154,405 |
Total gains (losses) included in earnings: | ||
Total gains (losses) included in earnings | (25,771) | 3,757 |
Purchases, issuances and settlements | ||
Issuances | 2,491 | 24,879 |
Settlements | 22 | (118,313) |
Fair value at the end of the period | 41,470 | 64,728 |
Unrealized gains (losses) still held | 41,470 | 64,728 |
Mortgage servicing rights | Change in fair value | ||
Total gains (losses) included in earnings: | ||
Total gains (losses) included in earnings | (25,771) | 3,757 |
Interest rate lock commitments. net (IRLCs) | ||
Changes in fair value of assets during the period | ||
Fair value at the beginning of the period | 3,351 | 4,357 |
Total gains (losses) included in earnings: | ||
Total gains (losses) included in earnings | 4,440 | (1,006) |
Purchases, issuances and settlements | ||
Fair value at the end of the period | 7,791 | 3,351 |
Unrealized gains (losses) still held | 7,791 | 3,351 |
Interest rate lock commitments. net (IRLCs) | Change in fair value | ||
Total gains (losses) included in earnings: | ||
Total gains (losses) included in earnings | $ 4,440 | $ (1,006) |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Valuation Techniques And Unobservable Inputs Applied (Details) - Level 3 $ in Thousands | Dec. 31, 2019USD ($) |
Securitized mortgage borrowings | DCF | |
Valuation techniques | |
Estimated fair value of liabilities | $ (2,619,210) |
Securitized mortgage borrowings | Measurement Input, Default Rate | DCF | Minimum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 0.02 |
Securitized mortgage borrowings | Measurement Input, Default Rate | DCF | Maximum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 3.9 |
Securitized mortgage borrowings | Measurement Input, Default Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 1.6 |
Securitized mortgage borrowings | Measurement Input, Loss Severity | DCF | Minimum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 6.3 |
Securitized mortgage borrowings | Measurement Input, Loss Severity | DCF | Maximum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 91.7 |
Securitized mortgage borrowings | Measurement Input, Loss Severity | DCF | Weighted Average | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 55.4 |
Securitized mortgage borrowings | Measurement Input, Discount Rate | DCF | Minimum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 2.9 |
Securitized mortgage borrowings | Measurement Input, Discount Rate | DCF | Maximum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 25 |
Securitized mortgage borrowings | Measurement Input, Discount Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 3.8 |
Long-term debt | DCF | |
Valuation techniques | |
Estimated fair value of liabilities | $ (45,434) |
Long-term debt | Measurement Input, Discount Rate | DCF | |
Unobservable input | |
Measurement input, long-term debt | 9 |
Long-term debt | Measurement Input, Discount Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, long-term debt | 9 |
Securitized mortgage collateral | DCF | |
Valuation techniques | |
Estimated fair value of assets | $ 2,628,064 |
Securitized mortgage collateral | Measurement Input, Prepayment Rate | DCF | Minimum | |
Unobservable input | |
Measurement input, securitized mortgage collateral | 2.5 |
Securitized mortgage collateral | Measurement Input, Prepayment Rate | DCF | Maximum | |
Unobservable input | |
Measurement input, securitized mortgage collateral | 34.6 |
Securitized mortgage collateral | Measurement Input, Prepayment Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, securitized mortgage collateral | 9.1 |
Mortgage servicing rights | DCF | |
Valuation techniques | |
Estimated fair value of assets | $ 41,470 |
Mortgage servicing rights | Measurement Input, Prepayment Rate | DCF | Minimum | |
Unobservable input | |
Measurement input, mortgage servicing rights | 8 |
Mortgage servicing rights | Measurement Input, Prepayment Rate | DCF | Maximum | |
Unobservable input | |
Measurement input, mortgage servicing rights | 88.8 |
Mortgage servicing rights | Measurement Input, Prepayment Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, mortgage servicing rights | 15.2 |
Mortgage servicing rights | Measurement Input, Discount Rate | DCF | Minimum | |
Unobservable input | |
Measurement input, mortgage servicing rights | 9 |
Mortgage servicing rights | Measurement Input, Discount Rate | DCF | Maximum | |
Unobservable input | |
Measurement input, mortgage servicing rights | 13 |
Mortgage servicing rights | Measurement Input, Discount Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, mortgage servicing rights | 9.2 |
Interest rate lock commitments. net (IRLCs) | Market pricing | |
Valuation techniques | |
Estimated fair value of assets | $ 7,791 |
Interest rate lock commitments. net (IRLCs) | Measurement Input, Pull-through Rate | Market pricing | Minimum | |
Unobservable input | |
Measurement input, derivative assets - IRLCs, net | 21.1 |
Interest rate lock commitments. net (IRLCs) | Measurement Input, Pull-through Rate | Market pricing | Maximum | |
Unobservable input | |
Measurement input, derivative assets - IRLCs, net | 99.9 |
Interest rate lock commitments. net (IRLCs) | Measurement Input, Pull-through Rate | Market pricing | Weighted Average | |
Unobservable input | |
Measurement input, derivative assets - IRLCs, net | 76.3 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments - Changes in Recurring Fair Value Measurements Included in Earnings (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of net trust assets, excluding REO | $ (3,397) | $ (1,599) | |
Securitized Mortgage Borrowings | |||
Outstanding principal balance of securitized mortgage borrowings | 4,931,849 | 6,218,134 | |
Contingent consideration | |||
Contingent consideration | 0 | $ 554 | |
Change in Fair Value of Net Trust Assets | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of net trust assets, excluding REO | 3,400 | 1,600 | |
Recurring basis | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Total | (37,588) | (44,171) | |
Recurring basis | Interest income | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Total | 11,279 | 28,165 | |
Recurring basis | Interest expense | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Total | (38,552) | (61,600) | |
Recurring basis | Change in Fair Value of Net Trust Assets | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Total | (3,397) | (1,599) | |
Recurring basis | Change in Fair Value of Long-term Debt | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Total | (1,429) | 3,978 | |
Recurring basis | Other revenue and expense | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Total | (25,771) | 3,672 | |
Recurring basis | Gain on sale of loans, net | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Total | 20,282 | (16,787) | |
Recurring basis | Hedging Instruments | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | 32 | (1,104) | |
Recurring basis | Hedging Instruments | Other revenue and expense | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | (85) | ||
Recurring basis | Hedging Instruments | Gain on sale of loans, net | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | 32 | (1,019) | |
Recurring basis | Securitized mortgage borrowings | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | (94,023) | (105,760) | |
Recurring basis | Securitized mortgage borrowings | Interest expense | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | (38,127) | (60,889) | |
Recurring basis | Securitized mortgage borrowings | Change in Fair Value of Net Trust Assets | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | (55,896) | (44,871) | |
Recurring basis | Long-term debt | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | (1,854) | 3,267 | |
Recurring basis | Long-term debt | Interest expense | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | (425) | (711) | |
Recurring basis | Long-term debt | Change in Fair Value of Long-term Debt | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of liabilities | (1,429) | 3,978 | |
Recurring basis | Securitized mortgage collateral | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | 63,778 | 71,437 | |
Recurring basis | Securitized mortgage collateral | Interest income | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | 11,279 | 28,165 | |
Recurring basis | Securitized mortgage collateral | Change in Fair Value of Net Trust Assets | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | 52,499 | 43,272 | |
Recurring basis | Mortgage servicing rights | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | (25,771) | 3,757 | |
Recurring basis | Mortgage servicing rights | Other revenue and expense | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | (25,771) | 3,757 | |
Recurring basis | Mortgage loans held-for-sale | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | 15,810 | (14,762) | |
Recurring basis | Mortgage loans held-for-sale | Gain on sale of loans, net | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | 15,810 | (14,762) | |
Recurring basis | Derivative assets - IRLCs | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | 4,440 | (1,006) | |
Recurring basis | Derivative assets - IRLCs | Gain on sale of loans, net | |||
Change in Fair Value Included in Net Earnings (Loss) | |||
Change in fair value of assets | 4,440 | (1,006) | |
Recurring basis | Level 3 | |||
Long-term debt | |||
Estimated fair value of long-term debt | 45,434 | $ 44,856 | |
Recurring basis | Level 3 | Long-term debt | |||
Long-term debt | |||
Long-term debt unpaid principal balance | 62,000 | ||
Estimated fair value of long-term debt | 45,400 | ||
Difference between aggregate unpaid principal balances and fair value of long-term debt | 16,600 | ||
Recurring basis | Level 3 | Securitized mortgage collateral | |||
Securitized mortgage collateral | |||
Unpaid principal balance of securitized mortgage collateral | 2,900,000 | ||
Estimated fair value of securitized mortgage collateral | 2,600,000 | ||
Difference between aggregate unpaid principal balance and fair value of securitized mortgage collateral | 300,000 | ||
Unpaid principal balance of loans 90 days or more past due | 400,000 | ||
Estimated fair value of loans 90 days or more past due | 200,000 | ||
Difference between aggregate unpaid principal balances and fair value of mortgage loans | 200,000 | ||
Securitized Mortgage Borrowings | |||
Outstanding principal balance of securitized mortgage borrowings | 2,900,000 | ||
Estimated fair value of securitized mortgage borrowings | 2,600,000 | ||
Bond losses | 2,200,000 | ||
Difference between aggregate unpaid principal balances and fair value of securitized mortgage borrowings | $ 300,000 |
Fair Value of Financial Instr_8
Fair Value of Financial Instruments - Nonrecurring Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2015 | |
Fair Value Measurements | ||||||
Goodwill | $ 0 | $ 0 | $ 104,587 | $ 104,600 | ||
Retained earnings | (1,157,019) | (1,149,042) | ||||
Total Losses | ||||||
Intangible asset impairment | $ (4,900) | $ (13,500) | (18,347) | |||
Goodwill impairment | $ (29,900) | $ (74,700) | (104,587) | |||
Nonrecurring Fair Value Measurements | ||||||
Total Losses | ||||||
REO | (6,434) | (950) | ||||
Intangible asset impairment | (18,347) | |||||
Goodwill impairment | (104,587) | |||||
Nonrecurring Fair Value Measurements | Level 2 | ||||||
Fair Value Measurements | ||||||
REO | 6,834 | 9,885 | ||||
Nonrecurring Fair Value Measurements | Level 3 | ||||||
Fair Value Measurements | ||||||
Intangible assets | 0 | 0 | ||||
Goodwill | $ 0 | $ 0 |
Reconciliation of Loss Per Sh_3
Reconciliation of Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator for basic loss per share: | ||
Net loss | $ (7,977) | $ (145,410) |
Numerator for diluted loss per share: | ||
Net loss | (7,977) | (145,410) |
Net loss plus interest expense attributable to convertible notes | $ (7,977) | $ (145,410) |
Denominator for basic loss per share: | ||
Basic weighted average common shares outstanding during the period | 21,189 | 21,026 |
Denominator for diluted loss per share: | ||
Basic weighted average common shares outstanding during the period | 21,189 | 21,026 |
Diluted weighted average common shares | 21,189 | 21,026 |
Basic (in dollars per share) | $ (0.38) | $ (6.92) |
Diluted (in dollars per share) | $ (0.38) | $ (6.92) |
Stock options | ||
Denominator for diluted loss per share: | ||
Antidilutive securities excluded from weighted average share calculations (in shares) | 1,100 | 1,000 |
Convertible Debt Notes | ||
Denominator for diluted loss per share: | ||
Antidilutive securities excluded from weighted average share calculations (in shares) | 1,200 | 1,200 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current income taxes: | ||
Federal | $ (362) | |
State | 117 | $ 689 |
Total current income tax (benefit) expense | (245) | 689 |
Deferred income taxes: | ||
Federal | 3,757 | |
State | 558 | |
Total deferred income tax expense | 4,315 | |
Total income tax (benefit) expense | $ (245) | $ 5,004 |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Federal and state net operating losses | $ 163,676 | $ 164,435 |
Mortgage securities | 49,927 | 51,356 |
Depreciation and amortization | 29,127 | 31,501 |
Capital loss carryover | 169 | 168 |
Compensation and other accruals | 3,535 | 4,571 |
Repurchase reserve | 2,765 | 2,350 |
Total gross deferred tax assets | 249,199 | 254,381 |
Deferred tax liabilities: | ||
Fair value adjustments on long-term debt | (4,391) | (4,620) |
Mortgage servicing rights | (11,549) | (18,443) |
Total gross deferred tax liabilities | (15,940) | (23,063) |
Valuation allowance | $ (233,259) | $ (231,318) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of income taxes to the expected statutory federal corporate income tax rates | ||
Expected income tax expense | $ (1,727) | $ (29,485) |
State tax expense, net of federal benefit | 106 | 301 |
State rate change | (269) | 35 |
Change in valuation allowance | 1,425 | 33,718 |
Other | 220 | 435 |
Total income tax (benefit) expense | $ (245) | $ 5,004 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) $ / shares in Units, $ in Thousands | Oct. 23, 2019shareholder$ / shares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017 |
Operating loss carryforwards | ||||
Income tax rate (as a percent) | 21.00% | 21.00% | 35.00% | |
Income tax (benefit) expense | $ (245) | $ 5,004 | ||
Accumulated other comprehensive earnings | 24,786 | $ 23,877 | ||
Accumulated other comprehensive earnings, tax | 11,300 | |||
Number of five-percent stockholders which, in the event of an increase in their ownership percentage by more than fifty percent, could result in the entity experiencing an ownership change | shareholder | 1 | |||
Rolling time period used for measurement of ownership increase of five-percent shareholders | 3 years | |||
Threshold percentage of outstanding stock in an unapproved stock purchase that would trigger activation of rights under the Rights Plan | 4.99% | |||
Redemption price of rights issued under Rights Plan | $ / shares | $ 0.001 | |||
Term of Rights Plan | 3 years | |||
AMT credit | 404 | |||
Minimum | ||||
Operating loss carryforwards | ||||
Percentage of ownership increase by five-percent shareholders which could potentially trigger an ownership change | 50.00% | |||
Federal | ||||
Operating loss carryforwards | ||||
Net operating loss carryforwards | 566,600 | |||
State | ||||
Operating loss carryforwards | ||||
Net operating loss carryforwards | $ 385,200 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet Items (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2015 |
Segment Reporting | ||||
Cash and cash equivalents | $ 24,666 | $ 23,200 | ||
Restricted cash | 12,466 | 6,989 | ||
Mortgage loans held-for-sale | 782,143 | 353,601 | ||
Mortgage servicing rights | 41,470 | 64,728 | ||
Trust assets | 2,634,746 | 3,165,590 | ||
Goodwill | 0 | 0 | $ 104,587 | $ 104,600 |
Other assets | 50,788 | 33,835 | ||
Total assets | 3,546,279 | 3,647,943 | ||
Total liabilities | 3,442,042 | 3,537,768 | ||
Corporate and other | ||||
Segment Reporting | ||||
Cash and cash equivalents | 1,015 | 1,397 | ||
Other assets | 21,599 | 5,017 | ||
Total assets | 22,614 | 6,414 | ||
Total liabilities | 53,131 | 39,257 | ||
Mortgage Lending | Operating segments | ||||
Segment Reporting | ||||
Cash and cash equivalents | 23,647 | 21,679 | ||
Restricted cash | 12,466 | 6,989 | ||
Mortgage loans held-for-sale | 782,143 | 353,601 | ||
Mortgage servicing rights | 41,470 | 64,728 | ||
Other assets | 29,121 | 28,737 | ||
Total assets | 888,847 | 475,734 | ||
Total liabilities | 723,965 | 304,013 | ||
Real Estate Services | Operating segments | ||||
Segment Reporting | ||||
Cash and cash equivalents | 4 | 124 | ||
Other assets | 2 | 2 | ||
Total assets | 6 | 126 | ||
Total liabilities | 1,103 | |||
Long-term Portfolio | Operating segments | ||||
Segment Reporting | ||||
Trust assets | 2,634,746 | 3,165,590 | ||
Other assets | 66 | 79 | ||
Total assets | 2,634,812 | 3,165,669 | ||
Total liabilities | $ 2,664,946 | $ 3,193,395 |
Segment Reporting - Statement o
Segment Reporting - Statement of Operations Items (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | |
Segment Reporting | ||||
Number of reportable segments | item | 3 | |||
Gain on sale of loans, net | $ 98,830 | $ 66,750 | ||
Servicing fees, net | 12,943 | 37,257 | ||
Loss on mortgage servicing rights, net | (24,911) | (3,625) | ||
Real estate services fees, net | 3,287 | 4,327 | ||
Other revenue | 479 | 291 | ||
Intangible asset impairment | $ (4,900) | $ (13,500) | (18,347) | |
Goodwill impairment | $ (29,900) | $ (74,700) | (104,587) | |
Other operating expense | (96,920) | (126,418) | ||
Other income (expense) | (1,930) | 3,946 | ||
Loss before income taxes | (8,222) | (140,406) | ||
Income tax (benefit) expense | (245) | 5,004 | ||
Net loss | (7,977) | (145,410) | ||
Corporate and other | ||||
Segment Reporting | ||||
Other revenue | 62 | |||
Other operating expense | (15,462) | (21,220) | ||
Other income (expense) | (1,808) | (1,787) | ||
Loss before income taxes | (17,208) | (23,007) | ||
Mortgage Lending | Operating segments | ||||
Segment Reporting | ||||
Gain on sale of loans, net | 98,830 | 66,750 | ||
Servicing fees, net | 12,943 | 37,257 | ||
Loss on mortgage servicing rights, net | (24,911) | (3,625) | ||
Other revenue | 157 | |||
Intangible asset impairment | (18,347) | |||
Goodwill impairment | (104,587) | |||
Other operating expense | (79,536) | (101,672) | ||
Other income (expense) | 6,067 | 1,100 | ||
Loss before income taxes | 13,550 | (123,124) | ||
Real Estate Services | Operating segments | ||||
Segment Reporting | ||||
Real estate services fees, net | 3,287 | 4,327 | ||
Other operating expense | (1,391) | (2,088) | ||
Loss before income taxes | 1,896 | 2,239 | ||
Long-term Portfolio | Operating segments | ||||
Segment Reporting | ||||
Other revenue | 260 | 291 | ||
Other operating expense | (531) | (1,438) | ||
Other income (expense) | (6,189) | 4,633 | ||
Loss before income taxes | $ (6,460) | $ 3,486 |
Commitments and Contingencies -
Commitments and Contingencies - Legal Proceedings (Details) $ in Millions | Jul. 16, 2018USD ($)itemdirector | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 07, 2011itemdirector |
Series B 9.375% redeemable preferred stock | ||||
Repurchase reserve | ||||
Preferred stock, dividend rate (as a percent) | 9.375% | 9.375% | 9.375% | |
Series C 9.125% redeemable preferred stock | ||||
Repurchase reserve | ||||
Preferred stock, dividend rate (as a percent) | 9.125% | 9.125% | 9.125% | |
Timm | ||||
Repurchase reserve | ||||
Number of directors elected by Preferred holders | director | 2 | 2 | ||
Number of days within which special election for election of directors to be held | 60 days | |||
Number of quarterly dividend payments sought for Preferred holders | 2 | |||
Number of quarterly dividends payments granted under judgement for Preferred holders | 3 | |||
Dividend amount required to be paid by company in three quarterly payment | $ | $ 1.2 | |||
Preferred B stock approval percentage | 67.00% |
Commitments and Contingencies_2
Commitments and Contingencies - Balance sheet and quantitative information (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Lease Assets and Liabilities | |
Operating lease ROU assets | $ 17,169 |
Balance sheet classification - ROU assets | us-gaap:OtherAssets |
Operating lease liabilities | $ 20,582 |
Balance sheet classification - Operating lease liabilities | us-gaap:OtherLiabilities |
Weighted average remaining lease term | 4 years 7 months 6 days |
Weighted average discount rate | 4.80% |
Commitments and Contingencies_3
Commitments and Contingencies - Future Minimum Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies | ||
Year 2020 | $ 5,138 | |
Year 2021 | 4,593 | |
Year 2022 | 4,721 | |
Year 2023 | 4,867 | |
Year 2024 | 3,729 | |
Total lease commitments | 23,048 | |
Less: imputed interest | (2,466) | |
Operating lease liabilities | 20,582 | |
Cash paid for operating leases | 4,700 | |
Total operating lease expense | 4,200 | $ 6,000 |
Interest expense on capital equipment leases | $ 1 | |
Interest expense on capital equipment leases | $ 9 |
Commitments and Contingencies_4
Commitments and Contingencies - Repurchase Reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments and Contingencies | ||
Beginning balance | $ 7,657 | $ 6,020 |
Provision for repurchases | 5,487 | 5,074 |
Settlements | (4,175) | (3,437) |
Total repurchase reserve | 8,969 | $ 7,657 |
Loans subject to representations and warranties | $ 4,100 | |
HARP | ||
Commitments and Contingencies | ||
Threshold period to stay current for loans to limit representation and warranty risk | 12 months | |
Non-HARP | ||
Commitments and Contingencies | ||
Threshold period to stay current for loans to limit representation and warranty risk | 36 months |
Commitments and Contingencies_5
Commitments and Contingencies - Concentration of Risk (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Concentration of Risk | ||
Aggregate unpaid principal balance of loans secured by properties | $ 782,143 | $ 353,601 |
Mortgage loans | Geographic concentration | California | ||
Concentration of Risk | ||
Percentage of risk | 81.00% | |
Properties kept as security for long-term mortgage portfolio | Geographic concentration | California | ||
Concentration of Risk | ||
Aggregate unpaid principal balance of loans secured by properties | $ 1,400,000 | |
Percentage of risk | 49.00% | |
Properties kept as security for long-term mortgage portfolio | Geographic concentration | Florida | ||
Concentration of Risk | ||
Aggregate unpaid principal balance of loans secured by properties | $ 321,900 | |
Percentage of risk | 11.00% |
Share Based Payments and Empl_3
Share Based Payments and Employee Benefit Plans - Incentive Plan and Weighted Average Assumptions Used (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
2010 Incentive Plan | ||
Equity and Share Based Payments | ||
Increase in shares under amendment to the 2010 Omnibus Incentive Plan | 500,000 | |
Number of shares available under the Plan | 3,200,000 | |
Shares available for grant as stock options, restricted stock and deferred stock awards | 1,230,953 | |
Stock options | ||
Weighted average assumptions used in estimating fair value of options granted | ||
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Minimum | Stock options | ||
Weighted average assumptions used in estimating fair value of options granted | ||
Risk-free interest rate (as a percent) | 2.23% | 2.69% |
Expected lives (in years) | 4 years 8 months 27 days | 5 years 2 months 16 days |
Expected volatility (as a percent) | 56.14% | 45.65% |
Fair value per share (in dollars per share) | $ 1.61 | $ 4.04 |
Maximum | Stock options | ||
Weighted average assumptions used in estimating fair value of options granted | ||
Risk-free interest rate (as a percent) | 2.51% | 2.76% |
Expected lives (in years) | 5 years 22 days | 5 years 6 months |
Expected volatility (as a percent) | 56.57% | 46.34% |
Fair value per share (in dollars per share) | $ 1.85 | $ 4.35 |
Share Based Payments and Empl_4
Share Based Payments and Employee Benefit Plans - Stock Options (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Options outstanding at beginning of period (in shares) | 1,001,469 | 1,582,754 |
Options granted (in shares) | 592,500 | 90,000 |
Options exercised (in shares) | (103,351) | (104,410) |
Options forfeited / cancelled (in shares) | (576,148) | (566,875) |
Options outstanding at end of year (in shares) | 914,470 | 1,001,469 |
Options exercisable at end of year (in shares) | 328,933 | 765,302 |
Weighted-Average Exercise Price | ||
Options outstanding at beginning of period (in dollars per share) | $ 13.16 | $ 13.61 |
Options granted (in dollars per share) | 3.66 | 9.52 |
Options exercised (in dollars per share) | 3.34 | 4.39 |
Options forfeited / cancelled (in dollars per share) | 13.20 | 15.46 |
Options outstanding at end of year (in dollars per share) | 8.10 | 13.16 |
Options exercisable at end of year (in dollars per share) | $ 14.36 | $ 13.41 |
Weighted-Average Remaining Life | ||
Weighted-Average Remaining Life, Options outstanding at end of year | 7 years 9 months 11 days | 5 years 26 days |
Weighted-Average Remaining Life, Options exercisable at end of year | 5 years 6 months 18 days | 3 years 10 months 28 days |
Aggregate Intrinsic Value (in thousands) | ||
Aggregate Intrinsic Value, Options outstanding at end of year (in dollars) | $ 838 | $ 102 |
Aggregate Intrinsic Value, Options exercisable at end of year (in dollars) | $ 25 | $ 102 |
Additional disclosure related to options | ||
Market price of common stock | $ 5.26 | $ 3.78 |
Unrecognized compensation cost | $ 889 | |
Weighted-average period over which compensation cost is expected to be recognized | 1 year 10 months 24 days | |
Aggregate grant-date fair value of stock options granted | $ 1,100 | $ 436 |
Stock-based compensation expense | $ 660 | $ 947 |
Share Based Payments and Empl_5
Share Based Payments and Employee Benefit Plans - Options Exercise Price Range (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
$2.73 - 3.21 | |
Additional information regarding stock options outstanding | |
Exercise price range, lower limit (in dollars per share) | $ 2.73 |
Exercise price range, upper limit (in dollars per share) | $ 3.21 |
Stock Options Outstanding, Number Outstanding (in shares) | shares | 39,863 |
Stock Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 7 years 3 months |
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 3.10 |
Options Exercisable, Number Exercisable (in shares) | shares | 9,863 |
Options Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 2.76 |
$3.22 - 3.74 | |
Additional information regarding stock options outstanding | |
Exercise price range, lower limit (in dollars per share) | 3.22 |
Exercise price range, upper limit (in dollars per share) | $ 3.74 |
Stock Options Outstanding, Number Outstanding (in shares) | shares | 170,000 |
Stock Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 9 years 1 month 6 days |
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 3.59 |
$3.75 - 5.38 | |
Additional information regarding stock options outstanding | |
Exercise price range, lower limit (in dollars per share) | 3.75 |
Exercise price range, upper limit (in dollars per share) | $ 5.38 |
Stock Options Outstanding, Number Outstanding (in shares) | shares | 310,000 |
Stock Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 9 years 1 month 28 days |
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 3.75 |
$5.39 - 9.85 | |
Additional information regarding stock options outstanding | |
Exercise price range, lower limit (in dollars per share) | 5.39 |
Exercise price range, upper limit (in dollars per share) | $ 9.85 |
Stock Options Outstanding, Number Outstanding (in shares) | shares | 105,832 |
Stock Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 7 years 2 months 16 days |
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 8.48 |
Options Exercisable, Number Exercisable (in shares) | shares | 52,500 |
Options Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 7.47 |
$9.86 - 17.39 | |
Additional information regarding stock options outstanding | |
Exercise price range, lower limit (in dollars per share) | 9.86 |
Exercise price range, upper limit (in dollars per share) | $ 17.39 |
Stock Options Outstanding, Number Outstanding (in shares) | shares | 132,958 |
Stock Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 6 years 11 days |
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 12.48 |
Options Exercisable, Number Exercisable (in shares) | shares | 110,753 |
Options Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 12.24 |
$17.40 - 20.49 | |
Additional information regarding stock options outstanding | |
Exercise price range, lower limit (in dollars per share) | 17.40 |
Exercise price range, upper limit (in dollars per share) | $ 20.49 |
Stock Options Outstanding, Number Outstanding (in shares) | shares | 78,917 |
Stock Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 6 years 2 months 19 days |
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 17.40 |
Options Exercisable, Number Exercisable (in shares) | shares | 78,917 |
Options Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 17.40 |
$20.50 | |
Additional information regarding stock options outstanding | |
Stock Options Outstanding, Number Outstanding (in shares) | shares | 76,900 |
Stock Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 5 years 7 days |
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 20.50 |
Options Exercisable, Number Exercisable (in shares) | shares | 76,900 |
Options Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 20.50 |
$2.73 - 20.50 | |
Additional information regarding stock options outstanding | |
Exercise price range, lower limit (in dollars per share) | 2.73 |
Exercise price range, upper limit (in dollars per share) | $ 20.50 |
Stock Options Outstanding, Number Outstanding (in shares) | shares | 914,470 |
Stock Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 7 years 9 months 11 days |
Stock Options Outstanding, Weighted-Average Exercise Price (in dollars per share) | $ 8.10 |
Options Exercisable, Number Exercisable (in shares) | shares | 328,933 |
Options Exercisable, Weighted-Average Exercise Price (in dollars per share) | $ 14.36 |
Share Based Payments and Empl_6
Share Based Payments and Employee Benefit Plans - Stock Units And Awards (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Restricted stock units | ||
stock units | ||
Fair value of stock granted | $ 281 | |
Number of Shares | ||
Granted (in shares) | 75,000 | |
Outstanding at end of year (in shares) | 75,000 | |
Weighted-Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 3.75 | |
Outstanding at end of year (in dollars per share) | $ 3.75 | |
Additional information | ||
Unrecognized compensation cost | $ 202 | |
Weighted-average period over which compensation cost is expected to be recognized | 2 years 2 months 12 days | |
Deferred stock units | ||
stock units | ||
Fair value of stock granted | $ 113 | |
Number of Shares | ||
Outstanding at beginning of year (in shares) | 24,500 | 100,750 |
Granted (in shares) | 30,000 | |
Issued (in shares) | (62,917) | |
Forfeited / cancelled (in shares) | (13,333) | |
Outstanding at end of year (in shares) | 54,500 | 24,500 |
Weighted-Average Grant Date Fair Value | ||
Outstanding at beginning of year (in dollars per share) | $ 10.11 | $ 10.41 |
Granted (in dollars per share) | 3.75 | |
Issued (in dollars per share) | 9.63 | |
Forfeited / cancelled (in dollars per share) | 14.64 | |
Outstanding at end of year (in dollars per share) | $ 6.61 | $ 10.11 |
Additional information | ||
Unrecognized compensation cost | $ 96 | |
Weighted-average period over which compensation cost is expected to be recognized | 1 year 10 months 24 days | |
Deferred stock units | Minimum | ||
stock units | ||
Vesting period | 1 year | |
Deferred stock units | Maximum | ||
stock units | ||
Vesting period | 3 years | |
Restricted stock awards | ||
Number of Shares | ||
Granted (in shares) | 35,069 | |
Outstanding at end of year (in shares) | 35,069 | |
Weighted-Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 3.57 | |
Outstanding at end of year (in dollars per share) | $ 3.57 | |
Additional information | ||
Unrecognized compensation cost | $ 0 | |
Stock-based compensation expense | $ 125 |
Share Based Payments and Empl_7
Share Based Payments and Employee Benefit Plans - 401(k) Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share Based Payments and Employee Benefit Plans | ||
Maximum employee contribution (as a percent) | 25.00% | |
Percentage of eligible compensation matched by employer | 50.00% | |
Percentage of employer match of eligible employee compensation | 4.00% | |
Basic matching contributions recorded | $ 751 | $ 459 |
Employer discretionary contributions | $ 0 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - shares | 1 Months Ended | 12 Months Ended | |
Feb. 29, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock options | |||
Subsequent Events | |||
Stock options granted | 592,500 | 90,000 | |
Restricted stock units | |||
Subsequent Events | |||
Number of awards granted other than options | 75,000 | ||
Deferred stock units | |||
Subsequent Events | |||
Number of awards granted other than options | 30,000 | ||
Subsequent Event | Stock options | |||
Subsequent Events | |||
Stock options granted | 30,000 | ||
Subsequent Event | Restricted stock units | |||
Subsequent Events | |||
Number of awards granted other than options | 245,000 | ||
Subsequent Event | Deferred stock units | |||
Subsequent Events | |||
Number of awards granted other than options | 15,000 |