Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 05, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Entity Registrant Name | IMPAC MORTGAGE HOLDINGS INC | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 21,229,857 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001000298 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash and cash equivalents | $ 43,002 | $ 24,666 |
Restricted cash | 5,326 | 12,466 |
Mortgage loans held-for-sale | 29,419 | 782,143 |
Mortgage servicing rights | 279 | 41,470 |
Securitized mortgage trust assets | 2,229,662 | 2,634,746 |
Other assets | 56,936 | 50,788 |
Total assets | 2,364,624 | 3,546,279 |
LIABILITIES | ||
Warehouse borrowings | 1,571 | 701,563 |
MSR advance financings | 448 | |
Convertible notes, net | 24,839 | 24,996 |
Long-term debt | 41,811 | 45,434 |
Securitized mortgage trust liabilities | 2,213,863 | 2,619,210 |
Other liabilities | 67,071 | 50,839 |
Total liabilities | 2,349,603 | 3,442,042 |
Commitments and contingencies (See Note 11) | ||
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.01 par value; 200,000,000 shares authorized; 21,229,857 and 21,255,426 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 212 | 212 |
Additional paid-in capital | 1,236,749 | 1,236,237 |
Accumulated other comprehensive earnings, net of tax | 23,899 | 24,786 |
Net accumulated deficit: | ||
Cumulative dividends declared | (822,520) | (822,520) |
Retained deficit | (423,340) | (334,499) |
Net accumulated deficit | (1,245,860) | (1,157,019) |
Total stockholders’ equity | 15,021 | 104,237 |
Total liabilities and stockholders’ equity | 2,364,624 | 3,546,279 |
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 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
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 | 21,229,857 | 21,255,426 |
Common stock, shares outstanding | 21,229,857 | 21,255,426 |
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) | $ 33,410 | $ 33,410 |
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) EARNINGS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Gain (loss) on sale of loans, net | $ 1,451 | $ 29,472 | $ (26,712) | $ 41,686 |
Servicing fees, net | 1,352 | 3,536 | 3,859 | 6,505 |
Real estate services fees, net | 293 | 807 | 687 | 1,613 |
Loss on mortgage servicing rights, net | (8,443) | (9,887) | (26,753) | (15,510) |
Other | 1,289 | 187 | 1,352 | 187 |
Total revenues, net | (4,058) | 24,115 | (47,567) | 34,481 |
Expenses: | ||||
Personnel expense | 7,774 | 14,339 | 28,439 | 28,461 |
General, administrative and other | 6,617 | 5,281 | 13,590 | 10,507 |
Business promotion | 74 | 2,013 | 3,203 | 4,936 |
Total expenses | 14,465 | 21,633 | 45,232 | 43,904 |
Operating (loss) earnings | (18,523) | 2,482 | (92,799) | (9,423) |
Other income (expense): | ||||
Interest income | 35,832 | 43,061 | 71,927 | 88,316 |
Interest expense | (35,051) | (40,518) | (68,218) | (83,977) |
Change in fair value of long-term debt | (4,208) | 388 | 4,828 | 654 |
Change in fair value of net trust assets, including trust REO losses | (864) | (1,459) | (3,247) | (4,142) |
Total other income (expense), net | (4,291) | 1,472 | 5,290 | 851 |
(Loss) earnings before income taxes | (22,814) | 3,954 | (87,509) | (8,572) |
Income tax expense | 15 | 81 | 51 | 167 |
Net (loss) earnings | (22,829) | 3,873 | (87,560) | (8,739) |
Other comprehensive (loss) earnings: | ||||
Change in fair value of mortgage-backed securities | (7) | 14 | ||
Change in fair value of instrument specific credit risk of long-term debt | 2,186 | 267 | (887) | 363 |
Total comprehensive (loss) earnings | $ (20,643) | $ 4,133 | $ (88,447) | $ (8,362) |
Net (loss) earnings per common share: | ||||
Basic (in dollars per share) | $ (1.08) | $ 0.18 | $ (4.12) | $ (0.41) |
Diluted (in dollars per share) | $ (1.08) | $ 0.18 | $ (4.12) | $ (0.41) |
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, net of tax | Total |
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 | |||||||
Proceeds from exercise of stock options | $ 1 | 162 | 163 | ||||
Proceeds from exercise of stock options (in shares) | 64,351 | ||||||
Stock based compensation | 107 | 107 | |||||
Other comprehensive (loss) earnings | 117 | 117 | |||||
Net (loss) earnings | (12,612) | (12,612) | |||||
Balance at Mar. 31, 2019 | $ 21 | $ 212 | 1,235,377 | (822,520) | (339,134) | 23,994 | 97,950 |
Balance (in shares) at Mar. 31, 2019 | 2,070,678 | 21,181,357 | |||||
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 | |||||||
Net (loss) earnings | (8,739) | ||||||
Balance at Jun. 30, 2019 | $ 21 | $ 212 | 1,235,583 | (822,520) | (335,261) | 24,254 | 102,289 |
Balance (in shares) at Jun. 30, 2019 | 2,070,678 | 21,181,357 | |||||
Balance at Mar. 31, 2019 | $ 21 | $ 212 | 1,235,377 | (822,520) | (339,134) | 23,994 | 97,950 |
Balance (in shares) at Mar. 31, 2019 | 2,070,678 | 21,181,357 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Proceeds from exercise of stock options | 206 | 206 | |||||
Other comprehensive (loss) earnings | 260 | 260 | |||||
Net (loss) earnings | 3,873 | 3,873 | |||||
Balance at Jun. 30, 2019 | $ 21 | $ 212 | 1,235,583 | (822,520) | (335,261) | 24,254 | 102,289 |
Balance (in shares) at Jun. 30, 2019 | 2,070,678 | 21,181,357 | |||||
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 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Proceeds from exercise of stock options | $ 1 | 46 | 47 | ||||
Proceeds from exercise of stock options (in shares) | 9,500 | ||||||
Stock based compensation | 238 | 238 | |||||
Other comprehensive (loss) earnings | (3,073) | (3,073) | |||||
Consolidation of corporate-owned life insurance trusts | (1,281) | (1,281) | |||||
Net (loss) earnings | (64,731) | (64,731) | |||||
Balance at Mar. 31, 2020 | $ 21 | $ 213 | 1,236,521 | (822,520) | (400,511) | 21,713 | 35,437 |
Balance (in shares) at Mar. 31, 2020 | 2,070,678 | 21,264,926 | |||||
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 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Consolidation of corporate-owned life insurance trusts | (1,300) | ||||||
Net (loss) earnings | (87,560) | ||||||
Balance at Jun. 30, 2020 | $ 21 | $ 212 | 1,236,749 | (822,520) | (423,340) | 23,899 | 15,021 |
Balance (in shares) at Jun. 30, 2020 | 2,070,678 | 21,229,857 | |||||
Balance at Mar. 31, 2020 | $ 21 | $ 213 | 1,236,521 | (822,520) | (400,511) | 21,713 | 35,437 |
Balance (in shares) at Mar. 31, 2020 | 2,070,678 | 21,264,926 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Retirement of restricted stock | $ (1) | (125) | (126) | ||||
Retirement of restricted stock (in shares) | (35,069) | ||||||
Stock based compensation | 111 | 111 | |||||
Issuance of warrants in connection with debt financing | 242 | 242 | |||||
Other comprehensive (loss) earnings | 2,186 | 2,186 | |||||
Net (loss) earnings | (22,829) | (22,829) | |||||
Balance at Jun. 30, 2020 | $ 21 | $ 212 | $ 1,236,749 | $ (822,520) | $ (423,340) | $ 23,899 | $ 15,021 |
Balance (in shares) at Jun. 30, 2020 | 2,070,678 | 21,229,857 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (87,560) | $ (8,739) |
(Loss) gain on sale of mortgage servicing rights | 4,811 | (864) |
Change in fair value of mortgage servicing rights | 21,942 | 16,374 |
Gain on sale of mortgage loans | (6,840) | (31,946) |
Change in fair value of mortgage loans held-for-sale | 23,202 | (8,334) |
Change in fair value of derivatives lending, net | 5,341 | (4,566) |
Change in provision for repurchases | 5,009 | 3,160 |
Origination of mortgage loans held-for-sale | (1,518,429) | (1,402,859) |
Sale and principal reduction on mortgage loans held-for-sale | 2,253,038 | 1,373,784 |
(Gain) loss from trust REO | (3,165) | 1,099 |
Change in fair value of net trust assets, excluding trust REO | 6,412 | 3,043 |
Change in fair value of long-term debt | (4,828) | (654) |
Accretion of interest income and expense | 32,141 | 13,768 |
Amortization of intangible and other assets | 286 | |
Amortization of debt issuance costs and discount on note payable | 4 | 11 |
Stock-based compensation | 349 | 313 |
Accretion of interest expense on corporate debt | 81 | |
Net change in other assets | 9,502 | (771) |
Net change in other liabilities | (10,715) | (8,737) |
Net cash provided by (used in) operating activities | 730,295 | (55,632) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Net change in securitized mortgage collateral | 222,994 | 295,035 |
Proceeds from the sale of mortgage servicing rights | 16,191 | 12 |
Investments in corporate-owned life insurance | (1,258) | |
Purchase of premises and equipment | (535) | (335) |
Purchase of mortgage-backed securities | (5,347) | |
Proceeds from the sale of mortgage-backed securities | 1,021 | |
Proceeds from the sale of trust REO | 12,944 | 10,607 |
Net cash provided by investing activities | 250,336 | 300,993 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of MSR financing | (15,000) | |
Borrowings under MSR financing | 15,448 | |
Repayment of warehouse borrowings | (2,153,051) | (1,133,320) |
Borrowings under warehouse agreements | 1,453,059 | 1,212,156 |
Repayment of securitized mortgage borrowings | (271,271) | (321,494) |
Net change in liabilities related to corporate owned life insurance | 1,461 | |
Principal payments on capital lease | (81) | |
Tax payments on stock based compensation awards | (2) | (39) |
Retirement of restricted stock | (126) | |
Proceeds from exercise of stock options | 47 | 163 |
Net cash used in financing activities | (969,435) | (242,615) |
Net change in cash, cash equivalents and restricted cash | 11,196 | 2,746 |
Cash, cash equivalents and restricted cash at beginning of year | 37,132 | 30,189 |
Cash, cash equivalents and restricted cash at end of period | 48,328 | 32,935 |
NON-CASH TRANSACTIONS: | ||
Transfer of securitized mortgage collateral to trust REO | 7,337 | 13,035 |
Mortgage servicing rights retained from issuance of mortgage backed securities and loan sales | 1,753 | 1,999 |
Recognition of corporate-owned life insurance cash surrender value (included in Other assets) | 9,476 | |
Recognition of corporate owned life insurance trusts (included in Other liabilities) | 10,757 | |
Issuance of warrants | $ 242 | |
Recognition of operating lease right of use assets (net of $3.8 million of deferred rent) | 19,694 | |
Recognition of operating lease liabilities | $ 23,447 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Millions | Jun. 30, 2019USD ($) |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Deferred rent liability | $ 3.8 |
Summary of Business and Financi
Summary of Business and Financial Statement Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Business and Financial Statement Presentation | |
Summary of Business and Financial Statement Presentation including Significant Accounting Policies | Note 1.—Summary of Business and Financial Statement Presentation Business Summary Impac Mortgage Holdings, Inc. (the Company or IMH) is a financial services company incorporated in Maryland with the following direct and indirect wholly-owned subsidiaries: Integrated Real Estate Service Corporation (IRES), Impac Mortgage Corp. (IMC), IMH Assets Corp. (IMH Assets), Impac Funding Corporation (IFC) and Copperfield Capital Corporation (CCC), which was created in the second quarter of 2020 to, among other activities, assist with managing mortgage loans held-for-sale, provide origination and servicing solutions focusing on loss mitigation strategies, including loan modifications and restructurings to assist borrowers. The Company’s operations include the mortgage lending operations and real estate services conducted by IRES, IMC and CCC 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. Financial Statement Presentation The accompanying unaudited 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) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These interim period condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the United States Securities and Exchange Commission. All significant intercompany 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 period 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 financial statements and the reported amounts of revenues and expenses during the reporting period to prepare these consolidated financial statements in conformity with GAAP. Additionally, other items affected by such estimates and assumptions 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 (MSR), mortgage loans held-for-sale (LHFS) and derivative instruments, including interest rate lock commitments (IRLC). Actual results could differ from those estimates and assumptions. Risks and Uncertainties As the novel coronavirus (COVID-19) pandemic and its effects on the economy escalated in the United States in early March 2020, the financial markets destabilized resulting in economic disruption and substantial market volatility. The widening of nominal spreads resulted in a sudden and severe decline in the mark-to-market values of certain residential mortgage-backed securities (RMBS) assets. The crisis in the RMBS market was closely followed by a substantial widening of spreads on credit assets and a reduction in available liquidity to finance credit assets, including the sizable non-qualified mortgage (NonQM) position within the Company’s LHFS portfolio, causing a severe decline in the mark-to-market values assigned by counterparties. In order to preserve liquidity, on March 30, 2020, the Company instituted a temporary suspension of all lending activities. The Company satisfied all margin calls received, while also increasing unrestricted cash to $80.2 million at March 31, 2020. Subsequent to March 31, 2020, the Company has continued to prioritize liquidity and de-risking the consolidated balance sheet by materially reducing its exposure on the consolidated balance sheet through asset sales and debt repayments. The reduction in LHFS and locked pipeline, reduction in MSRs and greater retention of uninvested cash to address the volatility in the market, is likely to result in diminished earning capacity for the Company for at least the next few quarters as the Company re-engaged lending activities in June 2020. Accounting Pronouncements Adopted in 2020 In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 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 adopted this guidance on January 1, 2020, and the adoption of this ASU had no significant impact on the Company’s 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 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 adopted this guidance on January 1, 2020, and the adoption of this ASU had no impact on the Company’s 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, with early adoption permitted. The Company early adopted ASU 2019-12 on a prospective basis on January 1, 2020 and the adoption of this ASU had no impact on the Company's consolidated financial statements. Recent Accounting Pronouncements Not Yet Effective In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging , and Topic 825, Financial Instruments (ASU 2019-04) , which provided certain improvements to ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) and ASU 2016-13. As the Company adopted ASU 2016-01 on January 1, 2018, the improvements in ASU 2019-04 are effective in the first quarter of 2020. Early adoption is permitted. The Company expects to adopt ASU 2016-13 in the first quarter of 2023, as described above, and the improvements in ASU 2019-04 will be adopted concurrently. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) , which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the benefits of) reference rate reform on financial reporting. The amendments in ASU 2020-04 are elective and apply to all entities, subject to meeting certain criteria, that have contract, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact the adoption of this ASU would have on our consolidated financial statements |
Mortgage Loans Held-for-Sale
Mortgage Loans Held-for-Sale | 6 Months Ended |
Jun. 30, 2020 | |
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 LHFS by type is presented below: June 30, December 31, 2020 2019 Government (1) $ 1,889 $ 51,019 Conventional (2) 19,259 436,040 Non-qualified mortgages (NonQM) 11,223 274,834 Fair value adjustment (3) (2,952) 20,250 Total mortgage loans held-for-sale $ 29,419 $ 782,143 (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 (loss) on sale of loans, net in the accompanying consolidated statements of operations and comprehensive (loss) earnings. At June 30, 2020 and December 31, 2019, the Company had $3.5 million and $4.5 million, respectively, in UPB of mortgage LHFS that were in nonaccrual status as the loans were 90 days or more delinquent. The carrying value of these nonaccrual loans at June 30, 2020 and December 31, 2019 were $3.0 million and $4.2 million, respectively. Gain (loss) on sale of loans, net in the consolidated statements of operations and comprehensive (loss) earnings, is comprised of the following for the three and six months ended June 30, 2020 and 2019: For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 (Loss) gain on sale of mortgage loans $ (21,853) $ 27,822 $ 25,639 $ 41,430 Premium from servicing retained loan sales 64 416 1,753 1,999 Unrealized gains (losses) from derivative financial instruments 936 5,175 (5,341) 4,566 Losses from derivative financial instruments (113) (2,300) (11,035) (3,354) Mark to market gain (loss) on LHFS 22,291 4,864 (23,202) 8,334 Direct origination expenses, net (260) (4,974) (9,517) (8,129) Change in provision for repurchases 386 (1,531) (5,009) (3,160) Gain (loss) on sale of loans, net $ 1,451 $ 29,472 $ (26,712) $ 41,686 |
Mortgage Servicing Rights
Mortgage Servicing Rights | 6 Months Ended |
Jun. 30, 2020 | |
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 six months ended June 30, 2020 and year ended December 31, 2019: June 30, December 31, 2020 2019 Balance at beginning of year $ 41,470 $ 64,728 Additions from servicing retained loan sales 1,753 2,491 Reductions from bulk sales (21,002) — Other — 22 Changes in fair value (1) (21,942) (25,771) Fair value of MSRs at end of period $ 279 $ 41,470 (1) Changes in fair value are included within loss on mortgage servicing rights, net in the accompanying consolidated statements of operations and comprehensive (loss) earnings. At June 30, 2020 and December 31, 2019, the UPB of the mortgage servicing portfolio was comprised of the following: June 30, December 31, 2020 2019 Government insured $ 146,180 $ 105,442 Conventional (1) — 4,826,407 Total loans serviced (2) $ 146,180 $ 4,931,849 (1) In May 2020, the Company sold all of the conventional mortgage servicing for approximately $20.1 million, receiving $15.0 million in proceeds upon sale, with the remaining due upon transfer of the servicing and transfer of all trailing documents. The Company used the $15.0 million in proceeds from the MSR sale to pay off the MSR financing. (See Note 5.—Debt– MSR Financings) (2) At June 30, 2020 and December 31, 2019, no collateral was pledged as part of the MSR Financing. (See Note 5.—Debt– MSR Financings) The table below illustrates hypothetical changes in fair values of MSRs caused by assumed immediate changes to key assumptions that are used to determine fair value. See Note 7.—Fair Value of Financial Instruments for a description of the key assumptions used to determine the fair value of MSRs. June 30, December 31, Mortgage Servicing Rights Sensitivity Analysis 2020 2019 Fair value of MSRs $ 279 $ 41,470 Prepayment Speed: Decrease in fair value from 10% adverse change * (1,850) Decrease in fair value from 20% adverse change * (3,631) Decrease in fair value from 30% adverse change * (5,325) Discount Rate: Decrease in fair value from 10% adverse change * (1,330) Decrease in fair value from 20% adverse change * (2,579) Decrease in fair value from 30% adverse change * (3,753) * At June 30, 2020, the Company was in the process of selling the remaining GNMA servicing portfolio and the indicative bids support the carrying value. 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 three and six months ended June 30, 2020 and 2019: For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 Change in fair value of mortgage servicing rights $ (3,111) $ (9,881) $ (21,942) $ (16,374) (Loss) gain on sale of mortgage servicing rights (5,332) (6) (4,811) 864 Loss on mortgage servicing rights, net $ (8,443) $ (9,887) $ (26,753) $ (15,510) Servicing fees, net is comprised of the following for the three and six months ended June 30, 2020 and 2019: For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 Contractual servicing fees $ 2,061 $ 3,891 $ 5,109 $ 8,080 Late and ancillary fees 26 38 65 92 Subservicing and other costs (735) (393) (1,315) (1,667) Servicing fees, net $ 1,352 $ 3,536 $ 3,859 $ 6,505 Loans Eligible for Repurchase from Government National Mortgage Association (GNMA or Ginnie Mae) The Company sells loans in GNMA guaranteed mortgage‑backed securities (MBS) by pooling eligible loans through a pool custodian and assigning rights to the loans to GNMA. When these GNMA loans are initially pooled and securitized, the Company meets the criteria for sale treatment and derecognizes the loans. The terms of the GNMA 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 GNMA pool loans it has previously sold and are more than 90 days past due (whether or not in forbearance), and the repurchase will provide the Company with a more than trivial benefit, 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 June 30, 2020 and December 31, 2019, loans eligible for repurchase from GNMA totaled $12.1 million and $1.7 million in UPB, 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. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Leases | Note 4.—Leases The Company has four operating leases for office space and certain office equipment under long‑term leases expiring at various dates through 2024. During the three and six months ended June 30, 2020, cash paid for operating leases was $1.3 million and $2.7 million, respectively, while total operating lease expense was $1.0 million and $2.6 million, respectively. Operating lease expense includes short-term leases and sublease income, both of which are immaterial. During the three months ended March 31, 2020, w e recognized right of use (ROU) asset impairment of $393 thousand related to the consolidation of one floor of our corporate office, reducing the carrying value of the lease asset to its estimated fair value. The impairment charge is included in general, administrative and other expense in the consolidated statements of operations and comprehensive (loss) earnings. As of June 30, 2020, the Company had no additional operating or finance leases that had not yet commenced. 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 June 30, 2020: June 30, Lease Assets and Liabilities Classification 2020 Assets Operating lease ROU assets Other assets $ 15,012 Liabilities Operating lease liabilities Other liabilities $ 18,403 Weighted average remaining lease term (in years) Weighted average discount rate % The following table presents the maturity of the Company’s operating lease liabilities as of June 30, 2020: Year remaining 2020 $ 2,486 Year 2021 4,593 Year 2022 4,721 Year 2023 4,867 Year 2024 3,729 Total lease commitments 20,396 Less: imputed interest (1,993) Total operating lease liability $ 18,403 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt | |
Debt | Note 5.—Debt Warehouse Borrowings The Company, through its subsidiaries, enters into Master Repurchase Agreements with lenders providing warehouse facilities. The warehouse facilities are uncommitted facilities used to fund, and are secured by, residential mortgage loans from the time of funding until the time of settlement when sold to the investor. In accordance with the terms of the Master Repurchase Agreements, the Company’s subsidiaries are 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 June 30, 2020, the Company was not in compliance with certain financial covenants and received the necessary waivers. The following table presents certain information on warehouse borrowings and related accrued interest for the periods indicated: Maximum Balance Outstanding at Borrowing June 30, December 31, Capacity 2020 2019 Maturity Date Short-term borrowings: Repurchase agreement 1 (1) $ — $ — $ 25,953 May 29, 2020 Repurchase agreement 2 (2) 100,000 1,571 72,971 July 28, 2020 Repurchase agreement 3 (1) — — 250,722 May 29, 2020 Repurchase agreement 4 (3) 200,000 — 119,838 August 29, 2020 Repurchase agreement 5 300,000 — 72,666 June 22, 2021 Repurchase agreement 6 (1) — — 159,413 June 25, 2020 Total warehouse borrowings $ 600,000 $ 1,571 $ 701,563 (1) In May 2020, the Company settled all of the loans on repurchase agreements 1, 3 and 6 and closed the lines. (2) In July 2020, the line was extended to July 2021, and the maximum borrowing capacity was reduced to $75.0 million. (3) In July 2020, the line was extended 30 days pending the renewal process. 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 were secured by FHLMC and GNMA pledged mortgage servicing rights (subject to an acknowledgement agreement) and was guaranteed by IRES. In April 2019, the maturity of the line was extended until January 31, 2020. In January 2020, the maturity of the line was extended to March 31, 2020. In April 2020, the maturity of the line was extended to May 31, 2020. In May 2020, the line was repaid with the proceeds from the MSR sale. At June 30, 2020, the Company had no outstanding borrowings under the FHLMC and GNMA Financing and had no available capacity for borrowing as a result of the sale of the FHLMC servicing. MSR Advance Financing In April 2020, Ginnie Mae announced they revised and expanded their issuer assistance program to provide financing to fund servicer advances through the Pass-Through Assistance Program (PTAP). The PTAP funds advanced by Ginnie Mae bear interest at a fixed rate that will apply to a given months pass-through assistance and will be posted on Ginnie Mae’s website each month. The maturity date is the earlier of the seven months from the month the request and repayment agreement was approved, or July 30, 2021. At June 30, 2020, the Company had $448 thousand in approved PTAP funds outstanding at an interest rate of 5.7%. In July 2020, the outstanding PTAP funds were repaid. Convertible Notes In May 2015, the Company issued $25.0 million Convertible Promissory Notes (2015 Convertible Notes) to purchasers, some of which are related parties. The 2015 Convertible Notes were originally due to mature on or before May 9, 2020 and accrued interest at a rate of 7.5% per annum, to be paid quarterly. Transaction costs of approximately $50 thousand were deferred and amortized over the life of the 2015 Convertible Notes. Noteholders could 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 (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 (as defined in the Convertible Notes). 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 of the 2015 Convertible Notes less the amount of interest paid by the Company prior to such dividend. On April 15, 2020, the Company amended and restated the outstanding 2015 Convertible Notes in the principal amount of $25 million originally issued in May 2015 pursuant to the terms of the Note Purchase Agreement between the Company and the noteholders of the 2015 Convertible Notes. The 2015 Convertible Notes have been amended to extend the maturity date by six months (until November 9, 2020) and to reduce the interest rate on such notes to 7.0% per annum (Amended Notes). In connection with the issuance of the Amended Notes, the Company issued to the noteholders of the Amended Notes, warrants to purchase up to an aggregate of 212,649 shares of the Company’s common stock at a cash exercise price of $2.97 per share. The warrants are exercisable commencing on October 16, 2020 and expire on April 15, 2025. Long-term Debt Junior Subordinated Notes The Company carries its Junior Subordinated Notes at estimated fair value as more fully described in Note 7.—Fair Value of Financial Instruments. The following table shows the remaining principal balance and fair value of Junior Subordinated Notes issued as of June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 Junior Subordinated Notes (1) $ 62,000 $ 62,000 Fair value adjustment (20,189) (16,566) Total Junior Subordinated Notes $ 41,811 $ 45,434 (1) Stated maturity of March 2034; requires quarterly interest payments at a variable rate of 3‑month LIBOR plus 3.75% per annum. During the three months ended June 30, 2020, the change in fair value of the long-term debt was the result of a decrease in the 3-month LIBOR forward curve, which reduced the undiscounted cash flows used in this calculation. |
Securitized Mortgage Trusts
Securitized Mortgage Trusts | 6 Months Ended |
Jun. 30, 2020 | |
Securitized Mortgage Trusts | |
Securitized Mortgage Trusts | Note 6.—Securitized Mortgage Trusts Securitized Mortgage Trust Assets Securitized mortgage trust assets, which are recorded at their estimated fair value, are comprised of the following at June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 Securitized mortgage collateral, at fair value $ 2,225,422 $ 2,628,064 REO, at net realizable value (NRV) 4,240 6,682 Total securitized mortgage trust assets $ 2,229,662 $ 2,634,746 Securitized Mortgage Trust Liabilities Securitized mortgage trust liabilities, which are recorded at their estimated fair value, are comprised of the following at June 30, 2020 and December 31, 2019: June 30, December 31, 2020 2019 Securitized mortgage borrowings $ 2,213,863 $ 2,619,210 Changes in fair value of net trust assets, including trust REO gains (losses), are comprised of the following for the three and six months ended June 30, 2020 and 2019: For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 Change in fair value of net trust assets, excluding REO $ (2,316) $ 3,113 $ (6,412) $ (3,043) Gains (losses) from REO 1,452 (4,572) 3,165 (1,099) Change in fair value of net trust assets, including trust REO gains (losses) $ (864) $ (1,459) $ (3,247) $ (4,142) |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 7.—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. The following table presents the estimated fair value of financial instruments included in the consolidated financial statements as of the dates indicated: June 30, 2020 December 31, 2019 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 $ 43,002 $ 43,002 $ — $ — $ 24,666 $ 24,666 $ — $ — Restricted cash 5,326 5,326 — — 12,466 12,466 — — Mortgage loans held-for-sale 29,419 — 29,419 — 782,143 — 782,143 — Mortgage servicing rights 279 — — 279 41,470 — — 41,470 Derivative assets, lending, net (1) 1,799 — — 1,799 7,791 — — 7,791 Securitized mortgage collateral 2,225,422 — — 2,225,422 2,628,064 — — 2,628,064 Liabilities Warehouse borrowings $ 1,571 $ — $ 1,571 $ — $ 701,563 $ — $ 701,563 $ — MSR advance financing 448 — — 448 — — — — Convertible notes 24,839 — — 24,839 24,996 — — 24,996 Long-term debt 41,811 — — 41,811 45,434 — — 45,434 Securitized mortgage borrowings 2,213,863 — — 2,213,863 2,619,210 — — 2,619,210 Derivative liabilities, lending, net (2) — — — — 651 — 651 — (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 securitized mortgage collateral and securitized mortgage borrowings, the underlying bonds are collateralized by Alt-A (non-conforming) residential and commercial loans and have limited or no market activity. 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 mortgage servicing rights, mortgage LHFS, securitized mortgage collateral and borrowings, MSR advance financing, long-term debt and derivative assets and liabilities. The carrying amount of cash, cash equivalents and restricted cash approximates fair value. Warehouse borrowings and MSR advance financing 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. 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 is 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 mortgage servicing rights, securitized mortgage collateral and borrowings, derivative assets and liabilities (IRLCs), 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 99% and 99% and 77% and 99%, respectively, of total assets and total liabilities measured at estimated fair value at June 30, 2020 and December 31, 2019. 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 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 six months ended June 30, 2020. 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 June 30, 2020 and December 31, 2019, based on the fair value hierarchy: Recurring Fair Value Measurements June 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Mortgage loans held-for-sale $ — $ 29,419 $ — $ — $ 782,143 $ — Derivative assets, lending, net (1) — — 1,799 — — 7,791 Mortgage servicing rights — — 279 — — 41,470 Securitized mortgage collateral — — 2,225,422 — — 2,628,064 Total assets at fair value $ — $ 29,419 $ 2,227,500 $ — $ 782,143 $ 2,677,325 Liabilities Securitized mortgage borrowings $ — $ — $ 2,213,863 $ — $ — $ 2,619,210 Long-term debt — — 41,811 — — 45,434 Derivative liabilities, lending, net (2) — — — — 651 — Total liabilities at fair value $ — $ — $ 2,255,674 $ — $ 651 $ 2,664,644 (1) At June 30, 2020, derivative assets, lending, net included $1.8 million in IRLCs and is included in other assets in the accompanying consolidated balance sheets. 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. (2) At June 30, 2020 and December 31, 2019, derivative liabilities, lending, net are included in other liabilities in the accompanying consolidated balance sheets. The following tables present reconciliations for all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended June 30, 2020 and 2019: Level 3 Recurring Fair Value Measurements For the Three Months Ended June 30, 2020 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term collateral borrowings rights net debt Fair value, March 31, 2020 $ 2,248,813 $ (2,238,208) $ 24,328 $ 863 $ (39,632) Total gains (losses) included in earnings: Interest income (1) 6,915 — — — — Interest expense (1) — (24,005) — — (157) Change in fair value 74,961 (77,277) (3,111) 936 (4,208) Change in instrument specific credit risk — — — — 2,186 (2) Total gains (losses) included in earnings 81,876 (101,282) (3,111) 936 (2,179) Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 64 — — Settlements (105,267) 125,627 (21,002) — — Fair value, June 30, 2020 $ 2,225,422 $ (2,213,863) $ 279 $ 1,799 $ (41,811) (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 $2.0 million for three months ended June 30, 2020. 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) earnings 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 (loss) earnings in the consolidated statements of operations and comprehensive (loss) earnings and is included in unrealized (losses) gains still held for long-term debt. Level 3 Recurring Fair Value Measurements For the Three Months Ended June 30, 2019 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term collateral borrowings rights net debt Fair value, March 31, 2019 $ 3,054,720 $ (3,051,736) $ 59,823 $ 3,164 $ (44,561) Total gains (losses) included in earnings: Interest income (1) 3,950 — — — — Interest expense (1) — (10,198) — — (108) Change in fair value 40,558 (37,445) (9,881) 5,285 388 Change in instrument specific credit risk — — — — 371 (2) Total gains (losses) included in earnings 44,508 (47,643) (9,881) 5,285 651 Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 416 — — Settlements (178,379) 184,223 (12) — — Fair value, June 30, 2019 $ 2,920,849 $ (2,915,156) $ 50,346 $ 8,449 $ (43,910) (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 $2.2 million for three months ended June 30, 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 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 (loss) earnings in the consolidated statements of operations and comprehensive (loss) earnings. The following tables present reconciliations for all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2020 and 2019: Level 3 Recurring Fair Value Measurements For the Six Months Ended June 30, 2020 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term collateral borrowings rights net debt Fair value, December 31, 2019 $ 2,628,064 $ (2,619,210) $ 41,470 $ 7,791 $ (45,434) Total (losses) gains included in earnings: Interest income (1) 2,108 — — — — Interest expense (1) — (33,931) — — (318) Change in fair value (174,419) 168,007 (21,942) (5,992) 4,828 Change in instrument specific credit risk — — — — (887) (2) Total (losses) gains included in earnings (172,311) 134,076 (21,942) (5,992) 3,623 Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 1,753 — — Settlements (230,331) 271,271 (21,002) — — Fair value, June 30, 2020 $ 2,225,422 $ (2,213,863) $ 279 $ 1,799 $ (41,811) Unrealized (losses) gains still held (3) $ (374,731) $ 2,620,691 $ 279 $ 1,799 $ 20,189 (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 $4.4 million for six months ended June 30, 2020. 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) earnings 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 (loss) earnings in the consolidated statements of operations and comprehensive (loss) earnings and is included in unrealized (losses) gains still held for long-term debt. (3) Represents the amount of unrealized (losses) gains relating to assets and liabilities classified as Level 3 that are still held and reflected in the fair values at June 30, 2020. Level 3 Recurring Fair Value Measurements For the Six Months Ended June 30, 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) 10,206 — — — — Interest expense (1) — (23,751) — — (223) Change in fair value 61,642 (64,685) (16,374) 5,098 654 Change in instrument specific credit risk — — — — 515 (2) Total gains (losses) included in earnings 71,848 (88,436) (16,374) 5,098 946 Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 1,999 — — Settlements (308,070) 321,495 (7) — — Fair value, June 30, 2019 $ 2,920,849 $ (2,915,156) $ 50,346 $ 8,449 $ (43,910) Unrealized (losses) gains still held (3) $ (263,682) $ 2,492,202 $ 50,346 $ 8,449 $ 18,090 (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 $4.2 million for the six months ended June 30, 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) earnings 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 (loss) earnings in the consolidated statements of operations and comprehensive (loss) earnings as required by the adoption of ASU 2016-01 on January 1, 2018. (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 June 30, 2019. 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 nonrecurring basis at June 30, 2020: 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 $ 2,225,422 Discounted Cash Flow Prepayment rates 4.5 - 33.8 % 10.3 % Securitized mortgage borrowings (2,213,863) Default rates 0.02 - 24.0 % 2.5 % Loss severities 0.13 - 98.9 % 63.5 % Discount rates 2.8 - 25.0 % 4.2 % Other assets and liabilities Mortgage servicing rights $ 279 Market pricing Indicative bid % 100 % Derivative assets - IRLCs, net 1,799 Market pricing Pull-through rates 22.9 - 96.2 % 69.0 % Long-term debt (41,811) Discounted Cash Flow Discount rate 8.4 % 8.4 % 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 (loss) earnings for the three months ended June 30, 2020 and 2019: Recurring Fair Value Measurements Changes in Fair Value Included in Net (Loss) Earnings For the Three Months Ended June 30, 2020 Change in Fair Value of Interest Interest Net Trust Long-term Other Revenue Gain (Loss) on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 6,915 $ — $ 74,961 $ — $ — $ — $ 81,876 Securitized mortgage borrowings — (24,005) (77,277) — — — (101,282) Long-term debt — (157) — (4,208) — — (4,365) Mortgage servicing rights (2) — — — — (3,111) — (3,111) Mortgage loans held-for-sale — — — — — 22,291 22,291 Derivative assets — IRLCs — — — — — 936 936 Derivative liabilities — Hedging Instruments — — — — — — — Total $ 6,915 $ (24,162) $ (2,316) $ (4,208) $ (3,111) $ 23,227 $ (3,655) (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 MSRs, net in the consolidated statements of operations and comprehensive (loss) earnings. Recurring Fair Value Measurements Changes in Fair Value Included in Net (Loss) Earnings For the Three Months Ended June 30, 2019 Change in Fair Value of Interest Interest Net Trust Long-term Other Revenue Gain (Loss) on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 3,950 $ — $ 40,558 $ — $ — $ — $ 44,508 Securitized mortgage borrowings — (10,198) (37,445) — — — (47,643) Long-term debt — (108) — 388 — — 280 Mortgage servicing rights (2) — — — — (9,881) — (9,881) Mortgage loans held-for-sale — — — — — 4,864 4,864 Derivative assets — IRLCs — — — — — 5,285 5,285 Derivative liabilities — Hedging Instruments — — — — — (110) (110) Total $ 3,950 $ (10,306) $ 3,113 $ 388 $ (9,881) $ 10,039 $ (2,697) (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. (1) Included in loss on MSRs, net in the consolidated statements of operations and comprehensive (loss) earnings. The following tables present the changes in recurring fair value measurements included in net (loss) earnings for the six months ended June 30, 2020 and 2019: Recurring Fair Value Measurements Changes in Fair Value Included in Net (Loss) Earnings For the Six Months Ended June 30, 2020 Change in Fair Value of Interest Interest Net Trust Long-term Other Income Gain (Loss) on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 2,108 $ — $ (174,419) $ — $ — $ — $ (172,311) Securitized mortgage borrowings — (33,931) 168,007 — — — 134,076 Long-term debt — (318) — 4,828 — — 4,510 Mortgage servicing rights (2) — — — — (21,942) — (21,942) Mortgage loans held-for-sale — — — — — (23,202) (23,202) Derivative assets — IRLCs — — — — — (5,992) (5,992) Derivative liabilities — Hedging Instruments — — — — — 651 651 Total $ 2,108 $ (34,249) $ (6,412) (3) $ 4,828 $ (21,942) $ (28,543) $ (84,210) (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 MSRs, net in the consolidated statements of operations and comprehensive (loss) earnings. (3) For the six months ended June 30, 2020, change in the fair value of net trust assets, excluding REO was $6.4 million. Recurring Fair Value Measurements Changes in Fair Value Included in Net (Loss) Earnings For the Six Months Ended June 30, 2019 Change in Fair Value of Interest Interest Net Trust Long-term Other Income Gain (Loss) on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 10,206 $ — $ 61,642 $ — $ — $ — $ 71,848 Securitized mortgage borrowings — (23,751) (64,685) — — — (88,436) Long-term debt — (223) — 654 — — 431 Mortgage servicing rights (2) — — — — (16,374) — (16,374) Mortgage loans held-for-sale — — — — — 8,334 8,334 Derivative assets — IRLCs — — — — — 5,098 5,098 Derivative liabilities — Hedging Instruments — — — — — (532) (532) Total $ 10,206 $ (23,974) $ (3,043) (3) $ 654 $ (16,374) $ 12,900 $ (19,631) (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 MSRs, net in the consolidated statements of operations and comprehensive (loss) earnings. (3) For the six months ended June 30, 2019, change in the fair value of net trust assets, excluding REO was $3.0 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 MSRs arising from its mortgage loan origination operations at estimated fair value. The fair value of MSRs is based upon an indicative bid at June 30, 2020 and a discounted cash flow model at December 31, 2019. 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. MSRs are considered a Level 3 measurement at June 30, 2020. Mortgage loans held-for-sale —The Company elected to carry its mortgage LHFS originated or acquired at estimated 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 June 30, 2020. 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 June 30, 2020, securitized mortgage collateral had UPB of $2.6 billion, compared to an estimated fair value on the Company’s balance sheet of $2.2 billion. The aggregate UPB exceeded the fair value by $0.4 billion at June 30, 2020. As of June 30, 2020, the UPB of loans 90 days or more past due was $0.4 billion compared to an estimated fair value of $0.1 billion. The aggregate UPB of loans 90 days or more past due exceeded the fair value by $0.3 billion at June 30, 2020. Securitized mortgage collateral is considered a Level 3 measurement at June 30, 2020. Securitized mortgage borrowings —The Company elected to carry 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 June 30, 2020, securitized mortgage borrowings had an outstanding principal balance of $2.6 billion, net of $2.2 billion in bond losses, compared to an estimated fair value of $2.2 billion. The aggregate outstanding principal balance exceeded the fair value by $0.4 billion at June 30, 2020. Securitized mortgage borrowings are considered a Level 3 measurement at June 30, 2020. 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 previous settlements with trust preferred debt holders and discounted cash flow analysis. As of June 30, 2020, long-term debt had UPB of $62.0 million compared to an estimated fair value of $41.8 million. The aggregate UPB exceeded the fair value by $20.2 million at June 30, 2020. The long-term debt is considered a Level 3 measurement at June 30, 2020. 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. 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 and expected sale date of the loan, adjusted for current market conditions. 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 June 30, 2020. 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 June 30, 2020. The following table includes information for the derivative assets and liabilities related to lending for the periods presented: Total Gains (Losses) Total Losses Notional Amount For the Three Months Ended For the Six Months Ended June 30, December 31, June 30, June 30, 2020 2019 2020 2019 2020 2019 Derivative – IRLC's (1) $ 103,148 $ 419,035 $ 936 $ 5,285 $ (5,992) $ 5,098 Derivative – TBA MBS (2) — 485,459 (113) (2,410) (10,384) (3,886) Derivative – Forward delivery loan commitment (3) — 232,530 — — — — (1) Amounts included in gain (loss) on sale of loans, net within the accompanying consolidated statements of operations and comprehensive (loss) earnings. (2) Amounts included in gain (loss) on sale of loans, net and loss on mortgage servicing rights, net within the accompanying consolidated statements of operations and comprehensive (loss) earnings. (3) As of December 31, 2019, $232.5 million in mortgage loans had been allocated to forward delivery loan commitments and recorded at fair value within LHFS in the accompanying consolidated balance sheets. 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 tables present financial and non-financial assets measured using nonrecurring fair value measurements at June 30, 2020 and 2019, respectively: Nonrecurring Fair Value Measurements Total Gains (Losses) (1) Total Gains (1) June 30, 2020 For the Three Months Ended For the Six Months Ended Level 1 Level 2 Level 3 June 30, 2020 June 30, 2020 REO (2) $ — $ 4,392 $ — $ 1,452 $ 3,165 ROU asset impairment — — 15,012 — (393) (1) Total gains (losses) reflect gains from all nonrecurring measurements during the period. (2) At June 30, 2020, $4.2 million of REO was within securitized mortgage trust assets. The balance represents REO at June 30, 2020, which have been impaired subsequent to foreclosure. For the three and six months ended June 30, 2020, the Company recorded $1.5 million and $3.2 million, respectively, in gains, which represent recovery of the NRV attributable to an improvement in state specific loss severities on properties held during the period which resulted in an increase to NRV. Nonrecurring Fair Value Measurements Total Losses (1) Total Losses (1) June 30, 2019 For the Three Months Ended For the Six Months Ended Level 1 Level 2 Level 3 June 30, 2019 June 30, 2019 REO (2) $ — $ 11,214 $ — $ (4,572) $ (1,099) (1) Total losses reflect losses from all nonrecurring measurements during the period. (2) At June 30, 2019, $10.9 million of REO was within securitized mortgage trust assets. Balance represents REO at June 30, 2019, which have been impaired subsequent to foreclosure. For the three and six months ended June 30, 2019, the Company recorded $4.6 million and $1.1 million, respectively, losses related to changes in NRV of properties. Losses represent impairment of the NRV attributable to an increase in state specific loss severities on properties held during the period which resulted in a decrease to NRV. Real estate owned —REO consists of residential real estate (within securitized mortgage trust assets) 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 are included in the nonrecurring fair value measurements tables. Fair values of REO are generally based on observable market inputs, and are considered Level 2 measurements at June 30, 2020. ROU asset impairment — The Company performs reviews of its ROU assets for impairment when evidence exists that the carrying value of an asset may not be recoverable. During the first quarter of 2020, the Company recorded a $393 thousand ROU asset impairment charge related to the consolidation of one floor of our corporate office . The impairment charge is included in general, administrative and other expense in the consolidated statements of operations and comprehensive (loss) earnings. ROU asset was considered a Level 3 fair value measurement at June 30, 2020. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Income Taxes | Note 8.—Income Taxes The Company calculates its quarterly tax provision pursuant to the guidelines in ASC 740 Income Taxes . ASC 740 requires companies to estimate the annual effective tax rate for current year ordinary income. In calculating the effective tax rate, permanent differences between financial reporting and taxable income are factored into the calculation, and temporary differences are not. The estimated annual effective tax rate represents the Company’s estimate of the tax provision in relation to the best estimate of pre-tax ordinary income or loss. The estimated annual effective tax rate is then applied to year-to-date ordinary income or loss to calculate the year-to-date interim tax provision. The Company adopted ASU 2019-12 on a prospective basis on January 1, 2020. The most significant impact to the Company included the removal of the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income). The changes also add a requirement for an entity to reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. The Company recorded income tax expense of $15 thousand and $51 thousand for the three and six months ended June 30, 2020, respectively. Tax expense for the three and six months ended June 30, 2020 is primarily the result of state income taxes from states where the Company does not have net operating loss carryforwards or state minimum taxes. The Company recorded income tax expense of $81 thousand and $167 thousand for the three and six months ended June 30, 2019, respectively. Tax expense for the three and six months ended June 30, 2019 is primarily the result of state income taxes from states where the Company does not have net operating loss carryforwards or state minimum taxes, offset by 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. At June 30, 2020, the Company had accumulated other comprehensive (loss) earnings of $23.9 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 NOL 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 hold the NOL. |
Reconciliation of (Loss) Earnin
Reconciliation of (Loss) Earnings Per Common Share | 6 Months Ended |
Jun. 30, 2020 | |
Reconciliation of (Loss) Earnings Per Common Share | |
Reconciliation of Loss Per Share | Note 9.—Reconciliation of (Loss) Earnings Per Common Share Basic net (loss) earnings per common share is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of vested common shares outstanding during the period (denominator). Diluted net (loss) earnings per common share is computed on the basis of the weighted average number of shares of common stock outstanding plus the effect of dilutive potential common shares outstanding during the period using the if-converted method. Dilutive potential common shares include shares issuable upon conversion of Convertible Notes, warrants, dilutive effect of outstanding stock options, restricted stock awards (RSA), restricted stock units (RSU), deferred stock units (DSU) and cumulative redeemable preferred stock outstanding for the periods indicated, when dilutive. For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 Numerator for basic (loss) earnings per share: Net (loss) earnings $ (22,829) $ 3,873 $ (87,560) $ (8,739) Numerator for diluted loss per share: Net (loss) earnings $ (22,829) $ 3,873 $ (87,560) $ (8,739) Interest expense attributable to convertible notes (1) — — — — Net (loss) earnings plus interest expense attributable to convertible notes $ (22,829) $ 3,873 $ (87,560) $ (8,739) Denominator for basic (loss) earnings per share (2): Basic weighted average common shares outstanding during the period 21,230 21,181 21,229 21,170 Denominator for diluted (loss) earnings per share (2): Basic weighted average common shares outstanding during the period 21,230 21,181 21,229 21,170 Net effect of dilutive convertible notes and warrants (1) — — — — Net effect of dilutive stock options, DSU’s, RSA's and RSU's (1) — 8 — — Diluted weighted average common shares 21,230 21,189 21,229 21,170 Net (loss) earnings per common share: Basic $ (1.08) $ 0.18 $ (4.12) $ (0.41) Diluted $ (1.08) $ 0.18 $ (4.12) $ (0.41) (1) Adjustments to diluted (loss) earnings per share for the three and six months ended June 30, 2020 and six months ended June 30, 2019 were excluded from the calculation, as they were anti-dilutive. (2) Number of shares presented in thousands. At June 30, 2020, there were 1.0 million shares of stock options, RSA’s, RSU’s and DSU’s outstanding in the aggregate. For the three and six months ended June 30, 2020 and 2019, there were 1.2 million shares attributable to the 2015 Convertible Notes that were anti-dilutive. Additionally, for the three months ended June 30, 2020, there were 213 thousand warrants 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 12.—Equity and Share Based Payments, 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. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting | |
Segment Reporting | Note 10.—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. Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Three Months Ended June 30, 2020: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 1,451 $ — $ — $ — $ 1,451 Servicing fees, net 1,352 — — — 1,352 Loss on mortgage servicing rights, net (8,443) — — — (8,443) Real estate services fees, net — 293 — — 293 Other revenue — — 30 1,259 1,289 Other operating expense (8,364) (356) (179) (5,566) (14,465) Other income (expense) 287 — (3,983) (595) (4,291) Net loss before income tax expense $ (13,717) $ (63) $ (4,132) $ (4,902) (22,814) Income tax expense 15 Net loss $ (22,829) Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Three Months Ended June 30, 2019: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 29,472 $ — $ — $ — $ 29,472 Servicing fees, net 3,536 — — — 3,536 Loss on mortgage servicing rights, net (9,887) — — — (9,887) Real estate services fees, net — 807 — — 807 Other revenue 36 — 131 20 187 Other operating expense (17,456) (345) (110) (3,722) (21,633) Other income (expense) 1,905 — 19 (452) 1,472 Net earnings (loss) before income tax expense $ 7,606 $ 462 $ 40 $ (4,154) $ 3,954 Income tax expense 81 Net earnings $ 3,873 Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Six Months Ended June 30, 2020: Lending Services Portfolio and other Consolidated Loss on sale of loans, net $ (26,712) $ — $ — $ — $ (26,712) Servicing fees, net 3,859 — — — 3,859 Loss on mortgage servicing rights, net (26,753) — — — (26,753) Real estate services fees, net — 687 — — 687 Other revenue — — 72 1,280 1,352 Other operating expense (33,307) (717) (350) (10,858) (45,232) Other income (expense) 2,387 — 3,957 (1,054) 5,290 Net (loss) earnings before income tax expense $ (80,526) $ (30) $ 3,679 $ (10,632) (87,509) Income tax expense 51 Net loss $ (87,560) Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Six Months Ended June 30, 2019: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 41,686 $ — $ — $ — $ 41,686 Servicing fees, net 6,505 — — — 6,505 Loss on mortgage servicing rights, net (15,510) — — — (15,510) Real estate services fees, net — 1,613 — — 1,613 Other revenue 36 — 98 53 187 Other operating expense (34,956) (732) (250) (7,966) (43,904) Other income (expense) 3,320 — (1,560) (909) 851 Net earnings (loss) before income tax expense $ 1,081 $ 881 $ (1,712) $ (8,822) $ (8,572) Income tax expense 167 Net loss $ (8,739) Mortgage Real Estate Long-term Corporate Balance Sheet Items as of: Lending Services Portfolio and other Consolidated Total Assets at June 30, 2020 (1) $ 100,640 $ 508 $ 2,229,677 $ 33,799 $ 2,364,624 Total Assets at December 31, 2019 (1) $ 888,847 $ 6 $ 2,634,812 $ 22,614 $ 3,546,279 (1) All segment asset balances exclude intercompany balances. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 11.—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 an 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 these 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 matter updates 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 Court of Special Appeal 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. On April 1, 2020, the Court of Special Appeal issued an opinion affirming the judgment in favor of plaintiffs on the Series B voting rights arguing that the voting rights provision was not ambiguous. In response, the Company filed a petition for a writ of certiorari to the Maryland Court of Appeal appealing the Court of Special Appeals opinion. The petition was submitted by the Company on May 20, 2020, the plaintiffs responded on June 4, 2020, and the Company submitted a reply brief on June 15, 2020. The Maryland Court of Appeals granted the writ of certiorari on July 13, 2020. 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. The plaintiffs filed their appellate reply on May 26, 2020. The Court has set August 17, 2020 for oral arguments. The Company is a party to other litigation and claims which are normal in the course of the Company’s operations. While the results of such other litigation and claims cannot be predicted with certainty, we believe 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 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 and can express no opinion as to their ultimate resolution. An adverse judgment in any of these matters could have a material adverse effect on the Company’s financial position and results of operations. Please refer to IMH’s report on Form 10-K for the year ended December 31, 2019 for a full description of litigation and claims. Repurchase Reserve When the Company sells mortgage loans, 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 law. The Company’s whole loan sale agreements generally require it to repurchase loans if the Company breached a representation or warranty given to the loan purchaser as well as refunds of premiums to investors for early payoffs on loans sold. The following table summarizes the repurchase reserve activity, within other liabilities on the consolidated balance sheets, related to previously sold loans for the six months ended June 30, 2020 and year ended December 31, 2019: June 30, December 31, 2020 2019 Beginning balance $ 8,969 $ 7,657 Provision for repurchases (1) 5,009 5,487 Settlements (3,936) (4,175) Total repurchase reserve $ 10,042 $ 8,969 (1) The provision for repurchases is included in gain (loss) on sale of loans, net in the accompanying consolidated statements of operations and comprehensive (loss) earnings. Corporate-owned Life Insurance Trusts During the first quarter of 2020, there was a triggering event that caused the Company to reevaluate the consolidation of certain corporate-owned life insurance trusts. As a result, the Company has consolidated life insurance trusts for three former executive officers. The corporate-owned life insurance contracts are recorded at cash surrender value, which is provided by a third party and held within trusts. At June 30, 2020, the cash surrender value of the policies was $10.7 million and were recorded within other assets on the consolidated balance sheets. At June 30, 2020, the liability associated with the corporate-owned life insurance trusts was $12.2 million. At June 30, 2020 Corporate-owned life insurance trusts: Trust #1 Trust #2 Trust #3 Total Corporate-owned life insurance cash surrender value $ 4,958 $ 3,796 $ 1,980 $ 10,734 Corporate-owned life insurance liability 5,641 4,425 2,152 12,218 Corporate-owned life insurance shortfall (1) $ (683) $ (629) $ (172) $ (1,484) (1) $1.3 million of the total shortfall was recorded as a change in retained deficit at the time of the consolidation of the trusts. The additional shortfall was recorded in the accompanying consolidated statements of operations and comprehensive (loss) earnings. Commitments to Extend Credit The Company enters into IRLCs with prospective borrowers whereby the Company commits to lend a certain loan amount under specific terms and interest rates to the borrower. These loan commitments are treated as derivatives and are carried at fair value. See Note 7. — Fair Value of Financial Instruments for more information. |
Equity and Share Based Payments
Equity and Share Based Payments | 6 Months Ended |
Jun. 30, 2020 | |
Equity and Share Based Payments | |
Equity and Share Based Payments | Note 12.—Equity and Share Based Payments Redeemable Preferred Stock At June 30, 2020, the Company had outstanding $68.5 million liquidation preference of Series B and Series C Preferred Stock, inclusive of cumulative undeclared dividends in arrears. 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 discussed within Note 11.—Commitments and Contingencies, all rights of the Preferred B holders under the 2004 Articles were deemed reinstated. Subject to an appeal, the Company has cumulative undeclared dividends in arrears of approximately $16.8 million, or approximately $25.20 per outstanding share of Preferred B, increasing the liquidation value to approximately $50.20 per share. Additionally, every quarter the cumulative undeclared dividends in arrears will increase by $0.5859 per share, or approximately $390 thousand. 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. Share Based Payments The following table summarizes activity, pricing and other information for the Company’s stock options for the six months ended June 30, 2020: Weighted- Average Number of Exercise Shares Price Options outstanding at the beginning of the year 914,470 $ 8.10 Options granted 30,000 5.34 Options exercised (9,500) 4.84 Options forfeited/cancelled (269,897) 7.85 Options outstanding at the end of the period 665,073 8.12 Options exercisable at the end of the period 413,246 $ 10.14 As of June 30, 2020, there was approximately $386 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 1.5 years. The following table summarizes activity, pricing and other information for the Company’s RSU’s for the six months ended June 30, 2020: Weighted- Average Number of Grant Date Shares Fair Value RSU’s outstanding at beginning of the year 75,000 $ 3.75 RSU’s granted 242,961 5.34 RSU’s issued — — RSU’s forfeited/cancelled (26,026) 4.32 RSU’s outstanding at end of the period 291,935 $ 5.02 As of June 30, 2020, there was approximately $758 thousand of total unrecognized compensation cost related to the RSU compensation arrangements granted under the plan. That cost is expected to be recognized over the remaining weighted average period of 2.5 years. The following table summarizes activity, pricing and other information for the Company’s DSU’s for the six months ended June 30, 2020: Weighted- Average Number of Grant Date Shares Fair Value DSU’s outstanding at the beginning of the year 54,500 $ 6.61 DSU’s granted 15,000 5.34 DSU’s issued — — DSU’s forfeited/cancelled (15,000) 5.34 DSU’s outstanding at the end of the period 54,500 $ 6.61 As of June 30, 2020, there was approximately $276 thousand of total unrecognized compensation cost related to the DSU compensation arrangements granted under the plan. That cost is expected to be recognized over the remaining weighted average period of 2.4 years. The following table summarizes activity, pricing and other information for the Company’s RSA’s for the six months ended June 30, 2020: Weighted- Average Number of Grant Date Shares Fair Value RSA’s outstanding at beginning of the year 35,069 $ 3.57 RSA’s granted — — RSA’s issued — — RSA’s forfeited/cancelled (35,069) 3.57 RSA’s outstanding at end of the period — $ — As of June 30, 2020, there were no outstanding RSA’s as the shares forfeited prior to the minimum vesting requirement. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events | |
Subsequent Events | Note 13.—Subsequent Events As previously reported on Form 8-K, on July 7, 2020, the Company received notification from the Freddie Mac that the Company’s eligibility to sell whole loans to Freddie Mac was suspended, without cause. As noted in Freddie Mac’s Seller/Servicer Guide, Freddie Mac may elect, in its sole discretion, to suspend a Seller from eligibility, without cause, thereby restricting the Seller from obtaining new purchase commitments during the suspension period. Subsequent events have been evaluated through the date of this filing. |
Summary of Business and Finan_2
Summary of Business and Financial Statement Presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Business and Financial Statement Presentation | |
Financial Statement Presentation | Financial Statement Presentation The accompanying unaudited 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) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These interim period condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the United States Securities and Exchange Commission. All significant intercompany 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 period 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 financial statements and the reported amounts of revenues and expenses during the reporting period to prepare these consolidated financial statements in conformity with GAAP. Additionally, other items affected by such estimates and assumptions 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 (MSR), mortgage loans held-for-sale (LHFS) and derivative instruments, including interest rate lock commitments (IRLC). Actual results could differ from those estimates and assumptions. |
Risks and Uncertainties | Risks and Uncertainties As the novel coronavirus (COVID-19) pandemic and its effects on the economy escalated in the United States in early March 2020, the financial markets destabilized resulting in economic disruption and substantial market volatility. The widening of nominal spreads resulted in a sudden and severe decline in the mark-to-market values of certain residential mortgage-backed securities (RMBS) assets. The crisis in the RMBS market was closely followed by a substantial widening of spreads on credit assets and a reduction in available liquidity to finance credit assets, including the sizable non-qualified mortgage (NonQM) position within the Company’s LHFS portfolio, causing a severe decline in the mark-to-market values assigned by counterparties. In order to preserve liquidity, on March 30, 2020, the Company instituted a temporary suspension of all lending activities. The Company satisfied all margin calls received, while also increasing unrestricted cash to $80.2 million at March 31, 2020. Subsequent to March 31, 2020, the Company has continued to prioritize liquidity and de-risking the consolidated balance sheet by materially reducing its exposure on the consolidated balance sheet through asset sales and debt repayments. The reduction in LHFS and locked pipeline, reduction in MSRs and greater retention of uninvested cash to address the volatility in the market, is likely to result in diminished earning capacity for the Company for at least the next few quarters as the Company re-engaged lending activities in June 2020. |
Recent Accounting Pronouncements | Accounting Pronouncements Adopted in 2020 In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 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 adopted this guidance on January 1, 2020, and the adoption of this ASU had no significant impact on the Company’s 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 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 adopted this guidance on January 1, 2020, and the adoption of this ASU had no impact on the Company’s 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, with early adoption permitted. The Company early adopted ASU 2019-12 on a prospective basis on January 1, 2020 and the adoption of this ASU had no impact on the Company's consolidated financial statements. Recent Accounting Pronouncements Not Yet Effective In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging , and Topic 825, Financial Instruments (ASU 2019-04) , which provided certain improvements to ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) and ASU 2016-13. As the Company adopted ASU 2016-01 on January 1, 2018, the improvements in ASU 2019-04 are effective in the first quarter of 2020. Early adoption is permitted. The Company expects to adopt ASU 2016-13 in the first quarter of 2023, as described above, and the improvements in ASU 2019-04 will be adopted concurrently. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) , which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the benefits of) reference rate reform on financial reporting. The amendments in ASU 2020-04 are elective and apply to all entities, subject to meeting certain criteria, that have contract, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact the adoption of this ASU would have on our consolidated financial statements. |
Mortgage Loans Held-for-Sale (T
Mortgage Loans Held-for-Sale (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Mortgage Loans Held-for-Sale | |
Summary of the unpaid principal balance (UPB ) of mortgage loans held-for-sale by type | June 30, December 31, 2020 2019 Government (1) $ 1,889 $ 51,019 Conventional (2) 19,259 436,040 Non-qualified mortgages (NonQM) 11,223 274,834 Fair value adjustment (3) (2,952) 20,250 Total mortgage loans held-for-sale $ 29,419 $ 782,143 (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 (loss) on sale of loans, net in the accompanying consolidated statements of operations and comprehensive (loss) earnings. |
Schedule of gain (loss) on sale of loans, net | For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 (Loss) gain on sale of mortgage loans $ (21,853) $ 27,822 $ 25,639 $ 41,430 Premium from servicing retained loan sales 64 416 1,753 1,999 Unrealized gains (losses) from derivative financial instruments 936 5,175 (5,341) 4,566 Losses from derivative financial instruments (113) (2,300) (11,035) (3,354) Mark to market gain (loss) on LHFS 22,291 4,864 (23,202) 8,334 Direct origination expenses, net (260) (4,974) (9,517) (8,129) Change in provision for repurchases 386 (1,531) (5,009) (3,160) Gain (loss) on sale of loans, net $ 1,451 $ 29,472 $ (26,712) $ 41,686 |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Mortgage Servicing Rights | |
Schedule of changes in the fair value of MSRs | June 30, December 31, 2020 2019 Balance at beginning of year $ 41,470 $ 64,728 Additions from servicing retained loan sales 1,753 2,491 Reductions from bulk sales (21,002) — Other — 22 Changes in fair value (1) (21,942) (25,771) Fair value of MSRs at end of period $ 279 $ 41,470 (1) Changes in fair value are included within loss on mortgage servicing rights, net in the accompanying consolidated statements of operations and comprehensive (loss) earnings. |
Schedule of the outstanding loans serviced by entity | June 30, December 31, 2020 2019 Government insured $ 146,180 $ 105,442 Conventional (1) — 4,826,407 Total loans serviced (2) $ 146,180 $ 4,931,849 (1) In May 2020, the Company sold all of the conventional mortgage servicing for approximately $20.1 million, receiving $15.0 million in proceeds upon sale, with the remaining due upon transfer of the servicing and transfer of all trailing documents. The Company used the $15.0 million in proceeds from the MSR sale to pay off the MSR financing. (See Note 5.—Debt– MSR Financings) (2) At June 30, 2020 and December 31, 2019, no collateral was pledged as part of the MSR Financing. (See Note 5.—Debt– MSR Financings) |
Schedule of hypothetical changes in the fair values of MSRs | June 30, December 31, Mortgage Servicing Rights Sensitivity Analysis 2020 2019 Fair value of MSRs $ 279 $ 41,470 Prepayment Speed: Decrease in fair value from 10% adverse change * (1,850) Decrease in fair value from 20% adverse change * (3,631) Decrease in fair value from 30% adverse change * (5,325) Discount Rate: Decrease in fair value from 10% adverse change * (1,330) Decrease in fair value from 20% adverse change * (2,579) Decrease in fair value from 30% adverse change * (3,753) * At June 30, 2020, the Company was in the process of selling the remaining GNMA servicing portfolio and the indicative bids support the carrying value. |
Schedule of gain (loss) on mortgage servicing rights | For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 Change in fair value of mortgage servicing rights $ (3,111) $ (9,881) $ (21,942) $ (16,374) (Loss) gain on sale of mortgage servicing rights (5,332) (6) (4,811) 864 Loss on mortgage servicing rights, net $ (8,443) $ (9,887) $ (26,753) $ (15,510) |
Schedule of components of servicing income | For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 Contractual servicing fees $ 2,061 $ 3,891 $ 5,109 $ 8,080 Late and ancillary fees 26 38 65 92 Subservicing and other costs (735) (393) (1,315) (1,667) Servicing fees, net $ 1,352 $ 3,536 $ 3,859 $ 6,505 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of balance sheets, weighted average remaining lease term and weighted average discount rates | June 30, Lease Assets and Liabilities Classification 2020 Assets Operating lease ROU assets Other assets $ 15,012 Liabilities Operating lease liabilities Other liabilities $ 18,403 Weighted average remaining lease term (in years) Weighted average discount rate % |
Schedule of maturities of operating leases | Year remaining 2020 $ 2,486 Year 2021 4,593 Year 2022 4,721 Year 2023 4,867 Year 2024 3,729 Total lease commitments 20,396 Less: imputed interest (1,993) Total operating lease liability $ 18,403 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Long-term Debt | |
Schedule of information on warehouse borrowings | Maximum Balance Outstanding at Borrowing June 30, December 31, Capacity 2020 2019 Maturity Date Short-term borrowings: Repurchase agreement 1 (1) $ — $ — $ 25,953 May 29, 2020 Repurchase agreement 2 (2) 100,000 1,571 72,971 July 28, 2020 Repurchase agreement 3 (1) — — 250,722 May 29, 2020 Repurchase agreement 4 (3) 200,000 — 119,838 August 29, 2020 Repurchase agreement 5 300,000 — 72,666 June 22, 2021 Repurchase agreement 6 (1) — — 159,413 June 25, 2020 Total warehouse borrowings $ 600,000 $ 1,571 $ 701,563 (1) In May 2020, the Company settled all of the loans on repurchase agreements 1, 3 and 6 and closed the lines. (2) In July 2020, the line was extended to July 2021, and the maximum borrowing capacity was reduced to $75.0 million. (3) In July 2020, the line was extended 30 days pending the renewal process. |
Junior Subordinated Notes | |
Long-term Debt | |
Schedule of remaining principal balance and fair value | June 30, December 31, 2020 2019 Junior Subordinated Notes (1) $ 62,000 $ 62,000 Fair value adjustment (20,189) (16,566) Total Junior Subordinated Notes $ 41,811 $ 45,434 (1) Stated maturity of March 2034; requires quarterly interest payments at a variable rate of 3‑month LIBOR plus 3.75% per annum. |
Securitized Mortgage Trusts (Ta
Securitized Mortgage Trusts (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Securitized Mortgage Trusts | |
Schedule of securitized mortgage trust assets | June 30, December 31, 2020 2019 Securitized mortgage collateral, at fair value $ 2,225,422 $ 2,628,064 REO, at net realizable value (NRV) 4,240 6,682 Total securitized mortgage trust assets $ 2,229,662 $ 2,634,746 |
Schedule of securitized mortgage trust liabilities | June 30, December 31, 2020 2019 Securitized mortgage borrowings $ 2,213,863 $ 2,619,210 |
Schedule of changes in fair value of net trust assets, including trust REO gains | For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 Change in fair value of net trust assets, excluding REO $ (2,316) $ 3,113 $ (6,412) $ (3,043) Gains (losses) from REO 1,452 (4,572) 3,165 (1,099) Change in fair value of net trust assets, including trust REO gains (losses) $ (864) $ (1,459) $ (3,247) $ (4,142) |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value of Financial Instruments | |
Schedule of estimated fair value of financial instruments included in consolidated financial statements | June 30, 2020 December 31, 2019 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 $ 43,002 $ 43,002 $ — $ — $ 24,666 $ 24,666 $ — $ — Restricted cash 5,326 5,326 — — 12,466 12,466 — — Mortgage loans held-for-sale 29,419 — 29,419 — 782,143 — 782,143 — Mortgage servicing rights 279 — — 279 41,470 — — 41,470 Derivative assets, lending, net (1) 1,799 — — 1,799 7,791 — — 7,791 Securitized mortgage collateral 2,225,422 — — 2,225,422 2,628,064 — — 2,628,064 Liabilities Warehouse borrowings $ 1,571 $ — $ 1,571 $ — $ 701,563 $ — $ 701,563 $ — MSR advance financing 448 — — 448 — — — — Convertible notes 24,839 — — 24,839 24,996 — — 24,996 Long-term debt 41,811 — — 41,811 45,434 — — 45,434 Securitized mortgage borrowings 2,213,863 — — 2,213,863 2,619,210 — — 2,619,210 Derivative liabilities, lending, net (2) — — — — 651 — 651 — (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 June 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Mortgage loans held-for-sale $ — $ 29,419 $ — $ — $ 782,143 $ — Derivative assets, lending, net (1) — — 1,799 — — 7,791 Mortgage servicing rights — — 279 — — 41,470 Securitized mortgage collateral — — 2,225,422 — — 2,628,064 Total assets at fair value $ — $ 29,419 $ 2,227,500 $ — $ 782,143 $ 2,677,325 Liabilities Securitized mortgage borrowings $ — $ — $ 2,213,863 $ — $ — $ 2,619,210 Long-term debt — — 41,811 — — 45,434 Derivative liabilities, lending, net (2) — — — — 651 — Total liabilities at fair value $ — $ — $ 2,255,674 $ — $ 651 $ 2,664,644 (1) At June 30, 2020, derivative assets, lending, net included $1.8 million in IRLCs and is included in other assets in the accompanying consolidated balance sheets. 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. (2) At June 30, 2020 and December 31, 2019, 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 Three Months Ended June 30, 2020 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term collateral borrowings rights net debt Fair value, March 31, 2020 $ 2,248,813 $ (2,238,208) $ 24,328 $ 863 $ (39,632) Total gains (losses) included in earnings: Interest income (1) 6,915 — — — — Interest expense (1) — (24,005) — — (157) Change in fair value 74,961 (77,277) (3,111) 936 (4,208) Change in instrument specific credit risk — — — — 2,186 (2) Total gains (losses) included in earnings 81,876 (101,282) (3,111) 936 (2,179) Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 64 — — Settlements (105,267) 125,627 (21,002) — — Fair value, June 30, 2020 $ 2,225,422 $ (2,213,863) $ 279 $ 1,799 $ (41,811) (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 $2.0 million for three months ended June 30, 2020. 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) earnings 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 (loss) earnings in the consolidated statements of operations and comprehensive (loss) earnings and is included in unrealized (losses) gains still held for long-term debt. Level 3 Recurring Fair Value Measurements For the Three Months Ended June 30, 2019 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term collateral borrowings rights net debt Fair value, March 31, 2019 $ 3,054,720 $ (3,051,736) $ 59,823 $ 3,164 $ (44,561) Total gains (losses) included in earnings: Interest income (1) 3,950 — — — — Interest expense (1) — (10,198) — — (108) Change in fair value 40,558 (37,445) (9,881) 5,285 388 Change in instrument specific credit risk — — — — 371 (2) Total gains (losses) included in earnings 44,508 (47,643) (9,881) 5,285 651 Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 416 — — Settlements (178,379) 184,223 (12) — — Fair value, June 30, 2019 $ 2,920,849 $ (2,915,156) $ 50,346 $ 8,449 $ (43,910) (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 $2.2 million for three months ended June 30, 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 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 (loss) earnings in the consolidated statements of operations and comprehensive (loss) earnings. The following tables present reconciliations for all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2020 and 2019: Level 3 Recurring Fair Value Measurements For the Six Months Ended June 30, 2020 Interest Securitized Securitized Mortgage rate lock Long- mortgage mortgage servicing commitments, term collateral borrowings rights net debt Fair value, December 31, 2019 $ 2,628,064 $ (2,619,210) $ 41,470 $ 7,791 $ (45,434) Total (losses) gains included in earnings: Interest income (1) 2,108 — — — — Interest expense (1) — (33,931) — — (318) Change in fair value (174,419) 168,007 (21,942) (5,992) 4,828 Change in instrument specific credit risk — — — — (887) (2) Total (losses) gains included in earnings (172,311) 134,076 (21,942) (5,992) 3,623 Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 1,753 — — Settlements (230,331) 271,271 (21,002) — — Fair value, June 30, 2020 $ 2,225,422 $ (2,213,863) $ 279 $ 1,799 $ (41,811) Unrealized (losses) gains still held (3) $ (374,731) $ 2,620,691 $ 279 $ 1,799 $ 20,189 (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 $4.4 million for six months ended June 30, 2020. 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) earnings 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 (loss) earnings in the consolidated statements of operations and comprehensive (loss) earnings and is included in unrealized (losses) gains still held for long-term debt. (3) Represents the amount of unrealized (losses) gains relating to assets and liabilities classified as Level 3 that are still held and reflected in the fair values at June 30, 2020. Level 3 Recurring Fair Value Measurements For the Six Months Ended June 30, 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) 10,206 — — — — Interest expense (1) — (23,751) — — (223) Change in fair value 61,642 (64,685) (16,374) 5,098 654 Change in instrument specific credit risk — — — — 515 (2) Total gains (losses) included in earnings 71,848 (88,436) (16,374) 5,098 946 Transfers in and/or out of Level 3 — — — — — Purchases, issuances and settlements: Purchases — — — — — Issuances — — 1,999 — — Settlements (308,070) 321,495 (7) — — Fair value, June 30, 2019 $ 2,920,849 $ (2,915,156) $ 50,346 $ 8,449 $ (43,910) Unrealized (losses) gains still held (3) $ (263,682) $ 2,492,202 $ 50,346 $ 8,449 $ 18,090 (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 $4.2 million for the six months ended June 30, 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) earnings 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 (loss) earnings in the consolidated statements of operations and comprehensive (loss) earnings as required by the adoption of ASU 2016-01 on January 1, 2018. (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 June 30, 2019. |
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 nonrecurring basis at June 30, 2020: 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 $ 2,225,422 Discounted Cash Flow Prepayment rates 4.5 - 33.8 % 10.3 % Securitized mortgage borrowings (2,213,863) Default rates 0.02 - 24.0 % 2.5 % Loss severities 0.13 - 98.9 % 63.5 % Discount rates 2.8 - 25.0 % 4.2 % Other assets and liabilities Mortgage servicing rights $ 279 Market pricing Indicative bid % 100 % Derivative assets - IRLCs, net 1,799 Market pricing Pull-through rates 22.9 - 96.2 % 69.0 % Long-term debt (41,811) Discounted Cash Flow Discount rate 8.4 % 8.4 % |
Schedule of changes in recurring fair value measurements included in net loss | Recurring Fair Value Measurements Changes in Fair Value Included in Net (Loss) Earnings For the Three Months Ended June 30, 2020 Change in Fair Value of Interest Interest Net Trust Long-term Other Revenue Gain (Loss) on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 6,915 $ — $ 74,961 $ — $ — $ — $ 81,876 Securitized mortgage borrowings — (24,005) (77,277) — — — (101,282) Long-term debt — (157) — (4,208) — — (4,365) Mortgage servicing rights (2) — — — — (3,111) — (3,111) Mortgage loans held-for-sale — — — — — 22,291 22,291 Derivative assets — IRLCs — — — — — 936 936 Derivative liabilities — Hedging Instruments — — — — — — — Total $ 6,915 $ (24,162) $ (2,316) $ (4,208) $ (3,111) $ 23,227 $ (3,655) (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 MSRs, net in the consolidated statements of operations and comprehensive (loss) earnings. Recurring Fair Value Measurements Changes in Fair Value Included in Net (Loss) Earnings For the Three Months Ended June 30, 2019 Change in Fair Value of Interest Interest Net Trust Long-term Other Revenue Gain (Loss) on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 3,950 $ — $ 40,558 $ — $ — $ — $ 44,508 Securitized mortgage borrowings — (10,198) (37,445) — — — (47,643) Long-term debt — (108) — 388 — — 280 Mortgage servicing rights (2) — — — — (9,881) — (9,881) Mortgage loans held-for-sale — — — — — 4,864 4,864 Derivative assets — IRLCs — — — — — 5,285 5,285 Derivative liabilities — Hedging Instruments — — — — — (110) (110) Total $ 3,950 $ (10,306) $ 3,113 $ 388 $ (9,881) $ 10,039 $ (2,697) (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. (1) Included in loss on MSRs, net in the consolidated statements of operations and comprehensive (loss) earnings. The following tables present the changes in recurring fair value measurements included in net (loss) earnings for the six months ended June 30, 2020 and 2019: Recurring Fair Value Measurements Changes in Fair Value Included in Net (Loss) Earnings For the Six Months Ended June 30, 2020 Change in Fair Value of Interest Interest Net Trust Long-term Other Income Gain (Loss) on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 2,108 $ — $ (174,419) $ — $ — $ — $ (172,311) Securitized mortgage borrowings — (33,931) 168,007 — — — 134,076 Long-term debt — (318) — 4,828 — — 4,510 Mortgage servicing rights (2) — — — — (21,942) — (21,942) Mortgage loans held-for-sale — — — — — (23,202) (23,202) Derivative assets — IRLCs — — — — — (5,992) (5,992) Derivative liabilities — Hedging Instruments — — — — — 651 651 Total $ 2,108 $ (34,249) $ (6,412) (3) $ 4,828 $ (21,942) $ (28,543) $ (84,210) (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 MSRs, net in the consolidated statements of operations and comprehensive (loss) earnings. (3) For the six months ended June 30, 2020, change in the fair value of net trust assets, excluding REO was $6.4 million. Recurring Fair Value Measurements Changes in Fair Value Included in Net (Loss) Earnings For the Six Months Ended June 30, 2019 Change in Fair Value of Interest Interest Net Trust Long-term Other Income Gain (Loss) on Sale Income (1) Expense (1) Assets Debt and Expense of Loans, net Total Securitized mortgage collateral $ 10,206 $ — $ 61,642 $ — $ — $ — $ 71,848 Securitized mortgage borrowings — (23,751) (64,685) — — — (88,436) Long-term debt — (223) — 654 — — 431 Mortgage servicing rights (2) — — — — (16,374) — (16,374) Mortgage loans held-for-sale — — — — — 8,334 8,334 Derivative assets — IRLCs — — — — — 5,098 5,098 Derivative liabilities — Hedging Instruments — — — — — (532) (532) Total $ 10,206 $ (23,974) $ (3,043) (3) $ 654 $ (16,374) $ 12,900 $ (19,631) (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 MSRs, net in the consolidated statements of operations and comprehensive (loss) earnings. (3) For the six months ended June 30, 2019, change in the fair value of net trust assets, excluding REO was $3.0 million. |
Schedule of information for derivative assets and liabilities - lending | Total Gains (Losses) Total Losses Notional Amount For the Three Months Ended For the Six Months Ended June 30, December 31, June 30, June 30, 2020 2019 2020 2019 2020 2019 Derivative – IRLC's (1) $ 103,148 $ 419,035 $ 936 $ 5,285 $ (5,992) $ 5,098 Derivative – TBA MBS (2) — 485,459 (113) (2,410) (10,384) (3,886) Derivative – Forward delivery loan commitment (3) — 232,530 — — — — (1) Amounts included in gain (loss) on sale of loans, net within the accompanying consolidated statements of operations and comprehensive (loss) earnings. (2) Amounts included in gain (loss) on sale of loans, net and loss on mortgage servicing rights, net within the accompanying consolidated statements of operations and comprehensive (loss) earnings. (3) As of December 31, 2019, $232.5 million in mortgage loans had been allocated to forward delivery loan commitments and recorded at fair value within LHFS in the accompanying consolidated balance sheets. |
Schedule of financial and non-financial assets and liabilities measured using nonrecurring fair value measurements | Nonrecurring Fair Value Measurements Total Gains (Losses) (1) Total Gains (1) June 30, 2020 For the Three Months Ended For the Six Months Ended Level 1 Level 2 Level 3 June 30, 2020 June 30, 2020 REO (2) $ — $ 4,392 $ — $ 1,452 $ 3,165 ROU asset impairment — — 15,012 — (393) (1) Total gains (losses) reflect gains from all nonrecurring measurements during the period. (2) At June 30, 2020, $4.2 million of REO was within securitized mortgage trust assets. The balance represents REO at June 30, 2020, which have been impaired subsequent to foreclosure. For the three and six months ended June 30, 2020, the Company recorded $1.5 million and $3.2 million, respectively, in gains, which represent recovery of the NRV attributable to an improvement in state specific loss severities on properties held during the period which resulted in an increase to NRV. Nonrecurring Fair Value Measurements Total Losses (1) Total Losses (1) June 30, 2019 For the Three Months Ended For the Six Months Ended Level 1 Level 2 Level 3 June 30, 2019 June 30, 2019 REO (2) $ — $ 11,214 $ — $ (4,572) $ (1,099) (1) Total losses reflect losses from all nonrecurring measurements during the period. (2) At June 30, 2019, $10.9 million of REO was within securitized mortgage trust assets. Balance represents REO at June 30, 2019, which have been impaired subsequent to foreclosure. For the three and six months ended June 30, 2019, the Company recorded $4.6 million and $1.1 million, respectively, losses related to changes in NRV of properties. Losses represent impairment of the NRV attributable to an increase in state specific loss severities on properties held during the period which resulted in a decrease to NRV. |
Reconciliation of (Loss) Earn_2
Reconciliation of (Loss) Earnings Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Reconciliation of (Loss) Earnings Per Common Share | |
Schedule of computation of basic and diluted earnings per common share | For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 Numerator for basic (loss) earnings per share: Net (loss) earnings $ (22,829) $ 3,873 $ (87,560) $ (8,739) Numerator for diluted loss per share: Net (loss) earnings $ (22,829) $ 3,873 $ (87,560) $ (8,739) Interest expense attributable to convertible notes (1) — — — — Net (loss) earnings plus interest expense attributable to convertible notes $ (22,829) $ 3,873 $ (87,560) $ (8,739) Denominator for basic (loss) earnings per share (2): Basic weighted average common shares outstanding during the period 21,230 21,181 21,229 21,170 Denominator for diluted (loss) earnings per share (2): Basic weighted average common shares outstanding during the period 21,230 21,181 21,229 21,170 Net effect of dilutive convertible notes and warrants (1) — — — — Net effect of dilutive stock options, DSU’s, RSA's and RSU's (1) — 8 — — Diluted weighted average common shares 21,230 21,189 21,229 21,170 Net (loss) earnings per common share: Basic $ (1.08) $ 0.18 $ (4.12) $ (0.41) Diluted $ (1.08) $ 0.18 $ (4.12) $ (0.41) (1) Adjustments to diluted (loss) earnings per share for the three and six months ended June 30, 2020 and six months ended June 30, 2019 were excluded from the calculation, as they were anti-dilutive. Number of shares presented in thousands. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting | |
Reconciliation of earnings from segment to consolidated | Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Three Months Ended June 30, 2020: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 1,451 $ — $ — $ — $ 1,451 Servicing fees, net 1,352 — — — 1,352 Loss on mortgage servicing rights, net (8,443) — — — (8,443) Real estate services fees, net — 293 — — 293 Other revenue — — 30 1,259 1,289 Other operating expense (8,364) (356) (179) (5,566) (14,465) Other income (expense) 287 — (3,983) (595) (4,291) Net loss before income tax expense $ (13,717) $ (63) $ (4,132) $ (4,902) (22,814) Income tax expense 15 Net loss $ (22,829) Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Three Months Ended June 30, 2019: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 29,472 $ — $ — $ — $ 29,472 Servicing fees, net 3,536 — — — 3,536 Loss on mortgage servicing rights, net (9,887) — — — (9,887) Real estate services fees, net — 807 — — 807 Other revenue 36 — 131 20 187 Other operating expense (17,456) (345) (110) (3,722) (21,633) Other income (expense) 1,905 — 19 (452) 1,472 Net earnings (loss) before income tax expense $ 7,606 $ 462 $ 40 $ (4,154) $ 3,954 Income tax expense 81 Net earnings $ 3,873 Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Six Months Ended June 30, 2020: Lending Services Portfolio and other Consolidated Loss on sale of loans, net $ (26,712) $ — $ — $ — $ (26,712) Servicing fees, net 3,859 — — — 3,859 Loss on mortgage servicing rights, net (26,753) — — — (26,753) Real estate services fees, net — 687 — — 687 Other revenue — — 72 1,280 1,352 Other operating expense (33,307) (717) (350) (10,858) (45,232) Other income (expense) 2,387 — 3,957 (1,054) 5,290 Net (loss) earnings before income tax expense $ (80,526) $ (30) $ 3,679 $ (10,632) (87,509) Income tax expense 51 Net loss $ (87,560) Statement of Operations Items for the Mortgage Real Estate Long-term Corporate Six Months Ended June 30, 2019: Lending Services Portfolio and other Consolidated Gain on sale of loans, net $ 41,686 $ — $ — $ — $ 41,686 Servicing fees, net 6,505 — — — 6,505 Loss on mortgage servicing rights, net (15,510) — — — (15,510) Real estate services fees, net — 1,613 — — 1,613 Other revenue 36 — 98 53 187 Other operating expense (34,956) (732) (250) (7,966) (43,904) Other income (expense) 3,320 — (1,560) (909) 851 Net earnings (loss) before income tax expense $ 1,081 $ 881 $ (1,712) $ (8,822) $ (8,572) Income tax expense 167 Net loss $ (8,739) |
Reconciliation of assets from segment to consolidated | Mortgage Real Estate Long-term Corporate Balance Sheet Items as of: Lending Services Portfolio and other Consolidated Total Assets at June 30, 2020 (1) $ 100,640 $ 508 $ 2,229,677 $ 33,799 $ 2,364,624 Total Assets at December 31, 2019 (1) $ 888,847 $ 6 $ 2,634,812 $ 22,614 $ 3,546,279 All segment asset balances exclude intercompany balances |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Schedule of the activity related to the repurchase reserve for previously sold loans | June 30, December 31, 2020 2019 Beginning balance $ 8,969 $ 7,657 Provision for repurchases (1) 5,009 5,487 Settlements (3,936) (4,175) Total repurchase reserve $ 10,042 $ 8,969 |
Schedule of corporate-owned life insurance trusts | At June 30, 2020 Corporate-owned life insurance trusts: Trust #1 Trust #2 Trust #3 Total Corporate-owned life insurance cash surrender value $ 4,958 $ 3,796 $ 1,980 $ 10,734 Corporate-owned life insurance liability 5,641 4,425 2,152 12,218 Corporate-owned life insurance shortfall (1) $ (683) $ (629) $ (172) $ (1,484) (1) $1.3 million of the total shortfall was recorded as a change in retained deficit at the time of the consolidation of the trusts. The additional shortfall was recorded in the accompanying consolidated statements of operations and comprehensive (loss) earnings. |
Equity and Share Based Paymen_2
Equity and Share Based Payments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of activity, pricing and other information for the Company's stock options | Weighted- Average Number of Exercise Shares Price Options outstanding at the beginning of the year 914,470 $ 8.10 Options granted 30,000 5.34 Options exercised (9,500) 4.84 Options forfeited/cancelled (269,897) 7.85 Options outstanding at the end of the period 665,073 8.12 Options exercisable at the end of the period 413,246 $ 10.14 |
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 75,000 $ 3.75 RSU’s granted 242,961 5.34 RSU’s issued — — RSU’s forfeited/cancelled (26,026) 4.32 RSU’s outstanding at end of the period 291,935 $ 5.02 |
Deferred stock units | |
Summary of activity, pricing and other information for the Company's | Weighted- Average Number of Grant Date Shares Fair Value DSU’s outstanding at the beginning of the year 54,500 $ 6.61 DSU’s granted 15,000 5.34 DSU’s issued — — DSU’s forfeited/cancelled (15,000) 5.34 DSU’s outstanding at the end of the period 54,500 $ 6.61 |
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 35,069 $ 3.57 RSA’s granted — — RSA’s issued — — RSA’s forfeited/cancelled (35,069) 3.57 RSA’s outstanding at end of the period — $ — |
Summary of Business and Finan_3
Summary of Business and Financial Statement Presentation (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Risks and uncertainties | |||
Unrestricted cash | $ 43,002 | $ 80,200 | $ 24,666 |
Mortgage Loans Held-for-Sale (D
Mortgage Loans Held-for-Sale (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Mortgage loans held-for-Sale | |||||
Fair value adjustment | $ (2,952) | $ (2,952) | $ 20,250 | ||
Total mortgage loans held-for-sale | 29,419 | 29,419 | 782,143 | ||
Gain on LHFS | |||||
Change in provision for repurchases | (5,009) | $ (3,160) | |||
(Loss) gain on sale of loans, net | 6,840 | 31,946 | |||
Government | |||||
Mortgage loans held-for-Sale | |||||
Total mortgage loans held-for-sale | 1,889 | 1,889 | 51,019 | ||
Conventional | |||||
Mortgage loans held-for-Sale | |||||
Total mortgage loans held-for-sale | 19,259 | 19,259 | 436,040 | ||
Non-qualified mortgages (NonQM) | |||||
Mortgage loans held-for-Sale | |||||
Total mortgage loans held-for-sale | 11,223 | 11,223 | 274,834 | ||
LHFS | |||||
Mortgage loans held-for-Sale | |||||
Carrying value | 3,000 | 3,000 | 4,200 | ||
Gain on LHFS | |||||
Gain on sale of mortgage loans | (21,853) | $ 27,822 | 25,639 | 41,430 | |
Premium from servicing retained loan sales | 64 | 416 | 1,753 | 1,999 | |
Unrealized losses from derivative financial instruments | 936 | 5,175 | (5,341) | 4,566 | |
Realized (losses) gains from derivative financial instruments | (113) | (2,300) | (11,035) | (3,354) | |
Mark to market gain (loss) on LHFS | 22,291 | 4,864 | (23,202) | 8,334 | |
Direct origination expenses, net | (260) | (4,974) | (9,517) | (8,129) | |
Change in provision for repurchases | 386 | (1,531) | (5,009) | (3,160) | |
(Loss) gain on sale of loans, net | 1,451 | $ 29,472 | (26,712) | $ 41,686 | |
LHFS | 90 days or more past due | |||||
Mortgage loans held-for-Sale | |||||
Unpaid principal balance of mortgage loans held for sale | $ 3,500 | $ 3,500 | $ 4,500 |
Mortgage Servicing Rights (Deta
Mortgage Servicing Rights (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
May 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Changes in the fair value of MSRs | ||||||
Balance at beginning of year | $ 41,470 | $ 64,728 | $ 64,728 | |||
Additions from servicing retained loan sales | 1,753 | 2,491 | ||||
Reductions from bulk sales | (21,002) | |||||
Other | 22 | |||||
Changes in fair value | (21,942) | (25,771) | ||||
Fair value of MSRs at end of period | $ 279 | 279 | 41,470 | |||
Total loans serviced | 146,180 | 146,180 | 4,931,849 | |||
Proceeds from the sale of mortgage servicing rights | 16,191 | 12 | ||||
Mortgage Servicing Rights Sensitivity Analysis | ||||||
Change in fair value of mortgage servicing rights | (3,111) | $ (9,881) | (21,942) | (16,374) | ||
Gain (loss) on sale of mortgage servicing rights | (5,332) | (6) | (4,811) | 864 | ||
Loss on mortgage servicing rights, net | (8,443) | (9,887) | (26,753) | (15,510) | ||
Servicing income, net | ||||||
Contractual servicing fees | 2,061 | 3,891 | 5,109 | 8,080 | ||
Late and ancillary fees | 26 | 38 | 65 | 92 | ||
Subservicing and other costs | (735) | (393) | (1,315) | (1,667) | ||
Servicing fees, net | 1,352 | $ 3,536 | 3,859 | $ 6,505 | ||
Loans eligible for repurchase from GNMA | 12,100 | 12,100 | 1,700 | |||
Government | ||||||
Changes in the fair value of MSRs | ||||||
Total loans serviced | 146,180 | 146,180 | 105,442 | |||
Conventional | ||||||
Changes in the fair value of MSRs | ||||||
Total loans serviced | 4,826,407 | |||||
Mortgage servicing rights | ||||||
Changes in the fair value of MSRs | ||||||
Amount pledged as collateral as part of the MSR Financing | 0 | 0 | 0 | |||
Mortgage Servicing Rights Sensitivity Analysis | ||||||
Fair value of MSRs | $ 279 | $ 279 | 41,470 | |||
Prepayment Speed, Decrease in fair value from 10% adverse change | (1,850) | |||||
Prepayment Speed, Decrease in fair value from 20% adverse change | (3,631) | |||||
Prepayment Speed, Decrease in fair value from 30% adverse change | (5,325) | |||||
Discount Rate, Decrease in fair value from 10% adverse change | (1,330) | |||||
Discount Rate, Decrease in fair value from 20% adverse change | (2,579) | |||||
Discount Rate, Decrease in fair value from 30% adverse change | $ (3,753) | |||||
Mortgage servicing rights | Conventional | ||||||
Changes in the fair value of MSRs | ||||||
Total amount received from sale of MSR | $ 20,100 | |||||
Proceeds from the sale of mortgage servicing rights | $ 15,000 |
Leases (Details)
Leases (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($)lease | |
Lease information | |||
Number of operating leases | lease | 4 | ||
Cash paid for operating leases | $ 1,300 | $ 2,700 | |
Total operating lease expense | 1,000 | 2,600 | |
Additional operating leases not yet commenced | 0 | 0 | |
Additional finance leases not yet commenced | $ 0 | $ 0 | |
General, Administrative and Other | |||
Lease information | |||
ROU asset impairment | $ 393 |
Leases - Lease Information (Det
Leases - Lease Information (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Lease Assets and Liabilities | |
Operating lease ROU assets | $ 15,012 |
Balance sheet classification - ROU assets | us-gaap:OtherAssets |
Operating lease liabilities | $ 18,403 |
Balance sheet classification - Operating lease liabilities | us-gaap:OtherLiabilities |
Weighted average remaining lease term (in years) | 4 years 2 months 12 days |
Weighted average discount rate | 4.80% |
Leases - Maturities (Details)
Leases - Maturities (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Operating lease liabilities: | |
Remainder of 2020 | $ 2,486 |
Year 2021 | 4,593 |
Year 2022 | 4,721 |
Year 2023 | 4,867 |
Year 2024 | 3,729 |
Total lease commitments | 20,396 |
Less: imputed interest | (1,993) |
Total operating lease liability | $ 18,403 |
Debt - Warehouse Borrowings (De
Debt - Warehouse Borrowings (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Jul. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Warehouse Borrowings | |||
Maximum Borrowing Capacity | $ 600,000 | ||
Balance Outstanding | 1,571 | $ 701,563 | |
Repurchase agreement 1 | |||
Warehouse Borrowings | |||
Balance Outstanding | 25,953 | ||
Repurchase agreement 2 | |||
Warehouse Borrowings | |||
Maximum Borrowing Capacity | $ 75,000 | 100,000 | |
Balance Outstanding | 1,571 | 72,971 | |
Repurchase agreement 3 | |||
Warehouse Borrowings | |||
Balance Outstanding | 250,722 | ||
Repurchase agreement 4 | |||
Warehouse Borrowings | |||
Maximum Borrowing Capacity | 200,000 | ||
Balance Outstanding | 119,838 | ||
Extended term | 30 days | ||
Repurchase agreement 5 | |||
Warehouse Borrowings | |||
Maximum Borrowing Capacity | $ 300,000 | ||
Balance Outstanding | 72,666 | ||
Repurchase agreement 6 | |||
Warehouse Borrowings | |||
Balance Outstanding | $ 159,413 |
Debt - MSR Financings and MSR A
Debt - MSR Financings and MSR Advance Financings (Details) - USD ($) $ in Thousands | 1 Months Ended | |||
Apr. 30, 2020 | May 31, 2018 | Jun. 30, 2020 | Feb. 28, 2018 | |
Long-term Debt | ||||
Maximum Borrowing Capacity | $ 600,000 | |||
PTAP funds outstanding | 448 | |||
FHLMC and GNMA Financing | ||||
Long-term Debt | ||||
Outstanding balance | 0 | |||
Available for borrowing | 0 | |||
MSR Advance Financing | ||||
Long-term Debt | ||||
PTAP funds outstanding | $ 448 | |||
Interest rate of debt (as a percent) | 5.70% | |||
MSR Advance Financing | Maximum | ||||
Long-term Debt | ||||
Agreement term | 7 months | |||
Line of credit | FHLMC and GNMA Financing | IMC | ||||
Long-term Debt | ||||
Maximum Borrowing Capacity | $ 60,000 | $ 50,000 | ||
Maximum borrowing capacity as a percentage of fair market value of pledged mortgage servicing rights | 60.00% | |||
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) $ / shares in Units, $ in Thousands | Apr. 15, 2020USD ($)$ / sharesshares | May 31, 2015USD ($)D$ / shares |
2015 Convertible Notes | ||
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 | |
Amended Notes | ||
Convertible Notes | ||
Amount of debt issued | $ | $ 25,000 | |
Interest rate of debt (as a percent) | 7.00% | |
Agreement term | 6 months | |
Aggregate number of common shares which can be purchased with warrants issued | shares | 212,649 | |
Warrant cash exercise price | $ / shares | $ 2.97 |
Debt - Long-term Debt (Details)
Debt - Long-term Debt (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Trust Preferred Securities | LIBOR | ||
Long-term Debt | ||
Applicable margin (as a percent) | 3.75% | |
Junior Subordinated Notes | ||
Junior Subordinated Notes, Fair Value | ||
Long-term debt | $ 62,000 | $ 62,000 |
Fair value adjustment | (20,189) | (16,566) |
Total | $ 41,811 | $ 45,434 |
Securitized Mortgage Trusts - S
Securitized Mortgage Trusts - Securitized Mortgage Trust Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Trust Assets | ||
Total securitized mortgage trust assets | $ 2,229,662 | $ 2,634,746 |
Mortgages secured by residential real estate | ||
Trust Assets | ||
Securitized mortgage collateral, at fair value | 2,225,422 | 2,628,064 |
REO inside trusts | ||
Trust Assets | ||
REO, at net realizable value (NRV) | $ 4,240 | $ 6,682 |
Securitized Mortgage Trusts -_2
Securitized Mortgage Trusts - Securitized Mortgage Trust Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Securitized Mortgage Trust Liabilities | ||
Securitized mortgage borrowings | $ 2,213,863 | $ 2,619,210 |
Securitized Mortgage Trusts - C
Securitized Mortgage Trusts - Change in Fair Value of Net Trust Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Change in fair value of net trust assets, including trust REO losses | ||||
Change in fair value of net trust assets, excluding REO | $ (2,316) | $ 3,113 | $ (6,412) | $ (3,043) |
Gains from REO | 1,452 | (4,572) | 3,165 | (1,099) |
Change in fair value of net trust assets, including trust REO gains | $ (864) | $ (1,459) | $ (3,247) | $ (4,142) |
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 | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | |||
Mortgage servicing rights | $ 279 | $ 41,470 | $ 64,728 |
Carrying Amount | |||
Assets | |||
Cash and cash equivalents. | 43,002 | 24,666 | |
Restricted cash | 5,326 | 12,466 | |
Mortgage loans held for-for-sale | 29,419 | 782,143 | |
Mortgage servicing rights | 279 | 41,470 | |
Derivatives assets, lending, net | 1,799 | 7,791 | |
Securitized mortgage collateral | 2,225,422 | 2,628,064 | |
Liabilities | |||
Warehouse borrowings | 1,571 | 701,563 | |
MSR financings | 448 | ||
Convertible notes | 24,839 | 24,996 | |
Long-term debt | 41,811 | 45,434 | |
Securitized mortgage borrowings | 2,213,863 | 2,619,210 | |
Derivative liabilities, lending, net | 651 | ||
Estimated Fair Value | Level 1 | |||
Assets | |||
Cash and cash equivalents. | 43,002 | 24,666 | |
Restricted cash | 5,326 | 12,466 | |
Estimated Fair Value | Level 2 | |||
Assets | |||
Mortgage loans held for-for-sale | 29,419 | 782,143 | |
Liabilities | |||
Warehouse borrowings | 1,571 | 701,563 | |
Derivative liabilities, lending, net | 651 | ||
Estimated Fair Value | Level 3 | |||
Assets | |||
Mortgage servicing rights | 279 | 41,470 | |
Derivatives assets, lending, net | 1,799 | 7,791 | |
Securitized mortgage collateral | 2,225,422 | 2,628,064 | |
Liabilities | |||
MSR financings | 448 | ||
Convertible notes | 24,839 | 24,996 | |
Long-term debt | 41,811 | 45,434 | |
Securitized mortgage borrowings | $ 2,213,863 | $ 2,619,210 |
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 | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets | |||
Mortgage servicing rights | $ 279 | $ 41,470 | $ 64,728 |
Level 3 | |||
Fair Value Measurements | |||
Percentage of level three assets to total assets measured at fair value | 99.00% | 77.00% | |
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 | $ 29,419 | $ 782,143 | |
Total assets at fair value | 29,419 | 782,143 | |
Liabilities | |||
Derivative liabilities, lending, net | 651 | ||
Total liabilities at fair value | 651 | ||
Recurring basis | Level 3 | |||
Assets | |||
Derivatives assets, lending, net | 1,799 | 7,791 | |
Mortgage servicing rights | 279 | 41,470 | |
Securitized mortgage collateral | 2,225,422 | 2,628,064 | |
Total assets at fair value | 2,227,500 | 2,677,325 | |
Liabilities | |||
Securitized mortgage borrowings | 2,213,863 | 2,619,210 | |
Long-term debt | 41,811 | 45,434 | |
Total liabilities at fair value | 2,255,674 | 2,664,644 | |
Recurring basis | Derivative assets, lending, net | Interest rate lock commitments. net (IRLCs) | Level 3 | |||
Assets | |||
Total assets at fair value | $ 1,800 | $ 7,800 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Reconciliation of All Assets and Liabilities Measured Using Level 3 Input (Details) - Level 3 - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Purchases, issuances and settlements | ||||
Net interest income including cash received and paid | $ 2,000 | $ 2,200 | $ 4,400 | $ 4,200 |
Recurring basis | Securitized mortgage borrowings | ||||
Changes in fair value of liabilities during the period | ||||
Fair value in the beginning of the period | (2,238,208) | (3,051,736) | (2,619,210) | (3,148,215) |
Total gains (losses) included in earnings: | ||||
Total (losses) gains included in earnings | (101,282) | (47,643) | 134,076 | (88,436) |
Purchases, issuances and settlements | ||||
Settlements | 125,627 | 184,223 | 271,271 | 321,495 |
Fair value at the end of the period | (2,213,863) | (2,915,156) | (2,213,863) | (2,915,156) |
Unrealized gains (losses) still held | 2,620,691 | 2,492,202 | ||
Recurring basis | Securitized mortgage borrowings | Interest Expense | ||||
Total gains (losses) included in earnings: | ||||
Total (losses) gains included in earnings | (24,005) | (10,198) | (33,931) | (23,751) |
Recurring basis | Securitized mortgage borrowings | Change in fair value | ||||
Total gains (losses) included in earnings: | ||||
Total (losses) gains included in earnings | (77,277) | (37,445) | 168,007 | (64,685) |
Recurring basis | Long-term debt | ||||
Changes in fair value of liabilities during the period | ||||
Fair value in the beginning of the period | (39,632) | (44,561) | (45,434) | (44,856) |
Total gains (losses) included in earnings: | ||||
Total (losses) gains included in earnings | (2,179) | 651 | 3,623 | 946 |
Purchases, issuances and settlements | ||||
Fair value at the end of the period | (41,811) | (43,910) | (41,811) | (43,910) |
Unrealized gains (losses) still held | 20,189 | 18,090 | ||
Recurring basis | Long-term debt | Interest Expense | ||||
Total gains (losses) included in earnings: | ||||
Total (losses) gains included in earnings | (157) | (108) | (318) | (223) |
Recurring basis | Long-term debt | Change in fair value | ||||
Total gains (losses) included in earnings: | ||||
Total (losses) gains included in earnings | (4,208) | 388 | 4,828 | 654 |
Recurring basis | Long-term debt | Change in instrument specific credit risk | ||||
Total gains (losses) included in earnings: | ||||
Total (losses) gains included in earnings | 2,186 | 371 | (887) | 515 |
Recurring basis | Securitized mortgage collateral | ||||
Changes in fair value of assets during the period | ||||
Fair value at the beginning of the period | 2,248,813 | 3,054,720 | 2,628,064 | 3,157,071 |
Total gains (losses) included in earnings: | ||||
Total gains (losses) included in earnings | 81,876 | 44,508 | (172,311) | 71,848 |
Purchases, issuances and settlements | ||||
Settlements | (105,267) | (178,379) | (230,331) | (308,070) |
Fair value at the end of the period | 2,225,422 | 2,920,849 | 2,225,422 | 2,920,849 |
Unrealized gains (losses) still held | (374,731) | (263,682) | ||
Recurring basis | Securitized mortgage collateral | Interest Income | ||||
Total gains (losses) included in earnings: | ||||
Total gains (losses) included in earnings | 6,915 | 3,950 | 2,108 | 10,206 |
Recurring basis | Securitized mortgage collateral | Change in fair value | ||||
Total gains (losses) included in earnings: | ||||
Total gains (losses) included in earnings | 74,961 | 40,558 | (174,419) | 61,642 |
Recurring basis | Mortgage servicing rights | ||||
Changes in fair value of assets during the period | ||||
Fair value at the beginning of the period | 24,328 | 59,823 | 41,470 | 64,728 |
Total gains (losses) included in earnings: | ||||
Total gains (losses) included in earnings | (3,111) | (9,881) | (21,942) | (16,374) |
Purchases, issuances and settlements | ||||
Issuances | 64 | 416 | 1,753 | 1,999 |
Settlements | (21,002) | (12) | (21,002) | (7) |
Fair value at the end of the period | 279 | 50,346 | 279 | 50,346 |
Unrealized gains (losses) still held | 279 | 50,346 | ||
Recurring basis | Mortgage servicing rights | Change in fair value | ||||
Total gains (losses) included in earnings: | ||||
Total gains (losses) included in earnings | (3,111) | (9,881) | (21,942) | (16,374) |
Recurring basis | Interest rate lock commitments. net (IRLCs) | ||||
Changes in fair value of assets during the period | ||||
Fair value at the beginning of the period | 863 | 3,164 | 7,791 | 3,351 |
Total gains (losses) included in earnings: | ||||
Total gains (losses) included in earnings | 936 | 5,285 | (5,992) | 5,098 |
Purchases, issuances and settlements | ||||
Fair value at the end of the period | 1,799 | 8,449 | 1,799 | 8,449 |
Unrealized gains (losses) still held | 1,799 | 8,449 | ||
Recurring basis | Interest rate lock commitments. net (IRLCs) | Change in fair value | ||||
Total gains (losses) included in earnings: | ||||
Total gains (losses) included in earnings | $ 936 | $ 5,285 | $ (5,992) | $ 5,098 |
Fair Value of Financial Instr_6
Fair Value of Financial Instruments - Valuation Techniques And Unobservable Inputs Applied (Details) - Level 3 $ in Thousands | Jun. 30, 2020USD ($) |
Securitized mortgage borrowings | DCF | |
Valuation techniques | |
Estimated fair value of liabilities | $ (2,213,863) |
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 | 24 |
Securitized mortgage borrowings | Measurement Input, Default Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 2.5 |
Securitized mortgage borrowings | Measurement Input, Loss Severity | DCF | Minimum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 0.13 |
Securitized mortgage borrowings | Measurement Input, Loss Severity | DCF | Maximum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 98.9 |
Securitized mortgage borrowings | Measurement Input, Loss Severity | DCF | Weighted Average | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 63.5 |
Securitized mortgage borrowings | Measurement Input, Discount Rate | DCF | Minimum | |
Unobservable input | |
Measurement input, securitized mortgage borrowings | 2.8 |
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 | 4.2 |
Long-term debt | DCF | |
Valuation techniques | |
Estimated fair value of liabilities | $ (41,811) |
Long-term debt | Measurement Input, Discount Rate | DCF | |
Unobservable input | |
Measurement input, long-term debt | 8.4 |
Long-term debt | Measurement Input, Discount Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, long-term debt | 8.4 |
Securitized mortgage collateral | DCF | |
Valuation techniques | |
Estimated fair value of assets | $ 2,225,422 |
Securitized mortgage collateral | Measurement Input, Prepayment Rate | DCF | Minimum | |
Unobservable input | |
Measurement input, securitized mortgage collateral | 4.5 |
Securitized mortgage collateral | Measurement Input, Prepayment Rate | DCF | Maximum | |
Unobservable input | |
Measurement input, securitized mortgage collateral | 33.8 |
Securitized mortgage collateral | Measurement Input, Prepayment Rate | DCF | Weighted Average | |
Unobservable input | |
Measurement input, securitized mortgage collateral | 10.3 |
Mortgage servicing rights | DCF | |
Valuation techniques | |
Estimated fair value of assets | $ 279 |
Mortgage servicing rights | Measurement Input Inactive Bid | Market pricing | |
Unobservable input | |
Measurement input, mortgage servicing rights | 100 |
Mortgage servicing rights | Measurement Input Inactive Bid | Market pricing | Weighted Average | |
Unobservable input | |
Measurement input, mortgage servicing rights | 100 |
Interest rate lock commitments. net (IRLCs) | Market pricing | |
Valuation techniques | |
Estimated fair value of assets | $ 1,799 |
Interest rate lock commitments. net (IRLCs) | Measurement Input, Pull-through Rate | Market pricing | Minimum | |
Unobservable input | |
Measurement input, derivative assets - IRLCs, net | 22.9 |
Interest rate lock commitments. net (IRLCs) | Measurement Input, Pull-through Rate | Market pricing | Maximum | |
Unobservable input | |
Measurement input, derivative assets - IRLCs, net | 96.2 |
Interest rate lock commitments. net (IRLCs) | Measurement Input, Pull-through Rate | Market pricing | Weighted Average | |
Unobservable input | |
Measurement input, derivative assets - IRLCs, net | 69 |
Fair Value of Financial Instr_7
Fair Value of Financial Instruments - Changes in Recurring Fair Value Measurements Included in Earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of net trust assets, excluding trust REO | $ 6,412 | $ 3,043 | |||
Securitized mortgage collateral | |||||
Difference between aggregate unpaid principal balance and fair value of securitized mortgage collateral | $ (2,952) | (2,952) | $ 20,250 | ||
Securitized Mortgage Borrowings | |||||
Outstanding principal balance of securitized mortgage borrowings | 146,180 | 146,180 | 4,931,849 | ||
Derivative liabilities, net, securitized trusts | TBA's | |||||
Derivative assets and liabilities | |||||
Derivative Liability, Notional Amount | 485,459 | ||||
Total Gains (Losses) | (113) | $ (2,410) | (10,384) | (3,886) | |
Derivative assets - IRLCs | Interest rate lock commitments. net (IRLCs) | |||||
Derivative assets and liabilities | |||||
Derivative Assets, Notional Balance | 103,148 | 103,148 | 419,035 | ||
Total Gains (Losses) | 936 | 5,285 | (5,992) | 5,098 | |
Mortgage loans held-for-sale | Forward delivery loan commitment | |||||
Derivative assets and liabilities | |||||
Derivative Assets, Notional Balance | 232,530 | ||||
Recurring basis | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Total | (3,655) | (2,697) | (84,210) | (19,631) | |
Recurring basis | Interest Income | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Total | 6,915 | 3,950 | 2,108 | 10,206 | |
Recurring basis | Interest Expense | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Total | (24,162) | (10,306) | (34,249) | (23,974) | |
Recurring basis | Change in Fair Value of Net Trust Assets | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Total | (2,316) | 3,113 | (6,412) | (3,043) | |
Recurring basis | Change in Fair Value of Long-term Debt | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Total | (4,208) | 388 | 4,828 | 654 | |
Recurring basis | Other Revenue and Expense | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Total | (3,111) | (9,881) | (21,942) | (16,374) | |
Recurring basis | (Loss) Gain on Sale of Loans, net | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Total | 23,227 | 10,039 | (28,543) | 12,900 | |
Recurring basis | Hedging Instruments | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of liabilities | (110) | 651 | |||
Recurring basis | Hedging Instruments | (Loss) Gain on Sale of Loans, net | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of liabilities | (110) | 651 | |||
Recurring basis | Securitized mortgage borrowings | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of liabilities | (101,282) | (47,643) | 134,076 | (88,436) | |
Recurring basis | Securitized mortgage borrowings | Interest Expense | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of liabilities | (24,005) | (10,198) | (33,931) | (23,751) | |
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 | (77,277) | (37,445) | 168,007 | (64,685) | |
Recurring basis | Derivative liabilities, net, securitized trusts | Hedging Instruments | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of liabilities | (532) | ||||
Recurring basis | Derivative liabilities, net, securitized trusts | Hedging Instruments | (Loss) Gain on Sale of Loans, net | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of liabilities | (532) | ||||
Recurring basis | Long-term debt | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of liabilities | (4,365) | 280 | 4,510 | 431 | |
Recurring basis | Long-term debt | Interest Expense | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of liabilities | (157) | (108) | (318) | (223) | |
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 | (4,208) | 388 | 4,828 | 654 | |
Recurring basis | Securitized mortgage collateral | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | 81,876 | (172,311) | 71,848 | ||
Recurring basis | Securitized mortgage collateral | Interest Income | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | 6,915 | 2,108 | 10,206 | ||
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 | 74,961 | (174,419) | 61,642 | ||
Recurring basis | Securitized mortgage collateral | Securitized mortgage borrowings | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | 44,508 | ||||
Recurring basis | Securitized mortgage collateral | Securitized mortgage borrowings | Interest Income | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | 3,950 | ||||
Recurring basis | Securitized mortgage collateral | 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 assets | 40,558 | ||||
Recurring basis | Mortgage servicing rights | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | (3,111) | (9,881) | (21,942) | (16,374) | |
Recurring basis | Mortgage servicing rights | Other Revenue and Expense | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | (3,111) | (9,881) | (21,942) | (16,374) | |
Recurring basis | Derivative assets - IRLCs | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | 936 | 5,285 | (5,992) | 5,098 | |
Recurring basis | Derivative assets - IRLCs | (Loss) Gain on Sale of Loans, net | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | 936 | 5,285 | (5,992) | 5,098 | |
Recurring basis | Mortgage loans held-for-sale | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | 22,291 | 4,864 | (23,202) | 8,334 | |
Recurring basis | Mortgage loans held-for-sale | (Loss) Gain on Sale of Loans, net | |||||
Change in Fair Value Included in Net Earnings (Loss) | |||||
Change in fair value of assets | 22,291 | $ 4,864 | (23,202) | $ 8,334 | |
Recurring basis | Level 3 | |||||
Long-term debt | |||||
Estimated fair value of long-term debt | 41,811 | 41,811 | $ 45,434 | ||
Recurring basis | Level 3 | Long-term debt | |||||
Long-term debt | |||||
Long-term debt unpaid principal balance | 62,000 | 62,000 | |||
Estimated fair value of long-term debt | 41,800 | 41,800 | |||
Difference between aggregate unpaid principal balances and fair value of long-term debt | 20,200 | 20,200 | |||
Recurring basis | Level 3 | Securitized mortgage collateral | |||||
Securitized mortgage collateral | |||||
Unpaid principal balance of securitized mortgage collateral | 2,600,000 | 2,600,000 | |||
Estimated fair value of securitized mortgage collateral | 2,200,000 | 2,200,000 | |||
Difference between aggregate unpaid principal balance and fair value of securitized mortgage collateral | 400 | 400 | |||
Unpaid principal balance of loans 90 days or more past due | 400,000 | 400,000 | |||
Estimated fair value of loans 90 days or more past due | 100,000 | 100,000 | |||
Difference between aggregate unpaid principal balances and fair value of mortgage loans | 300,000 | 300,000 | |||
Securitized Mortgage Borrowings | |||||
Outstanding principal balance of securitized mortgage borrowings | 2,600,000 | 2,600,000 | |||
Estimated fair value of securitized mortgage borrowings | 2,200,000 | 2,200,000 | |||
Bond losses | 2,200,000 | 2,200,000 | |||
Difference between aggregate unpaid principal balances and fair value of securitized mortgage borrowings | $ 400,000 | $ 400,000 |
Fair Value of Financial Instr_8
Fair Value of Financial Instruments - Nonrecurring Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Fair Value Measurements | ||||||
ROU asset | $ 15,012 | $ 15,012 | ||||
Retained earnings | (1,245,860) | (1,245,860) | $ (1,157,019) | |||
General, Administrative and Other | ||||||
Total Losses | ||||||
ROU asset impairment | $ (393) | |||||
Nonrecurring Fair Value Measurements | ||||||
Total Losses | ||||||
REO | 1,452 | $ (4,572) | 3,165 | $ (1,099) | ||
ROU asset impairment | (393) | |||||
Nonrecurring Fair Value Measurements | Level 2 | ||||||
Fair Value Measurements | ||||||
REO | 4,392 | 11,214 | 4,392 | 11,214 | ||
Nonrecurring Fair Value Measurements | Level 2 | Securitized Mortgage Trust Assets | ||||||
Fair Value Measurements | ||||||
REO | 4,200 | $ 10,900 | 4,200 | $ 10,900 | ||
Nonrecurring Fair Value Measurements | Level 3 | ||||||
Fair Value Measurements | ||||||
ROU asset | $ 15,012 | $ 15,012 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Income taxes | |||||
Income tax expense | $ 15 | $ 81 | $ 51 | $ 167 | |
Accumulated other comprehensive earnings, net of tax | 23,899 | 23,899 | $ 24,786 | ||
Accumulated other comprehensive earnings, tax | $ 11,300 | $ 11,300 | |||
Federal | |||||
Income taxes | |||||
Net operating loss carryforwards | 566,600 | ||||
State | |||||
Income taxes | |||||
Net operating loss carryforwards | $ 385,200 |
Reconciliation of (Loss) Earn_3
Reconciliation of (Loss) Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator for basic (loss) earnings per share: | ||||||
Net (loss) earnings | $ (22,829) | $ 3,873 | $ (87,560) | $ (8,739) | ||
Numerator for diluted loss per share: | ||||||
Net (loss) earnings | (22,829) | $ (64,731) | 3,873 | $ (12,612) | (87,560) | (8,739) |
Net (loss) earnings plus interest expense attributable to convertible notes | $ (22,829) | $ 3,873 | $ (87,560) | $ (8,739) | ||
Denominator for basic (loss) earnings per share: | ||||||
Basic weighted average common shares outstanding during the period | 21,230 | 21,181 | 21,229 | 21,170 | ||
Denominator for diluted (loss) earnings per share: | ||||||
Basic weighted average common shares outstanding during the period | 21,230 | 21,181 | 21,229 | 21,170 | ||
Net effect of dilutive stock options, DSUs, RSAs and RSUs | 8 | |||||
Diluted weighted average common shares | 21,230 | 21,189 | 21,229 | 21,170 | ||
Basic (in dollars per share) | $ (1.08) | $ 0.18 | $ (4.12) | $ (0.41) | ||
Diluted (in dollars per share) | $ (1.08) | $ 0.18 | $ (4.12) | $ (0.41) | ||
RSAs, RSUs, and DSUs | ||||||
Denominator for diluted (loss) earnings per share: | ||||||
Antidilutive securities excluded from weighted average share calculations (in shares) | 1,000 | |||||
Convertible Debt Notes | ||||||
Denominator for diluted (loss) earnings per share: | ||||||
Antidilutive securities excluded from weighted average share calculations (in shares) | 1,200 | 1,200 | 1,200 | 1,200 | ||
Warrant | ||||||
Denominator for diluted (loss) earnings per share: | ||||||
Antidilutive securities excluded from weighted average share calculations (in shares) | 213 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting | |||||||
Number of reportable segments | item | 3 | ||||||
Gain (loss) on sale of loans, net | $ 1,451 | $ 29,472 | $ (26,712) | $ 41,686 | |||
Servicing fees, net | 1,352 | 3,536 | 3,859 | 6,505 | |||
Loss on mortgage servicing rights, net | (8,443) | (9,887) | (26,753) | (15,510) | |||
Real estate services fees, net | 293 | 807 | 687 | 1,613 | |||
Other revenue | 1,289 | 187 | 1,352 | 187 | |||
Other operating expense | (14,465) | (21,633) | (45,232) | (43,904) | |||
Other income (expense) | (4,291) | 1,472 | 5,290 | 851 | |||
(Loss) earnings before income taxes | (22,814) | 3,954 | (87,509) | (8,572) | |||
Income tax expense | 15 | 81 | 51 | 167 | |||
Net (loss) earnings | (22,829) | $ (64,731) | 3,873 | $ (12,612) | (87,560) | (8,739) | |
Assets | 2,364,624 | 2,364,624 | $ 3,546,279 | ||||
Corporate and other | |||||||
Segment Reporting | |||||||
Other revenue | 1,259 | 20 | 1,280 | 53 | |||
Other operating expense | (5,566) | (3,722) | (10,858) | (7,966) | |||
Other income (expense) | (595) | (452) | (1,054) | (909) | |||
(Loss) earnings before income taxes | (4,902) | (4,154) | (10,632) | (8,822) | |||
Assets | 33,799 | 33,799 | 22,614 | ||||
Mortgage Lending | Operating segments | |||||||
Segment Reporting | |||||||
Gain (loss) on sale of loans, net | 1,451 | 29,472 | (26,712) | 41,686 | |||
Servicing fees, net | 1,352 | 3,536 | 3,859 | 6,505 | |||
Loss on mortgage servicing rights, net | (8,443) | (9,887) | (26,753) | (15,510) | |||
Other revenue | 36 | 36 | |||||
Other operating expense | (8,364) | (17,456) | (33,307) | (34,956) | |||
Other income (expense) | 287 | 1,905 | 2,387 | 3,320 | |||
(Loss) earnings before income taxes | (13,717) | 7,606 | (80,526) | 1,081 | |||
Assets | 100,640 | 100,640 | 888,847 | ||||
Real Estate Services | Operating segments | |||||||
Segment Reporting | |||||||
Real estate services fees, net | 293 | 807 | 687 | 1,613 | |||
Other operating expense | (356) | (345) | (717) | (732) | |||
(Loss) earnings before income taxes | (63) | 462 | (30) | 881 | |||
Assets | 508 | 508 | 6 | ||||
Long-term Portfolio | Operating segments | |||||||
Segment Reporting | |||||||
Other revenue | 30 | 131 | 72 | 98 | |||
Other operating expense | (179) | (110) | (350) | (250) | |||
Other income (expense) | (3,983) | 19 | 3,957 | (1,560) | |||
(Loss) earnings before income taxes | (4,132) | $ 40 | 3,679 | $ (1,712) | |||
Assets | $ 2,229,677 | $ 2,229,677 | $ 2,634,812 |
Commitments and Contingencies -
Commitments and Contingencies - Legal Proceedings (Details) $ in Millions | Jul. 16, 2018USD ($)item | Jun. 30, 2020 | Dec. 31, 2019 | Dec. 07, 2011itemdirector |
Series B 9.375% redeemable preferred stock | ||||
Repurchase reserve | ||||
Preferred stock, dividend rate (as a percent) | 9.375% | 9.375% | ||
Series C 9.125% redeemable preferred stock | ||||
Repurchase reserve | ||||
Preferred stock, dividend rate (as a percent) | 9.125% | 9.125% | ||
Timm | ||||
Repurchase reserve | ||||
Number of directors elected by Preferred holders | director | 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 |
Commitments and Contingencies_2
Commitments and Contingencies - Repurchase Reserve Activity (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Continuing operations repurchase reserve activity | ||
Beginning balance | $ 8,969 | $ 7,657 |
Provision for repurchases | 5,009 | 5,487 |
Settlements | (3,936) | (4,175) |
Total repurchase reserve | $ 10,042 | $ 8,969 |
Commitments and Contingencies_3
Commitments and Contingencies - Corporate-owned Life Insurance Trusts (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($)item | |
Corporate-owned life insurance trusts | ||
Number of life insurance trusts held for former executive officers | item | 3 | |
Corporate-owned life insurance cash surrender value | $ 10,734 | |
Corporate-owned life insurance liability | 12,218 | |
Corporate-owned life insurance short-fall | (1,484) | |
Consolidation of corporate-owned life insurance trusts | $ (1,281) | |
Retained Deficit | ||
Corporate-owned life insurance trusts | ||
Consolidation of corporate-owned life insurance trusts | $ (1,281) | (1,300) |
Trust #1 | ||
Corporate-owned life insurance trusts | ||
Corporate-owned life insurance cash surrender value | 4,958 | |
Corporate-owned life insurance liability | 5,641 | |
Corporate-owned life insurance short-fall | (683) | |
Trust #2 | ||
Corporate-owned life insurance trusts | ||
Corporate-owned life insurance cash surrender value | 3,796 | |
Corporate-owned life insurance liability | 4,425 | |
Corporate-owned life insurance short-fall | (629) | |
Trust #3 | ||
Corporate-owned life insurance trusts | ||
Corporate-owned life insurance cash surrender value | 1,980 | |
Corporate-owned life insurance liability | 2,152 | |
Corporate-owned life insurance short-fall | $ (172) |
Equity and Share Based Paymen_3
Equity and Share Based Payments - Redeemable Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Series B and C Preferred Stock | ||
Equity and Share Based Payments | ||
Outstanding liquidation preference | $ 68,500 | |
Liquidation preference amount per share (in dollars per share) | $ 25 | |
Series B 9.375% redeemable preferred stock | ||
Equity and Share Based Payments | ||
Outstanding liquidation preference | $ 33,410 | $ 33,410 |
Series C 9.125% redeemable preferred stock | ||
Equity and Share Based Payments | ||
Outstanding liquidation preference | $ 35,127 | $ 35,127 |
Timm | Series B 9.375% redeemable preferred stock | ||
Equity and Share Based Payments | ||
Liquidation preference amount per share (in dollars per share) | $ 50.20 | |
Cumulative undeclared dividends in arrears | $ 16,800 | |
Cumulative undeclared dividends in arrears (per share) | $ 25.20 | |
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 |
Equity and Share Based Paymen_4
Equity and Share Based Payments - Stock Options (Details) - Stock options $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Number of Shares | |
Options outstanding at beginning of period (in shares) | shares | 914,470 |
Options granted (in shares) | shares | 30,000 |
Options exercised (in shares) | shares | (9,500) |
Options forfeited / cancelled (in shares) | shares | (269,897) |
Options outstanding at end of year (in shares) | shares | 665,073 |
Options exercisable at end of year (in shares) | shares | 413,246 |
Weighted-Average Exercise Price | |
Options outstanding at beginning of period (in dollars per share) | $ / shares | $ 8.10 |
Options granted (in dollars per share) | $ / shares | 5.34 |
Options exercised (in dollars per share) | $ / shares | 4.84 |
Options forfeited / cancelled (in dollars per share) | $ / shares | 7.85 |
Options outstanding at end of year (in dollars per share) | $ / shares | 8.12 |
Options exercisable at end of year (in dollars per share) | $ / shares | $ 10.14 |
Additional disclosure related to options | |
Unrecognized compensation cost | $ | $ 386 |
Weighted-average period over which compensation cost is expected to be recognized | 1 year 6 months |
Equity and Share Based Paymen_5
Equity and Share Based Payments - Stock Units And Awards (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Restricted stock units | |
Number of Shares | |
Outstanding at beginning of year (in shares) | 75,000 |
Granted (in shares) | 242,961 |
Forfeited / cancelled (in shares) | (26,026) |
Outstanding at end of period (in shares) | 291,935 |
Weighted-Average Grant Date Fair Value | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 3.75 |
Granted (in dollars per share) | $ / shares | 5.34 |
Forfeited / cancelled (in dollars per share) | $ / shares | 4.32 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 5.02 |
Additional information | |
Unrecognized compensation cost | $ | $ 758 |
Weighted-average period over which compensation cost is expected to be recognized | 2 years 6 months |
Deferred stock units | |
Number of Shares | |
Outstanding at beginning of year (in shares) | 54,500 |
Granted (in shares) | 15,000 |
Forfeited / cancelled (in shares) | (15,000) |
Outstanding at end of period (in shares) | 54,500 |
Weighted-Average Grant Date Fair Value | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 6.61 |
Granted (in dollars per share) | $ / shares | 5.34 |
Forfeited / cancelled (in dollars per share) | $ / shares | 5.34 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 6.61 |
Additional information | |
Unrecognized compensation cost | $ | $ 276 |
Weighted-average period over which compensation cost is expected to be recognized | 2 years 4 months 24 days |
Restricted stock awards | |
Number of Shares | |
Outstanding at beginning of year (in shares) | 35,069 |
Forfeited / cancelled (in shares) | (35,069) |
Outstanding at end of period (in shares) | 0 |
Weighted-Average Grant Date Fair Value | |
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 3.57 |
Forfeited / cancelled (in dollars per share) | $ / shares | $ 3.57 |